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Great Panther Mining Limited (GPL)

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Great Panther Silver Limited (GPL)

Q4 2016 Results Earnings Conference Call

February 28, 2017, 11:00 AM ET

Executives

Spiros Cacos - Director, IR

Robert Archer - President and CEO

Jim Zadra - CFO

Analysts

Heiko Ihle - Rodman & Renshaw

Bhakti Pavani - Euro Pacific Capital

Presentation

Operator

Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Great Panther Silver Limited 2016 Year End Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions [Operator Instructions].

I would now like to turn the conference over to Spiros Cacos, Director of Investor Relations. Please go ahead.

Spiros Cacos

Thank you, Shakira. Good morning everyone, and thank you for taking the time to join our call today. With me here this morning are Robert Archer, President and CEO; and Jim Zadra, Chief Financial Officer.

Before we begin, I would like to mention that some of the commentary on today’s call may contain forward-looking statements. You should be cautioned that actual results and future events could differ from those noted in today’s presentation.

The commentary also makes reference to various non-IFRS measures definitions and reconciliations of which are included in the company's MD&A for the year-end ended December 31st, 2016.

I would like to remind everyone that this conference call is being recorded and will be available for replay after 10:00 A.M. Pacific Time today. Replay information and the presentation slides accompanying this conference call and webcast are available on our website at www.greatpanther.com.

I will now turn over the call to Bob Archer.

Robert Archer

Thank you, Spiros. Good morning everyone. I'll start this morning's conference call with our year end highlights and then provide an overview of our operational and financial results, discuss our outlook for 2017, and conclude with a Q&A session.

Before we start, I'd like to remind everyone that we commenced reporting all financial results in U.S. dollars in the third quarter of 2016. Therefore all dollar amounts expressed in this presentation and the associated financial statements and MD&A are in U.S. dollars unless otherwise noted.

In 2016, our industry witnessed a significant rebound in metal prices and general market sentiment. Consequently, Great Panther Silver reported strong financial results for the year with the continued ramp up in production at our San Ignacio mine; we set a new annual record in gold production and increased our mine operating earnings by more than 400% to $22 million.

Cash cost and all-in sustaining costs for AISC were substantially reduced by 51% and 20% respectively, while revenue, gross profit, adjusted EBITDA, and operating cash flow have all shown significant increases when compared to the previous year, primarily due to favorable foreign exchange rates and higher metal prices.

Despite these positive developments, we reported a net loss of $4.1 million for 2016. This was primarily due to unrealized foreign exchange losses of $11.1 million recognized in the first half of the year prior to our conversion to U.S. dollar reporting and underlying changes in the functional currencies of some of our operating subsidiaries.

Going forward this change should significantly minimize the past mark-to-market foreign exchange gains and losses which were often the problem factor making up our net income.

The improvement in market sentiment and in our share price provided the backdrop for a bought deal financing and ATM offering last summer that together provided net proceeds of $33.1 million. These financings combined with an improvement in cash flow from operations contributed to further strengthening Great Panther's balance sheet such that we closed the year with $56.6 million in cash and short-term investments, $66.6 million in net working capital, and no long-term debt.

We also closed the year on a positive note by signing an agreement with Nyrstar to acquire the Coricancha Mine Complex in Peru, marking a significant milestone for the company as we expand geographically into the second largest silver producing country in Latin America.

Turning now to the operation highlights for 2016. The Guanajuato Mine Complex or the GMC accounted for approximately 77% of our total production in 2016. Metal production from the GMC was approximately 3 million silver equivalent ounces, representing a 3% decrease over the previous year due to lower grades at San Ignacio.

Despite the slightly lower grades, San Ignacio continues to play a major role at the GMC contributing approximately 60% of the production and containing the bulk of the resources for the operation.

Cash cost for the GMC was $0.85 per payable silver ounce in 2016, mainly due to an increase in byproduct credits from record gold production and higher realized gold prices. The significant decrease in cash cost to the GMC contributed to a 48% reduction in AISC to $5.20 per payable silver ounce. The decrease in AISC is also reflection of the reduction in exploration, evaluation, and development expenditures.

Last week we announced an updated 43-101 mineral resource estimate for the GMC, illustrating that we had once again successfully replaced what we had mined in the previous year, while upgrading most of the resources to higher categories.

Significantly, the results from the surface drilling be conducted at San Ignacio in the fourth quarter of 2016 were not included in this resource update and will be added to the 2017 estimate.

I'll now continue with the summary of our Topia Mine in Durango. Topia's metal production was 17% lower when compared to 2015 due to lower throughput resulting from the two temporary shutdowns in the third quarter of 2016 and the plan processing suspension that commenced in December to facilitate plant upgrades and a transition to a new tailings storage facility.

Read the rest of this transcript for free on seekingalpha.com