NYSE American: GPL | TSX: GPR
"In 2019, Great Panther transformed into a growing, intermediate precious metals producer through the acquisition of Tucano, which increased production (on a gold equivalent basis) and revenue by 182% and 234%, respectively over 2018," said
On
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Q4 2019 | Q4 2018 | Change | 2019 | 2018 | Change | |||||
OPERATIONAL RESULTS | ||||||||||
Total material mined – Tucano (tonnes)1 | 5,857,185 | –1 | N/A1 | 19,343,355 | –1 | N/A1 | ||||
Ore mined – Tucano (tonnes)1 | 715,346 | –1 | N/A1 | 1,876,031 | –1 | N/A1 | ||||
Ore mined – | 64,843 | 92,158 | -30% | 262,877 | 376,743 | -30% | ||||
Tonnes milled – Tucano1 | 860,634 | –1 | N/A1 | 2,520,981 | –1 | N/A1 | ||||
Tonnes milled – | 67,564 | 89,270 | -24% | 266,867 | 374,229 | -29% | ||||
Tonnes milled – Consolidated operations | 928,198 | 89,270 | N/A1 | 2,787,848 | 374,229 | N/A1 | ||||
Plant gold head grade (g/t) – Tucano1 | 1.33 | –1 | N/A1 | 1.41 | –1 | N/A1 | ||||
Plant head grade (g/t Ag eq) – | 350 | 311 | 13% | 347 | 329 | 5% | ||||
Gold ounces produced – Tucano1 | 34,181 | –1 | N/A1 | 105,561 | –1 | N/A1 | ||||
Gold ounces produced – Consolidated operations | 37,089 | 4,101 | 804% | 118,494 | 20,161 | 488% | ||||
Gold equivalent ounces ("Au eq oz") produced2 | 44,697 | 11,897 | 276% | 146,853 | 52,137 | 182% | ||||
Gold ounces sold | 38,992 | 4,262 | 815% | 120,056 | 19,560 | 514% | ||||
Au eq oz sold2 | 45,625 | 11,807 | 286% | 145,746 | 49,096 | 197% | ||||
Cash cost per gold ounce sold - Tucano3 | $ | 1,340 | $ | –1 | N/A1 | $ | 1,118 | $ | –1 | N/A1 |
AISC per gold ounce sold - Tucano3 | $ | 1,681 | $ | –1 | N/A1 | $ | 1,406 | $ | –1 | N/A1 |
Cash cost per gold ounce sold3 | $ | 1,268 | $ | 777 | 63% | $ | 1,071 | $ | 664 | 61% |
All-in sustaining cost ("AISC") per gold ounce | $ | 1,615 | $ | 992 | 63% | $ | 1,383 | $ | 943 | 47% |
AISC per gold ounce sold3 | $ | 1,703 | $ | 1,385 | 23% | $ | 1,484 | $ | 1,285 | 15% |
__________________________ | |
1 | 2018 comparative data for Tucano has not been provided as this relates to the period of ownership by |
2 | Gold equivalent ounces are referred to throughout this document. Au eq oz were calculated using a 1:80 Au:Ag ratio, and ratios of 1:0.000795 and 1:0.00102258 for the price/ounce 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. |
3 | The Company has included the non-GAAP performance measures cost per tonne milled, cash cost per gold ounce sold, cash cost per payable silver ounce, AISC per gold ounce sold excluding corporate G&A expenditures, AISC per gold ounce sold, AISC per payable silver ounce, mine operating earnings before non-cash items, cost of sales before non-cash items and adjusted EBITDA throughout this document. 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. |
(in thousands, except per ounce, per share | Q4 2019 | Q4 2018 | Change | 2019 | 2018 | Change | ||||
FINANCIAL RESULTS | ||||||||||
Revenue | $ | 65,679 | $ | 13,647 | 381% | $ | 198,653 | $ | 59,434 | 234% |
Mine operating earnings before non-cash items1 | $ | 8,446 | $ | 2,017 | 319% | $ | 41,874 | $ | 12,020 | 248% |
Mine operating earnings (loss) | $ | (5,046) | $ | 1,206 | -518% | $ | 6,845 | $ | 8,185 | -16% |
Net loss | $ | (28,068) | $ | (3,559) | -689% | $ | (91,022) | $ | (10,063) | -805% |
Adjusted EBITDA1 | $ | (5,338) | $ | (2,638) | -102% | $ | 7,919 | $ | (5,054) | -257% |
Operating cash flow before changes in net non-cash working capital | $ | (7,750) | $ | (3,776) | -105% | $ | (1,486) | $ | (6,722) | -78% |
Cash flows from operating activities | $ | 7,785 | $ | (1,875) | 515% | $ | 13,787 | $ | 327 | 4,116% |
Cash and short-term deposits at end of period | $ | 36,970 | $ | 50,581 | -27% | $ | 36,970 | $ | 50,581 | -27% |
