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Great Panther Reports Second Quarter 2021 Financial Results

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Great Panther Reports Second Quarter 2021 Financial Results

 

 

 

 

 

Revenue of $52.1 million on total production of 27,722 gold equivalent ounces; resumption of mining at UCS will see higher-grade ore mined in upcoming quarters

 

 

Great Panther Mining Limited (TSX: GPR) (NYSE-A: GPL) a growing diversified gold and silver producer focused on the Americas, announces unaudited consolidated financial results for the three months ended June 30, 2021, from its three wholly-owned mines: Tucano in Brazil, and Topia and the Guanajuato Mine Complex in Mexico.

 

“The temporary suspension of mining at Tucano’s Urucum Central South pit resulted in lower gold production and higher costs in the second quarter of 2021. We are pleased to have safely recommenced mining at depth in UCS early in July, ahead of our original plan,” stated Rob Henderson, Great Panther’s President & CEO. “While this is a positive development, we will continue to have significant additional waste removal in Q3 related to UCS pushback activity. We have also revised our production guidance downward to account for lower than expected production in Q2 and uncertainty around production from our GMC complex in Mexico given the lack of progress on permits. The higher costs combined with lower production have caused us to further revise our cost guidance upward for 2021.”

 

“Looking forward, we are excited by the positive exploration results we have seen in our Tap C pit and the recent promising results from the Urucum North deposit at Tucano,” continued Mr. Henderson. “We believe the investments we have made in Urucum Central South as well as in our exploration programs will allow us to grow our production for the balance of 2021 and beyond.”

 

Gold production at Tucano for Q2 2021 was lower as a result of halting ore production from the Urucum Central South open pit due to the detection of movement in the west wall of the south-central portion of the pit. With the objective of improving the wall’s stability, approximately 1.4 million tonnes of waste material has been removed from the upper west wall of the UCS pit, with a further 1.2 million tonnes planned to be removed in Q3 2021. During the designed pushback at UCS, the mill at Tucano received lower grade ore from stockpiles and the Urucum North open pit. Compared with the same period last year, revenue was $52.1 million compared with $67.0 million and production costs increased to $45.0 million from $31.4 million.

 

The Company has revised production and cost guidance for 2021 as detailed under the heading Revised 2021 Consolidated Guidance

 

Second Quarter 2021 Highlights

 

  • UCS pit pushback activities ahead of schedule and production ramping up with higher-grade ore to be mined in upcoming quarters
  • Metal production of 27,722 gold equivalent ounces, inclusive of 22,804 gold ounces and 334,423 silver ounces
  • All-in-sustaining-costs, excluding corporate G&A, of $2,201 per gold ounce sold compared with $1,027 for the same period in 2020
  • Revenue of $52.1 million, a 22% decrease when compared with the same period in 2020
  • Mine operating loss of $0.6 million compared with mine operating earnings of $23.9 million in Q2 2020
  • Net loss of $10.1 million compared with net income of $8.6 million in Q2 2020
  • Adjusted net loss1 of $9.5 million compared with an adjusted net income of $16.7 million in Q2 2020
  • EBITDA1 and Adjusted EBITDA1 of negative $1.0 million and $0.5 million compared with $22.1 million and $30.2 million, respectively, for Q2 2020

 

Financial Highlights

 

(in thousands, except per oz, per share and exchange rate figures) Q2 2021 Q2 2020 Six months
ended June
30, 2021
Six months
ended June
30, 2020
Revenue $ 52,097 $ 67,028 $ 104,667 $ 115,078
Mine operating earnings before non-cash items1 $ 7,249 $ 35,755 $ 27,174 $ 50,003
Mine operating earnings (loss) $ (638) $ 23,861 $ 10,391 $ 29,831
Net income (loss) $ (10,057) $ 8,552 $ (10,388) $ (31,912)
Adjusted net income (loss)1 $ (9,473) $ 16,659 $ (7,779) $ 13,184
Adjusted EBITDA1 $ (450) $ 30,191 $ 11,921 $ 36,571
Free cash-flow1 $ (7,983) $ 11,574 $ (18,644) $ 6,900
Cash flow from operating activities $ 6,505 $ 19,499 $ 8,834 $ 31,256
Cash and cash equivalents at end of period $ 35,229 $ 60,205 $ 35,229 $ 60,205
Borrowings at end of period $ 26,317 $ 48,256 $ 26,317 $ 48,256
Net working capital at end of period $ 9,773 $ 6,836 $ 9,773 $ 6,836
Earnings (loss) per share – basic $ (0.03) $ 0.03 $ (0.03) $ (0.10)
Earnings (loss) per share – diluted $ (0.03) $ 0.03 $ (0.03) $ (0.10)
Average realized gold price per oz2 $ 1,818 $ 1,728 $ 1,785 $ 1,664
Average realized silver price per oz2 $ 27.45 $ 18.59 $ 26.41 $ 16.28
Brazilian real (BRL)/USD $ 5.295 $ 5.389 $ 5.384 $ 4.923
Mexican peso (MXN)/USD $ 20.036 $ 23.339 $ 20.026 $ 21.637

