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Firm Upgrades Miner to Outperform Amid Increases in Exploration

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Great Panther Mining has earned an Outperform rating from Noble Capital Markets, while three other firms rate it a Buy.

Great Panther Mining Ltd. (GPR:TSX; GPL:NYSE.American) has been a beehive of activity this year. On January 6, the company announced that it entered into a US$11.25 million gold doré prepayment agreement with Samsung C&T U.K. Ltd.

Samsung is advancing the funds for the delivery and sale of approximately 3,000 ounces of gold contained in doré each month for a two-year period. The gold will be from Great Panther's Tucano Gold Mine, located in Brazil. "Gold deliveries will be sold at a 0.65% discount to the benchmark price of gold at the time of delivery and will be used to offset repayments of the Advance, which are scheduled to occur between 11 to 24 months after the date of the Advance," the company stated.

The advance carries interest calculated at an annual rate of three-month USD LIBOR plus 5%; it is secured by a "pledge of all equity interests in Great Panther's Brazilian subsidiary that owns the Tucano Gold Mine." Great Panther can also offer to Samsung concentrates from the Coricancha Mine in Peru under certain circumstances. On February 3, Great Panther received the $11.25 million payment, having fulfilled the conditions of the agreement.

Added to the US$10 million concentrate prepayment arrangement Great Panther previously announced with the IXM Group of Switzerland for 100% of the gold-silver concentrates produced at the Guanajuato Mine Complex in Mexico at market based commercial terms, this provides Great Panther with more than $21 million in new capital.

Analyst Mark Reichman with Noble Capital Markets wrote on January 7, "In our view, the terms of the prepayment agreements are appropriate and underscore the confidence that these two well-recognized industry leaders have in Great Panther Mining, its operations and management. Both IXM and Samsung are respected throughout the industry and Samsung has been a source of financing for other mining companies we have covered and proven themselves to be a valued partner."

ROTH Capital Partners analyst Jake Sekelsky commented on the financial arrangement on February 6, noting, " We view both forms of financing as non-dilutive access to capital and believe the agreements alleviated recent pressure on the stock due to working capital concerns."

On January 13, Great Panther announced fourth quarter and 2019 production results, reporting production of about 147,000 consolidated gold equivalent ounces in 2019, a 182% increase that reflects the acquisition of Tucano in March 2019. Q4 production at Tucano reached 34,000 gold ounces, exceeding the high end of guidance. And at the Topia Mine, Great Panther produced 1.8 million ounces of silver equivalent in 2019, "benefitting from an increase in mill capacity, grade and an advancement of mine development."

Noble Capital Markets, on January 15, upgraded Great Panther to Outperform "based on improving risk and reward profile." Analyst Reichman wrote, "Based on an improving production and cost profile, we forecast 2020 EPS and EBITDA of $0.05 and $69.7 million, respectively," adding, "We are upgrading our rating based on our belief that recent operational issues at the Tucano mine will not negatively affect the company's long-term production profile. While Tucano's production potential won't be evident until the latter half of 2020, we think the depressed valuation offers investors an attractive entry point."

Great Panther, on January 28, provided an update on its Mexico projects' exploration results and plans for 2020. The company has two Mexico operations: the Topia Mine and the Guanajuato Mine Complex, which includes the Guanajuato Mine and the San Ignacio Mine. Jeffrey Mason, interim president and CEO, stated, "Our 2019 exploration program in Mexico was highly successful at both of our mining operations. This is already translating into growth in production and cash flow, with record silver equivalent production at the Topia Mine in 2019. In 2020, we plan to define new mineralized zones and test new targets at San Ignacio, and focus on developing new high-grade resources at Guanajuato with 63% more drilling meters, targeting increased production later this year. With comprehensive exploration plans of over $4 million in Mexico, our 2020 programs will build on momentum from our 2019 successes."

Noble analyst Reichman, writing on January 29, stated that Great Panther's Mexico exploration activity "carries momentum into 2020. . .While attention in 2019 largely focused on the company's Tucano mine in Brazil, Great Panther executed a successful exploration program in Mexico that set the stage for 2020."

Noble maintains an Outperform rating on Great Panther. Writes Reichman, "We are encouraged that the Guanajuato mine could return to service in 2020. The company's 2019 and 2020 exploration program will benefit the company's production profile and potentially improve the quality of reserves and resources while extending lives of the company's mines in Mexico."

