Q1 2021 Great Panther Mining Ltd Earnings Call
Thank you for standing by and this is the conference operator.
Welcome to Great Panther Mining's first quarter 2021 results conference call.
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I would now like to turn the conference over to Fiona Grant Lushy, Vice President Investor Relations. Please go ahead.
Thank you operator.
Good morning, everyone and the underground and the Jay. Thank you for taking the time to participate in the pulp the day before we begin please note, but we will be making forward looking statements. During the presentation you should be cautioned that actual results and future of that may differ from those noted in todays presentation.
And the commentary also refers to various non-GAAP measures definitions and reconciliations that are included and the company's MD&A and the <unk>.
For the three months ended March 30 for 2020 one.
Dollar amount express and the presentation and the associated financial and a.
And <unk> are in U S dollars unless otherwise noted.
For reference during the call each day, the first two all in sustaining cost.
Detailed cautionary statements can be found at the end of the presentation.
I would like to remind everyone. This conference call is being recorded and will be available for replay later today replay information and the presentation slides accompanying the conference call and webcast will be available on our website of great Panther dotcom.
On the call. This morning, we have Rob Henderson, President and CEO, Neil Hepworth, Chief operating officer and.
And.
And the President and finance.
Thanks, Janet and.
Thank you and everyone for dialing in today.
It's now been just over the yet from the global COVID-19, pandemic began and people everywhere I've been affected one way or another.
The business that you adapt and ways that we never imagined, but I'm very proud of how the team of great Panther has adapted to our new health and safety protocols, while continuing to.
And to successfully conduct of business.
The pandemic has undeniably impacted efficiencies of the operations and I had meant depreciation for the team delivering as they have even amidst these adverse conditions.
Pleased to report that operations continue safely despite COVID-19, and we remain on track.
The proposed guidance for the year.
The first quarter is typically and low production quarter for us due to the range in Brazil and I'll.
Consolidated metal production and the first quarter of 2021. It was 30556 gold equivalent ounces inclusive of 24978 ounces of gold and 360000 ounces of silver.
We are benefiting from a strong and metals price environment for both gold and silver.
Which resulted in revenues of $52 6 million and increase of 9% of the same quarter last year and mine operating earnings of $11 million.
The increase of 85% when compared with Q1 2020.
The weak Brazilian real and in relation to the first of all I had a positive effect on costs without all in sustaining costs, excluding corporate G&A coming and that's $1557 per ounce of gold zone, which is the decrease of 11% of.
The Q1 'twenty 'twenty.
Our adjusted EBITDA increased 94% of the Q1 2020 to $12 4 million and cash flow from operating activities.
But for changes in noncash working capital was $7 $3 million compared with $9 million from the same period last year.
We ended the quarter with a strong balance sheet.
For the 45 and $5 million and cash and cash equivalents.
And we reduced our debt position to $27 $6 million.
But our primary focus for 2020, one as I'm tapping the potential.
To kind of.
And the 90 kilometers by 30 kilometers.
The 90 kilometer about 30 kilometers tenement package that we wholly own and Brazil is really as of yet for the geologists and.
To that and this quarter, we saw a significant ramp up and drilling at Tucano with the 68% increase the meters drilled of the same quarter last year.
Our exploration team is headed up by Nick why not a CS and geologist with extensive experience, particularly at the corner.
We plan to do 60000 meters that to kind of this year and we have for exploration drills on the flights with another two rigs on the way.
The three pronged exploration program will focus on near mine open pit targets.
On the ground targets as well as the regional targets and March we announced encouraging results from the open pit dual program, which is focused on the shallow Pepsi pits, which is located between the a b pits and the all of whom pits that are currently in production.
These results demonstrate the continuity of open pit the bowls sulfide mineralization below the current taxi patrol.
I'll now turn it over to Neil Hepworth, our Chief operating officer to discuss the operations and more detail.
Okay. Thanks, Rob.
Focusing first on the Tucano gold production for the quarter was 22996 ounces compared with the 26176 ounces in Q1, 2020.
This is the <unk> 12 per cent decrease, but it's attributed to the lower oil production and the mine reduced process plant available share lower grades.
So kind of process the higher proportion of low grade stockpile of material this quarter due to the folks from all.
And the stripping of the upper levels and position of mine and the activity relative to the old and the lower benches.
Production was also affected by seasonal weather and the disruption to our oxygen supply Jimmy.
During the wet season normally from January through June production rates of Lola and jewelry and the dry season, which is normally July until December.
Purchase of oxygen supply was affected the schedule deliveries were re directed to Brazil's hospitals debates much needed demand for related to the pandemic.
