RE:Mr fire!cyanide5,
I had to chuckle when you about your "little dilution" comment with respect to Great Panther. My understanding is that GPL's float increased from 140 million shares to 164 million shares in that recent $26 million dollar stock offering. But when your stock is trading at over a dollar you can get away with a "little" 19 percent dilution!
The fact of the matter is that these junior silver producers have been so starved for capital that they have nearly all printed shares in the recent run up in the silver price. The only stocks that haven't diluted are GORO and PAAS. The rest have all printed shares: FSM 14 % dilution, ASM 55 % dilution, AG 57 % dilution, and EXK 32 percent dilution.
In the case of Scorpio Mining (now Americas Silver), the number of outstanding shares was constant at 200 million shares prior to the merger with US Silver and Gold. That merger added 100 million shares from USGIF, and Americas Silver received the San Rafael mine in an ALL SHARE transaction. The remaining 200 million shares added since then have been from financings necessary to keep USAPF alive.
On GPL's acquisition of Coricancha Mine in Peru, my question is whether GPL is using profits from a good mine to buy a bad mine? After all, Coricancha is on care and maintenance, and the previous owners had issues with the tailings dam, and the ore is refractory so BIOX is necessary and silver and gold recoveries may be low. Zinc grades are a little over 3 percent, lead at 2 percent, and copper 0.43 percent. Silver grades are 172 grams/t and gold at 5.5 grams/t. My understanding is that it will take $25 million dollars to get that mine up and running, so it may be a great deal or it could be a money sink for the next 12 to 18 months.
On the relative merits of owning GPL versus USAPF at this point in time, why don't we compare GPL's estimated production using Q3 production numbers and current metal prices. I estimate revenues of $13.8 million down from $15.6 million in Q3, and net income of $503,000 USD or $0.003 per share. AISC estimated at $13.88 USD per ounce of silver equivalent.
Meanwhile, Americas Silver estimated Q4 revenue of $17.4 million USD should be slightly above the $16.8 million USD revenue from Q3, as increases in zinc and lead prices compensate for declines in the silver price. After tax profit should be around $2.1 million dollars which translates into $0.05 per share. That is 5 cents per share, thanks to the 1 for 12 reverse split, and that reduction in the share float turns the tables on GPL making USAPF the more attractive stock. And USAPF's AISC comes in at $13.79 per ounce of silver equivalent.
Details are provided in the graphic below:
