Great Panther Silver (TSE:GPR) (NYSE MKT:GPL) has had its Buy rating reiterated by analysts at Rodman and Renshaw, who set a price target of US$1.10/share.
In a note to investors dated July 14, analyst Heiko F. Ihle saw outperformance at Great Panther’s Guanajuato Mine Complex (GMC) where total metal production during Q2 2015 reached a record 818,841 silver equivalent ounces (Ag eq oz), representing respective increases of 15% and 74% compared to the first quarter of 2015 and second quarter of 2014.
The US$1.10/share price target is based on long term silver and gold respective prices of US$17.50 and U$1,200 an ounce: “Our model now reflects slightly higher grades for 2015 as the firm has shown the ability to institute strong grade control practices. Moreover, given the expected cost improvements as a result of increased grades and strong balance sheet, we believe Great Panther remains well positioned to weather the current downturn precious metals prices,” Ihle said.
The analysts also noted Great Panther’s increased production guidance for 2015 to 3.8 to 3.9 million Ag eq oz from 3.5 - 3.6 Ag eq oz. after achieving record production of over a million Ag eq oz. in the second quarter of 2015 at its Mexican silver operations.
As Great Panther has focused its drilling activity in the Valencia area of the GMC, Ihle expects “an updated resource at Valencia to be completed in 3Q15 and believe the area could serve as a source of additional near-term production.”
Overall, the analysts were impressed by the combination of higher grades of 233 g/t silver and 2.49 g/t gold, a significant improvement over 1Q15 grades of 177 g/t silver and 1.92 g/t gold. Along with lower tonnage, this should improve Great Panther cost structure in the second quarter with related metrics to be published in early August.
The favorable cost structure prospect, based on increased grades and a strong balance sheet, suggests Ihle, will also allow Great Panther to weather the current downturn precious metals prices.