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Great Panther Reports Third Quarter 2021 Financial Results
Accelerating Tucano high-grade underground project; mining refocused on three other pits as UCS pushback postponed to mid-2022
Great Panther Mining Limited (TSX: GPR) (NYSEA: GPL) a growing gold and silver producer focused on the Americas, announces unaudited consolidated financial results for the three months ended September 30, 2021, from its three wholly-owned mines: the Tucano Gold Mine in Brazil, and Topia and the Guanajuato Mine Complex in Mexico, both primarily silver mines.
“The third quarter was challenging operationally, with lower than planned production, which led to greater than anticipated unit costs,” stated Rob Henderson, President & CEO of Great Panther. “We expect Q4 to be another challenging quarter due to the previously reported temporary suspension of mining in the UCS pit and incremental pushback requirements. Limited mining of ore was authorized by the geotechnical committee to continue in the southern portion of the pit. In order to ensure safe working conditions, we intend to ramp down mining in UCS at the end of the year and resume the pushback in mid-2022 when seasonally drier conditions are expected. We will focus mining activities for the first half of 2022 on TAP AB, Tap C and Urucum North. Resequencing plans also include accelerating our decision to develop the high-grade underground mine at the Urucum North deposit.”
Mr. Henderson added, “We expect to navigate through these challenging times in order to realize the full potential of the Tucano mine while optimizing and improving operations as we head into 2022. To that end, strong exploration results achieved during the third quarter demonstrate the prospectivity of our portfolio and extensive land package and are contributing to our objective of extending mine life both from the open pits and underground. We remain committed to the Company’s growth through extensive exploration in 2022 as well as actively pursuing accretive acquisition opportunities in South America.”
Selected Third Quarter 2021 Highlights
- Secured $25.0 million in new credit facilities with Asahi Refining Canada Ltd. and Samsung C&T U.K. Ltd. and re-established $25.0 million At-The-Market equity facility
- Metal production of 22,444 Au eq oz, inclusive of 18,423 gold ounces and 280,245 silver ounces
- All-in-sustaining-costs1, excluding corporate G&A, of $2,247 per gold ounce sold compared with $1,023 for the same period in 2020
- Revenue of $38.4 million, a 50% decrease when compared with the same period in 2020
- Mine operating loss of $7.1 million compared with mine operating earnings of $31.9 million in Q3 2020
- Net loss of $18.0 million compared with net income of $18.6 million in Q3 2020
- Adjusted net loss1 of $17.0 million compared with an adjusted net income of $21.1 million in Q3 2020
- EBITDA1 and Adjusted EBITDA1 of negative $9.8 million and $8.8 million compared with $32.5 million and $34.9 million, respectively, for Q3 2020
- Exploration returned favourable results, including high-grade intercepts from the underground zone at Urucum North (“URN”) and the identification of a new regional gold trend within a 20 km radius of the Tucano plant
Financial Highlights
| (in thousands, except per oz, per share and exchange rate figures) | Q3 2021 | Q3 2020 | Nine months ended September 30, 2021 |
Nine months ended September 30, 2020 |
||||
| Revenue | $ | 38,351 | $ | 77,019 | $ | 143,018 | $ | 192,097 |
| Mine operating earnings before non-cash items1 | $ | (377) | $ | 42,071 | $ | 26,798 | $ | 92,075 |
| Mine operating earnings (loss) | $ | (7,113) | $ | 31,892 | $ | 3,278 | $ | 61,723 |
| Net income (loss) | $ | (18,047) | $ | 18,635 | $ | (28,435) | $ | (13,277) |
| Adjusted net income (loss)1 | $ | (17,026) | $ | 21,059 | $ | (24,804) | $ | 34,245 |
