Here’s Why Great Panther Silver Is Soaring

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Executive Summary

  • Silver and gold prices are on the rebound in 2014 and strong company’s stocks in the sector are beginning to respond.
  • Great Panther Silver’s stock was crushed in 2013 with the selloff in metals, but managed to put up record numbers for the year.
  • The 2014 outlook for the company is incredibly strong with record production anticipated and production costs being slashed as much as possible
  • The stock is technically breaking out as resistance has been surpassed and the stock is now back above the $1.00 mark.

Silver and Gold prices are on the mend, and that bodes very well for some of the stronger gold and silver companies. Great Panther Silver (NYSEMKT:GPL) is primarily a silver mining and exploration company with operational activities currently focused on the mining of precious and base metals from its wholly owned properties in Mexico. It is also pursuing acquisition opportunities throughout Latin America to add a third mine to its portfolio of properties. Great Panther Silver has two primary mining properties, the Topia mine and the Guanajuato mine. Great Panther Silver also owns a development stage property, San Ignacio, which is approximately 20 kilometers from its Guanajuato processing plant, and an exploration stage property, Santa Rosa, which is located approximately 15 kilometers northeast of Guanajuato.

Great Panther Silver has a 100 percent interest in the El Horcon Silver/Gold Project in Jalisco State. El Horcon covers 7,908 hectares in 17 contiguous mining concessions and is located 60 kilometers northwest of Great Panther Silver’s Guanajuato Mine Complex. One advantage of the close proximity is that it is within trucking distance of the Cata Processing Plant. Great Panther Silver’s CEO Robert Archer acknowledged this, saying that it “has excellent potential to be a satellite mine for our Guanajuato Operations.” For more on the properties the company owns, please see this article.

Fantastic 2013 Numbers

Great Panther Silver’s ore processed increased 23 percent over 2012 to a record 283,608 tons. It achieved record metal production of 2,840,845 silver equivalent ounces (or, Ag eqoz), which was an increase of 19 percent over 2012 and a new annual record. Actual silver production rose 10 percent to a record 1,711,215 oz. Furthermore, gold production increased 44 percent to a record 15,714 gold ounces. The fourth-quarter was strong for GPL compared to Q4 2012. Ore processed increased 3 percent to 69,601 tons while total metal production increased 14 percent to 763,881 Ag eq oz. Actual silver production in the quarter rose 7 percent to a record 484,936 oz while gold production increased a whopping 37 percent to 3,880 ounces.

Another Record Year for 2014

I am very pleased with Great Panther Silver’s outlook for 2014. The company sees overall metal production for 2014 increasing gradually through the year as their San Ignacio project comes on stream. The project is expected to start production in the first half of 2014 at a rate of about 100 tons per day, ramping up to approximately 250 tons per day by year-end.

Production will remain steady at the flagship Guanajuato Mine Complex and the reliable Topia Mine. In fact, the Great Panther Silver expects to increase overall production by approximately 10 percent in 2014, to 3.1 to 3.2 million Ag eq oz. silver and gold prices dropped significantly in 2013, Great Panther Silver has heightened its focus on improving and strengthening the operational efficiency of its mines. Cash cost guidance will be provided in the company’s year-end earnings release, expected in early March.

Technical Breakout

Please see the chart of the price of Great Panther Silver for the last year. As you can see, it was a tough 2013. However, the company has challenged the resistance of $0.88-$0.92. The stock finally broke through the resistance and is back trading over $1.00 ($1.0050 at the time of this writing). Silver prices have rebounded about 13 percent in the last few months while Great Panther Silver is now up 50 percent in that time frame, blasting through resistance. Its next resistance point is now at $1.21 where it failed to breakthrough in late summer 2013. This represents another 21 percent upside from current levels. Should silver prices continue to inch higher, the company should rise in tandem. If it can break through $1.21, the stock doesn’t encounter resistance until $1.55, or another 55 percent appreciation from current levels.

Figure 1. Share Price of Great Panther Silver Over the Last Year With Resistance Areas Shown

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Conclusion

The year 2014 is projected to be even stronger than 2013 as new projects come on line. The company has taken appropriate steps to ensure profitability. In 2014, silver and gold prices have begun to rise and Great Panther Silver has been an excellent levered play. The stock not only has fundamentals behind it, but is also breaking out technically. This stock appears to have found its ‘greatness’ once again after being clobbered down from the $2.00 level (like most gold and silver stocks.) With fundamentals on its side and technical supporting a run, the company is looking like a strong buy with over 20 percent upside to next resistance. Of course, investors must watch metals prices as strong declines in silver and gold will impact Great Panther Silver. Overall, I think it is a very strong pick for 2014.

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