Great Panther to implement three-year growth strategy

Investment in new equipment, plant upgrades and an increased drilling budget along with new underground mine development are all part of Great Panther Resources‘ (GPR-T) three-year growth strategy in Mexico.

Capital expenditures for the initiative are forecast to reach roughly $22 million over the next three years, with an additional $14 million in exploration spending. Those sums will be paid for out of internal funds and cash flow.

Under the new plan, underground mine development will exceed 10 km at the company’s Guanajuato mine, 380 km northwest of Mexico City, and 5.5 km of development at the Topia mine, 350 km northwest of the city of Durango.

Plant throughput is expected to approach capacities of 1,200 tonnes per day at Guanajuato and 220 tonnes per day at Topia.

The Vancouver-based company hopes that as a result, annual production at its Mexican mines will climb to about 3.8 million silver equivalent ounces by 2012.

The company says it is already on track to meet or even surpass its 2009 target of 2.1 million silver equivalent ounces and the new growth strategy envisions the production of 2.5 million silver equivalent ounces in 2010; 3 million silver equivalent ounces in 2011; and 3.8 million silver equivalent ounces in 2012.

If those targets are achieved they will represent annual increases of about 20% and a total increase of more than 100% from 2008 levels.

Great Panther also intends to build its resource base at the Guanajuato and Topia operations to support a minimum 10-year mine life.

Using metal prices of US$15 per oz. silver, US$900 per oz. gold, US80¢ per lb. lead and US75¢ per lb. zinc, the company projects annual revenues will exceed $50 million by 2012.

And cash operating costs are anticipated to decrease from existing levels towards US$4 per oz. silver net of by-product credits.

At Guanajuato, the new development will focus on the deep extensions of the Rayas Clavo, the Valenciana mine, the Cata Clavo and the Guanajuatito zone and from new targets in between the major ore bodies along the 4.2 km trend of the Veta Madre structure.

Great Panther started production at Guanajuato in June 2006. The mine, on the outskirts of the colonial city of Guanajuato, the capital of Guanjuato state, is situated in one of the world’s most prolific silver districts.

Great Panther points out on its website that silver was discovered in the district in 1548 and estimates of historic production range from 700 million ounces of silver to 1.5 billion ounces of silver and between 4 million and 7 million ounces of gold.

The company’s three principal mines, Valenciana, Cata and Rayas are situated on the main Veta Madre (Mother Lode) structure that trends northwest-southeast through the district for about 25 km. But silver-gold mineralization can also be found elsewhere in the mine complex parallel to the Veta Madre and as large stockwork bodies on both sides of the structure.

The main claim block covers more than 4 km of strike length along the Veta Madre and contains 25 shafts, four internal shafts and more than a hundred kilometers of underground workings. Each of the three mines has a central shaft and the ore is hoisted up the central Cata shaft where the mill that services the mine is located.

“The Valenciana mine was once said to be the richest silver mine in the world,” the company states on its website. “Bonanza-style mineralization in the Veta Madre structure in this historic mine is still being extracted and is often considered as “direct shipping ore” (to the smelter) as the grades exceed those of the concentrates produced from average ore in the flotation plant.”

At Topia, production will be increased on several of the 10 veins that are being developed. The Argentina, Rosario and San Gregorio veins will provide the largest increases in tonnage.

An estimated total of 65,000 metres of exploration drilling will concentrate on defining resources, looking for vein extensions and testing new targets. Based upon previous experience, the discovery cost per ounce is expected to be about US50¢ or less.

The Topia silver-lead-zinc property is in west-central Durango state, in the heart of the Topia mining district, one of the oldest in Mexico with silver discoveries dating to 1538.

Great Panther estimates that the district produced a total of about 30 million ounces of silver. The production figures recorded from 1952 until 1999 exceed 15 million ounces of silver, 18,500 ounces of gold, 48,000 tonnes of lead and 44,500 tonnes of zinc.

Topia has a measured and indicated resource of 173,103 tonnes grading 552 grams silver per tonne, 0.99 gram gold per tonne, 5.58% lead and 4.83% zinc. In the inferred category Topia contains an estimated 174,562 tonnes grading 633 grams silver, 1.03 grams gold, 5.10% lead and 3.84% zinc.

The estimated total metal content of the resource is about 3.95 million ounces of silver, 7,718 ounces of gold, 25.96 million pounds of lead and 22.77 million pounds of zinc.

Great Panther refurbished the Topia mill in the second half of 2005, commenced production in January 2006, and now the plant operates at about 170 tonnes per day, including some custom milling for local small miners.  

Metal production in the second quarter reached 112,616 ounces of silver, 125 ounces of gold; 513,338 pounds of lead and 594,677 pounds of zinc.

Apart from Guanajuato and Topia, plans are underway to dewater, explore and develop the San Ignacio mine, which has been on care and maintenance since 2001.

San Ignacio is a stand-alone operation in the La Luz district, about 20 km by road from the Guanajuato plant. Surface drilling at San Ignacio and on other targets within the La Luz trend will start as soon as specific targets are identified and permits are in place

On other fronts, but also in Mexico, Great Panther is terminating its option on the Mapimi project in Durango state due to results from a scoping study that indicated low grades and the high capital cost of building a new plant.

“With US$2.2 million in cash payments due over the next 12months just to maintain the Mapimi option, plus ongoing exploration costs, the allocation of those funds to delineating resources at the existing mines is deemed to be a better use of the company’s funds,” the company’s management stated in a press release.

At presstime Great Panther was trading at 78¢ per share. The company has a 52-week trading range of 18¢-$1.25 per share and has 87.13 million shares outstanding.