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Monday, June 20, 2011 7:22:26 AM
Guanajuato and Topia will never become major silver producing mines, rather they will always be smaller operations. For Great Panther to grow production even more, they are going to have to make acquisitions. The company though isn’t very large in terms of market cap, only about $400 million, so they are limited to what they can buy. However, Endeavour Silver has property adjacent to Great Panther’s complex of mines at Guanajuato as well as San Ignacio. Since Endeavour has a larger market cap, it’s possible that Endeavour would acquire Great Panther. I’m sure the two companies have probably discussed joining up, since nothing has happened yet though maybe the two will remain independent.
Speaking of San Ignacio, Great Panther hit some very impressive drill holes, but the discrepancies in the retested samples have hurt the stock. Investors will have to wait and see if there is actually very high grade silver located in this past producing mine. If there is then the mine could be put into production in the short term.
Great Panther had an impressive first quarter in terms of earnings, and is trading at a forward p/e of 12 using those earnings. For a company increasing production by 30% in the next year, coupled with their estimated cash cost under $6 per ounce of silver, the stock is a good bargain. That is also using $35 per ounce silver, if silver can increase again to $50 then Great Panther would have a p/e in the single digits. Of course there are still risk. For starters the issue at San Ignacio has slightly hurt the credibility of the company, and silver might go down to $20 instead of $50. Assuming that the company delivers on production and cash cost, and silver doesn’t go down to $20, then the stock price should increase substantially.
http://goldstocksdaily.com/2011/06/19/great-panther-silver/
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