Q4 2019 Earnings Call
[music].
Good morning, and thank you for standing by welcome to Great Panther mining fiscal year 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 a question to join the question Q simply press Star then one on your Touchtone phone should anyone need assistance during the conference call. The main signaling operator by pressing star.
Zero on their children I would now like to turn the call over to David Weve VP corporate finance and Treasury. Please go ahead.
Good morning, everyone and thank you for taking the time to participate in our call today.
Joining me this morning, our Jeffrey Mason Chair, Great Panther, an interim president and CEO, Neil Hepworth, Chief operating Officer, Jim Zadra, Chief Financial Officer.
Before we get begin I would like to mention that some of the commentary on todays call contains forward looking statements you should be cautioned <unk> actual results and future events may differ from those noted in todays presentation.
The commentary also refers to various non-GAAP measures definitions and reconciliations that are included in the company's mdna for the period ended December 31st 29 team.
All dollar amounts expressed in this presentation and the associated financial statements and empty and they are in us dollars unless otherwise noted.
For reference during the call.
Hi, I see or a sick refers to all in sustaining costs I.
I would like to remind everyone that this conference call is being recorded and will be available for replay later today.
Replay information on the presentation slides accompanying this conference call a webcast will be available on our website, a great Panther dot com.
I will now I'll turn the call over to Great Panthers Chair Jeffrey Mason.
Thank you David Good morning, everyone. Thank him to join US on the call on Jeff for Mason, the chair of Great Panther, and the interim President and CEO.
Before we begin our review and discussion of the 2019 results I want to briefly discuss the covert 19 pandemic, how it is affecting us and what we are doing to ensure everyone is six.
Great Panther, we have a set of core values do we take seriously and most critical value is safety.
Safety is our Cody before we opt in every job every day, we present harmed by looking out for one another our communities and the environment because.
Life matters most.
Our team is closely monitoring the latest developments with regard to covert 19 through the World Health organization, the public Health agency of Canada.
And local and National health authorities in the countries to which we operate we've taken a number of measures to help flatten the curve, including travel restrictions and suspension of international travel until further notice implementation of supervision monitoring and response plans to reduce the risk of exposure and outbreak.
Nick health screening of local contractors visitors and employees have been employment.
Inappropriate.
Limited external visitors to only critical business functions and continuous assessment of the latest developments locally.
Oh operations have not been impacted by these measures and we have no concern Casey So cobot 19 across our corporate office and money in operations. So far we are continuing to operate as planned. However, we have implemented some contingency plans in case, there were to be a shutdown, including one stockpile.
Cleanup or add to kanno.
Procedures to follow in case of an outbreak and we have $37 million in cash, which will allow us to withstand the shutdown should it occur.
During this question then time of uncertainty we remain committed to the safety of our people and.
And our communities and we are prepared to act quickly as the situation evolves.
Turning to the results 2019 was a transformational year for great Panther as we completed in March 2019, the acquisition of the to cannot go might.
Located in northern Brazil, and became a primary goal producer we now have operating assets in both Mexico, and Brazil, and an advanced stage development project in Peru.
Consolidated gold equivalent production nearly tripled to almost 147000 ounces.
Up from just over 52000 gold equivalent ounces in 2018.
At any sick of 13 $83 per ounce driving that growth in production was up two cannot go mine, which produced nearly 124000 ounces of gold in calendar 2019, which approximately 106000 ounces were to our account post March 15 2000.
I was a 19.
With the successful completion of commissioning of the sulfide processing plant in April we have seen steady recoveries of gold at approximately 92%.
The two kind of mine is now a flagship asset and he is a big focus of ours in 2020 as we carry out a 55000 meter exploration drill program. Our team is excited to explore a multiple near mine targets with the intention of replacing ounces mined in 2020 as well as advancing expert.
Patient covering our broader 2000 square kilometer land package.
In 2020, we expect to Canada produce between 120 to 130000 ounces of gold at a nascent between Oh, 1100, 50, and 1200 $50 per ounce, a 15% improvement year over year in basic based on the midpoint of Twentytwenty guidance at or Mexico City.
Oh operations Topia achieved record metal production in 2019 of 1.8 million silver equivalent ounces or 22500 gold equivalent ounces, we made significant progress in our exploration efforts at the want to watch a mine complex.
