GREAT PANTHER MINING Ltd

The end. The court terminated the CCAA proceedings and Great Panther made a voluntary assignment into bankruptcy on 16 December, with Alvarez & Marsal appointed trustee and now exercising the company's rights as shareholder of its subsidiaries; directors Alan Hair, Joseph Gallucci, Trudy Curran and John Jennings resigned beforehand. Mina Tucano stays in Brazilian judicial reorganisation and funding to the Peruvian companies has stopped. Three years and nine months after the Beadell deal made Tucano the cornerstone, the parent no longer exists as a going concern.

bankruptcy or receivership

Terminated the share purchase agreement with Newrange for the Peruvian subsidiaries; the conditions, including TSX Venture approval and evidence that Newrange could fund it, were never met. Coricancha, in care and maintenance for the whole five years Great Panther owned it, could not be sold even for US$750,000.

material agreement termination

The BC Securities Commission issued a failure-to-file cease trade order dated 18 November after the company missed the 14 November deadline for its third-quarter accounts, and the company told the regulator and the monitor it would not be able to continue public disclosure at all. From here the record moves to the monitor's court filings rather than to shareholders.

listing compliance notice

The court approved a sales and investment solicitation process covering Great Panther and most of its assets including Mina Tucano, with RBC Capital Markets as sale adviser and a roughly twelve-week two-phase marketing period. This is the point at which the restructuring became an auction of the company rather than a plan to keep it.

bankruptcy or receivership

The Supreme Court of British Columbia converted the proceedings from the Bankruptcy and Insolvency Act to the more flexible CCAA on 4 October, with a stay only to 14 October and Alvarez & Marsal as monitor. The court also approved an agreement keeping refiner Asahi in place so Tucano's gold can still be sold - a company now managing week to week.

bankruptcy or receivership

The TSX confirmed delisting effective 27 October, completing the loss of both listings within six weeks of the insolvency filing. The release notes that shareholders retain their legal rights and equity interest and points them to over-the-counter trading.

listing compliance notice

Signed a non-binding letter of intent to sell both Peruvian subsidiaries, and with them the Coricancha mine, to Newrange Gold for US$750,000 in cash - subject to the proposal trustee and the court. Great Panther paid US$0.1 million plus an earn-out for Coricancha in 2017 and spent five years and a US$25 million restart plan on it without ever reopening the mine.

material agreement

NYSE American determined to delist the shares because of the insolvency filing and halted trading from 13 September; the company chose not to appeal, and a Form 25 would follow. Whatever market remains is OTC Pink, which the company itself warns may offer far less liquidity.

listing compliance notice

Brazilian subsidiary Mina Tucano and its two Beadell shareholders filed for judicial reorganisation in Rio de Janeiro, remaining in control of their assets under court protection from creditors. The TSX suspended trading and began an expedited delisting review, and NYSE American began delisting proceedings.

bankruptcy or receivership

Filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act, giving an immediate 30-day stay against creditors. The board states plainly that the company is likely to default on several material debtor agreements for lack of liquidity, blaming the previously disclosed operational problems, cost inflation, unplanned capital spending and contractor mobilisation delays, and authorises management to convert into CCAA proceedings if that suits better. Four weeks after selling Mexico, the money from that sale was not enough.

bankruptcy or receivership

Sold the whole Mexican business - the Guanajuato Mine Complex, Topia, El Horcon and Santa Rosa, held through Minera Mexicana El Rosario - to Guanajuato Silver for US$8.0 million cash plus about US$1.35 million of working capital adjustment, 25,787,200 GSilver shares worth about US$8.9 million at closing, and up to US$2.0 million of contingent payments tied to 2.5 million ounces of production and to silver reaching US$27.50 and US$30.00. About US$3.45 million of the proceeds went straight to repaying the Samsung lead concentrate prepayment. The company that began as a Mexican silver miner has sold every Mexican asset it ever had.

asset acquisition disposition

Announced a one-for-ten share consolidation to cure the NYSE American price deficiency, cutting 471,164,174 shares to about 47,116,417 with matching adjustments to options and share units, effective 21 July and trading on the new basis from 25 July.

security holder rights change

NYSE American notified the company it had breached the continued listing standard for a low share price, its 30-day average having fallen below US$0.20, and required sustained improvement above that level by 6 December 2022 or a reverse split. The TSX listing was unaffected, and shareholders were to vote at the June AGM on giving the board discretion to consolidate.

