In a July 9 research note, ROTH Capital Partners analyst Jake Sekelsky reported that Great Panther Mining Ltd. (GPR:TSX; GPL:NYSE.American) opted to advance its Coricancha mine in Peru toward a production restart, which is estimated to require $9 million in initial capex and happen by year-end 2020.
ROTH has a target price of US$2.25 per share on the mining company (the current share price is about US$0.72) and maintained its Buy rating.
Great Panther's decision to move forward, Sekelsky explained, was based on the fact that results from trial stoping and bulk sampling confirmed the operating parameters outlined in the preliminary economic assessment (PEA).
Specifically, the development rates achieved during bulk sampling averaged 3.2 meters per day (3.2m/day), surpassing the 3m/day rate noted in the PEA. Also on testing, recoveries, which averaged 90.3% silver, 76% gold, 85.7% lead and 82.9% zinc, were all consistent with the estimates in the PEA.
The bulk sampling work processed 5,000 tons of material and produced 5,561 ounces (5,561 oz) of silver, 303 oz of gold, 107,319 pounds (107,319 lbs) of lead and 99,899 lbs of zinc. A copper concentrate was not produced due to the low grade of the mined material. As such, Sekelsky commented that Great Panther will likely wait to produce a copper concentrate at Coricancha until it achieves commercial production there and has access to higher-grade material.
The economics of Coricancha could be improved further, according to Great Panther management, Sekelsky relayed, particularly with respect to dilution levels, transportation costs and recovery rates. He added that because the PEA incorporated about 28% of Coricancha's total resource base, it is likely Coricancha's mine life could be extended as well beyond the period given in the PEA.
Sekelsky pointed out that once Coricancha is back online, it should grow Great Panther's production base incrementally as it is expected to add about 40,000 oz of gold equivalent per year. It also should diversify the miner's revenue due to the deposit being polymetallic and diversify the jurisdictions in which it operates.
However, the analyst concluded, "While we view the results of the bulk sampling program at Coricancha as a positive, we believe the newly acquired Tucano mine should remain the focus of investors over the near term."
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Disclosures from ROTH Capital Partners, Great Panther Mining, Company Note, July 9, 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 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.
