Great Panther Mining Limited
Q2 2020 Earnings Call Transcript

Published: 6 Aug 2020

[Operator:]

Thank you for standing by. This is the conference operator. Welcome to the Great Panther Mining's Second Quarter 2020 Earnings Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Meghan Brown, Director, Investor Relations. Please go ahead.

[Meghan Brown:]

Thank you, operator, and good morning, everyone. I'm Meg Brown. Thanks for taking the time to participate in our call today. Before we begin, I would like to mention that some of the commentary on the call will contain forward-looking statements. You should be cautioned that actual results and future events may differ from those noted in today's presentation. The commentary also refers to various non-GAAP measures, definitions and reconciliations that are included in our MD&A for the period ended June 30, 2020. All dollar amounts expressed in this presentation and in the associated financials and MD&A are in U.S. dollars, unless otherwise noted. And for reference during the call, AISC refers to all-in sustaining costs. I would like to remind everyone that this call is being recorded and will be available for replay later today. Replay information and the presentation slides accompanying this conference call and webcast will be available on our website at greatpanther.com. On the call this morning, we have Rob Henderson, President and CEO; Neil Hepworth, Chief Operating Officer; and Jim Zadra, Chief Financial Officer. I'll now turn the call over to President and CEO, Rob Henderson.

[Robert Henderson:]

Thanks, Meg, and thank you, everyone for dialing in. I'm very excited to be sharing our second quarter results today. The robust production from our mines together with the increase in the gold and silver price has helped us deliver record earnings for the quarter. But before we discuss the operations, I want to say, I'm extremely impressed with how our team has managed through this period of uncertainty around COVID-19. Never before have we seen such disruption in every aspect of our lives and work. We face many risks in managing a mining company, but have never seen anything quite like this virus. People have responded with courage and tenacity and determination. It's evidence that we have a committed workforce adapting to new ways of working, and we are strengthening the relationships with all our key stakeholders. At Tucano, I'm pleased to report that all of our employees who have tested positive for COVID have now fully recovered. In Mexico, there have been four cases reported at GMC, one of them is fully recovered. And at Topia, which is more remote, there have been just two cases. We are monitoring our Mexican workforce very carefully as Mexico has seen a rise in cases in recent weeks. We continue to screen all employees on arrival at our mine sites and workers are encouraged to stay home if they don't feel well. The health and wellbeing of our people and communities is the core value and will continue to be our top priority throughout this pandemic. Our team has done very well in this disruptive time of COVID-19, and I would like to thank them all for their efforts. And now moving on to Slide 5, when I joined Great Panther just a little over three months ago, I told Jim that my priority was to support the team and getting our operations stabilized and generating strong cash flow. And I'm pleased to report that things are going in the right direction. At the operation, GMC and Topia made a smooth transition back into full operations, following the COVID shutdowns, and restarting a mine typically has bumped, but our team has worked diligently to bring things back as quickly and as smoothly as possible. Both are well positioned now to have a strong and steady second half and are aligned to benefit from a silver price that has risen more than 40% in just over a month. At Topia, we were able to issue cost and production guidance for the full-year for the first time. We also adjusted GMC guidance to reflect the short-term shutdown. We now have realistic and achievable production and cost objectives for the Mexican operations and both are in good shape to meet their targets. Tucano is also trending in line with the full-year targets we set out in January. Tucano achieved a new monthly production record of 15,389 ounces in June, a record since the time we acquired it in early 2019, and this was achieved in spite of seasonally cold weather. Next slide. In spite of COVID, 2020 is off to a good start as we delivered a number of all-time company records in the second quarter. Importantly, we are generating robust cash flows that will help us internally fund our capital and exploration programs and further improve our balance sheet. The combination of a strong rise in the gold price, record production at Tucano and substantially lower all-in sustaining costs drove these records, which included mine operating earnings before non-cash items of $35.8 million, net income of $8.6 million, adjusted EBITDA of $30.2 million and cash flow from operations of $19.5 million. We produced 38,541 gold equivalent ounces in Q2 2020, which is an 11% improvement of Q1 2020, and brings our year-to-date production to 73,267 gold equivalent ounces. This puts us on track to meet our full-year guidance of 146,000 to 158,000 of gold equivalent ounces. On the corporate side, we completed a bought deal financing in Q2 with gross proceeds of $16.1 million. This cash injection combined with our strong internal cash flow generation due to the rise in the gold price put us in a good position to internally fund our capital programs and further build working capital. Our cash position as of June 30 was $60 million. During the quarter, we also reached an agreement with Nyrstar to defer Coricancha bond requirements. This reduces our short-term funding requirements and highlights our commitment to realizing Coricancha’s significant potential. Neil, our Chief Operating Officer will go through the operations in more detail, but some highlights include the production 35,421 ounces of gold at Tucano, a 35%, increase of Q1 2020, and an all-in sustaining cost of $982 per ounce in gold sold. Production of 280,831 silver equivalent ounces from our Mexican mines, and this was despite nearly two months shutdown due to COVID. But as mentioned, operations have resumed smoothly as at the end of May. Because of COVID, I haven't had a chance to visit the mines yet and meet our teams in person. So I will hand over to Neil for the detailed discussion of the mines. And, of course, Jim will do the financial review. Neil, over to you.