listing compliance notice

The Tucano technical report itself, effective 31 July 2021. It shows the shape of the problem: open-pit reserves of about 9.2 million tonnes at only 1.16 g/t gold against underground reserves of 2.16 million tonnes at 4.13 g/t, so the mill's bulk feed is low grade and the high grade sits in an underground project not yet built.

resource reserve update

Both Mexican mines shrank. Topia's measured and indicated resource fell 25% to 11.1 million silver-equivalent ounces against the 2018 estimate, even though grade rose 8% to 1,041 g/t silver-equivalent, and the Guanajuato Mine Complex fell 36% to 7.7 million ounces against the 2020 estimate at a grade 2% higher. Higher grade on far fewer ounces means the reporting cut-off moved, not that the mines improved.

resource reserve update

The quarter the operating story broke. Tucano's cash cost jumped to US$1,801 per gold ounce sold from US$712 a year earlier and all-in sustaining cost to US$2,247 from US$1,023, on lower grades from blending stockpiled ore, poorer recoveries and the end of capitalising Urucum stripping. With an average realised gold price of US$1,780 an ounce, cash cost alone exceeded revenue per ounce; mine operating earnings fell US$39.0 million year on year and the quarterly net loss was US$18.0 million.

quarterly activities report

Tucano's geotechnical committee required more remediation at Urucum Central South, so ore mining there was suspended again and a new pushback of the west wall began, estimated at six to eight weeks. Vertical drains were expected by late November, and the company expected lower production and higher costs.

production update

The first crack at Tucano. Rainfall well above average raised water levels in the west wall of the Urucum Central South pit, movement was detected, and mining there was halted; the mill has to run on Urucum North ore and stockpiles instead. 2021 guidance is cut by 10,000 ounces to 125,000-140,000 gold-equivalent ounces, with UCS mining expected to resume in the third quarter.

production update

Filed the technical report supporting December's Tucano reserve update, effective 30 September 2020, and set out a record 2021 exploration budget of US$13 million for 90,000 metres of drilling under new chief executive Rob Henderson. The reserve position depends on that spending continuing.

resource reserve update

Filed the technical report for the Guanajuato Mine Complex resource announced on 23 November 2020, effective 31 July 2020: measured and indicated of 10.2 million silver-equivalent ounces, up 17%, at a silver grade 10% higher at 199 g/t, and inferred more than doubled to 18.1 million ounces on success at Los Pozos and Purisima.

resource reserve update

The rebuild worked, at least for one year. Tucano's proven and probable reserves are 629,000 gold ounces at 30 September 2020, essentially flat on the 646,000 ounces of a year earlier, which means the drilling replaced everything mined. Measured and indicated resources are 953,000 ounces, with the open-pit portion up 28% to 561,000 ounces, and inferred resources are 534,000 ounces - all from drilling only about two kilometres of a seven-kilometre trend.

drilling progress report

Early results from a 55,000 metre, US$6.6 million drill program at Tucano, 12,000 metres in with three rigs: 29.4 metres at 15.99 g/t gold in hole DD018 and 16.7 metres at 10.96 g/t gold in hole DD009 at the TAP AB1 and AB3 pits. The company is spending heavily to rebuild the reserve it wrote down in March, and says the results will go into a revised statement in the fourth quarter.

drilling result

Closed the raise at US$16.1 million after the underwriters took the full over-allotment, issuing 40.25 million shares at US$0.40 with a 6% commission. Proceeds are earmarked for Tucano exploration and improvements rather than for the Mexican mines.

capital raising announcement

A further bought deal, 25 million shares at US$0.40 for US$10 million, led by Cantor Fitzgerald Canada and BMO. The price is a little over half the US$0.75 charged nine months earlier and a quarter of the 2016 unit price, with Mexican operations suspended for COVID-19 at the time.

capital raising announcement

The point where the Beadell deal starts to look expensive. Great Panther's own first reserve estimate for Tucano, prepared with RPA and effective 30 September 2019, cut reserves to about 646,000 gold ounces - roughly 489,000 ounces below the June 2017 figure it inherited even after allowing for mining - and took another 500,000 ounces off resources. In Mexico, Guanajuato added 1.5 million silver-equivalent ounces to reach 3.7 million while sitting on care and maintenance since December 2018, San Ignacio fell 6.4 million ounces to 5.0 million mostly through depletion, and Topia faces a possible shutdown because tailings deposition has had to stop at its existing storage facility.

