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Great Panther Reports Second Quarter 2020 Financial Results, Including Record Net Income of $8.6 Million and Operating Cash Flow of $19.5 Million

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Great Panther Reports Second Quarter 2020 Financial Results, Including Record Net Income of $8.6 Million and Operating Cash Flow of $19.5 Million

 

 

 

 

 

Great Panther Mining Limited (TSX: GPR) (NYSE-A: GPL) reports unaudited consolidated financial results for the second quarter of 2020 from its three wholly owned mines: Tucano in Brazil, and Topia and the Guanajuato Mine Complex in Mexico.  

 

“The combination of a strong rise in the gold price and  record production at our flagship Tucano mine, leading to a substantially lower AISC, drove a significant increase in cash flow from operating activities to a record  $19.5 million for the second quarter of 2020,” stated President and CEO Rob Henderson.  “This was an impressive result given the unprecedented challenges of managing COVID-19.  We congratulate our teams at all Great Panther sites for this achievement.

 

“On a consolidated basis for 2020, we expect to produce 146,000 to 158,000 gold equivalent ounces at all-in sustaining costs in the range of $1,150 to $1,250 per gold ounce sold, and we are well positioned to deliver strong results while we continue to keep the safety and health our people our number one priority.”

 

Q2 2020 Highlights

 

Financial

 

  • Revenue of $67.0 million, representing a 48% increase over Q2 2019
  • Record mine operating earnings before non-cash items1 of $35.8 million ($0.11 per share)
  • Record adjusted EBITDA1 of $30.2 million
  • Record cash flow from operating activities of $19.5 million ($0.06 per share)
  • AISC before corporate G&A of $1,027 per gold ounce (oz) sold1
  • Cash and cash equivalents at June 30, 2020 of $60.2 million, an increase from $37.0 million at December 31, 2019 and $9.9 million at June 30, 2019
_____________________________________________
1 The Company has included in this news release and the accompanying Management’s Discussion and Analysis for the period ended June 30, 2020 (the “Q2 2020 MD&A”) the non-Generally Accepted Accounting Principles (“GAAP”) performance measures cash cost per gold ounce sold, cash cost per payable silver ounce, all-in sustaining cost (“AISC”) per gold ounce sold excluding corporate general and administrative (“G&A”) expenditures, AISC per gold ounce sold, AISC per payable silver ounce, mine operating earnings before non-cash items, cost of sales before non-cash items, adjusted earnings before interest, taxes depreciation and amortization (“Adjusted EBITDA”), adjusted net loss and adjusted net loss per share throughout this document. Refer to the Non-GAAP Measures section of the Company’s Q2 2020 MD&A for an explanation of these measures and reconciliation to the Company’s financial results reported in accordance with International Financial Reporting Standards (“IFRS”). As these are not standardized measures, they may not be directly comparable to similarly titled measures used by others.

 

Operational

 

  • Production of 38,541 gold equivalent ounces (Au eq oz)1
  • Record monthly production at Tucano in June of 15,389 gold oz since acquisition in March 2019
  • Au eq oz production growth of 11% over Q1 2020
  • Successful restart of GMC and Topia in Mexico after two-month COVID-19 shutdowns

 

Corporate

 

  • Closing of bought deal financing with gross proceeds of $16.1 million
  • Agreement reached with Nyrstar to defer Coricancha bond requirements
  • Appointment of David Garofalo, Alan Hair and Joseph Gallucci to the Board of Directors, and the appointment of Mr. Garofalo as Chair of the Board of Directors
  • Appointment of Rob Henderson as President and CEO

 

For the second quarter of 2020 Great Panther reported records for mine operating earnings before non-cash items, net income, adjusted EBITDA and cash-flow from operating activities as a result of strong production results at Tucano and a rise in the gold price which resulted in an average realized gold price of $1,728 per ounce for the quarter.  With the restart of the Company’s operations in Mexico in June, a strong increase in the price of silver and new records for the gold price since the end of the second quarter, Great Panther expects continued strong cash-flow generation in the third quarter. 