On February 6, Great Panther released exploration plans for the Tucano Gold Mine, budgeting US$6.6 million for both "near mine" and "regional" exploration. The near mine program will have 10,000 meters of reverse circulation drilling and 18,000 meters of diamond core drilling.

At the regional level, the company noted that it is "prioritizing concessions according to their proximity with respect to Tucano's mill and geological potential," and it plans to conduct 27,000 meters of regional exploration in 2020, including 18,000 meters of rotary air blast drilling and 9,000 meters of auger drilling.

Matthew O'Keefe, analyst with Cantor Fitzgerald, wrote in a February 6 report, "The 2020 drill program for Tucano should allow GPL to replace and expand its reserves and resources and start to unlock the significant upside we see on the property. We maintain our BUY rating and $1.00/C$1.30/share price target."

ROTH Capital Partners analyst Jake Sekelsky, wrote in a February 6 report that Great Panther's "strengthened balance sheet to drive exploration in 2020." He noted that "the majority of exploration efforts are expected to be focused on the company's Tucano gold mine in Brazil with ancillary programs at the Guanajuato Mine Complex (GMC) in Mexico. Given the company's recent cash infusion following concentrate pre-payment agreements, we believe Great Panther is well funded to execute on its exploration plans for 2020. As such, we are reiterating a Buy rating and US$1.00 price target."

Concerning the Tucano Mine, Sekelsky wrote, "We continue to view the updated resource estimate at Tucano as a primary catalyst for Great Panther during 1H20 as we expect to receive greater visibility with respect to the ongoing technical review of the UCS pit. In short, we believe Tucano hosts significant exploration potential and believe management is taking prudent steps to unlock additional value at the project."

"Given the company's increased cash balance, we believe the company possesses the necessary working capital to move forward with the technical review at Tucano and conduct exploration work across the project. Given this, we believe Great Panther remains undervalued at current levels," Sekelsky concluded.

H.C. Wainwright & Co. analyst Heiko Ihle noted on February 7, "Great Panther management continues to prioritize the strengthening of its balance sheet while simultaneously protecting the firm's profit margins." The firm has a Buy recommendation and price target of US$1.75 for Great Panther.

"We applaud management's diligent exploration and engineering work to maximize its return on investment, especially as Great Panther continues to work through various issues regarding its transformational Tucano acquisition. In short, given continued successes at Great Panther's sites we expect production from all three mines to grow throughout FY20 and FY21," Ihle concluded. [NLINSERT]

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Disclosures from Noble Capital Markets, Great Panther Mining Ltd.
Company Specific Disclosures
The following disclosures relate to relationships between Noble and the company (the "Company") covered by the Noble Research Division and referred to in this research report.

The Company has attended Noble investor conference(s) in the last 12 months.

Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) within the next 3 months.

Noble is not a market maker in the Company.

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

Disclosures from ROTH Capital Partners, Great Panther Mining, Company Note, February 6, 2020

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 Mining and as such, buys and sells from customers on a principal basis.

Shares of Great Panther Mining 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.

Disclosures from Cantor Fitzgerald, Great Panther Mining Ltd., Corporate Update, February 6, 2020

Potential conflicts of interest: The author of this report is compensated based in part on the overall revenues of Cantor, a portion of which are generated by investment banking activities. Cantor may have had, or seek to have, an investment banking relationship with companies mentioned in this report. Cantor and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. Although Cantor makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

Disclosures as of February 6, 2020
Cantor has provided investment banking services or received investment banking related compensation from Great Panther Mining Ltd. within the past 12 months.
The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of Great Panther Mining Ltd.
The analyst responsible for this report has visited the material operations of Great Panther Mining Ltd (Tucano). No payment or reimbursement was received for related travel costs.

Analyst Certification
The research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed herein accurately reflect his personal views about the securities, issuers or industries discussed herein.

Disclosures from H.C. Wainwright & Co., Great Panther Mining Ltd., Company Update, February 7, 2020
I, Heiko F. Ihle, CFA and Tyler Bisset, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.

None of the research analysts or the research analyst's household has a financial interest in the securities of Great Panther Mining Limited (including, without limitation, any option, right, warrant, future, long or short position).

As of December 31, 2019, neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Great Panther Mining Limited.

Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.

The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.

The firm or its affiliates received compensation from Great Panther Mining Limited for non-investment banking services in the previous 12 months.

The Firm or its affiliates did receive compensation from Great Panther Mining Limited for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Great Panther Mining Limited during the past 12 months.

The Firm does not make a market in Great Panther Mining Limited as of the date of this research report.

H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.

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