Net working capital at end of period | $ | 12,815 | $ | 61,851 | -79% | $ | 12,815 | $ | 61,851 | -79% |
Loss per share – basic and diluted | $ | (0.09) | $ | (0.02) | -350% | $ | (0.33) | $ | (0.06) | -450% |
Average realized gold price per oz2 | $ | 1,485 | $ | 1,250 | 19% | $ | 1,419 | $ | 1,278 | 11% |
Average realized silver price per oz2 | $ | 17.71 | $ | 14.80 | 20% | $ | 16.45 | $ | 15.56 | 6% |
Brazilian real ("BRL")/USD | $ | 4.12 | $ | 3.81 | 8% | $ | 3.94 | $ | 3.65 | 8% |
Mexican peso ("MXN")/USD | $ | 19.27 | $ | 19.86 | -3% | $ | 19.26 | $ | 19.25 | 0% |
SUMMARY REVIEW OF FINANCIAL RESULTS FOR THE YEAR ENDED
Revenue was
Mine operating earnings (inclusive of amortization and other non-cash charges) decreased to
Net loss for 2019 was
For accounting purposes, the Company re-evaluated its initial assessment of the purchase price of Tucano following receipt of the MRMR. The Company's updated assessment of the carrying value of Tucano assigned a value of
_____________________________ | |
1 | The Company has included the non-GAAP performance measures cost per tonne milled, cash cost per gold ounce sold, cash cost per payable silver ounce, AISC per gold ounce sold excluding corporate G&A expenditures, AISC per gold ounce sold, AISC per payable silver ounce, mine operating earnings before non-cash items, cost of sales before non-cash items and adjusted EBITDA throughout this document. 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. |
2 | Average realized gold and silver prices are prior to smelting and refining charges. |
Adjusted EBITDA for 2019 was
Operating cash flow before changes in non-cash net working capital was negative
EE&D expenditures increased by
G&A increased by
Finance and other expense consists of interest expenses related to Tucano borrowings and past due payables of
Refer to the MD&A for the year ended
CHANGE IN COST REPORTING MEASURES
As a result of the Acquisition, the Company's primary metal production by value is now gold. In addition, Great Panther's Mexican silver mining operations produce a significant component of gold by-product. As a result, the Company has changed to primary reporting of cash cost and AISC metrics on a per ounce of gold sold basis, net of by-product credits (refer to the Non-GAAP Measures section in the MD&A for definitions and reconciliations of these measures to the Company's reported financial results). Cash cost and AISC measures on a payable silver ounce basis (net of by-product credits) continue to be provided for the Company's Mexican operating mines as these remain primary silver producing mines by value.
CASH COST AND ALL-IN SUSTAINING COSTS
The consolidated operating results, cash cost and AISC for the year ended
Consolidated AISC per gold ounce sold (excluding corporate general and administrative ("G&A") expenses) of
- The Company made an accrual of
$5.6 million forBrazil legal claims in the fourth quarter of 2019, as discussed in the G&A expenses above; - The Company incurred penalties from its mining contractor for on-site contractor equipment that was unutilized, in accordance with its mining services contract;
- Higher cash cost per silver payable ounce at
Topia due to a less favourable market forTopia's concentrates and general cost increases over the prior year comparative period.
Further discussion of the Company's cash cost and AISC can be found in the MD&A for the year ended
CASH, SHORT-TERM DEPOSITS AND WORKING CAPITAL AT
At
Cash and short-term deposits decreased by
Net working capital was
2020 GUIDANCE AND OUTLOOK
Great Panther is not yet in a position to provide collective Company-wide guidance for 2020 but it is providing individual operating guidance for both Tucano and the GMC. These two operations combined represented approximately 85% of 2019 production on a gold equivalent ounce basis.