| Adjusted EBITDA1 | $ | (8,827) | $ | 34,934 | $ | 3,094 | $ | 71,507 |
| Free cash-flow1 | $ | (14,370) | $ | 10,984 | $ | (33,015) | $ | 17,884 |
| Cash flow from operating activities | $ | (7,958) | $ | 19,661 | $ | 875 | $ | 50,917 |
| Cash and cash equivalents at end of period | $ | 35,856 | $ | 66,648 | $ | 35,856 | $ | 66,648 |
| Borrowings at end of period | $ | 44,075 | $ | 45,924 | $ | 44,075 | $ | 45,924 |
| Net working capital at end of period | $ | 3,823 | $ | 24,996 | $ | 3,823 | $ | 24,996 |
| Earnings (loss) per share – basic | $ | (0.05) | $ | 0.05 | $ | (0.08) | $ | (0.04) |
| Earnings (loss) per share – diluted | $ | (0.05) | $ | 0.05 | $ | (0.08) | $ | (0.04) |
| Average realized gold price per oz2 | $ | 1,780 | $ | 1,907 | $ | 1,784 | $ | 1,751 |
| Average realized silver price per oz2 | $ | 22.79 | $ | 26.07 | $ | 25.36 | $ | 20.33 |
| Brazilian real (BRL)/USD | 5.229 | 5.380 | 5.332 | 5.076 | ||||
| Mexican peso (MXN)/USD | 20.016 | 21.771 | 20.023 | 21.681 | ||||
| _____________________________________________ | ||||||||
| 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. | ||||||||
Summary of Select Financial Results
For Q3 2021, the Company recorded a net loss of $18.0 million compared with net income of $18.6 million for Q3 2020. Lower metal sales volumes and lower prices for all metals resulted in a decrease in revenue to $38.4 million and mine operating loss of $7.1 million compared with revenue of $77.0 million and mine operating earnings of $31.9 million for the comparable quarter in 2020. Mine operating loss for Q3 2021 includes $4.6 million in stripping costs related to the Urucum pits that would have been deferred in prior periods resulting in higher reported cash costs for the current quarter.
Operational Highlights
| Q3 2021 | Q3 2020 | Nine months ended September 30, 2021 |
Nine months ended September 30, 2020 |
|||||
| Total material mined – Tucano (tonnes) | 4,618,128 | 5,687,291 | 17,195,310 | 18,877,807 | ||||
| Ore mined – Tucano (tonnes) | 201,229 | 373,928 | 760,608 | 1,108,526 | ||||
| Ore mined – Mexico (tonnes)1 | 55,319 | 65,505 | 167,953 | 156,996 | ||||
| Tonnes milled – Tucano | 886,362 | 823,353 | 2,555,831 | 2,457,187 | ||||
| Tonnes milled – Mexico1 | 55,776 | 65,393 | 170,441 | 158,894 | ||||
| Tonnes milled – consolidated operations | 942,138 | 888,746 | 2,726,272 | 2,616,081 | ||||
| Plant gold head grade (g/t) – Tucano | 0.64 | 1.31 | 0.78 | 1.30 | ||||
| Plant head grade (g/t Ag eq) – Mexico1 | 289 | 311 | 314 | 316 | ||||
| Gold oz produced – Tucano | 16,325 | 31,803 | 60,018 | 93,400 | ||||
| Gold oz produced – consolidated operations | 18,423 | 34,031 | 66,204 | 99,329 | ||||
| Au eq oz produced2 | 22,444 | 39,788 | 80,722 | 113,054 | ||||
| Gold oz sold | 17,940 | 35,179 | 66,228 | 99,063 | ||||
| Au eq oz sold2 | 21,542 | 40,489 | 79,119 | 112,029 | ||||
| Cash costs per gold oz sold – Tucano3 | $ | 1,781 | $ | 804 | $ | 1,419 | $ | 839 |
| AISC per gold oz sold – Tucano3 | $ | 2,051 | $ | 1,061 | $ | 1,918 | $ | 1,209 |
| Cash costs per gold oz sold3 | $ | 1,801 | $ | 712 | $ | 1,379 | $ | 808 |
| AISC per gold oz sold, excluding corporate G&A3 | $ | 2,247 | $ | 1,023 | $ | 1,971 | $ | 1,221 |
| AISC per gold oz sold3 | $ | 2,459 | $ | 1,123 | $ | 2,152 | $ | 1,331 |
| __________________________________ | ||||||||
| 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. | ||||||||
Gold production at Tucano for Q3 2021 was 16,325 ounces compared with 31,803 ounces for Q3 2020. The decrease in gold production during the quarter was due to mining activities focusing on the completion of the UCS open pit pushback. Low availability of equipment and higher than average rainfall also delayed completion of the pushback and factored into the lower production in the quarter. The decrease in production was partially offset by processing of low-grade stockpile ore to supplement the mill feed.
