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Great Panther Mining: Industry-Lagging Margins Expected In FY2021

Taylor Dart profile picture
Taylor Dart


  • Great Panther Mining released its Q4 and FY2020 results on Thursday, reporting annual production of ~150,100 gold-equivalent ounces.
  • This increase in annual production combined with higher metals prices translated to significant growth in free cash flow and a return to positive annual earnings per share.
  • However, while it was a solid year overall, we've seen a much softer outlook for FY21, with costs expected to rise to some of the highest levels in the industry.
  • Therefore, I believe there are much better bets out there in the sector, especially when factoring in that we still don't have clarity on whether GMC will be in production in H2 2021.

We're more than two-thirds of the way through the Q4 Earnings Season for the Gold Miners Index (GDX), and the most recent name to report its results is Great Panther Mining (GPL). Due to a strong performance from its Tucano Mine, Great Panther managed to increase metals production year-over-year, despite shutdowns in Mexico, which impacted operations. This allowed Great Panther to return to positive annual earnings per share [EPS], and the company posted its second quarter in a row of positive free cash flow. However, the FY2021 outlook is quite soft due to higher stripping at Tucano, and risks remain at Guanajuato, with no permits yet for tailings storage. Therefore, I believe there are much better bets elsewhere in the sector.

(Source: Company Presentation)

Great Panther Mining released its Q4 and FY2020 results last week and reported quarterly production of ~37,000 gold-equivalent ounces [GEOs] and annual production of ~150,100 GEOs. The quarterly figure was quite soft due to much lower grades at Tucano and a five-week suspension at its Topia Mine in Mexico. Fortunately, the Tucano Mine's strong performance in Brazil more than offset the weakness at the Mexican operations, allowing the company to post a 2% increase in output on a year-over-year basis. This translated to significantly lower costs for Great Panther, though all-in sustaining costs [AISC] of $1,328/oz were still well above the industry average of ~$1,010/oz. Let's take a closer look at the results below:

(Source: Company Filings, Author's Chart)

As shown in the chart above, Great Panther had an opposite trend from many miners in the sector, with relatively high Q2 production and Q4 production being one of the weakest quarters of the year. As noted earlier, this was due to a five-week shutdown at Topia to curb the spread of COVID-19 and lower grades from Tucano. If we look at

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Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, new positions I am entering/exiting, and proprietary sentiment indicators for gold miners in my newsletter below.  Returns Link: https://imgur.com/a/6fcWjD6Subscription Link: https://buy.stripe.com/3cseV37nl9Y7dUcaEI - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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Comments (14)

doctorslernon profile picture
Sold out but a drop under 70 cents would tempt me to come back in. Guidance still sucks though.
Brian Cellars profile picture
Thanks for the update. It's been a nice consistent trade buying at $1 CAD and selling over $1.20. I haven't re-bought yet but likely will with the sector potentially turning around.
matt.wood profile picture
80c anyone tempted to buy yet?
Why do you repeatedly dedicate so much attention and pub to what you characterize as a lesser peer? Unless, you are shorting it.
Taylor Dart profile picture
If you want to understand a sector well, you cover as many companies as possible to fully gauge health of sector, how certain companies are valued, etc. What you call dedicating so much attention, I call minimal attention and being productive.
doctorslernon profile picture
Sold out of GPL after these earnings. Looking weak for next year and alot could go wrong.
I examined many miners. Of all the companies in production, Great Panther had the lowest ratio of market capitalization to gold equivalent ounce production (divided by 1000) for 2021 and into the foreseeable future. 

The ratio for GPL was only 1.88. In contrast, KL was 6.52.

Other bargains I uncovered were GSS at 1.97, EQX at 2.96, and KGC at 3.35.
Taylor Dart profile picture
Strong correlation between costs to produce and ratio. HMY is near 1.50 as well, but it’s because it’s making $350/oz at $1,600/oz gold while KL makes double or $800/oz.
@Taylor Dart

Even a cursory examination of some of the basic numbers, leaving aside the large reserves of KL vs the dwindling reserves of GPL, and regular KL dividends vs. regular share dilution from GPL tells us:

KL is also priced accordingly at roughly $34/sh. GPL is a penny stock trading at 1/40th cost/sh. (also priced accordingly in my opinion) Factor in the total outstanding shares of 267M vs 352M for GPL plus the fact that GPL has managed to accumulate debts equal to its cash position vs KL which is sitting on more than 3/4 of a Billion in cash with insignificant debts and what do I come up with?

It's not rocket science: PP GPL management equals PP GPL performance equals pp GPL share prices.

In my opinion, the entire senior management "team" and board of directors should be fired for gross incompetence. The fact is that one would be hard pressed take what was once a rock solid, debt free company, and do a better job of running it into the ground even if you were doing so on purpose. You don't suppose.....Nah, couldn't be...

for the record: I am a long time share holder. I have NEVER shorted this stock. (clearly I should have...)
Frankthetank007 profile picture
@ddearborn are you actually comparing a 10 billion dollar company too a 275 million company? If you actually followed the company you would realize that they have 64 million cash and 38 million in debt. Go read the up to date financials. THe company is doing well now and has had a new CEO since last april and he turned the company around. You can crap on the old management but what beef do you have with Henderson?
Frankthetank007 profile picture
8th straight article cutting up great panther. Always good to hear that your consistent. I would expect GPR’s silver production to surprise on the upside in 2021 in production and price of silver received. GPR is a great value and will go up if the metals go up.
Taylor Dart profile picture
@Frankthetank007 Looks like the 8th straight article was right. You were correct on great value, a "great value" trap.
Prodigy Disc Golf profile picture
Thanks for the right up
This is one of my spec plays
Not doing great though
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