 

COVID-19 Response

 

Great Panther has developed and implemented robust COVID-19 prevention, monitoring and response plans following the guidelines of the World Health Organization and the regulatory agencies of each country in which it operates to ensure a safe work environment.  These plans include mandatory medical screening and testing on arrival at site, requirements to report infection or contact with those infected, restrictions on international travel and any non-essential domestic travel, alternative work arrangements, hygiene precautions and physical distancing practices, among others.  Specific areas have been prepared for the isolation, testing and care of employees showing COVID-19 symptoms.  Increased cleaning and sanitizing procedures have been introduced, especially in frequently visited areas.  Training campaigns to educate all employees and contractors, their families and local communities on preventive measures and hygiene best practices continue regularly.

 

Additional information regarding Great Panther’s COVID-19 response plan, preventive measures taken to date and the potential impact on operations are available in the Q2 2020 Management’s Discussion and Analysis, available on the Company’s website at www.greatpanther.com and on SEDAR at www.sedar.com.

 

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1 Gold equivalent ounces are referred to in this news release and the accompanying Q2 MD&A.  For 2020, Au eq oz were calculated using a 1:90 Au:Ag ratio, and ratios of 1:0. 0006412 and 1:0. 0007554 for the price/ounce of gold to price/pound of lead and zinc, respectively, and applied to the relevant metal content of the concentrates produced, expected to be produced, or sold from operations.  The ratios are reflective of average metal prices for 2020.

 

 

 

Table 1: Operational Highlights                    
                     
    Q2 2020   Q2 2019 Change   Six months
ended June
30, 2020
  Six months
ended June
30, 20191
Change
Total material mined – Tucano (tonnes)   6,075,380   5,009,392 21%   13,190,515   6,578,074 101%
Ore mined – Tucano (tonnes)   425,209   534,846 -20%   817,692   638,706 28%
Ore mined – Mexico (tonnes)   23,646   65,764 -64%   91,491   132,662 -31%
Tonnes milled – Tucano   822,638   718,682 14%   1,633,835   912,849 79%
Tonnes milled – Mexico (excluding custom milling)   24,536   63,886 -62%   93,501   133,540 -30%
Tonnes milled – consolidated operations (excluding custom milling)   847,174   782,568 8%   1,727,336   1,046,389 65%
Plant gold head grade (g/t) – Tucano   1.48   1.41 5%   1.29   1.31 -2%
Plant head grade (g/t Ag eq) – Mexico   325   355 -8%   320   333 -4%
Gold oz produced – Tucano   35,421   29,899 18%   61,597   35,063 76%
Gold oz produced – consolidated operations   36,357   33,461 9%   65,297   41,754 56%
Au eq oz produced2   38,541   39,922 -3%   73,267   54,782 34%
Gold oz sold   37,076   29,850 24%   63,883   38,039 68%
Au eq oz sold2   39,316   35,759 10%   71,541   50,003 43%
Cash costs per gold oz sold – Tucano3 $ 743 $ 957 -22% $ 859 $ 935 -8%
AISC per gold oz sold – Tucano3 $ 982 $ 1,126 -13% $ 1,291 $ 1,193 8%
Cash costs per gold oz sold3 $ 729 $ 950 -23% $ 862 $ 932 -8%
All-in sustaining costs (AISC) per gold oz sold, excluding corporate G&A expenditures3 $ 1,027 $ 1,153 -11% $ 1,330 $ 1,229 8%
AISC per gold oz sold3 $ 1,126 $ 1,260 -11% $ 1,445 $ 1,380 5%
 