[Neil Hepworth:]

Okay. Thanks, Rob. First of all, let's start with Tucano. The completion last year of the sulfide processing circuits that's allowing us to process much higher grade ore and still retaining pretty good high recoveries. The second quarter production totaled 35,421 ounces of gold, as Rob pointed out. This was an 18% increase over Q2 2019 despite particularly adverse seasonal weather. We had 40% higher rainfall than average in Q2 this year. The increase in gold production was primarily due to higher gold grades and increased ore processing rates. And as Bob said, we achieved a new monthly production record of 15,389 ounces of gold in June. With the 71,000 ounces of gold production in the first half of 2020, we are on track to achieve our guidance for Tucano of 120,000 to 130,000 ounces to the mine, and contributed to our confidence. And this is the expectation of the higher grades as we mine in the lower portions of the pits, which all tend to have a higher grade in June 4. All-in sustaining cost was $982 per ounce of gold sold, a 13% improvement over Q2 2019. And we are on track to meet our all-in sustaining cost guidance for Tucano of $11.50 to $12.50 per ounce. Our 2020 exploration program with a budget of $6.6 million and 55,000 meters of drilling is progressing well. The next slide. For our reserve replacement at Tucano, our target resources are below the $13.50 per ounce reserve pit shell, which is the blue line, and above the $1,500 per ounce pit shell, which is the orange line. This new shell is larger than the RPA $1,500 resource pit shell which considered some average mining cost for TAP AB and a BRL3.8 to the U.S. dollar exchange rate. The new shell includes a more favorable exchange rate of BRL4.5 to the U.S. dollar, and users mining cost specific to TAP AB to take into account the free diggable material and the proximity to process plants and to the waste dumps. The slide also shows the drill holes as part of this reserve replacement drilling with the purple color. The reserve replacement drilling is focused on resources currently drilled to inferred spaces that are located between the two pit shells. The target for this reserve replacement drilling in TAP AB is conversion of sufficient resources to reserves to replace 2020 reserve depletion in all of the pits. Next slide. This has to do with exploration. In June, we released the first set of drill results from the infill drilling and the open pits. Drilling completed to date, totaled 7,236 meters of diamond and RC drilling at the TAP AB1 and TAP AB3 pits plus 6,333 meters of drilling in the regional targets. Drilling rates are expected to increase in the second half of the year because this is when we go into the dry season. We've also increased the number of rigs that are operating, and we have got the fourth time to drill onsite. The additional – and plus extra RC rig, these additional rings are going to be focused on Urucum underground and Urucum East. Results from drilling up to the end of June will be incorporated into an updated resource and reserve estimates expected in Q4 2020. We are also gathering additional data to support our feasibility study for an underground operation below Urucum North pit. The study would commence around the end of the year, and we'll probably include an exploration decline that could eventually be converted to a production ramp. Next slide. Regionally, tenements cover the most prospective and underexplored greenstone terrain in Brazil. The image in the slide is conductivity of magnetics. The large oval-shaped blue zones reflect dramatic intrusions and they are the primary drivers of mineralization. The red squiggles are highly conductive zones such as banded iron formations or chemical settlements or deep weathering that