Further as discussed below, the remainder of the Company's 2019 production was from
Great Panther's 2020 Operating Guidance for Tucano and the GMC compared with actual 2019 results is as follows:
Operating Guidance | Tucano (costs per Au payable oz) (1) | GMC (costs per Ag payable oz) (1) | (costs per Ag | |||||
2020 | 2019 | 2020 | 2019 | 2019 | ||||
Gold production | koz | 120 - 130 | 106 | n/a | n/a | n/a | ||
Gold Eq production | koz | n/a | n/a | 14 - 16 | 19 | 22 | ||
Silver Eq production | Moz | n/a | n/a | 1.2 - 1.4 | 1.5 | 1.8 | ||
Cash Cost | $/oz sold | 900 - 1,000 | 1,118 | 9.00 – 10.00 | 6.74 | 12.09 | ||
AISC | $/oz sold | 1,150 - 1,250 | 1,406 | 13.00 - 14.00 | 13.21 | 15.35 | ||
Capex (sustaining) | $M | 6-8 | 6 | 0-1 | 0.2 | 1 | ||
Capex (non-sustaining) | $M | - | - | - | - | 2 | ||
Stripping/Development | $M | 23-27 | 13 | 1-2 | 1 | 1 | ||
Exploration (sustaining) | $M | - | 0.2 | 1 | 1 | 1 | ||
Exploration (non-sustaining) | $M | 7 | 3 | 3 | 1 | 0.1 |
(1) | Cash costs and AISC are calculated net of by-product credits. |
(2) | 2019 results for Tucano are reflective of the period under Great Panther ownership beginning |
(3) |
Tucano
At Tucano, 2020 planned production is between 120,000 to 130,000 gold ounces, representing an increase of approximately 13% - 23% compared to the 106,000 gold ounces of production under Great Panther's ownership in 2019, and marginally higher than Tucano's full year 2019 production at the mid-point of 2020 guidance. Production is expected to be primarily sourced from the Urucum Central North, TAP AB3, and Urucum North pits, with lower than average production expected in the first quarter, impacted by seasonal wet weather effects and a focus on waste movement which is expected to benefit ore production in the remainder of 2020. Ore production from the Urucum Central South pit ("UCS") is not included in the 2020 guidance but is planned for 2021, subject to successful remedial work. UCS was removed from the near-term mine plan in the third quarter of 2019 due to a geotechnical incident (refer to news releases dated
Great Panther initiated remedial unloading work at UCS in the first quarter of 2020 to remove free diggable material at the top of the west wall slope. Continued remedial unloading work and benching involving drilling and blasting is expected to start in the third quarter. This work is planned based on established protocols from the Company's consultants, Knight Piesold, and is contingent on favorable results from five geotechnical core holes to be drilled, commencing in
The 2020 AISC guidance mid-point of
Capital expenditures of approximately
Exploration expenditures of approximately
The Company's guidance for Tucano is sensitive to a number of factors, including the exchange rate of the US dollar to the Brazilian real, fluctuations in key input costs including diesel, pre-stripping requirements related to remedial work at UCS, and weather.
GMC
At the GMC, 2020 planned production is between 1.2 to 1.4 million silver equivalent ounces, a decline of approximately 7% to 20% from actual 2019 production of 1.5 million silver equivalent ounces. The 2020 guidance is based on a silver to gold ratio of 90:1 (which compares to 80:1 reported in 2019, and approximately 110:1 at current market prices) and based on over 80% of the ore production is sourced from the
The Company's guidance for the GMC is sensitive to a number of factors, including the exchange rate of the US dollar to the Mexican peso, and fluctuations in key input costs including diesel. In addition, exploration results from the ongoing drilling campaign at the Guanajuato Mines, if positive, could result in an upward revision to guidance in the second half of 2020.
On
The Company is continuing discussions with geotechnical and tailings management consultants regarding ongoing observations and assessments, while continuing to monitor conditions at the TSF. Alternatives to minimize any potential cessation of processing activities in 2020 are being evaluated, including re-commencement of tailings deposition at the Phase II TSF (if satisfactory mitigation measures can be achieved), and normal course permitting for the Phase III TSF, which is already at an advanced stage. While the Company cannot be certain of the timeline to permit the Phase III TSF, it expects it can obtain the necessary permit within the next three to six months.
If one of the aforementioned alternatives is not in place by the end of April, mill processing activities will temporarily cease until either Phase III is permitted or suitable mitigation of Phase II can be achieved. The Company is also evaluating the continuation of mining and stockpiling of ore if a temporary cessation of mill processing activities were to occur.
As 2020 production and costs for
A new Mineral Resource Estimate for
Coricancha
The Company continues to evaluate the timeline and conditions for a potential re-start of the
General Uncertainty due to COVID 19 Measures
The Company has been closely monitoring the effects of the spread of the coronavirus respiratory disease (COVID-19) with a focus on the jurisdictions in which the Company operates and its head office location in Canada.
