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Great Panther costs soar

Great Panther Mining reported a cost blow-out in the quarter to June 30 with its all-in sustaining cost increasing to US$3,080 per ounce, excluding corporate G&A, compared with $2,214 for the prior year period.
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Great Panther Mining's Tucano in Amapa, Brazil

Inflationary pressures and the acceleration of certain capital programmes including a tailings facility where highlighted as the causes, with the company increasing its 2022 AISC guidance to $2,200-2,300/oz from $1,600-1,700/oz.

"Inflationary pressures have had a significant impact on operating costs, including on diesel and other key consumables, when compared to the same period in 2021. In addition, due to higher-than-normal precipitation in the past two years, an increase in capital spending was necessary to fast track the expansion of the Tucano tailings storage facility, as well as a $2.3 million investment in evaporators to manage water levels in the tailings facilities," the company said.

Great Panther also said it will require further financing to meet its long-term objectives, improve working capital, fund planned capital investments and exploration, and meet scheduled debt repayment obligations. The company said it will consider additional equity financing and/or debt financing. IT completed a 10:1 share consolidation in July, reducing its shares outstanding to 47.1 million.

Great Panther subsequently closed the sale of its Mexican subsidiary to Guanajuato Silver for $8 million in and 25.8 million shares, valued at about $8.9 million. The company will have to hold 50% of the shares for four months, 25% for eight months and the remaining 25% for 12 months. The subsidiary included the Guanajuato Mine Complex, the Topia mine and the El Horcón and Santa Rosa projects. Great Panther is now focused on its assets in Brazil.

About $3.4 million of the proceeds were used to repay outstanding indebtedness pursuant to a concentrate prepayment agreement between MMR, Great Panther and Samsung. Samsung subsequently released its security interest in the MMR shares and GSilver assumed all future obligations under the agreement.

Great Panther reported a net loss of $12.3 million on sales of $30 million for the quarter as its gold production fell 20% to 16,629 ounces compared with 20,696oz a year ago.

"We expect the ramp up to steady-state production to continue through the third quarter and regular run rate to be achieved by the fourth quarter. From a cost perspective, we have had to adjust our guidance for the year, given the aforementioned factors, and are adapting our plans for capital expenditures to preserve capital where possible while focusing our efforts on improving operations and efficiencies at Tucano," said Great Panther Mining chair and interim CEO Alan Hair.

The company maintaining its guided 2022 production of 85,000-100,000oz this year from Tucano in Amapa, Brazil. Production was impacted in 2021 when movement was detected in the west wall of the Urucum South pit which triggered a resequencing that prioritised lower grade material and increased stripping, increasing its costs.

Shares in Great Panther Mining are trading at C$1.27, valuing the company at C$60 million.