For Q3 2021, gold ounces sold were 17,940 ounces compared with 35,179 ounces in Q3 2020. Silver sales were 258,664 ounces compared with 361,143 ounces in Q3 2020. Silver production from the Company’s two mines in Mexico was lower in Q3 2021 primarily due to the implementation of the new labour laws in Mexico, which resulted in delays in tonnage mined as contracting companies adjusted to the new requirements. In addition, production at the GMC was primarily from historically mined areas and actual tonnages available were lower than estimated.
Cash cost per gold ounce sold for Q3 2021 increased to $1,801 per gold ounce sold from $712 per gold ounce sold for Q3 2020. The $1,089 per ounce increase is primarily due to the impact of lower grades and recoveries resulting in an increase in cost per gold ounce sold of $738. Additionally, the Company ceased the capitalization of stripping costs for the Urucum open pits effective July 1, 2021. As a result, cash cost per ounce sold increased by $258 and deferred stripping costs decreased by the same amount; as a result AISC is not impacted. The remaining increase is primarily due to the weakening of the USD against the MXP and BRL.
AISC per gold ounce sold excluding corporate general and administrative expenditures was $2,247, compared with $1,023 for Q3 2020. In addition to the increase in cash costs discussed above ($1,089 per ounce), the impact of lower grades and recoveries resulted in an additional increase in AISC of $100 per ounce sold reflecting the impact of lower ounces of gold sold on costs included in AISC that are not included within cash costs. The remaining variance in AISC is primarily due to the weakening of the USD against the MXN and BRL.
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 nine months ended September 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.
GMC Operational Update
While the Company continues to proactively engage with CONAGUA in regards of the tailings dam permit, the decision has been made to put the Guanajuato mine and the Cata processing plant on care and maintenance as of November 30, 2021. The Company is continuing to operate the San Ignacio mine and is exploring alternative arrangements for the mine including third-party processing of ore.
Revised 2021 Consolidated Guidance
Due to the production disruptions at UCS, the Company has revised its 2021 production guidance for Tucano to between 70,000 and 80,000 Au oz and consolidated production guidance to 94,000 to 109,000 Au eq oz. Consolidated AISC guidance for 2021 has been increased to a range of $1,950 – $2,050 per gold ounce sold. AISC includes the cost of certain exploration activities critical to the Company’s growth strategy and are not representative of the cost structure when at steady state production.
The Company is still in the process of optimizing gold production from Tucano for 2022. Preliminary mine plans for next year include production of up to 100,000 Au oz from Tucano, approximately 75% of which is planned to be delivered in the second half of the year when the TAP AB pit accelerates mining in ore.
Revised 2021 consolidated guidance on costs is stated in the table below:
| Tucano 1 | Mexico | Consolidated | ||||
| Previous | Revised | Previous | Revised | Previous | Revised | |
| Gold eq production (oz) 2 | 100,000- 110,000 |
74,000- 84,000 |
25,000- 30,000 |
20,000- 25,000 |
125,000- 140,000 |
94,000- 109,000 |
| Silver production (k oz) | – | – | 1,500- 1,600 |
1,200- 1,300 |
1,500- 1,600 |
1,200- 1,300 |
| Gold production (oz) | 100,000- 110,000 |
74,000- 84,000 |
8,000- 10,000 |
6,500- 8,000 |
108,000- 120,000 |
80,500- 92,000 |
| AISC ($/Au oz sold) 3 | $1,450- 1,550 |
$1,950- 2,050 |
N/A | N/A | $1,450- 1,550 |
$1,950- 2,050 |
| ____________________________________ | ||||||
| 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. | ||||||
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 nine months ended September 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 nine months ended September 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.
As the COVID-19 pandemic continues to evolve, the Company maintains a high degree of vigilance across all its operations. Although cases at the Company’s mine sites remain low and vaccinations are progressing, strict health and safety protocols remain in place.
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, an advanced development project and a large land package with district-scale potential. Great Panther is focused on creating long-term stakeholder value through safe and sustainable production, reinvesting into exploration and pursuing acquisition opportunities to complement its existing portfolio.
TECHNICAL INFORMATION
The technical information contained in this news release has been reviewed and approved by Fernando A. Cornejo, P. Eng., Chief Operating Officer, a non-independent Qualified Person for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Posted November 4, 2021
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