Great Panther Silver Reports Increased Revenue, Earnings From Mining Operations and Record Net Income in Second Quarter
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 08/16/10 -- GREAT PANTHER SILVER LIMITED (TSX: GPR) (the 'Company') is pleased to announce the unaudited financial results for the Company's quarter ending June 30, 2010. The full version of the financial statements and the management discussion and analysis can be viewed on the Company's web site at www.greatpanther.com or on SEDAR at www.sedar.com.
'Great Panther enjoyed a strong second quarter, setting several new records, while continuing to focus on mine development and exploration drilling,' said Robert Archer, President & CEO. 'With new equipment still arriving, modified mine plans being initiated, and almost 9,000 metres of diamond drilling completed in the quarter, we should see continued improvements in production, unit costs and financial performance through the balance of 2010.'
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Second Quarter 2010 Highlights
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Q2 YTD
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Revenue $9.3 million $17.2 million
Earnings from mining
operations
(before amortization and
depletion) (1) $4.3 million $7.8 million
Earnings from mining
operations
(net of amortization and
depletion) $3.6 million $6.8 million
Adjusted EBITDA (2) $0.7 million $2.6 million
Net income $1.6 million $2.9 million
Cost per silver ounce (USD)
(3) $7.70 $7.25
Silver equivalent production
(4) 574,740 Ag eq oz 1,101,689 Ag eq oz
Silver ounces sold 374,631 Ag oz 693,827 Ag oz
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Second Quarter Highlights
-- 15% increase in overall metal production to 574,740 silver equivalent
ounces ('Ag eq oz') in the second quarter 2010 from 499,845 Ag eq oz in
the second quarter 2009.
-- 23% increase in silver production from 333,358 oz Ag in the second
quarter 2009 to a record 410,583 oz Ag in the second quarter 2010.
-- 31% increase in silver production from Guanajuato to a record 288,825 oz
from 220,742 oz in the second quarter 2009.
-- 19% increase in metal production from Topia to 205,350 Ag eq oz compared
to 172,550 Ag eq oz in the second quarter 2009.
-- Record metallurgical silver and gold recoveries at Guanajuato and record
metallurgical silver, lead and zinc recoveries at Topia.
-- 39% increase in revenue for the three months ended June 30, 2010 to $9.3
million compared to $6.7 million for the three months ended June 30,
2009 due to higher metal prices and an increase in payable silver
ounces.
-- 43% increase in earnings from mining operations to $4.3 million in the
second quarter 2010 from $3.0 million in the second quarter 2009.
-- Record net income of $1.6 million for the three months ended June 30,
2010 compared to a net loss of $0.2 million for the same period in 2009.
-- The Company invested $2.3 million in capital expenditures and $1.8
million in mineral property exploration expenditures during the quarter
as it continued the implementation of its three-year growth strategy
which commenced during the fourth quarter 2009. The Company plans to
invest $13 million in capital expenditures and $6.3 million in mineral
property exploration expenditures in 2010.
-- The Company reported positive assay results from the expanded 7,800-
metre (initially 6,000 metres) surface drill program at Topia. The
program will provide for additional mineral resources to direct mine
development and expansion decisions over the next several years and the
Company anticipates mineral resource estimates for an additional four to
five Topia area mines.
-- Early results from the on-going underground drilling and development
program in the Los Pozos and Santa Margarita zones in the Rayas area of
the Guanajuato mine demonstrated the continuity of silver and gold
mineralization. This will allow the Company to construct a new mineral
resource estimate and provide greater definition for the mine plan in
these areas.
Outlook
Great Panther has revised its overall production estimate for 2010 to 2.4 million silver equivalent ounces, a 9% increase over 2009 production, to reflect production shortfalls and reduced ore grades at Guanajuato, particularly during the first quarter of the year. Improvements have been evident in the second quarter and further improvements are expected throughout the balance of the year. In addition, underground development has advanced ahead of plan to provide for exploration drilling for Deep Rayas (drilling in progress), Guanajuatito and Valenciana (drilling to start in the third and fourth quarters respectively).
The long term forecast of achieving 3.8 million Ag eq oz by 2012 is unchanged. The impact of the new equipment is enabling increased development and production improvements throughout 2010 and positive exploration drill results are being used to estimate new resources in support of the 3- year growth strategy.
The Topia operation has made a very encouraging start to 2010 with record production and year to date unit costs of US$7.61 per oz of silver, net of by-product credits, and is well on its way to achieving its targets. At Guanajuato, year to date production is below plan mainly due to grades being lower than estimated in the first quarter. When combined with increased development costs during the first half of the year, this has resulted in Guanajuato's year to date cash cost per silver ounce, at US$7.08, being higher than the guidance of US$4.50 to US$5.00. The mining plans have been revised, and should result in continuous improvement through the third and fourth quarters. New mineralized zones are being prepared for production on the Los Pozos and Santa Margarita veins while mining of the higher grade Alto veins of the Cata Clavo will commence in the fourth quarter.
