Mr. Robert Archer reports
GREAT PANTHER SILVER REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS
Great Panther Silver Ltd. has released financial results for the company's three and six months ended June 30, 2017. The full version of the company's unaudited condensed interim consolidated financial statements and management's discussion and analysis can be viewed on the company's website or on SEDAR. All shareholders can receive a hard copy of the company's complete audited financial statements free of charge upon request. All financial information is prepared in accordance with international financial reporting standards.
Great Panther commenced reporting its financial results in U.S. dollars as of the third quarter of 2016. Accordingly, all dollar amounts expressed in this news release, and the associated financial statements and management's discussion and analysis, are in U.S. dollars, unless otherwise noted. Periods prior to the third quarter of 2016 were reported in Canadian dollars and have been restated to U.S. dollars using the July 1, 2016, Canadan-dolar/U.S.-dollar exchange rate of 1.3052.
"I am pleased to report net income for the three- and six-month periods ended June 30, 2017, of $800,000 and $3.9-million, respectively, reflecting improvements from losses in the comparative periods", stated Robert Archer, president and chief executive officer. "Great Panther was also able to deliver a record quarter of production with the Topia mine now operating at planned capacity. Additionally, with the recent closing of the acquisition of the Coricancha mine complex in Peru, the company embarks on a significant new opportunity for growth. Over the next few months, we will be focusing on advancing a resource update, engineering studies and underground development in support of additional drilling at Coricancha. We also continue to focus on additional growth and M&A [merger and acquisition] opportunities, given our strong balance sheet with $57-million in cash and short-term deposits, and no long-term debt."
Great Panther reported net income of $800,000 for the second quarter of 2017, compared with a net loss of $1.3-million in the same quarter of 2016. This was achieved despite lower metal prices, as the company generated $5.4-million in mine operating earnings before non-cash items and realized $800,000 foreign exchange gains associated with Mexican-peso foreign currency forward contracts.
Cash cost per payable silver ounce for the second quarter of 2017 was $5.67, while cash cost of $4.83 for the six-month period ended June 30, 2017, remains below the company's full-year guidance for 2017. All-in sustaining cost per payable silver ounce (AISC) for the second quarter of 2017 came in at $14.93, bringing the AISC for the six months ended June 30, 2017, to $16.76 and closer to the full-year 2017 guidance. As the company has now completed the construction of the Topia tailings filtration plant and plant upgrades, it expects AISC to continue to decrease from levels reported in the first and second quarters, which reflected capital expenditures associated with the Topia project (see outlook section).
Highlights of the second quarter 2017 compared with second quarter 2016, unless otherwise noted:
-
Metal production increased 6 per cent to a record 1,102,290 silver equivalent ounces.
- Silver production increased 6 per cent to 569,229 silver ounces.
- Gold production decreased 8 per cent to 5,543 gold ounces.
- Cash cost increased to $5.67 from $1.72.
- Cash cost per silver equivalent ounces increased 19 per cent to $11.47.
- AISC increased 108 per cent to $14.93.
- Revenues decreased 20 per cent to $15.7-million.
- Mine operating earnings before non-cash items were $5.4-million, a decrease of 46 per cent.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.5-million compared with $7.5-million.
- Net income totalled $800,000, compared with a net loss of $1.3-million.
- Cash flow from operating activities, before changes in non-cash net working capital, was $2.3-million, compared with $7.5-million.
- Cash and short-term deposits increased to $57.1-million at June 30, 2017, from $56.7-million at Dec. 31, 2016.
- Net working capital decreased to $63.0-million at June 30, 2017, from $66.6-million at Dec. 31, 2016.
