Great Panther closes deal and rolls up sleeves

Great Panther Resources (GPR-V) has taken possession of the Guanajuato mine in Guanajuato, Mexico, some 380-km northwest of Mexico City.

The Vancouver-based company announced on Monday Dec. 19 that it received the title transfers for a 100% interest in the mining concessions and surface rights.

In Toronto, its shares closed roughly 4% higher, or up 4 to $1.09 on about 230,000 shares.

Great Panther signed a purchase agreement on Oct. 25 requiring it to pay an instalment of US$2.2 million when it took hold of the assets. It has thus far paid US$3.65 million of the US$7.25 million total purchase price. Four more payments must be made by November 2006.

The acquisition includes 11 sq. km in two main properties, as well as the mill plant, workshop administration facilities, mining infrastructure, and mining equipment.

Years of neglect at the mine — it has been run by a workers co-op founded in 1939 — mean that Great Panther has its work cut out for it. The company says, as with many Mexican mines, the operation has had little working capital in recent years. No holes have been drilled since 2000, with the result that no reserves have been defined, and no systematic mine plan is in place.

The on-site plant needs repairs and the company is assessing whether the current flotation system is the best for recovery. Modifications to the plant flow sheet will be made prior to undertaking major repairs of the existing circuit.

Great Panther’s engineering department is on-site, developing a new mine plan and evaluating various areas of the mine for near-term production potential. Meanwhile, the geology department is working to establish a new resource compliant with National Instrument 43-101.

The current property owners established a resource of 2.75 million tonnes grading 1.56 grams gold per tonne and 176 grams silver per tonne — a total of roughly 24 million oz. silver. This is a historical figure, and not compliant with NI 43-101.

On Dec. 1, the company announced results from its first drilling program at the property. Six holes were drilled for a total of 1,163 metres. Highlights of the program include 5.8 metres of 692 grams silver per tonne and 5.17 grams gold per tonne, and 2.5 metres of 1,096 grams silver per tonne and 4.15 grams gold per tonne.

The main claim block covers more than 4 km of strike length and contains three mines with a total of 25 shafts, four winzes or internal shafts, and over 100 km of underground workings. The main shaft at each of the mines is operational, hoisting ore up a central shaft to the mill plant. The mill has a capacity for 1,200 tonnes per day although it is currently operating at only 20% capacity.

A fourth mine nearby is closed, but the company says its potential will be examined.

Great Panther has set up a new IT department in order to compile data at the mine. It will be used for creating a new set of level plans and sections and eventually, a three-dimensional model. It plans to have the mine back in production in 2006.