The Company's emphasis will be on maintaining profitability while developing and exploring to continually increase metal production. Great Panther's production strategy is to increase silver production year-on-year at continually decreasing unit costs.
'The second quarter of this year saw the achievement of new all-time records in both silver production and corporate net profits, with record metallurgical recoveries at both mines,' said Kaare Foy, the Company's Executive Chairman. 'The on-going implementation of our three-year growth strategy will provide us with increased resource levels and increased production.'
Great Panther Silver Limited is one of the fastest growing primary silver producers in Mexico with strong leverage to future rises in the price of silver. The Company owns a 100% interest in two operating mines in Mexico. The Company's mission is to become a leading primary silver producer by acquiring, developing and profitably mining precious metals in Mexico.
ON BEHALF OF THE BOARD
Robert A. Archer, President & CEO
Kaare G. Foy, Executive Chairman
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 the Securities Act (Ontario) (together, 'forward-looking statements'). Such forward-looking statements may include but are not limited to the Company's plans for production at its Guanajuato and Topia Mines in Mexico, exploring its other properties in Mexico, the overall economic potential of its properties, the availability of adequate financing and involve known and unknown risks, uncertainties and other factors which 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 potential political risks involving the Company's operations in a foreign jurisdiction, uncertainty of production and cost estimates and the potential for unexpected costs and expenses, physical risks inherent in mining operations, currency fluctuations, fluctuations in the price of silver, gold and base metals, completion of economic evaluations, changes in project parameters as plans continue to be refined, the inability or failure to obtain adequate financing on a timely basis, and other risks and uncertainties, including those described in the Company's Annual Report on Form 20-F for the year ended December 31, 2009 and reports on Form 6-K filed with the Securities and Exchange Commission and available at www.sec.gov and Material Change Reports filed with the Canadian Securities Administrators and available at www.sedar.com.
Standard & Poor's Listed
SEC 20-F Statement Filed
(1) 'Earnings from mining operations' is a non-GAAP measure and is defined
as mineral sales less cost of sales (excluding amortization and
depletion).
(2) 'Adjusted EBITDA' is a non-GAAP measure in which standard EBITDA
(earnings before interest expense, taxes, and depreciation and
amortization) is adjusted for stock-based compensation expense and non-
recurring items.
(3) The non-GAAP measure of cash cost per ounce of silver is used by the
Company to manage and evaluate operating performance at each of the
Company's mines and is widely reported in the silver mining industry as
a benchmark for performance, but does not have a standardized meaning.
(4) Silver equivalent ounces in 2010 were established using prices of
US$1,000/oz Au, US$16/oz Ag, US$0.80/lb Pb and US$0.80/lb Zn.
GREAT PANTHER SILVER LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited - Prepared by Management)
(Expressed in Canadian dollars)
Three and six months ended June 30, 2010 and 2009
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Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
(Revised)
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Revenues:
Mineral sales $ 9,317,101 $ 6,721,688 $17,232,261 $ 12,996,009
Cost of sales
(excluding
amortization
and depletion) 5,029,513 3,732,207 9,434,746 7,432,072
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4,287,588 2,989,481 7,797,515 5,563,937
Expenses:
Amortization and
depletion of mineral
properties, plant
and equipment 659,923 901,636 963,681 1,765,331
Accretion on asset
retirement
obligation 39,846 67,260 118,927 130,858
Mineral property
exploration
expenditures 1,828,011 278,012 2,934,693 454,098
General and
administrative 1,258,809 1,396,206 2,591,959 2,608,973
Stock-based
compensation 16,368 14,184 16,368 1,286,593
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3,802,957 2,657,298 6,625,628 6,245,853
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484,631 332,183 1,171,887 (681,916)
Other income
(expenses):
Interest income 22,426 5,299 43,414 29,969
Interest expense (219,268) (322,786) (427,851) (646,159)
Foreign exchange
gain (loss) (502,874) (140,910) 393,906 (321,577)
Gain (loss) on
disposal of fixed
assets (997) 5,177 (997) 3,607
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(700,713) (453,220) 8,472 (934,160)
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Income (loss) before
provision for income
taxes (216,082) (121,037) 1,180,359 (1,616,076)
Recovery of
(provision for)
income taxes 1,820,744 (78,892) 1,755,480 (173,931)
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Income (loss) for
the period $ 1,604,662 $ (199,929) $ 2,935,839 $ (1,790,007)
Other comprehensive
income (loss), net
of tax:
Unrealized gain
(loss) on
marketable
securities (109,169) 17,071 (107,177) 33,616
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Comprehensive income
(loss) for the
