On a conference call this morning, president and CEO Robert Archer said the results were in line with forecasts given lower production and the lower metal price environment, as well as record quarterly output a year ago.
Metal production of 557,667 silver equivalent ounces for the quarter that ended March 31 was down 8 per cent from the first quarter of 2011, but was up 2 per cent from the fourth quarter.
Silver production of 359,526 ounces, down 12 per cent from a year ago, was offset partially by record quarterly gold production of 2,729 ounces - an increase of 18 percent over the first quarter of 2011.
Silver production was up 1 per cent from the fourth quarter, while gold production rose 20 percent on a sequential basis.
Lead and zinc production in the latest period was 202 tonnes and 312 tonnes, respectively, down from 241 tonnes of lead and 345 tonnes of zinc in the first quarter of 2011.
"First quarter revenue was directly in line with our expectations, considering the lower production and metal prices compared to Q1 of last year," said Archer.
"This was also a timing issue for us related to a shipment of concentrate to a new smelter where the revenue will be recognized in Q2 this year.
"With the addition of this new customer, we have secured contracts for the sale of our concentrates for our 2012 planned production."
The company said it expects continued high inventory in the second quarter, as it ramps up sales to this new customer.
Great Panther Silver is a primary silver mining and exploration company focused on its two wholly-owned operating mines in Mexico, Guanajuato and Topia.
The company also owns a development stage property, San Ignacio, which is approximately 20 kilometres by road from its Guanajuato processing plant, and an exploration stage property, Santa Rosa, which is located 15 kilometres northeast of Guanajuato.
Archer said that the company is maintaining its guidance for metal production for the year, and expects a range of 2.5 to 2.75 million silver equivalent ounces, compared to 2.2 million ounces in 2011. Total cash costs are expected in the range of $9.50 to $10.50 an ounce, from $10.84 in 2011.
While first quarter production represented only modest growth over the fourth quarter, the company noted that output for the rest of the year is expected to continue to grow due to improving ore grades and recoveries.
At Guanajuato, ore grades for the first quarter were 213 grams per tonne (g/t) silver and 2.30 g/t gold, a 21 per cent increase over the average for 2011.
Mining of the high grade Deep Cata and the gold-rich Santa Margarita ore bodies have already showed the potential to build on this improvement, Great Panther said, with further expansion of production from these areas planned this year.
Record quarterly gold production in the quarter was on account of the Santa Margarita vein.
The company also said that plant metallurgy has already achieved "record metal recovery" at the operation, and further improvements are anticipated with the addition of the re-grind mill at the Cata plant.
Archer also said that plant capacity is "more than sufficient" to handle any increase in throughput.
The company expects output at Guanajuato to in the second quarter, with growth anticipated to continue in the third and fourth quarters.
Meanwhile, at Topia, production was lower due to a 20 per cent year-over-year reduction in ore grades in terms of silver equivalents.
"While ore grades were down for the quarter, grades improved in March to well above the average for 2011, with new vein developments to support higher grades throughout 2012," Archer said.
Great Panther noted on the conference call that operating results were impacted by the "extreme dry season" affecting central Mexico, resulting in a water shortage, and causing plant capacity to be reduced by almost 30 per cent to 160 tonnes per day during the last month of the quarter.
Custom milling throughput has been reduced temporarily, and any excess ore will be stockpiled for processing later in the year after the rainy season starts, the company said. It expects no plant capacity shortfall for the remainder of the year.
Meanwhile, plant modifications and efficiencies, including additional flotation cells, have been completed to allow for improved metallurgical performance. A Topia resource update is expected in the third quarter.
For the first quarter, the company posted a profit of $4.68 million, or 3 cents per diluted share, versus a profit of $7.01 million, or 5 cents per diluted share, in the year-ago period.
Revenue totalled $13.63 million, down from $15.46 million a year earlier. Total cash cost per silver ounce was $9.05, down from $10.33 in the first quarter of 2011.
Aside from the company's Guanajuato and Topia operations, the company has the San Ignacio development project, where Archer said he does not expect any permitting issues. As soon as "we hit the ore, we can truck that ore to the Cata plant and process it right away," he said.
Since San Ignacio is effectively a satellite of the Guanajuato Mine Complex, located 20 km away by road, and any mineralization extracted from San Ignacio will be processed at the Cata plant, the resource was recently updated to be considered as part of the overall Guanajuato Mine mineral inventory.
The updated measured and indicated mineral resource at the Guanajuato Mine Complex contains 5.649 million ounces of silver equivalent, replacing production from the Guanajuato Mine during the past 18 months.
Archer said the "rolling resource" is common in underground mines where it is difficult and not cost-effective to drill off a large resource.
Inferred mineral resources at the Guanajuato Mine are estimated at 2.5 million silver equivalent ounces.
The new inferred mineral resource at San Ignacio is estimated to contain 6.89 million silver equivalent ounces in 826,000 tonnes averaging 121 g/t silver and 2.28 g/t gold, using a 125 g/t cut-off.
The San Ignacio project continues to grow and will ultimately be processed at the Cata plant at the main complex, thereby significantly increasing the mine life of the Guanajuato operations, Great Panther said.
At San Ignacio, surface drilling is ongoing with two drills, and continues to extend the limits of the known mineralized zones beyond the resource model.
Highlights in the known zones include 2.65 metres grading 533 grams per tonne (g/t) silver and 7.59 g/t gold, and 1.15 metres grading 249 g/t silver and 2.99 g/t gold.
Archer said several hundred tonnes a day are expected to come out of San Ignacio by around 2014, with a ramp up to follow.
Great Panther is also pursuing acquisition opportunities in Mexico and Peru to add to its portfolio of properties.