An April 11 H.C. Wainwright & Co. research note indicated Great Panther Silver Limited (GPR:TSX; GPL:NYSE.MKT) is on track to meet 2018 production goals despite Q1/18 performance. "While consolidated production totals were slightly below levels seen in Q4/17, we continue to expect the firm to reach or exceed our 2018 silver equivalent (Ag eq) production estimate of 4.1 million ounces (4.1 Moz)," analyst Heiko Ihle wrote.
In Q1/18, Ag eq production was about 1 Moz, comprised of 514,218 ounces of silver, 5,931 ounces of gold, 441 tons of lead and 551 tons of zinc. The total was 42% higher than production in Q1/17 due to the temporary closure of the Topia plant for upgrades then.
But Q1/18 production was down 3% from that of Q4/17, resulting from less throughput at Guanajuato and lower silver grades at both Guanajuato and Topia, Ihle explained.
With respect to Guanajuato, Q1/18 production was 695,909 ounces, 4% below that in Q1/17 and Q4/17. Less throughput and lower silver grades were the cause. Gold grades and overall recoveries, however, were higher during Q1/18. "The firm seems to be focused on increasing gold production at Guanajuato and attempts to do so through higher grades and throughput from San Ignacio, a strategy that we support given that silver prices remain substantially undervalued relative to gold (trading at a roughly 81:1 silver:gold ratio based on current metals prices)," noted Ihle.
As for Topia, Q1/18 production of 336,027 ounces was 1% below that of Q4/17. This is attributed to lower gold and silver grades, which were offset partially by greater throughput. Despite silver grades gradually decreasing over the past three quarters, they should remain stable, at current levels, while Topia reaches steady state production, Ihle purported. "To this end, we feel that Topia is in a great position to continue to be a reliable source of production, especially given that throughput has remained steady at an average of ~17,900 tons over the past four quarters," he added.
Regarding Great Panther overall, a potential catalyst for its stock this year is additional mergers and acquisitions activity, Ihle noted.
H.C. Wainwright maintains its Buy rating and $2.25 per share price target on the company, whose stock is currently trading at around $1.65 per share.
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Disclosures from H.C. Wainwright & Co., Great Panther Silver Ltd., Company Update, Apr. 11, 2018
I, Heiko F. Ihle, CFA and Matthew Barry, 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 Silver Ltd. (including, without limitation, any option, right, warrant, future, long or short position).
As of March 31, 2018, neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Great Panther Silver Ltd.
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 did not receive compensation from Great Panther Silver Ltd. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Great Panther Silver Ltd. as of the date of this research report.