___________________________________
1 The comparative data presented for the six months ended June 30, 2019 is for the period from March 5, 2019 to June 30, 2019, the period for which the Company owned Tucano following the acquisition of Beadell.
2 Gold equivalent ounces are referred to throughout this document.  For 2020, Au eq oz were calculated using a 1:90 Au:Ag ratio, and ratios of 1:0. 0006412 and 1:0. 0007554 for the price/ounce of gold to price/pound of lead and zinc, respectively, and applied to the relevant metal content of the concentrates produced, expected to be produced, or sold from operations.  The ratios are reflective of average metal prices for 2020. Comparatively, Au eq oz for 2019 were calculated using a 1:80 Au:Ag ratio, and ratios of 1:0.000795 and 1:0.00102258 for the price/ounce of gold to price/pound of lead and zinc, respectively, and applied to the relevant metal content of the concentrates produced, expected to be produced, or sold from operations.  The ratios are reflective of average metal prices for 2019.
3 The Company has included the non-GAAP performance measures cash cost per gold ounce sold, AISC per gold ounce sold excluding corporate G&A expenditures and AISC per gold ounce sold, throughout this news release and the accompanying Q2 2020 MD&A.  Refer to the Non-GAAP Measures section of the Company’s Q2 2020 MD&A for an explanation of these measures and reconciliation to the Company’s financial results reported in accordance with IFRS.  As these are not standardized measures, they may not be directly comparable to similarly titled measures used by others.

 

 

 

Table 2: Financial Highlights                    
                     
(in thousands, except per ounce, per share and exchange rate figures)   Q2 2020   Q2 2019 Change   Six months
ended June
30, 2020
  Six months
ended June
30, 20191
Change
Revenue $ 67,028 $ 45,278 48% $ 115,078 $ 61,972 86%
Mine operating earnings before non-cash items2 $ 35,755 $ 10,728 233% $ 50,003 $ 14,219 252%
Mine operating earnings $ 23,861 $ 2,902 722% $ 29,831 $ 4,419 575%
Net income (loss) $ 8,552 $ (5,758)           n/a $ (31,912) $ (53,784) 41%
Adjusted net income (loss)1 $ 11,430 $ (8,965)           n/a $ 3,882 $ (13,938)           n/a
Adjusted EBITDA2 $ 30,191 $ 2,044 1,377% $ 36,571 $ 347 10,439%
Cash flows from operating activities $ 19,499 $ (5,527)           n/a $ 31,256 $ (14,009)           n/a
Cash and short-term deposits at end of period $ 60,205 $ 9,945 505% $ 60,205 $ 9,945 505%
Net working capital at end of period $ 6,836 $ 1,553 340% $ 6,836 $ 1,553 340%
Earnings (loss) per share – basic $ 0.03 $ (0.02)           n/a $ (0.10) $ (0.22) 55%
Earnings (loss) per share – diluted $ 0.03 $ (0.02)           n/a $ (0.10) $ (0.22) 55%
Average realized gold price per oz3 $ 1,728 $ 1,310 32% $ 1,664 $ 1,306 27%
Average realized silver price per oz3 $ 18.59 $ 15.03 24% $ 16.28 $ 14.92 9%
Brazilian real (BRL)/USD   5.39   3.92 38%   4.92   3.84 28%
Mexican peso (MXN)/USD   23.34   19.13 22%   21.64   19.17 13%
 
________________________________
1 The comparative data presented for the six months ended June 30, 2019 is for the period from March 5, 2019 to June 30, 2019, the period for which the Company owned Tucano following the acquisition of Beadell.
2 The Company has included the non-GAAP performance measures mine operating earnings before non-cash items, adjusted EBITDA, and adjusted net income (loss) throughout this news release and the accompanying Q2 2020 MD&A.   Refer to the Non-GAAP Measures section of the Company’s Q2 2020 MD&A for an explanation of these measures and reconciliation to the Company’s financial results reported in accordance with IFRS.  As these are not standardized measures, they may not be directly comparable to similarly titled measures used by others.
3 Average realized gold and silver prices are prior to smelting and refining charges.