 

Summary of Select Financial Results

 

Cash cost per gold ounce sold increased to $1,508 for the second quarter of 2021 from $729 for the second quarter of 2020. This increase in production costs together with the impact on costs of a stronger BRL were partially offset by increases in average realized prices for gold and silver resulting in mine operating loss of $0.6 million for the second quarter of 2021 compared with mine operating earnings of $23.9 million for the second quarter of 2020. Average realized prices for gold and silver increased to $1,818 and $27.45, respectively, for the second quarter of 2021 from $1,728 and $18.59 for the second quarter of 2020. After accounting for G&A and exploration, evaluation and development expenditures, operating loss for the second quarter of 2021 was $8.2 million compared with an operating income of $17.4 million for the second quarter of 2020. Net loss for the second quarter of 2021 was $10.1 million after accounting for interest and financing charges, foreign exchange and derivative losses and income taxes compared with a net income of $8.6 million for the second quarter of 2020. After making adjustments for derivative losses, foreign exchange losses and share-based compensation, the adjusted net loss for the second quarter of 2021 was $9.5 million compared with an adjusted net income of $16.7 million for the second quarter of 2020. Net working capital at June 30, 2021, was $9.8 million compared to $6.8 million at June 30, 2020. The Company is well progressed in credit facility negotiations that are expected to close in the third quarter and boost the Company’s working capital balance.

 

________________________________
1 Throughout this news release and the accompanying MD&A, Great Panther has included the non-Generally Accepted Accounting Principle (“non-GAAP”) performance measures cash costs per gold oz sold, cash costs per payable silver oz, all-in sustaining costs (“AISC”) per gold oz sold excluding corporate general and administrative (“G&A”) expenditures, AISC per gold oz sold, AISC per payable silver oz, free cash-flow, mine operating earnings (loss) before non-cash items, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA and adjusted net income (loss). Refer to the Non-GAAP Measures section of the Company’s 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 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS
2 Average realized gold and silver prices are prior to smelting and refining charges.

 

 

Operational Highlights

Q2 2021 Q2 2020 Six months
ended June
30, 2021
Six months
ended June
30, 2020
Total material mined – Tucano (tonnes) 5,678,601 6,075,380 12,577,182 13,190,515
Ore mined – Tucano (tonnes) 211,913 424,001 559,379 734,598
Ore mined – Mexico (tonnes)1 55,658 23,646 112,634 91,491
Tonnes milled – Tucano 873,433 822,638 1,669,469 1,633,835
Tonnes milled – Mexico (excluding custom milling)1 55,997 24,536 114,665 93,501
Tonnes milled – consolidated operations (excluding custom milling) 929,430 847,174 1,784,134 1,727,336
Plant gold head grade (g/t) – Tucano 0.81 1.48 0.85 1.29
Plant head grade (g/t Ag eq) – Mexico1 327 325 325 320
Gold oz produced – Tucano 20,696 35,421 43,692 61,597
Gold oz produced – consolidated operations 22,804 36,357 47,781 65,297
Au eq oz produced2 27,722 38,541 58,278 73,267
Gold oz sold 23,407 37,076 48,288 63,883
Au eq oz sold2 27,941 39,315 57,577 71,541
Cash costs per gold oz sold – Tucano3 $ 1,617 $ 743 $ 1,289 $ 859
AISC per gold oz sold – Tucano3 $ 2,214 $ 982 $ 1,870 $ 1,291
Cash costs per gold oz sold3 $ 1,508 $ 729 $ 1,223 $ 862
AISC per gold oz sold, excluding corporate G&A3 $ 2,201 $ 1,027 $ 1,869 $ 1,330
AISC per gold oz sold3 $ 2,358 $ 1,126 $ 2,038 $ 1,445

 

________________________________________
1 Includes Topia and the GMC.
2 Gold equivalent oz are referred to throughout this document. For 2021, Au eq oz were calculated using a 1:85 Au:Ag ratio, and ratios of 1:0.00049 and 1:0.00057 for the price/oz 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 2021. Comparatively, Au eq oz for 2020 were calculated using a 1:90 Au:Ag ratio, and ratios of 1:0.00064 and 1:0.00076 for the price/oz 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.
3 Throughout this news release and the accompanying MD&A, Great Panther has included the non- GAAP performance measures cash costs per gold oz sold, cash costs per payable silver oz, AISC per gold oz sold excluding corporate G&A expenditures, AISC per gold oz sold, AISC per payable silver oz, mine operating earnings (loss) before non-cash items, adjusted EBITDA, adjusted net income (loss), and free-cash flow throughout this news release and the accompanying MD&A. Refer to the Non-GAAP Measures section of the Company’s 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 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