The rapid worldwide spread of COVID-19 is prompting governments to incrementally implement restrictive measures in an attempt to curb the spread of COVID-19. During this period of uncertainty, Great Panther's priority is to safeguard the health and safety of personnel and host communities, support and enforce government actions to slow the spread of COVID-19, and to continually assess and mitigate the risks to the business operations.
The Company has implemented a COVID-19 response plan that includes a number of measures to safeguard against the spread of the virus at its offices and sites and is also maintaining regular communications with legal and government representatives, suppliers, customers and business partners to monitor any potential risks to its ongoing operations. Broader government measures to limit the spread of COVID-19 have not impacted the Company's operating mines in
Although there have not been any impacts to the Company's operations to date, the Company cannot provide assurance that there will not be disruptions to its operations in the future. If the Company's operations are impacted or expected to be impacted, the Company will seek measures to preserve cash including suspension of discretionary spending and other collaborative and legal means to reduce and minimize contractual spending.
WEBCAST AND CONFERENCE CALL TO DISCUSS THE FISCAL YEAR 2019 FINANCIAL RESULTS
The Company has scheduled the release of its fiscal year 2019 financial results for
Shareholders, analysts, investors and media are invited to join the live webcast and conference call by logging in or calling in five minutes prior to the start time.
Live webcast and registration: | www.greatpanther.com |
1 800 319 4610 | |
International Toll: | +1 604 638 5340 |
A replay of the webcast will be available on the Webcasts section of the Company's website approximately one hour after the conference call. Audio replay will be available for four weeks by calling:
1 800 319 6413, replay code 4211 | |
International Toll: | +1 604 638 9010, replay code 4211 |
ABOUT GREAT PANTHER
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws (together, "forward-looking statements"). Such forward-looking statements may include, but are not limited to, statements regarding (i) the Company's production guidance and ability to meet its production guidance, (ii) expectations of cash cost, AISC, capital expenditures, and other expenditures (iii) the exploration potential of Tucano,
These forward-looking statements and information reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: continued operations at Tucano in accordance with the Company's mine plan; the accuracy of the Company's mineral reserve and mineral resource estimates and the assumptions upon which they are based; ore grades and recoveries; prices for silver, gold, and base metals remaining as estimated; currency exchange rates remaining as estimated; capital, decommissioning and reclamation estimates; prices for energy inputs, labour, materials, supplies and services (including transportation); all necessary permits, licenses and regulatory approvals for the Company's operations are received in a timely manner, including the permit for the Phase III Topia TSF; the Topia TSF can be remediated as planned and the Company's ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.
These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements expressed or implied by such forward-looking statements to be materially different. Such factors include, among others, risks and uncertainties relating to: the inherent risk that estimates of mineral reserves and resources may not be accurate and accordingly that mine production will not be as estimated or predicted; gold, silver and base metal prices may decline or may be less than forecasted; fluctuations in currency exchange rates (including the
There is no assurance that these forward-looking statements will prove accurate or that actual results will not vary materially from these forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward-looking statements and information are designed to help readers understand management's current views of our near and longer term prospects and may not be appropriate for other purposes. The Company does not intend, nor does it assume any obligation to update or revise forward-looking statements or information, whether as a result of new information, changes in assumptions, future events or otherwise, except to the extent required by applicable law.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of US dollars)
| | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 36,970 | $ | 24,524 | |
Short-term deposits | – | 26,057 | |||
Restricted Cash | 115 | – | |||
Trade and other receivables | 21,756 | 8,887 | |||
Inventories | 35,120 | 5,955 | |||
Loan receivable | – | 5,048 | |||
Reimbursement rights | 6,465 | 6,385 | |||
Derivative assets | 3,454 | 738 | |||