 

Refer to the Q2 2020 MD&A for more details of the financial results and for reconciliations of the Company’s non-GAAP performance measures to the nearest GAAP measure. The full version of the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2020 and 2019 and the Q2 2020 MD&A can be viewed on the Company’s website at www.greatpanther.com or on SEDAR at www.sedar.com.  All financial information is prepared in accordance with IFRS, except as noted in the Non-GAAP Measures section of the Q2 2020 MD&A.

 

2020 Guidance and Outlook

 

The Company provides production and cost guidance for its operating mines from time to time.  The 2020 cost guidance for Topia and for the consolidated operation is provided below for the first time as production guidance for Topia was only provided on July 9, 2020 due to the previous decision to suspend tailings deposition at the mine’s Phase II tailings storage facility and subsequent Mexican federal government restrictions on non-essential business activities in an effort to limit the spread of COVID-19. Production guidance remains unchanged from Great Panther’s disclosure on July 9, 2020.  Cost guidance for Tucano remains unchanged. Cost guidance for the GMC has been revised to reflect the impact of the April and May shutdown. 

 

 

 

Table 3 – 2020 Guidance        
         
  Tucano1 Topia2 GMC2 Consolidated
Gold production (oz)3 120,000-130,000 120,000-130,000
Silver eq production (oz)4 1,200,000-1,300,000 1,200,000-1,300,000 2,400,000-2,600,000
Gold eq production (oz) 120,000-130,000 13,000-14,000 13,000-14,000 146,000-158,000
Cash cost ($/oz sold) $900-$1,000 $15-16 $9-10 $900-1,000
AISC ($/oz sold) $1,150-1,250 $21-22 $13-14 $1,150-1,250
Sustaining capital ($M)5 $29-35 $2-3 $1-3 $32-41
Exploration – growth (non-sustaining) ($M) $7 $0-1 $3 $10-11
__________________________________
1 Tucano costs are presented per gold ounce sold.  Cash cost and AISC guidance for Tucano is based on an estimated BRL/USD foreign exchange rate of 5.20. Actual results will differ.
2 Topia and GMC costs are presented per silver payable ounce.  Cash cost and AISC guidance for Topia and the GMC is based on an estimated MXN/USD foreign exchange rate of 21.75.  Actual results will differ.  AISC for Topia and the GMC includes fixed costs incurred during the mandatory shutdowns in April and May of 2020 related to COVID-19.
3 Gold equivalent ounces are calculated using a 1:90 Au:Ag ratio.  Figures are rounded.
4 Silver equivalent ounces for 2020 are calculated using a 90:1 Ag:Au ratio, and ratios of 1:0.05770751 and 1:0.06798419 for the price/ounce of silver to price/pound of lead and zinc, respectively. 
5 Includes capitalized stripping costs.

 

Great Panther expects to have a completed report from its geotechnical consultants on a program for the remediation of the UCS pit at Tucano by the fourth quarter of 2020.  This report will be based on the results of the current geotechnical drilling and analysis being performed which is expected to be completed by the end of September. Unloading of the pit re-commenced in July and the Company expects to fully recover UCS and return it to production in the fourth quarter of 2020.

 

Further information on Great Panther’s 2020 guidance is provided in the Outlook section of the Company’s Q2 2020 MD&A, available on www.greatpanther.com and www.sedar.com.

 

These production and cost guidance estimates are forward-looking statements and information and should be read in conjunction with the Cautionary Statement on Forward-Looking Information section at the end of this news release and the accompanying Q2 2020 MD&A.  Readers are cautioned that there are no current estimates of mineral reserves for any of the Company’s Mexican mines.  Mineral resources that are not mineral reserves have no demonstrated economic or technical viability.

 

ABOUT GREAT PANTHER

 

Great Panther is a growing gold and silver producer focused on the Americas.  The Company owns a diversified portfolio of assets in Brazil, Mexico and Peru that includes three operating gold and silver mines, four exploration projects, and an advanced development project.  Great Panther is actively exploring large land packages in highly prospective districts and is pursuing acquisition opportunities to complement its existing portfolio.  

 

Posted August 6, 2020

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