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Great Panther Mining Limited (GPL)

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Great Panther Mining Limited (GPL)

Q1 2019 Results Earnings Conference Call

May 16, 2019, 11:00 AM ET

Company Participants

Alex Heath - Director, Corporate Development and Investor Relations

James Bannantine - President and CEO

Jim Zadra - Chief Financial Officer

Conference Call Participants

Heiko Ihle - H.C. Wainwright

Mark Reichman - Noble Capital Markets

Jake Sekelsky - ROTH Capital Partners

Craig Stanley - Eight Capital

Bhakti Pavani - Alliance Global Partners

Presentation

Operator

Thank you for standing by. This is the conference operator. Welcome to the Great Panther Mining’s First Quarter 2019 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 Alex Heath, Director of Corporate Development and Investor Relations. Please go ahead.

Alex Heath

Thank you, Ariel. Good morning, everyone, and thank you for taking the time to participate in our call today. With me here this morning are James Bannantine, President and CEO; and Jim Zadra, Chief Financial Officer.

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

The commentary also refers to various non-GAAP measures, definitions and reconciliations that are included in the company's MD&A for the year ended March 31, 2019. All dollar amounts expressed in the presentation and the associated financial statements in MD&A are in U.S. dollars unless otherwise noted.

I would like to remind everyone that this conference call is being recorded and will be available for replay later today. Replay information and the presentation slides accompanying this conference call and webcast will be available on our website at greatpanther.com.

I’ll now turn the call over to Great Panther's President and CEO, James Bannantine.

James Bannantine

Thank you, Alex. Good morning, everyone. On our call today I will start with highlights of the first quarter then follow with an overview of our operational and financial results, discuss our outlook for 2019 and conclude with a question-and-answer session.

The highlight of the first quarter was us closing the acquisition of Beadell Resources Limited. This acquisition has transformed Great Panther into an intermediate precious metals producer focused on leading mining jurisdictions across Latin America.

Our portfolio is well-diversified in terms of asset types, with three producing mines, an advanced stage growth project, and significant exploration potential. As announced on Tuesday, this past week, we've now commissioned the supplemental oxygen system at Tucano, which is performing well.

Through to the middle of May, the Tucano plant processed an average of 1.75 grams per ton of gold, with gold recoveries at 94.5%. By comparison, April and the first quarter was limited to processing material at just under 1 gram per ton and recoveries were down at 88%. We expect Tucano to produce between 125, 000 and 135,000 ounces of gold effective March 5th onwards to the end of 2019.

At Coricancha, we are in the final processing stage of our Bulk Sample Program or BSP and expect to announce results in the restart decision in late June.

At Topia in Mexico, we are advancing the process plant expansion project. During the first quarter we announced an increased resource estimate which increased measured and indicated resources by 28%. Production also increased 16% compared to the same quarter in 2018. With the acquisition of Tucano, gold is now our primary metal produced by value. For the quarter, consolidated gold equivalent ounce production was up by 7%.

Our updated consolidated production guidance for 2019 to account for the acquisition of Tucano on March 5, 2019, is 171,500 ounces to 185,000 gold equivalent ounces. Based on our 2019 guidance, we expect gold production to account for approximately 83% of our metal production by value.

At Tucano, our reported production of 14,000, excuse me, our reported production of 14,860 gold equivalent ounces for the first quarter only includes Tucano gold production from March 5th, the date of acquisition. For the 26-day period Tucano produced 5,164 ounces.

Production at Tucano has been limited to processing lower grade oxide material due to the lack of sufficient oxygen as we continue to turnaround the operation. With limited grade of oxide under 1 gram per time, this lowered our production and raised our all-in sustaining cost for the first quarter and for the year-to-date versus what we expect the rest of the year and for future years.

However, as announced earlier this week, the supplemental oxygen system was commissioned by the end of April and we've been able to process higher grade sulfide ore with excellent recoveries upwards of 94% since the beginning of May.

I previously noted that in the first half of May, Tucano produced an average grade of 1.75 grams per ton and we successfully run the plant with grades over 2 grams per ton at those same recoveries. With the implementation of a supplemental oxygen, the final phase of the Tucano plant optimization is now complete and the mine can be operated in a manner that maximizes grade.

Through continuous improvement program going forward and having looked at the operation in detail since taking ownership, we believe there is opportunity to significantly reduce all-in sustaining cost further over the mid-term.

Tucano’s production guidance for 2019 from March 5th onwards is between 125,000 to 135,000 gold ounces. It's worth noting the significant seasonal trend of the production at Tucano with the rainy and the dry season, with 70% of the year’s production guidance plan for the last two quarters of the remaining three quarters. This also includes a very low month for the month of April.

Read the rest of this transcript on seekingalpha.com