An $8.4 million, three-pronged exploration program aimed at extending mine life at Tucano and identifying further deposits in the gold-rich region of north Brazil is showing results.

With annual production of 125,417 ounces of gold in 2020 - its first full year as owners of the Tucano mine - Great Panther Mining moved into the ranks of intermediate gold producers. In order to secure future growth, in 2021 the company embarked on its most extensive and ambitious exploration program to date at Tucano and the wider region in northern Brazil.

"I believe that gold is the right commodity for us," says Rob Henderson, who took over as CEO in April 2020. "Right now, over 80% of our revenue comes from gold and Tucano is extremely underexplored. To my eyes, the chances of there being a second or third mine in the district are very high."

The $8.4 million exploration program includes 60,000 meters of drilling focused on three different areas. The first goal is to extend the mine life at Tucano, a conventional carbon-in-leach mine fed from multiple open pits along a seven-kilometer strike length. TAP C is the first target, with potential for new production fronts from shallow pits close to the current plant. A total of 24,000 meters of drilling will be dedicated to defining the resource at TAP C, a pit with current depths of 50 meters. The program will drill to 120 meters in order to demonstrate continuity at depth.

"I think TAP C is a great opportunity," says Henderson.  "We have a much better understanding of the geological model and the strip ratio is low, so TAP C could potentially come online earlier in the mine plan and with a lower strip ratio than other pits, helping boost margins."

In September Great Panther Mining released promising drill results from TAP C including 8.55m at 4.9g/t Au from 25.95m and 38m at 2.5g/t from 167m, including 3m at 8.7g/t Au from 167m. These results will help boost the updated resource estimate targeted for the end of 2021.

The second goal of the exploration program is to drill out a number of underground targets under the Urucum North open pit. In July drill results included 2.2 meters at 14.3g/t Au and 2.6 meters at 9.3g/t Au. The Urucum North underground project is envisioned at an estimated 40,000 to 50,000 gold ounces per year.

"When we finish mining the Urucum North pit later next year, that will give us the opportunity to go underground," says Henderson. "We're planning to advance all the technical information on the deposit, in order to reach a decision to potentially start underground mining in the second half of 2022."

The final focus of the three-pronged program involves the drilling of 28,000 meters in a number of regional targets within 20 kilometers of the Tucano mine, piggy backing off of regional surveys conducted by BHP Billiton and AngloGold Ashanti in the 1990s. Great Panther Mining has already begun an extensive 500-line-kilometer soil sampling program. The first geochemical results from a target called Mutum, 15 kilometers northeast of Tucano, suggest a 3.8 kilometer elevated gold trend.

But Mutum is just one of eight high-priority gold corridors the company is targeting for regional exploration and Henderson is excited for the drill rigs to start turning on the highly prospective Guyana shield greenstone belt in the fourth quarter of 2021.  "That's the ultimate prize, to find a second or even a third mine" he says.

Top priority for Henderson was to find the right professional to lead the exploration program. In June 2020, the firm appointed Nick Winer as VP Exploration. A former Exploration Manager for both BHP and then AngloGold Ashanti, when they respectively each owned the Tucano project (then known as the Amapari project) in the 1990s, with over 20 years of Brazil experience, it would be hard to imagine a better fit.

The exploration program is backed by cash flow from Tucano. The company had $9.7m in working capital at the end of the second quarter and in September 2021 it signed credit facilities worth $25 million with Asahi Refining Canada and Samsung C&T to bolster its working capital while it executes on its growth objectives. 

Meanwhile, in mid 2021 the company successfully addressed a wall stability issue at Tucano's UCS pit, caused by higher-than-normal rainfall during the rainy season - typically the first half of the year - that led to the surface mud by the pit's west wall to become unstable when it became oversaturated. "We thought we'd solved the problem last year, but we had a very wet first quarter this year and it returned," he says, "We've now taken the slopes back to 18 degrees, so there is less probability of the material moving due to the slope angle and we are putting in dewatering wells to drain the water so that we can better manage the issue when the rains pick up again next year." 

The company continues to receive revenues from its two Mexican silver mines, Topia and the Guanajuato Mine Complex, which produced 1.08m and 1.13m equivalent ounces of silver respectively in 2020. A $3m exploration project including 20,000 meters of drilling is earmarked for Mexico in 2021 with the objective of replacing depleted resources.

Elsewhere, Henderson says he is "cautiously optimistic" that political risk in Peru will decline as the new government adopts a pragmatic approach to mining and an underground drilling program focused on high-grade veins is underway at Great Panther Mining's Coricancha project in the mountains 90 kilometers east of Lima. A preliminary economic assessment of the former mine shows 3.1 million silver equivalent ounces, including both precious metals and lead, zinc and copper.

Brazil, however, remains the company's central focus. Henderson is bullish on the country, pointing to excellent university mining courses, strong government support for the industry and community-level recognition of the importance of the sector for employment and wealth creation. "Brazil likes mining and it's an underexplored jurisdiction. There's a lot of precious metal mines in the country and I believe a lot more can be brought into production."  

Although Brazil remains the short-term focus, the company is on the lookout for mergers and acquisition opportunities throughout Latin America.

"From an M&A point of view, we're essentially one big gold mine in Brazil at the moment," he says. "It would be better to have two or three to increase diversification and minimize risk, so it would be interesting to join forces with other single asset producers to become a more dominant presence."

If Great Panther Mining can make the step up to over 200,000 ounces of gold per year, either through organic growth or M&A, it would gain relevance and attractiveness to institutional investors.

"We're in the right jurisdiction, we have skilled individuals on our team and we are highly leveraged to the gold price as it enters its next bull phase," says Henderson. "We're firing on all cylinders and we have a record exploration budget. Now it's time to execute."