OPERATING AND FINANCIAL RESULTS SUMMARY
Q2 2017 Q2 2016 Six months ended Six months ended
Operating June 30, 2017 June 30, 2016
Tonnes milled (excluding custom milling) 98,576 99,905 181,232 188,588
AgEq oz produced (1) 1,102,290 1,037,728 1,832,476 2,047,556
Silver production -- ounces 569,229 536,726 935,664 1,076,198
Gold production -- ounces 5,543 6,010 10,721 11,609
Payable silver ounces 524,411 601,449 869,406 1,079,547
AgEq oz sold 992,057 1,148,467 1,673,041 1,994,779
Cost per tonne milled (2) $103 $86 $96 $90
Cash cost (2) 5.67 1.72 4.83 2.81
Cash cost per AqEq oz (2) 11.47 9.67 11.28 10.02
AISC (2) 14.93 7.19 16.76 8.10
AISC per AgEq oz (2) 16.37 12.54 17.48 12.88
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(in 000s, unless otherwise noted) Q2 2017 Q2 2016 Six months ended Six months ended
June 30, 2017 June 30, 2016
Financial results
Revenue $15,731 $19,596 $28,102 $33,735
Mine operating earnings before non-cash items (2) 5,418 10,087 10,864 16,021
Mine operating earnings 4,465 8,831 9,127 13,541
Net income (loss) 833 (1,332) 3,873 (4,750)
Adjusted EBITDA (2) 1,489 7,545 3,623 10,405
Operating cash flows before changes in
non-cash net working capital 2,255 7,548 3,150 10,613
Cash and short-term deposits at end of period 57,071 22,093 57,071 22,093
Net working capital at end of period 63,037 37,865 63,037 37,865
Average realized silver price per oz (3) 16.01 17.82 17.32 17.10
Average realized gold price per oz (3) 1,254 1,298 1,274 1,321
Earnings (loss) per share -- basic and diluted 0.00 (0.01) 0.02 (0.04)
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(1) Silver equivalent ounces are referred to throughout this document. For 2017, silver equivalent ounces
are calculated using a 70 to 1 silver to gold ratio and ratios of 1 to 0.0559 and 1 to 0.0676 for the price per
ounce of silver to lead and zinc price per pound, respectively, and applied to the relevant metal content of
the concentrates produced, expected to be produced, or sold from operations. Comparatively, in 2016, silver
equivalent ounces are calculated using a 70 to 1 silver to gold ratio and ratios of 1 to 0.0504 and 1 to 0.0504
for the price per ounce of silver to lead and zinc price per pound, respectively, and applied to the relevant
metal content of the concentrates produced, expected to be produced, or sold from operations.
(2) The company has included the non-international financial reporting standard performance measures cost per
tonne milled, cash cost, cash cost per silver equivalent ounces, all-in sustaining costs, AISC per silver
equivalent ounces, mine operating earnings before non-cash items, cost of sales before non-cash items and
adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) throughout this document.
(3) Average realized silver and gold prices are prior to smelting and refining charges.
Outlook
The company's production and cost guidance for the year ended Dec. 31, 2017, remains unchanged.
PRODUCTION AND CASH COST GUIDANCE
H1 2017 actual FY 2017 guidance FY 2016 actual
Total silver equivalent ounces (1) 1,832,476 4,000,000-4,100,000 3,884,960
Total payable silver ounces 869,406 1,950,000-2,000,000 2,010,252
Cash cost (2) $4.83 $5.00-$6.00 $3.65
AISC (2) $16.76 $14.00-$16.00 $10.99
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(1) For 2017 guidance, silver equivalent ounces have been established using a 70 to 1 Ag
to Au ratio, and ratios of 1 to 0.0559 and 1 to 0.0676 for the U.S.-dollar price of silver
ounces to the U.S.-dollar price for lead and zinc pounds, respectively. For 2016, silver
equivalent ounces were calculated using a 70 to 1 Ag to Au ratio, and a ratio of 1 to
0.0504 for the U.S.-dollar price of silver ounces to the U.S.-dollar price for both lead
and zinc pounds.
(2) Cash cost and AISC are non-international financial reporting standard measures.
AISC for the first half of 2017 was higher than the annual 2017 guidance and prior year due mainly to capital expenditures associated with the Topia project. AISC is expected to decrease slightly in the second half of the year as the Topia project was largely completed in the first half of 2017. However, it is noted that cash cost and AISC are highly sensitive to fluctuations in the Mexican-peso/U.S.-dollar exchange rate.
The company recently completed the outstanding condition required by the Mexican Environmental Authority (Semarnat) for the change in use of soils permit associated with the Topia phase 2 TSF and announced that it had resubmitted its application for this permit. The company expects that a response will be received within 60 business days of filing. All tailings are currently being deposited at the phase 1 TSF while the company continues its efforts to obtain the phase 2 permit from Semarnat. The company believes that it will be able to obtain a permit for the phase 2 TSF without interruption of operations at Topia. However, the deposition of dry tailings on the phase 1 TSF cannot continue indefinitely, and the company cannot provide complete assurance that a disruption can be avoided.
There is a risk that production and cost guidance may be affected if the company is unable to obtain a permit for the Topia phase 2 TSF on a timely basis or at all. In the event that there is a significant change to the company's production guidance expectations, the company will provide an update to the market as soon as possible.
