Some of the problem is that the piece of crap mining companies like Great Panther Silver (GPL) (GPR.to) will never, ever point you towards their weaknesses as companies and will offer up the figures that best suit themselves. Another part of the problem is that people are lazy and don’t bother looking any further than the news releases. Another again is that when they do, it might not be so obvious what’s going on. Also a significant chunk of the problem is that the shyster management teams such as GPR’s will hire paid pumper assholes such as “Mexico Mike” Kachoweveryouspellit to soft soap their sheep into believing all is well, when it most obviously is not well.
GPR is out with its 1q14 numbers this evening and has reported yet another net loss, but throws sand in the eyes of the herds by blaming minor level downtime while trying to highlight costs that are under control. Here’s the reported COGS from GPR and at first light it looks that way, more or less capped by the $10m line.
But the question always arises as to why, if GPR insists that its cash cost figures per ounce of silver are much lower than the selling prices for its ounces of silver and that it’s trimming things like G&A hard, is the company reporting losses. The basic answer is that the reported COGS above is a crock of shit and completely ignores the amortization and depreciation (A+D) charges that the company has to register. And GPR is keen on doing just that because it knows its mines are old and inefficient craphole assets that get more and more expensive to mine every freakin’ year (all these Mexican “oh they were great historic mines for decades and they closed down due to low costs and then we were so smart and opened it up again when silver started shooting up in price” stories , and there are dozens of them, will all suffer from this same Achilles’ Heel, precisely because they are piece of shit mining assets) so it does its best to hide Amorts+Deprec away from your innocent eyes. But when you put the two onto one chart…
…you see that A+D has been rising fast and eating into the revenues, all while GPR insists its cash costs aren’t going up. And people, like it or not it’s vital you include A+D into your true costs because if you don’t you’re basically saying, “oh yeah, we have this non-renewable fixed asset and we’re mining it and we’ve taken out X amount of metal from the rocks….but the asset isn’t going down in value, honest”. In short, excluding A+D from cash costs is sheer bullshittery and GPR knows it, but they’re not going to tell you that little inconvenient truth (and neither are the bullshit paid pumpers like Mexico Mike).
I digress (and repeat). So back to the issue at hand and when you now stack COGS-plus-A&D against revenues…
…you see how the mine is way, way less sexy and profitable and cool than it used to be. In fact subtract one from another to get gross profits…
…and that’s your chart. And therefore, if you can’t even make a freakin’ gross profit before G&A and stuff are charged, you have no chance of returning a net profit…
…as this final chart shows. Yes, that does indeed illustrate how GPR has returned an aggregate net loss of $14.616m over the last six quarters, which is also the main reason why its total assets figure has dropped by nearly nineteen and a half million over the same period (but let’s not go to the balance sheet today, because there’s things there that aren’t just bad, they’re gawdawful).
Anyway, bottom line, read the quarterlies and not the NRs to get a real handle on what’s going on at these piece of shit small mining companies that continually swallow your money and convert it into director’s salaries.