Great Panther Silver (TSX: GPR; NYSE-AM: GPL) is closing in on a restart of the company’s Coricancha mine – a Cordilleran polymetallic ore deposit located 90 km east of Lima, Peru. Great Panther bought Coricancha from Nyrstar (EPA: NYR) in December 2017. The existing mine has remained unused since a fall in commodity prices forced its closure in August 2013. Restarting production there is crucial to Great Panther’s growth strategy, as silver production from its three Mexican mines – Topia, Guanajuato and San Ignacio – has stagnated since 2015.
On Aug. 2, Great Panther provided further colour on its recently released prefeasibility assessment for Coricancha in the company’s second quarter conference call. The PEA is based on the resource estimate released last December, which pegged total measured and indicated resources at 753,000 tonnes grading 5.78 grams gold per tonne, 200 grams silver per tonne, 2.06% lead, 3.26% zinc and 0.53% copper. That equates to 24.2 million silver-equivalent ounces.
The PEA shows potential for average annual production of 3 million silver-equivalent ounces. The net-smelter return is expected to be US$295 per tonne based on an average head grade of 768 silver-equivalent grams per tonne. Following an initial capital outlay of US$8.8 million, funded by existing cash reserves, Great Panther expects the project to generate US$16.6 million in after-tax net present value resulting in an impressive 81% internal rate of return.
The PEA suggests Great Panther is eyeing a low initial capital outlay and quick payback. “We’re a small company we want to make sure we get this off the ground on the right foot and in a very profitable way,” said James Bannantine, Great Panther president and CEO, during the company’s second quarter conference call. “We believe once we restart the mine and access the underground there will be opportunity to convert more of this resource.”
The next step for Great Panther at Coricancha is an eight-month, 6,000-tonne bulk sample program taken from Coricancha’s Constancia vein. Initial progress reports will be released in the fourth quarter.
“Assuming we have a positive outcome on the bulk sample, that would put us in a position to take the next step of a restart around the first quarter of next year. From that point, the ramp up to full production is about nine months,” Bannantine said.
Production from the company’s three operating mines in Mexico totaled 2.0 million silver-equivalent oz. in the first half of 2018, an increase of 202,000 silver-equivalent oz. from the year prior. All-in sustaining costs per silver-equivalent oz. fell from US$17.48 to US$16.50. Revenue grew US$6 million to US$34 million, while net income fell US$7 million to a net loss of US$3 million.
Shares of Great Panther Silver are currently valued at $1.45 a piece with a 52-week range of $1.42 to $1.86. The company has a $271 million market capitalization.
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