Shortages and the purchase of oxygen supply and is expected to decrease recovery rates and reduced throughput of two corner over the next few months.
And Asics for the quarter was $1549 an ounce. This is a 12% improvement of the Q1 'twenty 'twenty, mainly due to the weakening of the Brazilian real.
As Rob said, we had for diamond drill rigs turning this quarter focused on near mine resource definition, specifically attempts the open pits and Oracle North underground.
Until the end of the quarter.
And the first phase Bill program conducted and Q1, the grades and which we are seeing on good but what excites of the team most of it.
The at these results it was and.
The these results indicate continuity of mineralization down to 70 meters below the current pets, which is sitting at 50 paces deep. These.
These results of helps us put together of high confidence model that must be used to target further testing and the second phase Bill program currently underway.
We believe that this new marble and ongoing and drilling will allow inclusion of the temps the open and pizza and the next mineral resource statement for two corner.
And and Mexico L focus on the strict stricter management controls and I'll stop sisters of the and reduce dilution and and improvements and and grades.
And have to go on to watch and mine complex a total of 2270 9000 and 306, so but equivalent of illnesses were produced with silver recoveries of eight 6.1 per cent, an average sort of the grades of 124 grams of tongue.
The old the companies for 86 five per cent and the average gold grade was 1.53 grams per ton.
Production was down and 29% of the Q1 2020, mainly because of of lower throughput due to the COVID-19 related work for a short of just.
This was essentially reduced supervision and do the vulnerable workers they staying at home.
The the ASIC was $33 for the two per pay bill else of silver compared with 14, and 21 $14 21, and two 120 20, and this is reflecting the level of sales given the lower production and hire local currency operating costs of what partly due to some one of the costs related to restructuring and co.
Of it.
Ah Tropea the tone.
Production was 363319, the silver equivalent of ounces of decrease of three per cent compared to to one last year.
Average grades of 398 grams per ton silver and 0.87 grams for some Goldberg achieved along with byproducts of zinc metal recoveries of at 9% to 2.4% for the sofa and $55 for central for gold.
Basic to pay your bill of else was $18 71 list of 17 73, and two 120 22 by me too high and low key.
Curtains, the operating costs of the bullets and put.
Due to the COVID-19 true rid of related work force shortage. In this case. It was it was my system, which took place over a couple of weeks.
Could he come true devote and project and Peru negotiations with the local community, where the advanced and work starting and preparation for the plan and little program and queue to the snow program and start talking high grade zones, the readily accessible to mine.
I will now turn the call of the great punches, Vice President financial and Turkington to discuss the financial results.
And thank you Neil.
Strong metal price environment, we are experiencing has provided great tailwind for our financials over the last year Q1, 2021, and saw revenues of 52.6 million and increase of 9% over Q1, and 2020, thanks to hire realize and that'll prices of 1000 and $755 for gold and $25.35 for silver.
The representing and increase of 11% and 66% respectively.
This and turned led to an increase of the 85% and mine operating earnings to the 11 million from 6 million and Q1 and 2020.
Consolidated basic approval down of filled excluding corporate G&A was the $1557 and and 11% decrease compared with the coupon and 2000 to the 20th.
Mainly due to the benefit of the weakening Brazilian currency and higher average realized metal prices.
During the quarter and we settled the final floor and exchange contracts that were entered into at the end of 2019 and the early 2020 as part of of risk management strategy to reduce the exposure of our costs to channel two foreign exchange fluctuation the weakness of the Bureau, and an experienced and Q1 and 2020 contributed to of net loss of and that quarter of.
$45 million for the current quarter are net loss of the $300000 adjusted EBITDA of $12 for a million and improvements of 94% over the same quarter of 2020.
Currently we have no forward currency contracts and place.
Cash flow from operating activities the for changes and non-cash working capital was 7.3 million of significant improvement from $894000 in Q1 and 2020.
During Q1 and 2021, we also pay down borrowings of five 8 million, bringing our total borrowings 227, 6 million that quarter and and closed the quarter with 45 $5 million and cash and cash equivalents.
Thank you that's all we have for formal remarks of of now turn it back to the operator for the Q&A.
Thank you we will now begin the question and answer session.
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And the first question comes from Heiko Elaine with each the Wainwright. Please go ahead.
Hey, guys. This is Tyler bissett on for Heiko. Thank you for taking our questions.
Hi, Good morning provided from you provided from drill results for Chicano on April 7th and reiterated the focus on drilling and your news released today.
You previously had a photo from the tap seat situated between the tap a b and the year of come pets that are the current focus of production of Tucano or can you walk us through your focused and plans for the rest of the year and a bit more detail and what are you seeing with cost and timing for drove results.