resource reserve update

A second, larger prepayment a week later: US$11.25 million from Samsung C&T UK against roughly 3,000 ounces of Tucano gold dore a month for two years, sold at a 0.65% discount to benchmark, at three-month LIBOR plus 5% and secured by a pledge of all the equity in the Brazilian subsidiary that owns Tucano. Pledging the cornerstone asset's shares is a materially harder security package than the IXM deal.

debt financing

Raised US$10 million from metals trader IXM as a prepayment against all Guanajuato Mine Complex gold-silver concentrate for 2020 and 2021, repayable on 31 December 2020 at three-month LIBOR plus 5% and guaranteed by the parent. It is borrowing secured on future output rather than equity, with no gold or silver hedging attached.

debt financing

Tucano's recovery problem eased after a supplemental liquid oxygen system was commissioned at the end of April: July milled 266,357 tonnes at 1.56 g/t gold with 93.5% recovery for 12,497 ounces, against 254,700 tonnes at 0.98 g/t and 87.6% recovery for 7,020 ounces in April. Three consecutive months of improvement heading into the drier, more productive second half.

production update

Bought-deal equity raise of 20 million shares at US$0.75 for US$15 million, led by Cantor Fitzgerald Canada, with insiders and employees taking about US$525,000. The price is less than half the US$1.60 unit price of the 2016 bought deal, so the same amount of money now costs far more of the company.

capital raising announcement

First exploration drilling at Tucano since the acquisition returned genuinely high grades under the TAP AB3 pit: 15.35 g/t gold over 13.55 metres (including 30.94 g/t over 5.35 metres) in hole 19TABDD001 and 13.00 g/t gold over 25.50 metres (including 63.40 g/t over 5.00 metres) in hole 19TABDD010, from 10 of the first 12 holes. Widths and grades of this order underpinned the case that Tucano's mine life could be extended below the existing pits.

drilling result

Bought back all of Beadell's senior secured debentures due June 2023 for US$10.5 million plus accrued interest, a month after closing the acquisition. Every holder accepted the offer made under the indenture, clearing the inherited secured debt but using cash the enlarged company would soon need.

debt financing

Closed the Beadell acquisition and became Great Panther Mining Limited. Combined 2019 guidance is about 200,000 gold-equivalent ounces, most of it from Tucano, so a silver company with two small Mexican mines is now principally a Brazilian gold producer. Beadell's former chief executive Nicole Adshead-Bell joins the board.

business combination

The Supreme Court of Western Australia gave final approval on 15 February and the scheme became effective on 18 February, leaving only mechanical closing steps. At this point Great Panther still described itself as a primary silver miner with two Mexican mines and an undecided restart at Coricancha.

business combination

Great Panther shareholders approved the Beadell acquisition and the change of name to Great Panther Mining, with 96% of votes cast in favour of the scheme resolution.

business combination

Lent the target US$5 million before owning it: a non-revolving term loan to Beadell and Beadell Brasil at 14% a year maturing 15 January 2019, for working capital, repayable immediately out of any Brazilian PIS/COFINS tax refunds. Beadell needed cash to reach closing, which is the first concrete sign that the cornerstone asset was tight for money.

debt financing

Settled the biggest condition on the Beadell deal: contractor MACA agreed to consent to the change of control rather than call its A$54.7 million loan, and to leave it outstanding to June 2022. The trade-off is mixed - the cash sweep on new financings drops from 30% to 10% and MACA's conversion right is capped at A$15 million, but scheduled 2019 principal repayments rise from A$12.0 million to A$16.5 million. Management also states plainly that Tucano faces a lower-grade profile in the first half of 2019.

business combination

AMC's independent technical report on Tucano, prepared to support the Beadell acquisition circular: proved and probable reserves of 24.5 million tonnes at 1.79 g/t gold for 1.41 million ounces as at 30 June 2017, at assumed gold prices of US$1,200 an ounce open pit and US$1,120 underground. AMC flags that 2017 reconciliation work is likely to change the resource and reserve modelling parameters at the next estimate - an early warning about the asset Great Panther was about to make its cornerstone.