squeeze between the granites. The 7-kilometer long Tucano trend is North-South red trend indicated by the arrow. Note the numerous environments are very similar to the Tucano trend and all of these potential targets. Our new VP of Exploration, Nick Winer has got extensive experience in greenstones and extensive experience in this area in particular. Nick is using his skills and structural geology combined with his multi-element geochemistry experience to identify high potential corridors and targets. This is with a view to fast track an exploration program that could involve RC and diamond drilling as early as Q4 this year, depending on accessing and permitting constraints. Next slide. Okay. This is Topia. In Mexico, while our primary metal produced on a company-wide basis is gold. Our Mexican operations remain primary silver in terms of production. Therefore, we continue to report silver equivalent ounce production and unit cost metrics for Mexican silver mines. Q2 production was adversely impacted by suspension of mining operations in Mexico, in April and May. This was in compliance with the director of the Mexican federal government due to COVID-19. At Topia, we produced 146,128 silver equivalent ounces and we're on track to meet the guidance of 1.2 million to 1.3 million silver equivalent ounces. All-in sustaining cost was $22.32 per ounce of payable silver for the second quarter, reflecting the full costs of maintenance during the temporary shutdown. Plant throughput will increase in Q3 as the third mill comes back online and grades should increase as the proportion of development or decreases as we complete opening of new areas. We continue to focus on increasing strong throughput and driving down costs at Topia. On the exploration front at Topia, we completed 2,612 meters of exploration drilling in Q2 with the four rigs that are onsite. I think very importantly, we also received the required government approvals and a permit to start stacking on Phase III of the TSF. Phase III will be available after we finished construction of retaining walls and erosion controls around the base of the facility. Next slide. At GMC, nearly all of the processed ore was sourced from the San Ignacio Mine, while we continue the exploration activities at Guanajuato Mine. The two mines together shared processing plant that comprised our Guanajuato Mine Complex, referred to as GMC. Production from GMC in the second quarter was 134,703 ounces of silver equivalent and all-in sustaining cost of $27.36 per silver equivalent ounce. As with Topia, GMC’s all-in sustaining cost for the second quarter reflects the full cost of mine during the shutdown at Bay and the all-in sustaining cost is expected to trend towards due to the full-year guidance of $13 to $14 for the full-year. At Guanajuato, the exploration program continues to advance the GMC with the objectives of outlining in-situ blocks of higher-grade mineralization. We completed 2,612 meters of infill drilling program in Q2 2020 with four rigs operating. Guanajuato underground drilling is focused on the North Coastal area and improving mineral resource estimation confidence in other areas. We are planning for an increase in production from Guanajuato in the second half based on continued development of the [indiscernible]. Underground and surface exploration has also increased at San Ignacio. The initial program and surface drilling at San Ignacio is located at the hanging walls on along the Purisima vein system, where initial results show very high potential. And additional 2,500 meters of drilling has been allocated in this area for the second phase of infill drilling that will start in mid-August. I'll now turn the call over to Great Panther’s CFO, Jim Zadra to discuss our financial results.

[Jim Zadra:]