Sure I appreciate the question.
Yeah.
We released the results cause we thought they are pretty significant.
And that's we have discovered mineralization on the existing.
Given the Columbia the trains that is beneath some very shallow pits.
So.
The the the results were to essentially model the geologic continuity of the vein. So we have the proof of concept and now we know that these things are.
And.
Exists beneath and a pitch so it's very mindful of material.
About three kilometers from the plants. So it's easy trackable and the second phase of the program is essentially to do infill drilling.
Bring those resources onto the books. So we can put it onto the mine plan. So the second phase of tips. These essentially info too.
Bringing into Monroe and resources.
The other two prongs of exploration per game or.
The and the biggest one is the reason you know and we have the 90 kilometer about 30 kilometers region, which is essentially and drilled so and iguana is proving up targets.
And we hope to get diamond drills and to.
Some of them this year and and that really wouldn't be of game changer.
Once we find a regional discovery and and and what we're looking for is more open and put material and that we can truck 210.
10000 tons of a milk.
And then the last one of the underground the on the ground.
And is very intriguing, it's four to five Grand am a ton of it lies directly beneath northern most picked which is the <unk> pits newer compared to the scheduled to be complete mixed yes, and we would have the opportunity to start doing underground there. So we're doing some more drilling on the underground per.
Move up exactly how much we could.
Potentially get from and underground mind that at Oregon, and so you know the work as we doing there is in order to prepare ourselves for the potential of going underground and order from once the the coaches depleted.
Perfect and.
Okay I was I was I was I.
I was just going to add a little bit to that as well because I mean.
We are pretty excited about these type of <unk> results because if.
If you remember I mean, we took a huge hit on the hours on our resources and 2019 and the amount of the resources was was actually of material that was removed from the the the top C resource base, because basically because of all P. I didn't understand the model and.
And now.
Now, we got Nick one of who happens to be and expert and structural geology geophysics and geochemistry of his sister is put together a new model and these is busy sort of.
Sort of sort of taking at the at the moment, but it's quite exciting because it means we got a good chance of of of.
Of recapturing and a lot of those reserves without or resources from 2018 without the without doing a huge amount of drilling.
I appreciate that and and any sort of timing on one you might expect drill results from the face too.
Well I mean, we basically gaming.
To have a do it more and more out before the end of the year. So we'll probably be shutting off the drilling round about the end of and of July.
Bringing and these these two extra rigs and.
Among these I mean, basically I mean, the pits sort of 50 meters deep in the next day basically stopped at the base of the oxide.
And it's actually lends itself to the two two hours.
Sending in the the I'll see rake and drilling of fairly close pattern of of of.
Holes in there so we could end up with a pretty good idea.
Of what we're going to be mining. So yeah. I think it's I think towards the end of July will be will be coming off the drilling and some sometime October November we should we should be coming up with the.
Revised and more them off of that.
Uh-huh.
Perfect then just kind of building on that.
And you had expected the inclusion of tap C and the next mineral reserves and resource the statement for Chicano.
Is there any new information surfaced and the last 30 days or so that you can use to provide some color on the future for this area.
No no not really because I mean, we still doing I mean, what we'd started off doing was doing a series of holes along the entire strike plans and they all came up positive showing that the that we called ex extension of of the mineralization and we're starting to the sort of swelling of the a little bit on all of those whole set of it's just it's showing the same the the same.
The same thing and.
So so nothing particularly new on that at the stage I think that once we.
Once sort of the neck finishes off the model and and.
And and if we get the Aussie drilling done and then I think that's you know and then then I think we might end up with another sort of press release before the M. R. M. A.
Perfect appreciate that and one last question guys them you stress the work for storage of that that you experienced during the quarter at the G. M C and top of your minds are you seeing any meaningful issues and April and May thus far.
No not really I mean this is this is part of the restructuring costs that we picked up of a gypsy. Unfortunately, I mean, a lot of these people.
Having some sort of reorganize the the work force a little bit and bring and a lot of the Ah bringing.
Bringing a lot of of new people, so big to actually a couple of those shortages. So yes sir.
I think that's and.
We don't expect we expect and seems to get better and hope not worse in terms of the the the people shortages related to COVID-19.
Yeah.
Perfect. That's all for me of hop back and queue. Thanks, guys.
Mhm.
And the next question and that comes from Joseph make out with the Roth capital partners.
Please go ahead.
[noise] morning, guys. Thanks for taking the questions.
And yet I guess.
Hey, Ah So first thing.
On capital spending you know it was a bit elevated.
Eight and Q1 I think that was part of the plan was for it to be I think the first half elevated was the prior conversation on that you know what should we expect for total capex rest of the year.