resource reserve update

Agreed to buy ASX-listed Beadell Resources by scheme of arrangement, issuing 0.0619 Great Panther shares per Beadell share - about 103.6 million new shares, valuing Beadell at roughly A$144 million (US$105 million) and a 51% premium to its last close. It is by far the largest deal in the company's history: Beadell's Tucano gold mine in Brazil produced 130,000 ounces in 2018 against Great Panther's own 4.0 million silver-equivalent ounces, and Beadell holders would end up with 38% of the combined company. Tucano, not the Mexican silver mines, becomes the cornerstone asset.

business combination

Preliminary economic assessment for Coricancha: 608,053 tonnes processed over a 3.75-year life at 768 g/t silver-equivalent, producing 11.7 million silver-equivalent ounces, or about 3.1 million a year, at an all-in sustaining cost of US$12.16 per silver-equivalent ounce. Initial capital is only US$8.8 million (US$32.4 million including sustaining), giving an 81% after-tax return but a modest after-tax net present value of US$16.6 million at a 7.5% discount rate - a short-life, low-capital restart rather than a company-transforming mine. A trial stope and bulk sample program starts in the third quarter, with a restart decision targeted for early 2019.

resource reserve update

Measured and indicated resources at the Guanajuato Mine Complex nearly doubled, up 91% to 13.6 million silver-equivalent ounces, driven mainly by San Ignacio, whose measured category rose 121% to 9.3 million ounces while the older Guanajuato mine added 33% to 1.8 million. After two years of merely replacing what it mined, the complex has genuinely grown, and 24,000 metres of drilling is planned for 2018.

resource reserve update

First Great Panther resource estimate for Coricancha, prepared by Golder: 404,205 measured tonnes at 5.9 g/t gold, 210 g/t silver, 2.16% lead, 3.43% zinc and 0.54% copper, plus 348,554 indicated tonnes at 5.6 g/t gold and 189 g/t silver - about 24 million silver-equivalent ounces of measured and indicated. Tonnes and grades broadly match Nyrstar's 2012 numbers, though the inferred category came down on tighter search parameters, and the estimate is enough to start the engineering work needed for a restart decision.

resource reserve update

Mexico's environmental authority SEMARNAT granted all permits for the new Phase II tailings storage facility at the Topia mine, allowing dry stack tailings disposal under the current operating plan. Construction was to start imminently, and the company said Phase I had enough remaining capacity to continue mining until the switch. This is a positive step for Topia, whose tailings capacity later became a constraint from 2020 per the history.

regulatory community update

Closed the Coricancha purchase effective 30 June 2017, paying US$0.1 million shortly after closing plus up to US$10 million of earn-out, set at 15% of the mine's free cash flow. Great Panther gained a fully permitted 600 tonne-per-day plant in Peru, its first operation outside Mexico.

business combination

After letting the 2015 option lapse and continuing to negotiate, agreed to buy Coricancha outright from Nyrstar for almost nothing up front - US$0.1 million plus the cash in the subsidiary - with up to US$10 million payable later as 15% of the mine's free cash flow over five years. The real cost is the restart: roughly US$25 million and 12 to 18 months, against a hoped-for 3 million silver-equivalent ounces a year, funded from the more than US$54 million of cash the company then held.

business combination

Bought-deal equity raise of US$20 million: 12.5 million units at US$1.60, each unit being one share plus half a warrant exercisable at US$2.25 for 18 months, underwritten by Cantor Fitzgerald Canada and Rodman & Renshaw with a 6% commission and an over-allotment option for a further US$3 million.

capital raising announcement

Completed the Cangold acquisition announced in April; Cangold shareholders approved it with 99.44% of votes cast and the BC Supreme Court gave final approval on 26 May. Cangold is now a wholly-owned subsidiary and Guadalupe de los Reyes becomes a Great Panther project.

business combination

Took a two-year option from Nyrstar to acquire 100% of the Coricancha mine complex in Peru, 90 kilometres east of Lima and on care and maintenance. This is the first move outside Mexico and follows the company's stated model of buying past-producing mines cheaply and restarting them.

business combination

Signed the definitive agreement to buy Cangold, following February's binding letter agreement, at 0.05 Great Panther shares per Cangold share - about 2.14 million new shares for 42.78 million Cangold shares. The prize is the 6,000-hectare Guadalupe de los Reyes gold-silver project in Sinaloa, with the Plomo project and the past-producing Argosy mine in Ontario coming along; it is a share-funded pipeline top-up rather than an addition to the two producing Mexican mines.

business combination

Great Panther reported a surface drill intersection at the San Ignacio mine of 7.45 metres assaying 1,133 g/t silver and 6.86 g/t gold.

drilling result