Thank you, Neil, and welcome everyone. We recorded revenue of $67 million in the second quarter, a 48% increase relative to Q2 2019 reflecting strong production results for Tucano and a strong increase in the gold price. These factors along with an improvement in our unit costs at Tucano drove a very significant increase in our operating earnings, EBITDA margins, net earnings and cash flow. We reported mine operating earnings before non-cash items of $35.8 million and cash flow from operations of $24.1 million before non-cash net working capital movements. These were both new records for Great Panther and a reflection of the significant free cash flow leverage in our operations. We delivered a substantial increase in adjusted EBITDA to $30.2 million, which also reflected a quarterly record. Our net earnings were $8.6 million or $0.03 per share and also included approximately $6.8 million of foreign exchange losses, which were primarily non-cash charges related to foreign subsidiary translation adjustments and mark-to-market adjustments. It is important to note that these strong revenue earnings and cash flow results for the second quarter were achieved at an average realized gold price of $1,728 per ounce, and also despite the suspension of our Mexican operations for most of the second quarter due to the government mandate in Mexico to Medicaid the spread of COVID-19. As noted, our Mexican mines have resumed full operation and gold is now well above $2,000 per ounce and silver traded above $28 per ounce today. With the current silver and gold price environment, we expect to see an even stronger financial performance for the third quarter. As noted, we saw a significant improvement in our costs in the second quarter and reported AISC of $1,027 per ounce of gold sold on a consolidated basis and before corporate G&A costs. The lower AISC is reflective of a weaker Brazilian real, higher production for Tucano and lower stripping costs due to the stripping that was advanced in the first quarter. For the full-year, our AISC guidance for $11.50 to $12.50 per ounce on a consolidated basis, and we're trending well to this. As our AISC reflected higher stripping costs in Q1 2020, we also expect AISC for Q3 and Q4 to be below our guidance range. This implies significant free cash flow margin for our operations at current prices is gold and silver. For Tucano alone the current gold price implies a free cash flow margin of over $1,100 per ounce based on our expected AISC for the second half. Significant margin levels can even be achieved if the gold price reverts back to the Q2 average. In terms of our balance sheet, our cash position improved to $60.2 million at the end of June, while we reduced our debt by about $4 million and continued to improve our net working capital position. We completed a bought deal financing in the second quarter for net proceeds of $14.1 million. The financing was completed in light of the uncertainties posed by COVID-19 and to ensure we had sufficient working capital to complete the critical exploration programs we will discuss. As Rob noted, our operating teams have done an excellent job of managing the unprecedented challenge of COVID-19 while this challenge still remains for us and other mines operating throughout the world. We are in an even stronger position to manage it from the standpoint of our financial position and in terms of our experience and knowledge. In terms of capital allocation for 2020, our priorities are the noted exploration programs at Tucano and in Mexico, which we commenced earlier in the year. Given the recent raise in gold and silver prices, we're pleased – we started these programs early on and we look forward to opportunities to further advance them. Thank you. That's all we have for formal remarks, and I'll turn back to the operator for our Q&A?

[Operator:]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Heiko Ihle with H.C. Wainwright. Please go ahead.

[Heiko Ihle:]

Hey guys. Thanks for taking my questions. Good quarter, and I guess a bit of a common looking at mine operating earnings for a quarter of $0.11 with a stock price, below US$1 shows the valuation gap that we frankly expect to diminish over time quite well. Looking at Tucano, have you seen any new found challenges in regards to costs for labor, materials or supplies that are unrelated to COVID and more based on the recent strengths that are essentially based on strength in metal prices and not COVID. I mean, Jim mentioned earlier, realized prices were $1,728 in the quarter. You're obviously well over $2,000 right now. And I expect at least at some point in time, other guys are going to want a piece of that pie. Are you seeing anything like that?

[Robert Henderson:]

Yes. Good morning, Heiko. Thanks for the question. Yes, I think right now we are benefiting from a very weak real in Brazil. And I think we are seeing a bit of an inflation happening in Brazil. So we are seeing some local costs going up, but Tucano is a pretty remote operation and there's not a lot of gold mining in Brazil. So we're not being crowded out by other people, but we are just seeing a local inflation costs pressure there, but the real is – the very low real is certainly helping our cash costs.

[Neil Hepworth:]

Can I just add – I mean the one thing that impacts us is that there's a rise and fall attached to the mining contracts that's related to the exchange rate. But it's not a significant part of it, but it definitely impacts our costs in a negative way.

[Heiko Ihle:]

Fair enough. Speaking of Brazil and the COVID case, I mean obviously, Brazil is not the best at handling this whole thing right now, and efficiency issues with having a fairly large caseload. So just thinking out loud given the nature of the pause, it’s an open pit mine and not has really all that crowded underground together, and you have some ease of continued distancing in the miners. Do you think that's a fair assessment? Are you maybe like able to give us a little bit more a breakdown of the impact that you're seeing? What exactly has changed? Can you just maybe provide a little bit more color along those lines? Thank you.

[Robert Henderson:]

Neil, do you want to address that?

