Q1 2022 Great Panther Mining Ltd Earnings Call

Thank you for standing by this is the conference operator, welcome to Great Panther Mining's first quarter 2022 results conference call.

As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star Zero I would now like to turn the conference over to Fiona Grant, let Jay Vice President.

Investor Relations. Please go ahead.

Thank you operator good morning.

<unk>. Thank you for participating today before we begin please note.

We will be making forward looking statements during the presentation.

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Various non-GAAP measures definitions and reconciliations that are included in the company's MD&A for Cleveland.

And at March 31st 2022.

All dollar amounts expressed in this presentation and the associated financial statements and MD&A.

Unless otherwise noted.

So welcome gentlemen, Paul Asia, well first you all in sustaining Paul.

For today's call. Please refer to the first quarter 2022 financial results news release issued yesterday and the accompanying financial statements and MD&A, which were posted on our website and have been filed on SEDAR and Edgar.

This conference call is being recorded and will be available for replay later today.

Information and the presentation slides accompanying this conference call and webcast will be available on our website a great Panther dotcom.

On the call. This morning, we have Alan Hill, Chairman and interim CEO .

On the de Paul Chief Financial Officer.

Chief operating officer.

Yeah.

Thank you for your honor and thank you everyone for dialing in today.

Never get it through another challenging quarter and have made good progress in a number of fronts to build back to steady state production that's kind of.

But that's and we're starting to see improvements in operating performance at Tucano. Thanks to the mobilization of the new contract in <unk>, who is working in tandem with our current contract to U N M and we have advanced stripping of the top a b Hep C and Ericsson north picks in preparation for production in the third quarter.

Reported an updated mineral reserve and mineral resource estimate for kind of a gold mine, which outlines an increase in both reserves and resources successfully replacing 2021 mine depletion and increasingly open mine open pit mine life by one and a half years.

<unk> was focused on the open pit drilling of the <unk> underground project has just been completed.

The underground resource will be updated once engineering studies currently underway are finalized.

We also reported some encouraging exploration exploration.

Exploration results from the core timeshare advanced development project in Peru.

Our results confirm the potential of the Escondida vein, which is never been mined.

Our evaluating options to further advance the project.

We were fortunate fortunate that the omnicom Covid, such 80, Q1 did not adversely affect our operations safety protocols remain in place and vaccination programs continued to progress.

Our financial results for the quarter are representative of where we are in a new optimized mine plan for Tucano following the setbacks in 2021.

Revenue for the quarter was $33 $4 million on a consolidated production of 17913 gold equivalent ounces consolidated cash costs were $725 per ounce for Golden sold and consolidated ASIC, excluding corporate G&A was 2740 per gold ounce sold.

We expect you to have high costs in the first half of this year because of the amount of stripping we are doing against the backdrop of low gold energy is coming from the mine.

We expect cost to normalize free cash flow to improve as production increases throughout the second half of the year.

We ended the quarter with $33 4 million in cash and cash equivalents and borrowings of $52 7 million.

Sandra will go into further details in these financials later in the call.

I will now pass it over to Fernando Cordero C O to discuss results from our operations.

Thank you Alan and good morning, everyone.

Focusing first on Tucano gold production for the quarter was 14037 analysis compared with the 22996 ounces in Q1, 2021 decrease of 39%. This block despite the planned throughput being 10% higher compared to Q1 2021, the ongoing stripping.

In the top baby top sheet and political north pitch with Solta in low or production youre getting a higher consumption of low grade stockpiles in margin of lore.

The Atlanta is great for this first quarter was boring 57 grams per tonne.

Impaired to the 0.9 Gram per tonne in Q1, 2021.

Production in the first quarter of 2022 was positively affected by mining the conjugation and higher plant throughput due to the higher availability of it would be not mine fleet to rehab the stockpile.

For the quarter cash cost per ounce sold was $817 compared to the $983 in Q1 2021 Andy.

And the eight per ounce sold was $2606 compared to the 1500 and $49 in Q1 2021.

Yeah.

In Q1, they took gatineau geotechnical comedy completed.

These four central South pit pushback weakness eastern so it's sort of gave consulting.

The studies further refine the design of the pushback, providing more confidence that this push back could be done safely and effectively.

This work is expected to commence in the second half of 2022 and production of board is expected to resume in 2023.

With regards to the new contract or we are on track to have fully mobilized in Q2 this year.

<unk> with its new locally sourced.

Fleet High school.

More efficient productivity and over time this will have a positive effect on performance and costs.

Finally, you outlined that we are currently in discussions with our existing contract or you and them to resolve concerns over equipment availability.

Moving on we had the tapia totaled.

Total production for the quarter was 290694 silver equivalent ounces compared with 363318 outages in Q1 2021.

Middle production decreased by 20%, Brian Buddy due to lower material mill in the absence of the stockpiles.

While the target date, producing mines for 2022 wedding development sugar.

Silver recoveries were 92% same as in Q1, 2021 and gold recoveries were 64, 1% compared to the 55, 4% in 2021.

Average freight rates were somewhat lower at 362 grams per ton silver and <unk> 84 grams per tonne bulk con.

Compared to 398 grams per ton silver and <unk> 87 grams per tonne gold and 2021.

For the quarter cash cost per payable silver ounce were $16 eight two cents compared to the $15 88 in Q1 2021.

N D. A C for payable silver ounce was $26 74 sands compared to the $18.71 in Q1 2021.