Yeah. Thanks true.
Yeah as noted the the the first half of the year is the bias towards stripping costs of Tucano. So yeah. It's just the mining phase mirror and so yeah. We've we've got to do a lot more capital stripping and Q1 and Q2 and then we get into the higher grades lower down.
Sure and I don't know if you have the the details on Capex spin for the air but certainly most of it is and the the first half of them.
I don't have the phone numbers.
Thanks for the question the.
Deferred stripping and costs are heavily weighted towards the queue and and tail off by the end of the queue too and those of the bulk of our capital costs during the year. So.
We would expect the the.
Q2 costs.
The significantly lower than Q1 and we.
We don't expect significant different surfing the second half of the year.
Okay.
And then as far as the first quarter went with that it was it in line with the expectations of a little higher a little lower.
[noise] are causing the online with our expectations.
Yeah pretty pretty much in the line you know and do things never never go in the straight line. This from the highs and lows and yeah. We.
I think overall the the team the really good job and and delivered what they intended to deliver.
Okay.
One more on to kind of.
You know you guys process the.
Very high percentage of the low grade stockpiles and cute one.
What what should we be modeling as far as percentage of total.
And age on a quarterly basis, that's coming from those little great stockpiles compared to for sure.
Yeah. The the first the two quarters, yeah, we are putting stockpiles true because the the mining face is associated with overburden, we do get into the higher grades so the grades pick up considerably and the and the second two quarters. So.
Consequently, the the stump palm total drops down and so what we'll see is the gold ounces pick up and Q3 and Q for it because we stopped money and the stockpiles, so yeah, the queue and and queue to Austin and a lot of stockpile of material come true Q3 and queue for.
There wouldn't be nearly as much of an great go up significantly 10 and stays the same the great goes up cause weird and to the the the bitter or and.
And the the pits and Q3 and Q for.
Okay. Okay, that's fair enough and then.
Just went on on G M C and.
You you guys gave a little bit of color and the release and and your comments on the operating costs. It at G. M C being elevated and the corner I think you guys reference the you know lower.
Lower total ounces and you know slightly higher operating costs, but.
And any color on what you're you're expecting you know next quarter to look like and the rest of the year to look like you know obviously, the 22 57 and was quite elevated on a cash cost basis.
Yeah. It is you know and and as Milstead, you know and I think G. M. C was probably been one of all of US facilities that had been most impacted by COVID-19. Just it affects you won't be of labor productivity and the ability to mine safely. So we did see a number of and inefficiencies at G. M.
See and the quarter and.
COVID-19 cases have dropped significantly so we do expect things to get better going forward. Some we would expect and.
<unk> to get me in the back on track and.
And and they are and you know and proving as as we speak so I think.
G. M C. We can you know to expect.
Much better the results from and and the second half of the year and particularly is so the price gets.
Yep.
To where it is now and.
The ability to generate cash and cruise significantly it's at G. M C.
Oh man Grump could I, just add a little bit there.
I think one of the one of the I mean, that's of as I say, there's been a fair amount of sort of restructuring at the at G. M C. The that cost us.
Quite a bit of quite a bit of money, but it's probably worth it but one of the things that we've done is we've we've brought the general manager from Cory country and we've is now located it's it's going to watch it is working at the G. M C mind and.
And this this guy is the is it exceptionally strong manage of technically and in terms of dealing with people and he's already sort of like cross things sort of.
Extremely firmly and but what are the things. These jumped into his C is the dilution and the others and control. So there's a huge amount of work the sky on the and in terms of getting perhaps that's sort of under control.
So I think the things.
And I I think we and he's also looking at the introducing another shift so the mind and and some of the places where we've got the reasonable ventilation. So I I think things of of can be moving forward and extremely positively and and and this quarter and the and the next quarter going on what's.
That's all right.
For contribution.
Yeah. Thank you I'll turn it over.
Thanks jump from.
Next question comes from the Matthew Oh, Keith with Cantor Fitzgerald. Please go ahead.
Hi, Thanks, operator, good morning, and good afternoon, just a couple of questions for me first of all can you talk a little bit more about the the oxygen shortage and the impact that it's gonna have I mean, basically how how badly does that impact recoveries sort of quantifiably and how long and what's the best estimate.
For you know getting getting your supply back.
She shut shall I banks manageable.
Oh and I'll take it yeah, Yeah, that's I think what you've seen and the results said recoveries are impacted by about 2% to 3% and we do have a supply of oxygen, but it's not the good stuff. The good stuff was diverted to hospitals to you know help with the the COVID-19.
Case, the good news is that we do.
