Great Panther Silver (TSE:GPR)(AMEX:GPL) reported Tuesday that total metal production for the second quarter was down slightly due to lower than anticipated ore grades at its Guanajuato silver mine in Mexico.
Still, the company achieved record quarterly production at its other mine in Mexico, Topia, thanks to the recent expansion of the plant at the site.
Metal production from both mines, at 562,944 silver equivalent ounces, fell 2% from the second quarter of 2010, as silver output dropped 6%, partially offsetting a 31% rise in gold production.
The silver producer's Topia mine achieved record metal production of 212,108 silver equivalent ounces, up 3% from a year earlier. Pure silver output from the operation jumped 18%, another quarterly record.
However, metal production at Guanajuato was down over the prior year period, due primarily to lower mined grades, and to a lesser degree, to the installation and commissioning of a new flotation circuit in the plant. Ore grades of 1.38 grams per tonne (g/t) of gold and 193 g/t silver were lower by 26% from a year earlier. Steps are being taken to improve grade control, the company said.
Great Panther also said that due to delays in shipments from its Guanajuato mine, inventories at quarter end were higher than normal, and second quarter revenue is anticipated to be lower than originally thought as a result. However, this is expected to be temporary, as once these sales are realized, revenue will be positively impacted in the coming quarters.
"We have been working hard to ensure the continuous delivery of our Guanajuato concentrates through this period and see this as a short-term issue which will be resolved over the next two quarters," said president and CEO, Robert Archer.
"While our quarterly revenue might be a bit bumpy until things smooth out, we have a strong cash position to weather this issue and have not altered our plans to increase production."
Plant throughput at both operations rose by a record 30% year-over-year during the second quarter.
For the year to date, combined metal production increased 6% from a year ago to 1.17 million silver equivalent ounces, and the company said it is expected to increase further in the second half of the year.
In the meantime, exploration drilling at Guanajuato continues, from surface at the San Ignacio area, and underground at the Rayas area. When the analysis of results are complete, the company will proceed with a resource estimate for San Ignacio, expected to be later this year.
Mine development is also underway at Topia, expected to provide additional production in the second half of the year, as well new mineral resources. A new surface program of 7,000 metres has been planned and will start later this month, once the rainy season has brought much needed water to the area.
Yesterday, Global Hunter Securities initiated coverage of Great Panther with an ‘accumulate’ rating and US$4.25 share price target, describing the silver producer as an attractive investment thanks to its liquidity, excellent leverage to the silver and gold price and organic growth strategy.
Last month, Great Panther was added to the Russell Global Index. Russell Investments offers performance benchmarks and has about $161 billion worth in assets under management as of March 31, serving individual, institutional and advisor clients in more than 35 countries.