Great Panther revises production forecasts

Great Panther Mining Ltd. [GPR-TSX; GPL-NYSE American] on Friday November 29 said it has reduced its fourth quarter gold production forecast for its Tucano Gold Mine in Brazil.

The company is guiding the market to anticipate production of between 31,000 and 33,000 ounces, down from the previous estimate of 39,000 to 44,000 ounces.

The company attributed the drop to the recent geotechnical incident at the USCS pit, heavy rainfall, increased pit congestion and the need for smaller blasts. As a result, Great Panther’s annual consolidated production forecast, which includes the company’s Mexican operations (and Tucano operations from the March 5, 2019 acquisition date) has been adjusted to between 142,000 and 149,000 ounces.

That marks a 6% decrease from the midpoint of the previous guidance range of 150,000 to 160,000 gold equivalent ounces.

Great Panther shares declined on the news, falling 12.3% or $0.08 to 57 cents on volume of 511,728. The shares are trading in a 52-week range of 58 cents and $1.58.

Great Panther is a low-cost producer with a very strong leverage to the price of silver. The company operates three mines, including the Tucano Gold Mine in Amapa State Brazil, and two primary silver mines in Mexico: the Guanajuato Mine Complex and Topia Mine.

The company was in the news recently when it approved a positive production decision for its 100%-owned Coricancha gold-silver-zinc-copper mine in Peru.

Great Panther said the decision was based upon the final results of the trial stope and bulk sample program (BSP) which confirmed the key operating assumptions for Coricancha contained in a Preliminary Economic Assessment that was announced in May, 2018.

“The actual restart date is expected in the first half of 2020 and will be aligned with our other mining operations to ensure the project has the necessary planning and resources in place to optimize operations and profitability,” Great Panther said. “Coricancha is expected to produce approximately 40,000 ounces of gold equivalent annually and will be an important addition to Great Panther’s production portfolio going forward.”

Meanwhile, Great Panther has said its primary focus for 2019 will be on the integration and optimization of the recently acquired Tucano Gold Mine, which is now a 100%-owned asset. The Tucano Gold Mine is currently the second largest gold producer in Brazil, producing gold per year from several open pit mines.

Formerly a heap leach operation, it ran from late 2005 until January 2009, producing approximately 292,000 ounces of gold from 8.8 million tonnes of ore. The processing plant was upgraded in 2018 with the addition of the SAG mill and CIL infrastructure and is now capable of treating sulphide ore.

“Following the geotechnical incident which suspended mining at Tucano’s Urucum Central South pit on October 6, 1029, production was suspended from the Urucum North and Urucum South pits,” the company said. “Mining from these two pits has since encountered lower than expected productivities due to higher than normal rainfall, increased pit congestion and due to more constrained mining geometries, and smaller blasts needed to separate ore and waste to reduce dilution. These collective factors, paired with ore variability resulted in lower than expected production.”