[Neil Hepworth:]

Yes. Additionally, we had some – not so much the social distancing side of things because we were – we did some fairly sort of innovative stuff in terms of the canteen and multiple hours and all of the rest of it. And with it being an open pits as well, we can sort of maintain fairly good sort of social distancing. The process plant is a little bit more tricky. But we haven't really experienced too many problems. The one thing that did happen, I mean, which was quite gratifying, was it the – because initially we had quite a lot of people off just for proportions and because of exhibiting minor symptoms and all the rest of it, we changed to 12-hour shifts from eight hour shifts. Normally the union fights you very hard on that because they obviously prefer to have the eight hours where they can sort of employ more people, but the union was pretty sort of solid behind us and has allowed us to go on to 12-hour shifts and then – on the mining and on the process plant, and we just – only now we're going back to eight-hour shifts.

[Heiko Ihle:]

Very helpful. Thank you, guys, and thanks for taking my questions.

[Robert Henderson:]

Thank you.

[Operator:]

Our next question is from Matthew O'Keefe with Cantor Fitzgerald. Please go ahead.

[Matthew O'Keefe:]

Thanks Robert. Thanks for taking my question, and congrats on a great quarter. I just had a couple of things. One, you mentioned in the presentation there at Tucano, part of your forward exploration plans, you're contemplating doing an underground exploration drift. Could you expand on that a little bit and sort of the timing for that and the cost and what impact that would have short-term and long-term?

[Robert Henderson:]

Yes. Thanks Matt. We do have an existing study on an underground option at Tucano and the study was done a couple of years ago. So the potential to go underground has always been there. Typically with abandoned iron-type formation, you do eventually do go underground because they are very deep structures. So I guess the original team at Tucano had identified the underground a couple of years ago and did some initial work on it. We want to refine them at work. We want to increase our confidence levels certainly in the earlier parts of the access. So we want to get and revisit that study at the end of this year, do some more drilling just to confirm orebody continuity and access details. So we're essentially going to be de-risking a study that would be done a couple of years ago.

[Matthew O'Keefe:]

Okay. And can you remind us again the rough number of ounces that you'd be targeting under there?

[Robert Henderson:]

Neil, do you have that number at hand?

[Neil Hepworth:]

Sorry, Robert.

[Robert Henderson:]

The underground potential, how many ounces are we looking at?

[Neil Hepworth:]

It's fairly – I'm trying to think now. No, I'd have to look it up because it is quite substantial. Just off the top of my head, I would have thought probably about 30,000 or 40,000 ounces a year when we started mining.

[Matthew O'Keefe:]

Right. Okay. And that would be…

[Neil Hepworth:]

That's sort of order of magnitude.

[Matthew O'Keefe:]

Right. And so – since you're doing an underground, we'd be doing an underground drift to be able to access that pretty readily once you – you’d have access to it fairly quickly after you'd done the exploration presumably with that access.

[Robert Henderson:]

That's correct. It would be done through an existing pit. I mean the future would consist of underground mining and open pit mining simultaneously to keep the mill full.

[Matthew O'Keefe:]

Got it. And then – okay, that's great. And then just one other thing on Tucano, the recoveries were I think 90 point – just over 90%, we've got an unusual recovery like, is that what we should be looking at going forward? Because I thought we’re more towards 92%, we will be expecting, is that just within the very normal variance or…

[Robert Henderson:]

Yes. Neil can give more color, but it's a function of where we were mining in the pits and we’re mining a very high prototype zone, which typically gives us pretty low recoveries. So we were – the recoveries were actually better than what we expected. But as we migrate back towards the Tapereba pits, I think we're going to see a recovery increase again. Neil, are you going to give more color on that?

[Neil Hepworth:]

Yes. That's right. I mean, initially when we first hit these sort of prototype hotspots, we had some horrible recovery, so like 81%, I mean it was quite nasty and we had the high grades. But eventually we identified exactly what the problem was and we did a whole series of tests and towards the end of June, we started to sort of blend a lot more to try and get the amount of prototypes sort of percentage down. And those recoveries got back up to 92%, 93%, even up to 94% at one stage. So the 90% sort of reflects initially very low recoveries, but then getting back on top of it.