The mine remains on care and maintenance, while the company assesses our options to maximize the potential of this asset.

I will now turn the call over to Sandra Zhang our CFO to discuss the financial results.

Thank you Fernando.

Consolidated revenue for the quarter was $33 $4 million compared with $52 $6 million in Q1 2021 on consolidated sales of 17798 gold equivalent ounces compared with 29635 gold equivalent ounces in Q1 2021.

Mine operating earnings were $2 $3 million compared with $19 $9 million in the same period of 2021.

Our average realized price for gold was $1885 per ounce in Q1 2022 versus $1755 per ounce in Q1, 2021.

And our average realized silver price decreased slightly to $25 and 10 scrapped in the first quarter compared with $25.35 per ounce in Q1, 2021.

Cash cost per gold ounce sold for $1725 per gold ounce sold an 81% increase compared with $954 per gold ounce sold in Q1, 2020 one you guided the.

A reduction in sales volumes stemming from the processing of lower grade stockpiles and marginal ore to supplement supplement lower mined ore production that Fernando mentioned.

Consolidated is it trickled out so excluding corporate G&A was 2000 and $740 in Q1, 2022 compared with 1050 $557 in Q1, 2020 one.

As we are seeing across the industry inflationary pressures are starting to have an impact on cost the strengthening of the BRL against the US dollar represented approximately $100 per ounce at the higher ASIC in Q1, 2022 versus Q1, 2021 and inflation in Brazil costs also contributed approximately one.

<unk> hundred $20 per ounce to ASIC.

To that end, we are reviewing the potential impact of this cost pressure relative to our 2022 cost guidance and assessing further initiatives to improve operational efficiency and reduce fixed costs.

Our net loss was $8 $9 million compared with a net loss of different $3 million in Q1, 2021 and.

And EBITDA was negative $1 $2 million compared with 10 $3 million of EBITDA in the same quarter last year.

Cash flow from operating activities before changes in noncash working capital was negative four five.

$5 million compared with $7 $3 million in Q1, 2021.

We ended the quarter with cash and cash equivalents of $33 $4 million compared with $45 $5 million for the same period in 2021 and $47.7 million on December 31st 2021.

During Q1 2022 borrowings.

Total debt at the end of Q1, 2022 borrowings totaled $52 $7 million compared with $27.6 million in Q1, 2021 and in addition during Q1 2022, the company issued shares for proceeds of $2.7 million through the ATM facility.

Our net working capital declined to negative $18 $1 million in the quarter and current assets declined only slightly negative change.

And catch a fucking by $3 million was partially offset by higher receivable and inventory balances, including the reclassification of $7 $4 million tax refund receivable into current assets because as we are very happy to report. This sizable refund was received in April .

However, current liabilities increased by $17 million.

Due to $6 $1 million in off take loan repayments being re classed to current liabilities $6 $8 million in higher provisions for leases contingencies, and reclamation and a $2.7 million increase in trade payables.

A big portion of that increase stemmed from inflation and the exchange rate that I mentioned earlier.

The company expected to expect to generate positive cash flows from its mining operations in 2022 prior to capital investments debt repayment obligations and exploration and development costs.

We have established an established track record of refinancing our debt obligations as they come due in the meantime, we expect to require further financing and we are evaluating various alternatives to bridge the gap to steady state production in the latter half of the year.

Thank you that's all we have a formal remarks I'll now turn the call back to the operator for the question and answer period.

Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear Tony acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

I'll pause for a moment as callers join the queue.

Our first question comes from Heiko Eli of H C. Wainwright. Please go ahead.

Hi, there. Thanks for taking my questions can you hear me okay.

Yes, we can.

Hum.

So my next should fully mode.

Sorry, you're breaking up.

Pardon me it seems heico's line has disconnected.

Once again, if you have a question. Please press Star then one.

Yeah.

Once more to join the question queue. Please press Star then one now.

Yeah.

Operator, it's a lie.

Working heico's, obviously disconnected.

HEICO has disconnected I'll hand, it over to Fiona.

Obviously, well have a question on behalf with Jake Zukowski of AGP. He is traveling at the moment, but did center a question.

By email so close that right now and you can answer it here.

You've seen inflationary pressures across the board.

Any proactive steps to mitigate the impact here, specifically related to energy and consumables.

Yes, absolutely I mean, we're doing a very thorough review of our.

Costs in the current contracts, maybe Fernando could give a little bit more detailed color.

Yeah, absolutely. We are we are breaking down the contracts, you're doing major contracts and meet sized contracts and we're going into our renegotiations with all those companies.

Some of those will imply.

Potentially switching switching suppliers at this point in time, but.

The team in Brazil, and Mexico are moving ahead with those renegotiations.

Okay.

Yeah.

Yeah.

This concludes the question and answer session I would like to turn the conference back over to Alan hair for any closing remarks.

Thank you operator, as Sandra mentioned, we expect to generate positive cash flow from our operations in the second half of this year, we are prudently managing our costs and are focused on delivering optimal operation performance as to kind of ramps back up we will have results from the European North underground drill campaigns, and then shortly which will be followed by completion of.

The easiest studies required for development by the end of the year.

As we stated earlier the first half of this year is all of that building back to steady state of the economy with the expectation of a stronger second half of 2020 to continue into 2023.

We look forward to sharing our progress with you in the next quarter. Thank you for your time today.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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