How did you decide to put together Great Panther Silver?

In 2003 I partnered with a mining engineer, Francisco Ramos, to start a private company in Mexico with the idea of moving into production quickly and growing the company out of cash flow. Our first acquisition was the Topia mine in Durango and we went public in 2004. In 2005 we bought the Guanajuato mine in Central Mexico, and by 2006 both operations were into production. Our output increased every year until 2015. Last year we acquired the Coricancha mine complex in Peru, which has been in care and maintenance since August 2013. We plan to conduct a thorough evaluation of the project, with some preliminary underground rehabilitation, some underground and surface diamond drilling, and we would like to complete a prefeasibility study in 2017 as well. We expect that the capex to put the mine back into production will be between $20 and $25 million between 2017 and part of 2018.

What are the terms of your deal with Nyrstar for Coricancha?

The deal is a risk-sharing agreement. Because the mine has been in care and maintenance, it is going to take us a while to put it back into production. Nobody knows how metal prices are going to behave over the next years, so the deal has been structured in a way that we do not have to pay a lot of money upfront, and the money we will be investing will go into the project directly. We only have to pay $100,000 on closing. Once we have recovered our initial investment and the project is profitable, we will pay Nyrstar 15% of the free cash flow for five years, up to a maximum of $10 million. Another aspect of the deal is that the project has some legacy environmental issues related to tailings that need to be removed or reclaimed, and Nyrstar will assume the cost of that up to certain maximums.

How attractive is Peru for mining investment, and how could you expand your presence in the country using Coricancha as the stepping stone?

Being a geologist, I have always recognized that Peru has tremendous geological potential, but on my first visit, one of the things that struck me is that there are very large mines run by large international and Peruvian firms, as well as many small operations that were more or less family-run, however there were not many medium-sized projects owned and operated by public companies. I therefore saw a lot of opportunity for public companies of our size with access to the capital markets to bring some of these mines into production. We want Coricancha to be our first base of operations and then gradually we will grow in the country in the same way we have done in Mexico over the last years.

Coricancha is over 100 years old. Do you think there will be room for mechanization?

One of the challenges at Coricancha is that it is a narrow-vein operation, so we will not be looking at full-blown mechanization. If you try to mechanize a mine like that, you end up having too much dilution, grade goes down and the operation becomes uneconomic. We already have a lot of experience in narrow-vein mining in Mexico, so we can bring some of that to Peru –this is going to be critical in making Coricancha a profitable operation.

What is Great Panther Silver’s positioning in the market?

The company has a very good reputation and a strong brand. We have a very large component of retail shareholders, particularly in the U.S. We have very strong liquidity on the NYSE, with over 2 million shares traded daily. The company is well known and the share price has outperformed most of our peers for the last year. We were able to raise nearly $30 million in just five days last summer. We have since been added back into the GDXJ Junior Gold Miners ETF in New York, so we are back to having about 25% of institutional shareholders. This helps increase our ability to raise capital in the future, although right now we have enough money in the bank to put Coricancha back in production without having to go to the market. Also, we have no debt.

Finding silver deposits is increasingly difficult. Will you lean towards gold as other primary silver companies have been doing lately?

According to historical records at Coricancha, the rough breakdown of the deposit is 45% gold, 35% silver and 20% base metals (copper, lead and zinc). We would like to keep silver as a major component of our production, but realistically it is very difficult to find and acquire a silver-dominant project –this is a challenge for all sorts of producers. What we are also seeing is that, over the last six years, with lower metal prices, shareholders are more concerned with cash-flow than they are about specific commodities, but certainly our plan is to stay focused on precious metals.