period $ 1,495,493 $ (182,858) $ 2,828,662 $ (1,756,391)
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Earnings (loss)
per share
Basic $ 0.01 $ (0.00) $ 0.03 $ (0.02)
Diluted $ 0.01 $ (0.00) $ 0.03 $ (0.02)
Weighted average
number of common
shares
Basic 113,587,389 86,798,900 113,332,904 86,138,021
Diluted 115,635,935 86,798,900 115,590,435 86,138,021
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GREAT PANTHER SILVER LIMITED
CONSOLIDATED BALANCE SHEETS
(Unaudited - Prepared by Management)
(Expressed in Canadian dollars)
June 30, December 31,
2010 2009
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Assets
Current assets:
Cash and cash equivalents $ 10,882,994 $ 13,312,091
Marketable securities 106,133 22,754
Amounts receivable 6,920,536 5,539,238
Income taxes recoverable 219,398 342,217
Inventories 2,348,653 1,438,376
Prepaid expenses, deposits and advances 1,858,214 1,585,069
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22,335,928 22,239,745
Mineral properties, plant and equipment 15,126,596 14,934,521
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$ 37,462,524 $ 37,174,266
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 4,280,548 $ 2,658,024
Current portion of capital lease obligation 614,153 800,761
Current portion of promissory notes 371,523 121,994
Current portion of future income tax
liability - 506,222
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5,266,224 4,087,001
Long-term liabilities:
Capital lease obligation 130,068 62,634
Promissory notes 259,235 118,424
Convertible loan notes 3,567,373 3,356,397
Asset retirement obligations 733,939 1,382,091
Future income tax liability - 1,311,609
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9,956,839 10,318,156
Shareholders' equity:
Share capital 77,106,023 75,910,220
Contributed surplus 10,055,120 10,268,043
Equity component of convertible note 1,563,000 1,563,000
Accumulated other comprehensive loss (3,291,917) (22,773)
Deficit (57,926,541) (60,862,380)
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27,505,685 26,856,110
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$ 37,462,524 $ 37,174,266
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GREAT PANTHER SILVER LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Prepared by Management)
(Expressed in Canadian dollars)
Three and six months ended June 30, 2010 and 2009
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Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
(Revised)
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Cash flows used in
operating
activities:
Income (loss) for
the period $ 1,604,662 $ (199,929) $ 2,935,839 $ (1,790,007)
Items not involving
cash:
Amortization and
depletion of mineral
properties, plant
and equipment 659,923 901,636 963,681 1,765,331
Accretion on asset
retirement
obligations 39,846 67,260 118,927 130,858
Stock-based
compensation 16,368 14,184 16,368 1,286,593
Foreign exchange
(gains) losses 18,816 (128,298) 122,706 (101,161)
Future income taxes (1,895,802) (30,061) (1,853,184) 64,978
Interest accretion
on convertible note
payable 107,096 177,501 210,976 348,443
Loss (gain) on
disposal of capital
assets 977 (5,177) 977 (3,607)
Shares received for
mineral exploration
expenditures (22,876) - (22,876) (1,500)
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529,010 797,116 2,493,414 1,699,928
Changes in non-cash
operating working
capital:
Amounts receivable 2,768,794 161,598 (1,548,978) (1,015,191)
Inventories 50,461 (290,481) (811,316) (443,084)
Prepaid expenses and
deposits (135,653) 101,286 (264,935) 107,956
Accounts payable and
accrued liabilities 262,668 (276,849) 586,981 616,520
Income taxes 148,112 (27,343) 122,819 188,543
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Net cash provided by
operating activities 3,623,392 465,327 577,985 1,154,672
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Cash flows used in
investing
activities:
Mineral properties
and capital
expenditures (1,725,591) (302,754) (3,317,164) (482,281)
Proceeds from
disposal of capital
assets 50 5,177 50 5,177
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Net cash used in
investing activities (1,725,541) (297,577) (3,317,114) (477,104)
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Cash flows from
financing
activities:
Proceeds from
exercise of options 145,290 13,500 525,571 13,500
Proceeds from
exercise of warrants - 37,018 472,890 37,018
Repayment of capital
lease obligation (261,202) (109,334) (446,733) (129,463)
Repayment of
promissory notes (102,179) - (122,008) -
Issuance of shares
for cash, net of
issue costs - - (31,949) 884,549
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Net cash provided by
(used in) financing
activities (218,091) (58,816) 397,771 805,604
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Effect of exchange
rate changes on cash
and cash equivalents (47,073) 45,969 (87,739) 50,588
Increase (decrease)
in cash and cash
equivalents 1,632,687 154,903 (2,429,097) 1,533,760
Cash and cash
equivalents,
beginning of period 9,250,307 1,985,101 13,312,091 606,244
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Cash and cash
equivalent, end of
period $ 10,882,994 $ 2,140,004 $ 10,882,994 $ 2,140,004
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Contacts:
B&D Capital
604 685 6465
604 899 4303 (FAX)
info@greatpanther.com
www.greatpanther.com