Other current assets | 1,461 | 797 | |||
105,341 | 78,391 | ||||
Restricted cash | 927 | 1,237 | |||
Other receivables | 10,155 | – | |||
Reimbursement rights | 4,705 | 4,470 | |||
Mineral properties, plant and equipment | 133,810 | 13,391 | |||
Exploration and evaluation assets | 15,659 | 15,065 | |||
Deferred tax assets | 145 | 222 | |||
$ | 270,742 | $ | 112,776 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Trade payables and accrued liabilities | $ | 49,533 | $ | 10,647 | |
Current portion of borrowings | 38,066 | – | |||
Reclamation and remediation provisions – current | 4,927 | 4,473 | |||
92,526 | 15,120 | ||||
Other liabilities | 17,078 | – | |||
Borrowings – MACA Limited | 4,627 | – | |||
Reclamation and remediation provisions | 50,647 | 22,947 | |||
Deferred tax liabilities | 5,365 | 2,053 | |||
170,243 | 40,120 | ||||
Shareholders' equity: | |||||
Share capital | 252,186 | 130,912 | |||
Reserves | 17,420 | 19,829 | |||
Deficit | (169,107) | (78,085) | |||
100,499 | 72,656 | ||||
$ | 270,742 | $ | 112,776 |
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Expressed in thousands of US dollars, unless otherwise noted)
For the years ended | |||||
2019 | 2018 | ||||
Revenue | $ | 198,653 | $ | 59,434 | |
Cost of sales | |||||
Production costs | 156,779 | 47,414 | |||
Amortization and depletion | 34,671 | 3,462 | |||
Share-based compensation | 358 | 373 | |||
191,808 | 51,249 | ||||
Mine operating earnings | 6,845 | 8,185 | |||
General and administrative expenses | |||||
Administrative expenses | 15,721 | 5,338 | |||
Amortization and depletion | 514 | 111 | |||
Share-based compensation | 1,322 | 940 | |||
17,557 | 6,389 | ||||
Exploration, evaluation, and development expenses | |||||
Exploration and evaluation expenses | 12,741 | 9,984 | |||
Mine development costs | 1,487 | 1,930 | |||
Change in reclamation and remediation provision | 9,752 | (214) | |||
Share-based compensation | 46 | 8 | |||
24,026 | 11,708 | ||||
Impairment of goodwill | 38,682 | – | |||
Business acquisition costs | 2,923 | 1,345 | |||
Care and maintenance costs | 795 | – | |||
Finance and other income (expense) | |||||
Interest income | 726 | 1,518 | |||
Finance costs | (5,752) | (20) | |||
Accretion expense | (3,404) | (897) | |||
Foreign exchange gain (loss) | (1,499) | 1,067 | |||
Other income (expense) | (3,211) | 178 | |||
(13,140) | 1,846 | ||||
Loss before income taxes | (90,278) | (9,411) | |||
Income tax expense | 744 | 652 | |||
Net loss for the year | $ | (91,022) | $ | (10,063) | |
Loss per share – basic and diluted | $ | (0.33) | $ | (0.06) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of US dollars)
For the years ended | |||||
2019 | 2018 | ||||
Cash flows from operating activities: | |||||
Net loss for the year | $ | (91,022) | $ | (10,063) | |
Items not involving cash: | |||||
Amortization and depletion | 35,185 | 3,573 | |||
Impairment of goodwill | 38,682 | – | |||
Change in reclamation and remediation provision | 9,752 | (214) | |||
Finance costs | 5,752 | 20 | |||
Unrealized foreign exchange loss (gain) | 431 | (926) | |||
Income tax expense | 744 | 652 | |||
Share-based compensation | 1,726 | 1,321 | |||
Other non-cash items | 2,710 | (580) | |||
Interest received | 686 | 1,185 | |||
Interest paid | (5,692) | (38) | |||
Income taxes paid | (440) | (1,652) | |||
(1,486) | (6,722) | ||||
Changes in non-cash working capital: | |||||
Trade and other receivables | 4,568 | 6,357 | |||
Inventories | 10,521 | 510 | |||
Other current assets | 212 | (105) | |||
Trade payables and accrued liabilities | (28) | 287 | |||
Net cash provided by (used in) operating activities | 13,787 | 327 | |||
Cash flows from investing activities: | |||||
Cash restricted for Coricancha environmental bond | 371 | – | |||
Cash received on Acquisition of Beadell | 1,441 | – | |||
Redemptions of (investments in) short-term deposits and restricted cash, net | 25,941 | (5,965) | |||
Repayment received prior to Acquisition on loan advanced to Beadell | 3,069 | – | |||
Advances to Beadell prior to Acquisition | (354) | (5,000) | |||
Additions to mineral properties, plant and equipment | (25,910) | (2,069) | |||
Net cash provided by (used in) investing activities | 4,558 | (13,034) | |||
Cash flows from financing activities: | |||||
Proceeds from financings, net of expenses | 15,939 | – | |||
Payment of lease liabilities | (6,190) | – | |||
Proceeds from borrowings | 32,210 | – | |||
Repayment of borrowings | (48,444) | – | |||
Proceeds from exercise of share options | 504 | 349 | |||
Net cash from (used in) financing activities | (5,981) | 349 | |||
Effect of foreign currency translation on cash and cash equivalents | 82 | 85 | |||
Increase (decrease) in cash and cash equivalents | 12,446 | (12,273) | |||
Cash and cash equivalents, beginning of year | 24,524 | 36,797 | |||
Cash and cash equivalents, end of year | $ | 36,970 | $ | 24,524 |
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