Great Panther leaps on new resource, silver price (March 28, 2011)

Positive exploration and development news from its two silver mines in Mexico and a 30-year-high silver price have helped Great Panther Silver (GPR-T, GPL-X) achieve an all-time share price high.

Last December the company issued its first reserve estimates for the underground Guanajuato mine, named after the state in which it sits, with 320,200 proven and probable tonnes grading 282 grams silver per tonne and 2.19 grams gold per tonne for 4.4 million eq. oz. silver.

Total resources at Guanajuato were 399,000 measured and indicated tonnes grading 2.1 grams gold and 287 grams silver, and 212,000 inferred tonnes of 4.39 grams gold and 106 grams silver. Despite production losses, the resource represented a 53% increase over the previous estimate thanks in part to the company’s addition of the Los Pozos and Santa Margarita veins to the resource.

In late January the company announced that it had extended mineralization at Guanajuatito from the 80-metre mining level down to the 245-metre level. The company has identified what it calls the Veta Madre zone and a slightly deeper Footwall zone, with widths ranging from less than a metre to 4.6 metres. Demonstrating the range, hole 10-8 hit 0.61 metre grading 8.52 grams gold and 1,300 grams silver while hole 10-9 cut 3.59 metres carrying 0.87 gram gold and 241 grams silver. The company’s best hit at the 245-metre Footwall zone cut 1.72 metres averaging 2.77 grams gold and 839 grams silver.

Meanwhile at the company’s Topia polymetallic mine in Durango state, a new resource has added 36% to the measured and indicated category and 109% in the inferred. As with Guanajuato, the increase has come largely thanks to the addition of more veins to the resource.

Topia’s measured and indicated resource now stands at 171,000 tonnes grading 864 grams silver, 1.56 grams gold, 7.53% lead and 4.37% zinc, for 7.44 million silver equivalent oz. In the inferred category, the resource came in at 285,000 tonnes of 868 grams silver, 1.5 grams gold, 6.5% lead and 3.7% zinc for a further 11.91 million silver equivalent oz.

“We have consistently increased the resource base with every drill program while increasing production at the same time,” stated Robert Archer, president and chief executive of Great Panther, in a news release.

Production in 2010 was 2.3 million silver equivalent oz., up 2% from 2009. The company focused on extending mine life with 27,000 metres of drilling, and laying the groundwork for future production increases with equipment and plant upgrades. By 2012 the company wants to achieve production of 3.8 million silver equivalent oz. 

The company is paying for its $57-million exploration and development work with revenue from its producing mines, having not financed since a $12-million raise in late 2009. Great Panther did, however, recently settle $4.05 million worth of 8% unsecured loan notes from 2007 by issuing 1.8 million shares at $2.25. The move eliminated the company’s long term debt and will give it about 123 million shares outstanding or 133 million fully diluted.

Great Panther’s work in recent months has coincided with a rise in the silver price from around US$18 per oz. last August to a high of US$36.60 per oz. in early March.

Combined, the two drivers have helped propel Great Panther’s share price from around 75¢ last August to a trading high of $4.90 after the Topia resource was released. On the day of the release alone, the company’s share price climbed 43¢ or 9.8% on 4.7 million shares traded to close at $4.82.