In a March 3 research note, ROTH Capital Partners analyst Jake Sekelsky reported that while Great Panther Mining Ltd.'s (GPR:TSX; GPL:NYSE.American) 2018 results were "generally in line with our expectations, we believe investors should continue to focus on the company's acquisition of Beadell Resources," that was due to close on March 5, 2019.
For 2018, Great Panther reported a net loss of $0.06 per share on revenue of $59.4 million compared to ROTH's estimated loss of $0.05 per share on revenue of $65.9 million. Higher-than-expected costs, which averaged $15.62 per ounce of silver equivalent (Ag eq), are to blame for the "mostly higher loss," Sekelsky commented.
Also affecting operations, at least in Q4/18, was the current restructuring of the Guanajuato mine complex. But those efforts, the move to processing higher-margin material from San Ignacio, should pay off in lower costs at Guanajuato in 2019. "We support management's decision to take a modest step back in production in favor of a lower cost structure," Sekelsky indicated.
He noted that Great Panther's 2019 guidance is in line with expectations. Management forecasts production of 3.7–4 million ounces (3.7–4 Moz) of Ag eq at an all-in sustaining cost (AISC) of $13–$15 per ounce. ROTH's estimates fall within those ranges, with production at 3.8 Moz of Ag eq at an AISC of $13.21 per ounce.
Sekelsky highlighted that these projections do not include any potential production from Beadell's Tucano mine, which is expected to produce 145,000–155,000 ounces of gold in 2019.
As for Tucano, Great Panther is well positioned financially, having more than $50 million in cash, to incorporate and optimize it, Sekelsky pointed out. Additionally, the miner could benefit from its new larger size and likely greater bargaining power with local buyers, ultimately seeing "significant" savings as a result. Also, increased throughput at the mine should translate into lower costs on a per ounce basis.
ROTH has a Buy rating and a US$1.80 per share price target on Great Panther, whose stock is currently trading at around US$0.88 per share on NYSE.American.
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Disclosures from ROTH Capital Partners, Great Panther Silver, Company Note, March 3, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Great Panther Silver Limited and as such, buys and sells from customers on a principal basis.
Shares of Great Panther Silver Limited may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