Commonly referred to as G.M.C., we plan to complete further expiration in 2020 with a 25000 meter drill program for Mexico, focusing on one a watchful, which is already well underway with for true drill rigs.
GMC is expected to produce between 1.2, and 1.4 million silver equivalent ounces in 2020 at anything between $13 and $14 an ounce.
As we will discuss later on the call Topias guidance will be released at a future date, but no later than the end of Q2.
Mine operating earnings before non cash items increased significantly in 2019, and we further enhanced our balance sheet to retain approximately 37 million a borrowings assumed in the acquisition of to cancel we also finished the year with 37 million in cash those debt and cash numbers do not include.
Another 14 million of non dilutive capital, we successfully raised post year end.
In March of 2020, we completed with were also possible associates, a rigorous inaugural mineral reserve and resource estimate referred to as the more and more for the mechanical mine.
The updated MRM out our provides greater confidence in mine planning reduces total tonnage is yet increases the average grade. Furthermore, it provides better information and data to plan and guide or exploration program, which is primarily focused on finding near mine resources and converting existing open.
<unk> resources to reserves as a result of the more and more we incurred a noncash impairment of goodwill.
In 2019 of 39 million, we also announced a new mineral resource assessment for the sentiment San Ignacio and one water mines at the one award to mine complex, Great Panther has a strong diverse operating platform from which to grow with exploration upside in the financial strength along with.
As an experienced team to execute on these important initiatives I'll now turn the call over to Neal Hepworth, our CEO to cover operations.
[noise]. Thanks, your Jeffrey Okay, starting with two corner.
After closing the acquisition in March 2019, we immediately focused on finishing construction and commissioning of the sulfide processing circuit, which and look to higher grade so far doors or afresh rocket two corn.
We completed this middle upgrades in April in them, since instead be bringing recoveries or 92% or better.
In the fourth quarter, despite significant headwinds caused by the isolated west pitfalls instability, it's sort of come central South pit, we still managed to produce 34191 ounces of gold by re sequencing money going the other pits.
After closing of the took on acquisition to the end of 2019. The mine has produced 105561 ounces of gold.
Hi, sick of 1004 to $6 per gold ounce sold now team took on that has focused on steady operational productivity improvements continue into twentytwenty.
Okay. This this slide is a good illustration of these types of improvement the seamless achieved as a reference points the docks at Red lines indicate when we acquired the mine.
The Lifetime chart, you can see that the material movement progressively increase since the activation of on your mining contract to you and then with the decrease in October close by the you'll see us incident.
On the rights on chalks clumps recoveries dramatically increased starting in April of 2019 with the completion of the supplement supplemental Oaks external system.
Okay recoveries have held steady at 92% since that time with the recent dip caused more seasonal lower feed grade to the mill.
Hi, bets that's moved to the Mexican operations, it's important to note that our primary metal produces now goal. However, we continue to use and report cost metrics for payable silver helps to manage and evaluate writing performance with our Mexican silver mines.
Okay as I was.
As Jeff mentioned Topia achieved record monthly production in 2019, or a 1.8 million silver equivalent ounces or 22500 gold equivalent ounces.
Represents a 15% increase over 2018.
Is attributed to higher grades or increase in processing rights.
Cash cost of basic the sold what else was $12, a nine cents and $15.35 per ounce respectively.
<unk> costs were impacted by less favorable market conditions for Topias led zinc concentrates as well as increased input costs.
As noted in our remarks non <unk> press release, we temporarily ceased to posting timings on its phase two tailing storage facility based on a recommendation by our consultants on evidence of mass movement.
Our team is reviewing various alternatives, including evaluating mitigation measures to continue using the phase two TSS and advancing a promising for phase three of the TSS.
Currently we estimate the potential most stoppage for threed six months with ongoing mining and stopped profitable.
I'm going to walk through mine complex, maybe all of the process in 2019 was salsas sourced from the San Ignacio mine, while we continued exploration activities at the garnering walks won.
The two mines together with a shared processing plant comprise our Governor Walker mine complex all GMC.
Total metal production from from the GMC was approximately 1.5 million silver equivalent barrels balances or 19000 gold equivalent ounces at <unk> at the cash cost of six total 74 per payable silver equivalent ounces, a nice sick of $13 trend you arm.
Sales for equivalent silver ounce.
Okay. The exploration program program continues to advance Ocwen walks in line with for underground drill rigs and operation on the objective of outlining in situ blocks of high grade mineralization.
Underground and surface exploration has also been increase that's hard to Ignacio.
And in March of this year, we announced an updated Eni 43, one to one resource we both want to walk through some Ignacio jet fuel Toby more about that infinite.
Exploration efforts will continue this year with the goal of boosting production from the Gore and walks of mine in the second hold true up to 20 Tracy.
All right I'll now hand, it over to Jim Zadra now CFO to discuss our financial summary for 2019.
Thanks, Neil and welcome everyone.
Acquisition of to Count on March 2019 at a significant impact on our financial results for the year. The addition of to Kratos production and stronger metal prices drove strong increases in our revenue mine operating earnings before non cash items and operating cash flow.
Revenues increased 234% and mine operating earnings before non cash items increased 248% 41.9 million.
Dollars or 15 cents per share our operating cash flow increased to 13.8 million per year.
Despite the strong increases in mine operating earnings and operating cash flow, we reported a net loss of 33 cents per share after accounting for non cash items.
Notably these included the 39 million non cash goodwill impairment charge Jeffery spoke to.
35 million and depletion and amortization charges.
And other provisions and non cash charges.
Reflecting adjustments for these non cash items, including the impairment charge.
Adjusted EBITDA.
2019 was 7.9 million.
The non cash impairment charge reflects or reevaluation of the accounting purchase price allocation.
Following the receipt of the mineral reserve and resource update or am RMR.
But the approximately 165 million purchase price for to Toronto, we assign the value of 85 million existing to the existing to count on mining operations on acquisition.
And 43 million to the non appreciable elements, which include the underground mine reserves and resources.
At open pit resources.
We believe this conservative allocation of value for these growth elements of the mine.
Clearly as these include existing open pit resources.
We are targeting to convert to reserves with a significant exploration program.
In addition, the an existing technical study for the underground mine provides a pre tax net asset value or 25.5 million.
1200 dollar per ounce gold.
The balance of the share exchange purchase price of 39 million was representatives goodwill on acquisition.
And it was done taken as a non cash impairment charge.
In this regard our views that there is no value represented on our balance sheet for the exploration potential to count on define your resources either in the existing mining corridor regionally across the greater than 2000 square kilometer land package, which we are also actively exploring.
The 24 million in exploration evaluation and development or E and de expenditures represent 105 increase so hundred 5% increase.
105% increase over last year.
Reflecting an increase in our exploration program. In addition to 9.7 million dollar increase in our reclamation remediation provisions.
Which have not been capitalized these relate primarily to try to changes in regulations and requirements for remediation out or sites in Mexico.
Ian de expenditures also include the advancement of core catch and Peru, working with the bulk sample program completed in June 2019.
In October 2019, we commenced a limited mining and processing campaign of approximately 25000 tons of material.
DNA expenditures were higher than 2018 do the addition of DNA costs from the acquisition of to Colorado and additional legal provisions in respect of Tucano.
We expect to see a significant reduction in DNA in 2020, as we realize cost synergies from consolidating a former parent company head office of two capital.
The second quarter 2020, most of the contractual ongoing employment and other administrative costs of the former head office will have been wound down.
For 2019 consolidated cash costs was a thousand $71 per gold ounce sold and all in sustaining costs, excluding corporate DNA.
Was $1383 per gold ounce sold.
Hey, I see in cash costs were impacted by the issues related to the you see us at our to counter operation as discussed by Neil.
This resulted in lower than anticipated production at a higher than expected Hey, I see.
In terms of our balance sheet, we assume 69 million of borrowings on the closing of to Council and March 29 team.
During the year, we repaid about 37 million of to kind of got including about 11 million that was converted to equity.
On the refinancing side of the equation, we we nominally increased our credit facilities in Brazil and in December we close the Arcseven prepayments facility for $10 million.
The net result was what we ended the year with about 43 million of borrowings and 37 million of cash and there are no further equity conversion rights associated with our debt facilities.
Following the end of 2019, we closed the gold prepayments solely with Samsung for 11 million, an increased or credit facilities with bank of Banco Bradesco in Brazil buying that 2.5 million.
All of our prepayment facilities are for metal delivery of spot prices and do not involve any hedging.
We're continuing to pursue additional capital to fund our exploration growth programs and to improve.
