|Great Panther Has Ambitions To Become A Leading Primary Producer Of Silver With Its Recent Deals -- GPR.v|
Date: July 27, 2005
Great Panther Has Ambitions To Become A Leading Primary Producer Of Silver With Its Recent Deals
It took Canadian listed Great Panther Resources quite a time to buy the Topia silver-lead-zinc mine in Durango, Mexico, but it is often better to risk losing a project than spend the rest of one’s days regretting an unwise purchase. The whole process started at the beginning of 2004 when the company acquired a private Mexican company called Minera Mexicana el Rosario, which had options to acquire Topia as well as the San Antonio gold exploration project in the state of Chihuahua. At the time the owner of Topia was planning to put the mine back into production on a small scale within a few months.
The Topia mining district has a long history going back to the first discovery of silver in 1538. The first major development, however, was not until 1950 when Penoles, Mexico’s biggest silver miner consolidated the ownership, built a road and constructed a mill. The mine was then operated until 1989 when it closed due to union problems. It was then sold to a former mine manager who kept operations going on a small scale until 1999. During the whole of this period production exceeded 15 million ounces of silver, 18,500 ounces of gold, 106 million lbs of lead and 98 million lbs of zinc. The Topia mine therefore includes a mill and complete mining infrastructure capable of treating 200 tonnes a day.
Great Panther spent a lot of the time on a drilling programme which confirmed that that the Topia property had potential to host additional resources. Now that it is satisfied with that, it is going to clean up the mill before moving on to carry out industrial scale tests on reprocessing the old tailings heap. Records handed down by Penoles estimated the inferred resource of the tailings at 1 million tonnes at 70 g/t silver, 0.4 g/t gold, 0.3% lead and 0.7% zinc. The recovery potential, apart from lead, was thought to be at least 75 per cent and the author of the evaluation advised that it should be examined for early cash flow while the mine reserves were being developed for full scale mining.
There is a sensible each-way bet as, if the tailings prove uneconomic, the company will simply get on with underground mining from the Don Benito level. In the first three months of this year the mill was operated at only 25 per cent of capacity to treat ore grading 710 g/t silver, 5.5% lead and 6.0% zinc from this part of the mine. In new hands, and with Great Panther flush with cash after some recent fundings to raise around C$6 million, it should not be many months before production is raised to capacity especially as one of the mine’s former managers when it was owned by Penoles, Jesus Rico Aguilera, has joined Great Panther as mine manager. According to him silver grades were running as high as 1,000 g/t silver at the mine on occasions.
At the same time the company has signed a letter of intent to acquire the famous Metalica Metalurgica Sante Fe mines from the local mining co-operative in Guanajuato which have a history going back to 1548. At one time in the 1700s the mines were said to be producing one third of the world’s then production of silver. Hopefully the deal will not take as long to complete as Topia, but again Great Panther is buying a mill and infrastructure as well as the mines. According to the company the mill was working until recently at only 20 per cent of its full 1,200 tonnes/day capacity and the property covers over 1,000 hectares in 3 blocks with the main block having 3 working shafts, 4 internal shafts and hundreds of kilometres of underground workings.
Due diligence is currently in progress and, again, Great Panther will have to refurbish and improve the mill and clean out the old workings as the mine has been operated for some time with no working capital, poor mine planning, no defined ore reserves and an inefficient mill. The potential is there, however, for a very profitable operation on resources currently estimated at 24 million ozs silver and plenty more to come in and around the mines. Provided the deal goes through once the current financing is out of the way the company could be re-starting production and working on a new resource definition at Guanajuato before the end of this year.
Add to that the fact that the plan for next year is to develop new stopes at Topia in order to support increased production and expanded throughput at the mill and it is easy to see why Union Securities has stepped up to the plate to raise gross proceeds of C$4.5 million by way of a brokered private placement. This placing has tended to put the share price on hold for a while and it will be interesting to see how it reacts when the full impact of the Guanajuato deal and the exploration potential of the Great Virimoa gold project in Durango and the San Antonio gold-copper project in Chihuahua are taken into account by investors.