CAPITAL EXPENDITURES AND EE&D EXPENSE GUIDANCE
(in millions)
H1 2017 actual FY 2017 guidance FY 2016 actual
Capital expenditures, excluding acquisition cost
and capital expenditures associated with the CMC $3.0 $6.3-$7.3 $4.8
EE&D operating mines (excludes the CMC) $3.2 $3.5-$4.5 $3.0
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The company completed the acquisition of the CMC, effective June 30, 2017. The company plans to carry out further evaluations of the mine and processing infrastructure, mine rehabilitation, and development in preparation for underground drilling, undergound drilling, environmental studies and the initiation of a preliminary feasibility study (PFS). Depending upon the outcome of the PFS, capital investments in support of restarting operations could commence in 2018. The company is currently working on an updated mineral resource estimate for the CMC, which is expected to be completed toward the end of the third quarter of 2017. The company has also agreed to carry out reclamation and remediation work on certain legacy TSFs associated with the CMC and will be reimbursed for such work by Nyrstar, up to $20-million. Investors should refer to the company's material change report filed on SEDAR on July 10, 2017, for a detailed discussion on the company's obligations to complete this reclamation work and Nyrstar's related obligation to reimburse the company.
The company continues to seek and evaluate additional acquisition opportunities to meet the company's growth objectives.
Webcast and conference call to discuss the first quarter 2017 financial results
Great Panther will hold a live webcast and conference call to discuss the financial results on Aug. 3, 2017, at 8 a.m. Pacific Time. Hosting the call will be Mr. Archer and chief financial officer and corporate secretary Jim Zadra.
Shareholders, analysts, investors and media are invited to join the live webcast and conference call by logging in or calling in five minutes prior to the start time.
Live webcast and registration: at the Great Panther website
United States and Canada toll-free: 1-866-548-4713
International toll: 1-323-794-2093
Conference ID: 6312752
A replay of the webcast will be available on the investors section of the company's website approximately one hour after the conference call.
About Great Panther Silver Ltd.
Great Panther Silver is a primary silver mining and exploration company listed on the Toronto Stock Exchange trading under the symbol GPR and on the NYSE MKT under the symbol GPL. Great Panther's current activities are focused on the mining of precious metals from its two wholly owned operating mines in Mexico: the Guanajuato mine complex, which includes the San Ignacio mine; and the Topia mine in Durango. With the recent completion of the acquisition of the Coricancha mine complex in Peru, the company's activities will include efforts to return the Coricancha mine to production, and the pursuit of additional mining opportunities in the Americas.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(expressed in thousands of U.S. dollars)
Three months Six months
ended June 30 ended June 30
2017 2016 2017 2016
Revenue $ 15,731 $ 19,596 $ 28,102 $ 33,735
Cost of sales
Production costs 10,313 9,509 17,238 17,713
Amortization and depletion 849 1,178 1,540 2,365
Share-based compensation 104 78 197 116
-------- -------- -------- --------
11,266 10,765 18,975 20,914
-------- -------- -------- --------
Mine operating earnings 4,465 8,831 9,127 13,541
General and administrative expenses
Administrative expenses 1,580 1,162 2,974 2,432
Amortization and depletion 17 51 33 104
Share-based compensation 337 173 529 331
-------- -------- -------- --------
1,934 1,386 3,536 2,867
-------- -------- -------- --------
Exploration, evaluation and development expenses
Exploration and evaluation expenses 1,520 619 2,643 2,026
Mine development costs 820 844 1,645 1,294
Share-based compensation 8 22 16 43
-------- -------- -------- --------
2,348 1,485 4,304 3,363
-------- -------- -------- --------
Impairment charge - 1,679 - 1,679
Finance and other income (expense)
Interest income 209 25 422 47
Finance costs (40) (28) (78) (48)
Foreign exchange gain (loss) 645 (4,789) 2,460 (9,496)
Other income 13 16 20 34
-------- -------- -------- --------
827 (4,776) 2,824 (9,463)
-------- -------- -------- --------
Income (loss) before income taxes 1,010 (495) 4,111 (3,831)
Income tax expense (recovery) 177 837 238 919
-------- -------- -------- --------
Net income (loss) for the period 833 (1,332) 3,873 (4,750)
Other comprehensive income (loss), net of tax
Items that may be reclassified subsequently
to net income (loss)
Foreign currency translation 20 2,759 49 5,501
Change in fair value of available-for-sale
financial assets (net of tax) 1 - (1) 3
-------- -------- -------- --------
21 2,759 48 5,504
-------- -------- -------- --------
Total comprehensive income for the period 854 1,427 3,921 754
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Earnings (loss) per share
Basic and diluted 0.00 (0.01) 0.02 (0.03)
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We seek Safe Harbor.
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