And to improve our balance sheet in terms of our capital allocation priorities.
Our primary focus optimization and exploration or to council and secondly exploration at our minds in Mexico.
I'll now turn the call Dr. Jeffrey Mason.
Thank you Jim I'd like to touch on our updated mineral reserve and mineral resource estimates that we announced recently, particularly for two cattle as mentioned earlier in the call. We undertook a more rigorous approach to mineral resource and mineral reserve estimates that you cannot compared to the June Thirtyth 2017 estimate by the previous operator.
The more and more and jacana reflects operating experience since acquiring the mine in 2019.
And a better understanding of the mines geology, and therefore expected to improve the reliability of mine forecasting.
As a result, overall mass decrease, but proven and probable grades improved by 17% and measured and indicated.
And then I grades increased by 27%.
While the new reserve estimate implies an open pit mine life to the end of 2021, it's important to note the significant opportunities we have to add resources and extend mine life, starting with our expanded exploration program for 2020, specifically, we are spending 6.6 million on a 55000 meter drill program.
That is now underway, primarily targeting near mine areas. They could contribute to the mine plan over the next couple of years.
5 million is dedicated to near mine within our seven kilometers north south trend of open pits, while 1.6 million is focused on regional targets within a 20 columnar distance to the mill.
Being within economic trucking distance, we also see opportunities for bringing some of the incremental M&A resource into the mine plan, particularly AG current gold prices and foreign exchange rates. In addition, the advancement of the existing Prefeasibility study for our underground opportunity and European North and regional exploration.
On a larger land package are both opportunities to extend mine life over the medium and longer term.
At GMC, we saw a successful exploration program in 2019 with a wonderful antos mines ammonite resources, increasing 66%.
We are continuing exploration, both want to watch and sending Inacio in 2020 with a goal of increasing want to watch those production in the second half of the year and building mineral inventory at San Ignacio.
Looking at two kanno on the right hand side of this slide you can see the plan view of the main seven kilometers north South mineralized corridor with the current resources in Red. So the left is a schematic longitudinal section of that same north South corridor, we will be targeting areas between each of the.
Open pits and extensions of the pits, which should improve near term mine planning.
And your income North illustrated by the number five at the right hand side of the long section, we have existing underground reserves and a prefeasibility study that was completed in 2016.
In 2020, we will be conducting both exploratory and geotechnical drilling here to better understand the deposit and geological controls. The advantage of eurocom North is that the underground access is near the bottom of the existing pit and the rock is highly confident as a reference the existing Prefeasibility study.
As outlined in initial capital costs of 10 million and a two year timeframe to production.
We are considering the commencement of the feasibility study in the fourth quarter thereafter building a decline to improve accessibility for exploration potentially converting this access declined to a production decline. In addition, as part of the feasibility study we plan to evaluate the economics of dual production declines.
Different mining methods and contractor versus owner operator models.
Outside the main mineralized corridor, but within 20 kilometers we have identified numerous targets with high grade soil anomalies in 2000 21.6 million dollar 28000 meter auger and rotary Arab last drill program has been outline.
Within trucking distance the central Tucano plant.
These areas provide longer term resource development opportunities within our pro approximate 2000 collamer.
Land square kilometer land package, turning to Peru, we made significant advances on our core cancer project in 2019 in June we completed a bulk sample Coke program, which confirms some of the key assumptions in our 2018 preliminary economic assessment, including the ability to mine the narrow.
Higher grade veins to characterize deposit and achieving target metallurgical recoveries. We have since continued with a 25000 ton processing campaign from reminisced or with a mill performing as expected and providing incremental revenue to offset some of the care and maintenance costs. In 2020, we would be we will be conducting further.
Engineering and refinement analysis for the project well the mine remains on care and maintenance, we will continue to evaluate the conditions for potential restart.
In terms of production guidance for 2020, we expect gold production from two Khanna of between 120000 to 130000 ounces, an increase of 13% to 23% compared to the approximate 106000 gold ounces to our accounts in 2019.
Cash cost per jacana are expected to range from $900 to $1000 per ounce with 86 of 1100 50 to 1200 $50 per ounce.
15% improvement at the midpoint relative to 2019.
As we expect to benefit from the weaker Brazilian real lower oil prices and a number of key business improvement initiatives for GMC, we expect gold equivalent production between fourth.
