Mr. Robert Archer reports
GREAT PANTHER SILVER REPORTS FIRST QUARTER 2015 FINANCIAL RESULTS
Great Panther Silver Ltd. has released its financial results for the company's three months ended March 31, 2015. The full version of the company's financial statements, management's discussion and analysis (MD&A), and annual information form (AIF) can be viewed on the company's website or SEDAR. All financial information is prepared in accordance with international financial reporting standards.
"We are pleased to report first-quarter 2015 financial results reflecting significant improvements in our operating cash flow and margins," stated Robert Archer, president and chief executive officer. "Despite metal prices that are down significantly from the first quarter of last year, the strengthening of the U.S. dollar, improved grades and addition of production from San Ignacio since it commenced commercial production last June, all contributed to a significantly improved quarter. These same factors decreased our cash cost and AISC per payable silver ounce to $8.71 (U.S.) and $14.47 (U.S.), respectively. It should be noted that the first quarter of last year was marked by operational disruptions that also contributed to the improved comparative results. Nonetheless, there have been a number of significant achievements on the part of our team that will continue to have a positive, lasting impact on our operations."
Highlights compared with first quarter 2014, unless otherwise noted:
- Record metal production of 987,887 silver equivalent ounces, representing a 48-per-cent increase and driven primarily by the addition of production from San Ignacio;
- San Ignacio production increased by 164,982 Ag equivalent ounces to 217,429 Ag equivalent ounces;
- Silver production increased 61 per cent to a new quarterly record of 597,111 silver ounces;
- Gold production increased 28 per cent to 4,703 gold ounces;
- Cash cost per silver payable ounce decreased 35 per cent to $8.71 (U.S.);
- All-in sustaining cost per silver payable ounce (AISC) decreased 39 per cent to $14.47 (U.S.);
- Revenues increased 57 per cent to $20.3-million;
- Net income totalled $3.6-million, compared with a net loss of $600,000;
- Adjusted earnings before interest, taxes, depreciation and amortization was $3.7-million compared with negative $500,000;
- Cash flow from operating activities, before changes in non-cash net working capital (NCWC), amounted to $4.8-million, compared with $600,000.
Highlights compared with fourth quarter 2014, unless otherwise noted:
- Metal production on a silver-equivalent-ounce basis increased 8 per cent.
- Cash cost per silver payable ounce decreased 29 per cent, and AISC decreased 32 per cent.
- Revenues increased 42 per cent.
- Adjusted EBITDA increased to $3.7-million compared with negative $1.2-million.
- Cash flow from operating activities, before changes in NCWC, improved by $6.1-million.
- Cash and cash equivalents were $18.7-million at March 31, 2015, compared with $18.0-million at Dec. 31, 2014.
- Net working capital increased to $36.9-million at March 31, 2015, from $32.9-million at Dec. 31, 2014.
OPERATING AND FINANCIAL RESULTS SUMMARY
(in $000s except ounces, amounts per share and per ounce)
Q1 2015 Q1 2014 Q4 2014
Operating
Tonnes milled (excluding custom milling) 99,252 72,631 92,574
Silver equivalent ounces (Ag eq) produced (1) 987,887 667,349 911,048
Silver ounce production 597,111 370,668 550,010
Gold ounce production 4,703 3,665 4,822
Silver payable ounces 622,339 352,288 534,664
Cost per tonne milled (U.S.$)(2) $102.12 $121.38 111.08
Cash cost per silver payable ounce (U.S.$)(2) $ 8.71 $ 13.49 12.23
AISC per silver payable ounce (U.S.$)(2) $ 14.47 $ 24.18 21.46
Financial
Revenue $20,250 $12,880 14,244
Gross profit before non-cash items (2) $ 6,652 $ 3,271 2,159
Gross profit (loss) $ 524 $ (418) (2,693)
Net income (loss) $ 3,588 $ (602) (26,948)
Adjusted EBITDA (2) $ 3,688 $ (545) (1,211)
Operating cash flows before changes in NCWC $ 4,827 $ 613 (1,253)
Cash at end of period $18,694 $21,660 17,968
Net working capital at end of period $36,904 $36,886 32,907
Average realized silver price (U.S.$)(3) $ 16.99 $ 20.22 15.78
Per-share amounts
Earnings (loss) per share -- basic $ 0.03 $(0.00) $ (0.19)
Earnings (loss) per share -- diluted $ 0.03 $(0.00) $ (0.19)
(1) Silver equivalent ounces are referred to throughout this document. For 2015, Aq equivalent
ounces are calculated using a 65:1 Ag:Au ratio, and ratios of 1:0.050 and 1:0.056 for the
U.S. dollar price per ounce of silver to lead and zinc price per pound, and applied to the
relevant metal content of the concentrates produced, expected to be produced, or sold from
operations. Comparatively, in 2014 Aq equivalent ounces was established using prices of
$18.50 (U.S.) per ounce, $1,110 (U.S.) per ounce (60:1 ratio), 90 U.S. cents per pound and
85 U.S. cents per pound for silver, gold, lead and zinc, respectively.
(2) The company has included the non-IFRS performance measures cost per tonne milled, cash cost
per silver payable ounce, all-in cost per silver payable ounce (AIC), all-in sustaining cost
per silver payable ounce (AISC), gross profit before non-cash items, cost of sales before
non-cash items and adjusted EBITDA throughout this document. Refer to the non-IFRS measures
section of the company's management discussion and analysis for an explanation of these
measures and reconciliation to the company's reported financial results in accordance with
IFRS. As these are not standardized measures, they may not be directly comparable with
similarly titled measures used by others.