 

Revised 2021 Consolidated Guidance

 

Due primarily to the additional pushback activities at UCS and the lower number of ounces produced in Q2 2021 compared to Q2 2020, all-in-sustaining costs (“AISC”) per gold ounce sold (excluding corporate general and administrative expenses (“G&A”)) was $2,201 compared with $1,027 for Q2 2020. Based on the results to date as well as expected production and costs for the balance of 2021 including a reduction in gold and silver ounces sold at the GMC due to permitting uncertainty, AISC per gold ounce sold (excluding corporate G&A) is expected to be in the range of $1,700 – $1,800 per Au oz sold. This translates into a range of $1,550 – $1,675 per Au oz sold for the second half of 2021. Revised 2021 consolidated guidance on costs is stated in the table below:

 

Tucano1 Mexico Consolidated
Previous Revised Previous Revised Previous Revised
Gold eq production (oz)2 100,000-
110,000
100,000-
105,000
25,000-
30,000
20,000-
25,000
125,000-
140,000
120,000-
130,000
Silver production (k oz) 1,500-1,600 1,200-1,300 1,500-1,600 1,200-1,300
Gold production (oz) 100,000-1
10,000
100,000-
105,000
8,000-10,000 6,500-8,000 108,000-
120,000
106,500-
113,000
AISC ($/Au oz sold)3 $1,450-1,550 $1,700-1,800 N/A N/A $1,450-1,550 $1,700-1,800
Exploration (operating mines) ($ millions) $8.4 $8.4 $3.0 $3.0 $11.4 $11.4

 

Production and AISC guidance here and elsewhere in this news release is forward-looking information that should be read in conjunction with the Cautionary Statement on Forward-Looking Statements section at the end of this news release and the Company’s most recently filed Management Discussion and Analysis for the three and six months ended June 30, 2021. The Company may revise guidance during the year to reflect actual results to date and those anticipated for the remainder of the year.

 

Refer to the Company’s 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, 2021 and 2020 and MD&A can be viewed on the Company’s website at www.greatpanther.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml. All financial information is prepared in accordance with IFRS, except as noted in the Non-GAAP Measures section of the Company’s MD&A.

 

The COVID-19 pandemic continues to affect the regions in which the Company operates. Strict health and safety protocols remain in place, and the Company is particularly focused on maintaining top–of–mind awareness about prevention practices within the organization and surrounding communities. Vaccination programs are advancing, albeit slowly, and vigilance is of the utmost importance in order to support health authorities during this time.

 

______________________________________
1 The revised production and cost guidance for 2021 assumes no COVID-19 related shutdowns, the Company being able to maintain geotechnical control/stability of the UCS pit and access of the mineralization in the UCS pit, based on completion of the planned additional technical work and in accordance with the revised Tucano mine plan and without additional costs or significant interruption, as well as the continuation of mining activities at GMC within existing tailings storage capacity until December 31, 2021. There are no current Mineral Reserves for the Company’s Mexican operations.
2 Gold equivalent ounces for 2021 are calculated using a 1:85 ratio of the silver price to the gold price, which is representative of the average ratio for the respective metal prices and approximate ratios for the price per ounce of gold to price per pound of lead and zinc.
3 AISC refers to all-in sustaining cost per gold ounce sold, excluding corporate general and administrative expenditures, and reflects the AISC at the Company’s operating mines. The calculation starts with cash cost net of by-product revenue and adds accretion of reclamation provisions, lease liability payments, sustaining exploration, evaluation and development expenses, and sustaining capital expenditures for the operating mines. Sustaining expenditures are those costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output.  AISC is a non-GAAP measure. This measure is widely used in the mining industry as a benchmark for performance but does not have a standardized meaning as prescribed by IFRS as an indicator of performance and may differ from methods used by other companies with similar descriptions. Refer to the Non-GAAP Measures section of the Company’s MD&A for a reconciliation of AISC to the Company’s financial statement measures. The Company’s AISC guidance assumes a Brazilian real to US dollar exchange rate of 5.00 for the third and fourth quarter of 2021. Actual results may differ.

 

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 MD&A, available on the Company’s website at www.greatpanther.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml.

 

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. Great Panther trades on the Toronto Stock Exchange trading under the symbol GPR, and on the NYSE American under the symbol GPL.

 

TECHNICAL INFORMATION

 

On behalf of Great Panther, Fernando A. Cornejo , M. Eng., P. Eng. and Chief Operating Officer, approved this news release. Mr. Cornejo is a non-independent Qualified Person as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

 

Posted August 5, 2021

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