Fourth teen and 16000 gold ounces based on a 90 to one silver to gold ratio on a silver equivalent basis. This is between 1.2 and 1.4 million ounces cash costs will range between nine and $10 per ounce of silver with ace sick at about 13.
$14 per silver ounce produce at this time, we are only providing 2020 production guidance for the Jacana mine and GMC as Topias operations will me will be impacted by our ability to continue mining and processing.
After April 2020, we plan to complete an assessment of alternatives before providing consolidated 2020 guidance, we expect to provide annual operational guidance. No later than the end of the second quarter of 2020.
Current with the availability of a more reliable outlook on Topia as a reminder, topia accounts for approximately 15% of our consolidated gold equivalent production. Thank you. The call is now open for questions over to you operator.
Thank you, we'll now begin the question and answer session.
He joined the question to you May Press Star then one.
He was your tone acknowledging your request if you are using speakerphone. Please pick up your Harris said before pricing.
To the draw your question Please press star.
Well posture enrollment hollers join the queue.
The first question comes from Heiko.
With H.C. Wainwright. Please go ahead.
Hey, guys. Thanks for taking my questions.
Hi, I hope.
Hey, I want to also are in taking the midpoint of guidance, you're guiding down 10% and just to confirm that does not include any potential impact or any contingencies for Colbert 19 right.
That's correct.
Okay, and then just building on the screen just walk me through the longer term production potential of the side as you see it I mean, you guys have very expensive reserves and resources up a slate I mean, just sort of walk me through your original 121 through call. It 2026 plans. Please.
Okay will you know where we stand currently and thanks for the question is what we have the mining reserve to which were mining which takes us to 2021.
In the open pit scenario.
We are because of the exploration we are using Rps will also parcels findings, which has helped us to vector and pinpoint where to drill both on both sides of the pit and below the pit such said the geometry of the pits can be redesign to take in potential additional findings.
And or resources converted to reserves. So for the next couple of years thereafter, our target is to replace the current years production through exploration.
And then ensuing as well for the following year.
Likewise in parallel we look to advance that underground targeted it was preliminary lead drilled and a prefeasibility study done in 2016. There is additional drilling that we will entertain to do in the fourth quarter. This year Geo technical in part, but also between the two.
Lenses and to depth to try to understand a little bit more of its extent it plunges to the north and as well appears to.
Carry on to depth, but there has not been any.
Deep drill holes at that target and we will be looking to entertain that as well in the fourth quarter.
And then in the longer term.
It's really the outside targets within the 20 kilometers or thereafter, we are really going to tickle those targets. This year and then based on that findings next year consider a more fulsome program to bring those two.
Further understanding.
Thank you.
Thanks, and then just just for more and just thinking conceptually there youve deferred production from from you'll see US 2020 warm and currently greater cash so all in sustaining rather of 11 safety to 12 50, an hour can you just provide some color and quantify award guidance would have stood if you see us was producing is.
Prime plus here.
And can we maybe use the answer to that last question as our outlook for 2021, and if not why not please. Thank you guys very much.
Yes, Thats a good question. So you know the Wesco wall of you see as subsided, we did not have a collapse and for the first quarter of this year, we have been removing daigle material from that area basically taking the load at the high end of that West wall, we'll be working closely with Knighton piece sold two.
To blast and bench on that so in essence, we are stripping to levels on that pit.
Had we completed last year, we would have then come back in and ensuing year and strip that pit, we're going to take both.
Strip levels, starting in the third quarter this year and will reach the or by the end of the fourth quarter. So weve conservatively said production of ore and gold from that pit will be in Twentytwenty, one and then going to your question that additional pre strip.
Is being reflected both in our cash costs and he said it will be deferred from an accounting perspective on our balance sheet, but we're taking the brunt of the expense this year, which will enable 2021 to be a more favorable a second cash costs scenario.
The magnitude will be likely in the 100 250 dollar range per ounce, but thats to be determine subject tonight and peaceful and the Geotech calls, which will commence in April.
Thank you.
Very helpful. Thank you guys, some mostly stable to.
Okay.
Our next question comes from J.C., Kelly King with Roth Capital Partners.
Please go ahead.
Hey, guys. Thanks for hosting the call on taking my questions.
Good morning on.
That last question a bit more it looks like you guys have those five geotechnical holes plan starting in may in you're making some good progress on the review do you see us but.