(3) Average realized silver price is prior to smelting and refining charges.
Discussion of first-quarter 2015 financial results
For the first quarter of 2015, the company earned revenue of $20.3-million, compared with $12.9-million for the comparative period in 2014. The $7.4-million increase in revenue is primarily attributable to a 79-per-cent increase in metal sales volume as a result of an increase in metal production. In addition, there was a drawdown of inventory in the quarter, and a 12-per-cent appreciation of the U.S. dollar against the Canadian dollar had the effect of increasing revenue reported in Canadian dollars. These factors more than offset the impact of 16-per-cent and 7-per-cent decreases in the average realized silver and gold prices in U.S. dollars, respectively.
Gross profit before non-cash items increased by $3.4-million in the first quarter of 2015, compared with the first quarter of 2014, as a result of the $7.4-million increase in revenues, which exceeded the $4.0-million increase in cost of sales before non-cash items. A reduction in unit cash cost also contributed to the improved gross profit margin.
General and administrative (G&A) expenses were $2.2-million for the first quarter of 2015, compared with $1.7-million for the same period in 2014. The increase primarily reflects timing of certain corporate expenditures for audit and filing fees, and some non-recurring legal and consulting fees associated with the structuring of the company's investment in its Mexican subsidiaries.
Exploration and evaluation (E&E) expenses were $1.0-million for the first quarter of 2015, compared with $1.6-million for the same period in 2014. The decrease is primarily a function of significant San Ignacio development costs incurred in the first quarter of 2014 to prepare the mine for commercial production. This factor was partly offset by a $400,000 increase in spending on business development activities, primarily related to the Cangold plan of arrangement (refer to the company's news release dated April 13, 2015, for more information on the Cangold plan of arrangement).
Finance and other income amounted to $6.1-million for the first quarter of 2015, compared with $3.2-million for the same period in 2014. The change is primarily associated with a $6.0-million foreign currency gain recognized in the first quarter of 2015, compared with a foreign currency gain of $3.8-million in the comparative period.
Net income for the first quarter of 2015 was $3.6-million, compared with a net loss of $600,000 for the same period in 2014. The increase in net income is primarily attributable to the $900,000 increase in gross profit, the $3.0-million increase in finance and other expense (due mainly to foreign exchange fluctuation described above), and an income tax recovery of $200,000.
Adjusted EBITDA was $3.7-million for the first quarter of 2015, compared with negative $500,000 for the same period in 2014. The increase in adjusted EBITDA reflects the $3.4-million increase in gross profit before non-cash items, a $700,000 decrease in E&E expenses, and a $700,000 reduction of non-recurring expenses associated with the illegal occupation of the Guanajuato mine facilities incurred in the comparative period. These factors were partly offset by a $500,000 increase in G&A expenses.
Cash cost and all-in sustaining cost
Cash cost was $8.71 (U.S.) for the first quarter of 2015, a 35-per-cent decrease compared with $13.40 (U.S.) for the first quarter of 2014. The decrease was due to a combination of the U.S. dollar strengthening compared with the Mexican peso and higher silver grades. These factors were partially offset by lower byproduct credits primarily attributed to lower gold prices.
AISC for the first quarter of 2015 decreased to $14.47 (U.S.) from $24.18 (U.S.) in the first quarter of 2014. This reduction is primarily due to the reduction in cash cost, augmented by reductions in exploration, mine development and capital costs per payable silver ounce.
Cash and working capital at March 31, 2015
At March 31, 2015, the company had cash and cash equivalents of $18.7-million, compared with $18.0-million at Dec. 31, 2014. Cash increased by $700,000 in the first quarter of 2015 primarily due to cash flows from operating activities of $1.8-million, and a $1.1-million increase in cash and cash equivalents as the result of favourable foreign exchange fluctuations. These factors were partly offset by $1.3-million invested in mineral properties, plant and equipment during the period, as well as $900,000 paid in advances to Cangold (refer to the company's news release dated April 13, 2015, for more information).
At March 31, 2015, the company had net working capital of $36.9-million, compared with $32.9-million at Dec. 31, 2014. Net working capital increased by $4.0-million primarily due to net income of $3.6-million and an increase in the foreign currency translation reserve of $2.0-million, less $1.3-million on Capex.