Do you have oxygen back at the site again uhm it came on.
Last week. So you know the to me indicates two things one of the hospitals are not urgently needing oxygen anymore and that's really good for the communities and to you know we do have oxygen back again at all plants and we expect recoveries to get back up again to other should be and the you know of 90 192 per cent range. So.
Of course oxygen could disappear again, if COVID-19 hospitals need it but right now things of stable and we have all of oxygen supply back so.
Okay. So so that 88, 6% recovery of that was reflect the they had this quarter was reflective of of the oxygen shortage.
Correct.
Okay got it Okay, and then and then as far as we're always struggling here a little bit with the with the great profile types of kind of a quarter to quarter.
I guess of at that 0.9% seed great.
Oh, sorry for nine grams per tendency great this quarter.
Our first quarter similar for the second quarter do we feel of the raise there and then and then higher and Q2 three two for like is it wrapping up or is it a step up.
Yeah. It's it's really it's it's the story of Hobbes and of course is.
Yes, the first half of the year the.
Second quarter is gonna be similar and maybe a little bit better and the first quarter, but the big increases come and Q3 and Q for the spring we were into the the the high great or.
And.
Great is that okay, similar to what we saw and sort of the set.
And the third quarter of 2020.
Kind of range, you know I don't have the numbers on the hand, but suddenly.
Neither but I think one great today, one minute for browser and Oh yeah.
$55. The end of our production comes from the second half of the year, and and 45 items and the fears tops and.
And use that mask [laughter].
So where so we're still holding our guidance tear yourself the guy holding to the original guidance for the year and.
That is correct.
Okay. Okay. Yeah that was just it for me I mean, all eyes aren't the Kanto and I really looking for it to the the ongoing as exploration some exploration of success.
Thanks Man.
And thanks.
[laughter].
And once again and if you have a question please press star and the one.
And the next question comes from the center online and a private investor.
Please go ahead.
Oh, Hi, guys I came in a little bit late so I might've missed if you. If you commented on the G. M C tailings and in that situation did you talk about that yet.
Mm good money and milk, Neil kind of drifts at Christian.
Yeah Uhm.
The the situation at the moment is that we've we've got sort of from two embankment races, and and the process of being permitted.
And lifts the 18 and 19 and what's happened is the the environmental people of of of handle that.
This over to the water authorities conagra to basic needs to get there like honestly for Ya.
They they looking after the big dams now and.
So we still waiting for connect with the get back we should've actually already had the results of about a month of months ago, and we should have had it but unfortunately the change the director and connect with so that's that's the light seems a little bit.
So in the in the meantime, we've done some modifications for the to the way that we put the material isn't the the way we deposit and we've been just to get it and ourselves some capacity up until the first week in July. So we we we hoping that's that's.
That's the that this will be resolved with the the the the the day.
Direct you should've sort of like sort of better themselves and by now and being able to sort of make some decisions and things I mean, obviously pressurising them all the time to do that.
But so we hope he and that that's.
And that's going to come about now we have a couple of playing bass, but I'm not sure whether the day that they sort of fully just disclosed yet.
The.
Uhm Rob.
Oh.
And can I talk about told Milly.
I'm sure.
Yeah. So we've we've we've we've been approached by one operator, that's sort of range within reasonable trucking distance of of going to watch.
That's the the could take at least all of our production from the going to watch the minds. So we have that sort of plan b and and all of this this this other there's other people around as well as the couldn't possibly take some of the side of the Bachelor So the.
So so the plan and a is that we sit tight and and and and keep on pressurizing Conagra for that permit and the plan b as the the three of.
We go told Milly.
Now we've already done the whole bunch of thumbs looking at for what sort of of rights, we need to do the sudden day.
It it doesn't look that bad to be for.
Emily enough puts and you know anyway, that's that's the situation that the present.
Okay. Thank you for that.
Thank you.
And that concludes the question and answer session and.
And would like to turn the conference pack of furniture, Rob Henderson for any clothing for Mark.
Thank you all right and and thanks, everyone for the time today, just the emphasized that idea of consolidated production guidance remains unchanged and 135 to 150000 and gold equivalent of bounces.
We do expect the second half of 2021 to come for other 55% of the production and are a stick to be within the guided range. As we are moving to the the bit of sick does that to kind of.
I am pleased to report and we ended the quarter with a healthy balance sheets minds of performing is expected and exploration is doing the bring results that will contribute to the future at the economy. So the awesome, everyone had great Panther I look forward to share and a previous with you and the next quarter and thank you for you and what time today.
This concludes today's conference call you may disconnect your lines.
Thank you for participating and have a pleasant day.
And.
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