And right now it looks like the plan is to keep it in the mine plan for next year, but I'm just wondering when should we expect the final determination that are in Im just trying to get a better handle on what the mine plan might look like next year.
Okay.
No. It's a good question and there is some variability and is subject to success I mean, we can tell youd today. There has been no additional subsiding a movement on that Westlaw for whatever pressure. There was relieved in that was wall appears to be.
To be completed however.
We need to understand the geology and that geotech behind that wall.
We will have further information and a plan beginning in the third quarter that is the dry season, so we'll be dealing with less water pressures hydrostatic and the like so we'll make movement and stripping of that area.
More secure or more predictable and we will provide updates as we move along in the quarters I think the critical part will be the first section of that as we move towards it.
And then thereafter, we will become more routine as weve unloaded that west wall.
Maybe Neal do you have some additional comments you've been on the ground several times with this and have the background in the Geotech category.
Yes, Sir.
Domestic but I think we've we've we sort of removed a lot of the problem material that was actually sitting above the stability.
We still removing that material.
What would be waiting for is basically the go ahead from from night Presale piece all to start during the drilling and blasting operations at the front.
I think once we get that go ahead.
As a charge that we can accelerate the.
The the production. This is what we've actually said in the mining schedule, but at this stage, because we not bringing in the oriented and twentytwenty.
Yes pitch, we've kept the stripping basically sort of fit in with that let's.
Is there is a good he's a good John said, if we get degrees lundstrom from might be sold and Synventive end of May early June that we can actually accelerate production from there and actually see some more this year.
Excellent Jake back to you please.
Got it thanks, that's very helpful.
In that links leap into my next question I'm, just looking at the plans capitalized stripping of 23 to 27 million.
This year, if the break this down a bit I mean.
Should we expect this getting more heavily weighted in the first half year versus the second up.
Yes. It is you know the production profile just wanted to announce basis is pretty even between the first on the second half were roughly 45% to 55 current split between the two and then on a movie material pre stripping is heavily weighted in the first half as opposed to the second half.
And that not only involves you see asked were higher in the pits because we're in the rainy season, so were stripping in the the top parts of the pits.
It's more freely digital and we're we're got all the large pieces of equipment, whereas later in the year as we drawdown inside the pits, we become more constrained in our movement and our production is more focused on the or so we don't have specific breakdowns, one way or the other but you on the split between first half second half.
That's the way it is unlike last year, we are not planning for a big fourth quarter, we're tending to be much more homogeneous across the quarter, a slight lower in the first quarter rainy season or pre strip.
Higher second and third and then a modest fourth quarter so much.
Smoother projection for this year.
Thank you.
Okay. That's very helpful. That's all for me Thanks again guys.
Yes.
Once again, if you have a question. Please press Star then one.
Our next question comes from Bhakti Pavani with Alliance Global Partners. Please go ahead.
Good morning, guys. Thanks for taking my question.
Given the full year development time frame.
The underground resource.
At this point, what's kind of.
Strategy.
That underground resource and how would the production of took on the like combined with open but Luckily underground reserves.
Yes, Great question then.
Yeah.
I think theres a couple of things there number one we need to understand more that underground clearly there needs to be more drilling in that area that underground is best defined in the north but there is.
Indication that extends down towards the southern trend north to south trend the.
Pits as shown in the in the surface.
Reflection or also likely inflected to depth, we have indications they continue to adapt so we need a better understanding there to.
Driving the drift or a decline to access the or will give us a much clearer understanding.
[music].
RP.
Designed it based on a standalone basis, and it was with a able to withstand the economics of production. However, our goal is to have it a layered on supplementary higher grade underground operation to supplement open pit production, thereby.
We can continue to produce at 10000 tonnes per day throughput through the mill.
In order to do that the key is the exploration and in the third quarter, we will reassess the results for the first half of drilling along with targets and Vectoring to maybe consider accelerating increasing our exploration efforts dollars drill holes to.
Dr. too earlier understanding of open pit targets or extensions. So short answer is we plan to try to make Ed a two prong attack, both underground and open pit by extending the underground and accelerating our understanding of the underground premier accelerating open pit findings.
And then accelerating our understanding of the underground.
Does that answer some of your question.
Hey, Doug I'm, just kind of do you gave the know how would net.
Can you just mentioned that do you expect audio plan to go with it.