Outlook
As the company progresses through the remainder of the year, production increases may be less pronounced, as the 2014 comparative quarters will represent more meaningful production from San Ignacio as its production was ramped up through the latter half of 2014. In addition, the first-quarter 2015 financial results reflected significant foreign exchange gains mainly from the Canadian dollar translation of U.S.-dollar-denominated monetary assets, which may not recur or may even reverse.
The company previously announced the tabulated production and cost guidance for the year ending Dec. 31, 2015, which remains unchanged.
Production and cash cost guidance FY 2014 actual Q1 2015 actual FY 2015 guidance range
Total silver equivalent ounces (1) 3,187,832 987,887 3,500,000 to 3,600,000
Cash cost per silver pyable ounce (U.S.$)(2) $ 12.78 $ 8.71 $ 11.50 to $ 12.50
AISC (U.S.$)(2) $ 22.07 $ 14.47 $ 18.50 to $ 19.85
(1) Silver equivalent ounces are referred to throughout this document. For 2015, Aq equivalent
ounces are calculated using a 65:1 Ag:Au ratio, and ratios of 1:0.050 and 1:0.056 for the
U.S. dollar price per ounce of silver to lead and zinc price per pound, and applied to the
relevant metal content of the concentrates produced, expected to be produced, or sold from
operations. Comparatively, in 2014 Aq equivalent ounces was established using prices of
$18.50 (U.S.) per ounce, $1,110 (U.S.) per ounce (60:1 ratio), 90 U.S. cents per pound and
85 U.S. cents per pound for silver, gold, lead and zinc, respectively.
(2) The company has included the non-IFRS performance measures cost per tonne milled, cash cost
per silver payable ounce, all-in cost per silver payable ounce (AIC), all-in sustaining cost
per silver payable ounce (AISC), gross profit before non-cash items, cost of sales before
non-cash items and adjusted EBITDA throughout this document. Refer to the non-IFRS measures
section of the company's management discussion and analysis for an explanation of these
measures and reconciliation to the company's reported financial results in accordance with
IFRS. As these are not standardized measures, they may not be directly comparable with
similarly titled measures used by others.
The company still plans to spend between $10-million to $12-million in 2015 on mine development and diamond drilling at the GMC and Topia mine, and on the acquisition of new mining and plant equipment to support further operational efficiencies. At this time, the company's previously disclosed exploration drilling plans for 2015 also remain unchanged. These consist of approximately 19,000 metres with the objective to further define resources, look for vein extensions and test new targets. This estimate may change on closing of the Cangold arrangement, for which Cangold has scheduled a May 22, 2015, special shareholders meeting to vote on the matter. The company will provide a further update shortly after the Cangold special meeting. (Refer to the company's news release dated April 13, 2015, for more information.)
Webcast and conference call to discuss first-quarter 2015 financial results
Great Panther will hold a live webcast and conference call to discuss the financial results on May 7, 2015, at 8 a.m. PST, 11 a.m. EST. Hosting the call will be Mr. Archer, president and chief executive officer, and Jim Zadra, chief financial officer and corporate secretary. Shareholders, analysts, investors and media are invited to join the live webcast and conference call by logging in or dialling in just prior to the start time.
Live webcast and registration: See company's website
U.S. and Canada toll-free: 866-832-4290
International toll: 919-825 3215
Conference ID: 24996406
A replay of the webcast will be available on the investors section of the company's website approximately one hour after the conference call.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(expressed in thousands of dollars, except per-share data)
For the three months ended March 31,
2015 2014
Revenue $20,250 $12,880
Cost of sales
Production costs 13,598 9,609
Amortization and depletion 6,000 3,634
Share-based payments 128 55
19,726 13,298
Gross profit (loss) 524 (418)
General and administrative expenses
Administrative expenses 2,074 1,553
Amortization and depletion 63 83
Share-based payments 98 61
2,235 1,697
Exploration and evaluation expenses
Exploration and evaluation, and development expenses 916 1,601
Share-based payments 57 16
Income (loss) before the undernoted (2,684) (3,732)
Finance and other income (expense)
Interest income 139 81
Finance costs (21) (38)
Foreign exchange gain (loss) 5,966 3,774
Other income (expense) 26 (661)
6,110 3,156
Income (loss) before income taxes 3,426 (576)
Income tax (recovery) expense
Current 155 165
Deferred (317) (139)
(162) 26
Net income (loss) for the period $ 3,588 $ (602)
Other comprehensive income (loss), net of tax
Items that are or may be reclassified subsequently to net income (loss)
Foreign currency translation (2,054) (432)
Change in fair value of available-for-sale financial assets - 4
(2,054) (428)
Total comprehensive Income (loss) for the period $ 1,534 $(1,030)
Earnings (loss) per share $ 0.03 $ (0.00)
Basic $ 0.03 $ (0.00)
Diluted
We seek Safe Harbor.
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