In a May 16 research note, analyst Jake Sekelsky reported that ROTH Capital Partners raised its target price on Great Panther Mining Ltd. (GPR:TSX; GPL:NYSE.American) to US$2.25 per share from US$1.80 (versus about US$0.70 today) after incorporating the Tucano mine acquisition and an in line Q1/19 into the company's model.
ROTH forecasts consolidated 2019 production, including that from Tucano, to be around 175,500 ounces (175.5 Koz) of gold, which "elevates the company to intermediate producer status and should pave the way for a rerating," Sekelsky highlighted.
Tucano should produce 125–135 Koz of gold at all-in sustaining (AISC) of $1,100–$1,200 per ounce, according to Great Panther's management. ROTH's estimate falls within that range, at 130 Koz at an AISC of $1,114 per ounce.
Sekelsky pointed out that capital expenditures will likely remain elevated in 2019 for development and optimization of Tucano. However, this should "moderate" in 2020 once Great Panther has fully integrated the Brazilian project, which is "well underway."
The company commissioned a supplemental oxygen plant at Tucano earlier this month, which already led to an increased grade of gold produced to 1.7 grams per ton, a level that should remain stable now, the analyst added. "We view this improvement as tangible evidence that management's turnaround efforts are beginning to bear fruit and expect continued improvements throughout 2019."
As for Q1/19, the company reported a net loss of $0.05 per share on revenue of $16.7 million versus ROTH's projected loss of $0.03 per share on revenue of $14.7 million. "We attribute the slightly higher loss to increased costs associated with the closing of the Tucano acquisition as well as higher-than-anticipated operating costs in Mexico," commented Sekelsky.
The analyst concluded that "investors should maintain focus on the strides being made at Tucano as we expect the project to be the main value driver over the next year."
ROTH has a Buy rating on Great Panther Mining.[NLINSERT]
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Disclosures from ROTH Capital Partners, Great Panther Silver, Company Note, May 16, 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.