You know along with open for downturn, but im just trying to understand how would the production look like because currently from being open the guidance is about 100 and.
30000 ounces.
And the production increase when when underground.
Oh comes into production is what I'm going to Sam.
You know and right now we just have the AMC Prefeasibility study and the group. The grade tonnage is about 4.13, Theres about 288000 ounces into fine reserve there and you can see there's a gap in one of the slides that we had.
Between sort of the top lands in the bottom lens, which needs to be drilled. So I just think it's too preliminary we are looking at the drilling and understanding to move to a feasibility study to better understand it and I think that towards the fourth quarter and the first quarter next year that will become much more focus to her.
How that will play in with our open pit.
So it's too early bottom line, it's too early although we do see line of sight that is going to be a layered.
Production of underground higher grade to supplement open pit feed.
Got it thank you.
Okay.
And yet prepared remarks steel.
That's great Doug said that the operations on moving uninterrupted until April of 2000, Wendy what kind of a timeline on an induction do expect those seed and during that timeframe, what kind of before we didn't cost.
Youre welcome.
The processing facilities Embeddability shutdown.
Sure and I'm, just going to give a little bit of color and then I'll pass it over to Neil.
So couple key takeaways both phase two in phase three.
We call it the Victoria TSS tailings storage facilities have capacity for a number of years typically there is a seasonal shift in the Ts Sep one to remnant tailings, we think it's isolated and we're carrying out mitigating.
Activities, so that we can reactivate TSS to.
Having said that we have been permitting since November phase, three which has multiple years.
Potential use however, both this particularly on the second one is subject to Mexican authorities approval, which as I mentioned, we submitted in November whereas phase two is subject to sign off by our various geo technical and TSS administrators Slash management group consultants.
And we are increasing our.
Review up TCEP to both the instrumentation and monitoring of that to see if we can get the green light. So I'll pass it over to Neal to give you a little bit more technical on that but just on the last comment.
Weve guided to three to six it could be shorter. It's just some of these items are outside our control. So we better to suggest six month with respect to contractors, it's about two week notice.
For contractors.
Because we're in a small community we're leaning towards a month if noticed however, it's a very small community, they're very dependent on us. So we are working with the community regulators and the lake to not have a prolonged shutdown, but at the same time, we have the ability to minimize costs.
What were two Neil please.
Yes, just just to say that this.
What we're talking about is the they call. It a patio slip surface, it's been around for many tens of years already and the this movement has been registered on this thing sort of fairly consistently.
But what we have been places is what they call.
Top which is a trigger actually response plan I missed the movement. Some exceeds a said the mountain the certain sort of.
Things that you need to do and one in one of them. So what happened was we had excessive rains during 2019 way way above the average.
Yes.
The drainage wasn't quite up to up to speed up to standard in some of this water would've got into the into this cardio failure surface and we have an acceleration of movement that went into the Red zone in terms of the transaction response plan.
As I say that means stopped stopping work on the.
Stacking on Ts have too.
Subsequent to that the the the movements have stabilized and then now back in March is this this for you phenomenons and two of them are showing the green, which is sort of normal situation than to them as shown yellow almost screen. So basically.
We could we could actually make a decision now to to move back, but which we wanted to give us a little bit longer.
To make sure that these numbers have stabilized we also have positively yellow.
As part of the yellow.
<unk>.
Responses, we need to do a whole we need to install some additional instruments and do some additional testing. So we were doing we're doing all of the absolutely. We comply with this transaction response plan.
We could the good chance that we could get done sooner rather than than later, but we'd rather be a little bit conservative on this because everybody is very sensitive about tailings dams stage.
I think Tony so anything more Jeffrey.
No I think thats, good and so.
Key takeaway is we're attacking it on two fronts phase three permitting.
Moving along with that phase two mitigation procedures underway and number three we've assessed costs that we can differ between two weeks in one week to go towards that and there is one other element. We will also consider some underground mining to stockpile ore in the interim keep the mine running not the mill.
With a view if we can see through the mill will be re activated and tailings storage and these are dry stack tails not conventional wet can really be resumed than we would continue in that track.
So three to six is a conservative stance and then that's where we've lifted and that we can reduce costs if need be thank you.
Thank you.
Just one follow up with regards to though to the mitigation of that Nvidia can cause is there any going no cost do you expect to.
Oh.
