After gold production fell 27% on a year over year basis for the second quarter at Great Panther Mining (TSX: GPR), shareholders, arguably were not expecting much positives from the company. They were right to do so.
Great Panther last night reported revenues for the second quarter of $30.0 million, which declined from $39.0 million in the year ago period, despite realizing a higher gold price of $1,865 per ounce. The firm sold a total of 16,076 ounces of gold in the quarter, while producing 16,629 ounces.
On a per ounce basis, the company posted cash costs of $1,575 per ounce of gold, while all-in sustaining costs per ounce of gold was an eye-popping $3,299.
Cost of sales overall meanwhile amounted to $29.9 million, leading to mine operating earnings of just $82,000. After general and administrative expenses as well as exploration and evaluation expenses, the firm posted an operating loss of $5.2 million. Combined with finance and other expenses of $6.8 million, the firm posted a net loss of $12.3 million for the quarter, or a loss of $0.26 per share.
“Inflationary pressures and the necessary acceleration of certain capital programs affected our financial results this quarter, however as previously guided we continue to expect improvements in the coming quarters as we return to a normalized rate of production in the second half,” said interim CEO Alan Hair, whom was appointed to the role earlier this year following management resignations.
In terms of its balance sheet, the company maintained a cash and cash equivalents position of $21.1 million, with total current assets of $59.4 million. Trade payables meanwhile sits at $57.6 million, while total current liabilities amount to $99.1 million.
As for guidance, the company has maintained its prior guidance of 85,000 to 100,000 ounces of production for the full fiscal year at Tucano, which excludes the discontinued operations of the Guanajuato Mine Complex and Topia mine in Mexico, which are in the process of being sold off. The second half of the year is expected to see at least 65% of the annual production guidance, which also implies AISC will start to come down.
All this appears to be for naught however, with the company revising cost guidance materially higher. Cash costs per ounce, previously estimated at $1,200 to $1,300, has now jumped to a range of $1,400 to $1,500, while AISC, previously estimated at $1,600 to $1,700, is now guided to be substantially at between $2,200 and $2,300 – meaning losses are very likely for the remainder of the year.
“Inflationary pressures have had a significant impact on operating costs, including on diesel and other key consumables, when compared to the same period in 2021,” commented the company on the revised cost guidance.
Finally, the company, unsurprisingly, indicated that it needs further financing to meet debt payment obligations, as well as to achieve long term objectives and planned capital investment programs and exploration programs. Great Panther is currently considering both equity financing, such as through an ATM facility, as well as debt financing.
The results follow a ten to one share consolidation conducted by the company last month in an attempt to continue to meet NYSE listing requirements.
Great Panther last traded at $1.32 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.