Yes that you were in the near term.
So.
TSS too.
We will be doing some controle, we're going to move some houses that are further downstream as mitigating centers theres additional.
Devices to monitor movement, and then consulting fees, we see that in a range of between 250 and $500000 yet to be determined and then in TSS. Three there is some preparatory contrarian, but some of that can be done at the same time, we drive back so costs or.
Our relatively minor they are but they are there are some additional costs in that order of magnitude of 250 to $500000.
Got it thank you.
Moving on to GMC.
You know you did mentioned that in the second half I'm wondering what their mind would be included ended the production.
From the Mark with respect to what is one of the that's great.
Silver and gold and.
GMC.
Good question I'm going to touch a bit on that and then I'll, let Neil consumer the grades. So what we've been doing is we have been having some mine feed from Warner Watteau, it's mainly reminiscent and various stope cleaning and the like we have to clear targets that were drilling on and we are increased.
And our focus there so we are doing wire frame models.
Engineering and design access to stopes and development areas to boost production currently modeling is 10% to 20% feed from Warner Wantto with some exploration success and we've got four rigs drilling there. It's in the back half that we are looking to increase.
And we will announce should we get to that kind of position. So we are operating that mine in a modest situation and so one of the key variables there is.
It would increase the denominator E. R mill would be running at full capacity, which would increase our ounce production, which would drive costs down.
So the additional feed is very important to drive the unit costs down and then I'll pass it over to Neal on grade.
Grades that we are looking we've currently got line of sight in want a logical.
Yes.
The evidence that we sort of focused on on the most it's actually the most also area.
That's the basis resources are coming in and about 1.2 million silver equivalent ounces and that's that's running at about 350 grams per tonne silver equivalent. So that's that's not too bad.
We.
So a lot of a lot of the focus is actually weve busy developing on the ore body there to try and define the.
So basically define a reserve from a resource.
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Yeah, I think there's there's an opportunity as we expect just sort of towards the sort of towards the middle of the yes, we have enough excess in into that area that we've actually starts stoping. So we could potentially sort of break out another 80 to 100 tonnes a day from from that area.
Without any additional capex basically just doing just continuing lumpy doing I'm one of the things is as as Jeffrey was alluding to is increasing the denominator, which is bringing more ounces out I.
I mean this there's a number of different areas that we that we identified he this this basis. So the round of exploration I mean, he was about three to 3 million ounces of something that came into it.
And.
What we're going to be doing in the next study sort of immediately is we're going to be doing a whole bunch of sort of many feasibility studies on each of the sort of.
The most promising brands.
Hi, Princes, Los Pozos, that's got 1.2 million ounces from Antonio That's got another 1.2 million ounces and causes are another half million ounces and going over to disappoint point 4 million ounces. So what will be doing is we'll be looking at development is required to get in there and what the what the what what Capex requirement.
The is.
I'm trying to work out how many stopes, we can run and what sort of grades.
One of the things with this year with the narrow veins is that.
This you also mining production rates can vary from ups I've seen some stubs running at a 20 times today another stumps running at 80 tons a day, it's very much depends on the continuity and that you can only really pickup when you start James US This type of development that we that we pushing.
At this stage you can pick up from drill holes leverage also just tell you because.
Assumptions continuous in between.
So based based on that developments and based on these many feasibility studies will will will.
We will come to some sort of conclusion in terms of.
Do we want to spend the extra bucks to get the.
Can you get the extra production on.
So thank you Neil and you can see his passion and our operators all have passion to to deliver on the results and best guide towards our mineral resource estimate.
Which is measured and indicated of 3.8 million silver equivalent at 339 grams per tonne silver equivalent and our inferred of 2.4 million silver equivalent at 354, and I think those are pretty good guide right now if you model.
That in subject to Neil and the team.
Successfully engineering and developing those areas.
Thank you.
Got it. Thank you very much guys. That's it from my side.
This concludes the question and answer session I would like to turn the conference back over to Jeffrey Mason for any closing remarks.
Thank you operator, 2019 was an important year for great Panther as we transitioned into a gold producer. Despite our recent challenges I am confident that we now have a solid platform.
In a highly competent team to drive growth and continued to steadily improve our operations. Thank you for your participation today and on behalf of everyone. Here a great Panther I look forward to sharing their progress with you in the next quarter. Thank you very much.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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