[Matthew O'Keefe:]

Okay. That's great. That's a good clarification on that. And it sounds like you've got that kind of figured out going forward. And then just one final question on Coricancha. How should we be thinking about that? I mean, we've got some pretty good commodity prices here. There's a lot of metal there. That's pretty – could be readily available. Maybe you could just talk a little bit about your plans for Coricancha?

[Robert Henderson:]

Sure. Yes. It is a project that's very even to metal price and we have an old study done a couple of years ago, which needs refreshing. So we've allocated a team to have a much deeper dive into what our production rates could be and look at different ways of accessing the orebody. So we expect you to refresh the study towards the end of this year with a view of even potentially more drilling if it looks feasible, but at current metal prices, it is a very interesting project.

[Matthew O'Keefe:]

Yes. And is it a – I can't recall all those, but is it a long, like once you did sort of figure out, what you wanted to do with it? Is it a long lead time to get because you've done some production from it previously? I mean, is it a ramp up time? Or is there a lot of work to be done for development and do you need any new major equipment?

[Robert Henderson:]

Yes. It is an existing mine. We have a mill that's running there. So it's a function of mine access that we'd going to have look at and we'd have to do some rehab and work. But we're not talking about a long lead time at all because most of the infrastructure is there.

[Matthew O'Keefe:]

Yes. Thanks. I realize there's a lot going on and I'm just curious about that when given these metal prices. But that's it for me. Thanks very much.

[Robert Henderson:]

Thank you, Matt.

[Operator:]

Our next question is from Bhakti Pavani with Alliance Global Partners. Please go ahead.

[Bhakti Pavani:]

Good morning, guys. Thank you for taking my questions and congratulations on the quarter.

[Robert Henderson:]

Thank you, Bhakti.

[Bhakti Pavani:]

I apologize if my question is under budgeted, but just kind of curious, you had a record monthly production at Tucano in June and second half is normally the strongest production at Tucano. Could you maybe provide some color on how the production has fade in the month of July in comparison to June?

[Robert Henderson:]

Yes. I think June was an exceptional month because we did hit very high grades, which we expected and the recoveries were better than what we expected because the guys in the plant figured out how to deal with the prototype. So it was a pleasant surprise in June that we hit that record. I think we are going back towards the Tapereba pits in the second half of the year, so we're not going to have these spectacular high grades situations. So we're maintaining our guidance on Tucano pretty steady. So there's no big surprises.

[Bhakti Pavani:]

Got it. Thank you so much for the color. Just wanted to follow-up on Coricancha. You just mentioned that you plan to do additional study, which should be out by the end of the year. But just kind of curious following the completion of study, in addition to this, what else do you need to accomplish in order to take a production decision there?

[Robert Henderson:]

Well, yes. First of all, you've got to figure out is it worth doing. You got to look at the financial metrics. You've got to look at capital prioritization. So there are a number of hurdles for us to jump through. And right now with the existing study, we think that needs a lot more refining and de-risking. So it's a matter of improving that study and getting the project to a state where we can make a decision whether to proceed or not to proceed. So we've got a lot of things to look at, and I think the main one is improve the financials and its ability to generate decent cash flow, so that's going to be the priority and make sure this project is going to be economic for us.

[Bhakti Pavani:]

Got it. And lastly, on the cash, you had a very good quarter when it comes to cash flow generation and you have about $60 million cash. What's your near-term plan on deploying that cash? Is it going to be more focused towards debt reduction? Or you plan to go ahead with the underground development at Tucano? If you can provide some color, please?

[Robert Henderson:]

Yes. Jim, do you want to handle that?

[Jim Zadra:]

Sure. Hi, Bhakti. Really the capital allocation priorities are the exploration drilling as I outlined. We're going to continue to pay down our debts, which are very manageable given our current cash position. And with the current metal prices, we'll continue to look for other opportunities to deploy capital in a way that will increase value and increase our NAV.

[Bhakti Pavani:]

All right. Thank you very much. That's it from my side.

[Robert Henderson:]

Thank you.

[Operator:]

[Operator Instructions] Our next question is from Roger Davis, Private Investor. Please go ahead.

[Unidentified Analyst:]

Good morning, gentlemen. Congratulations on the numbers. I think you kind of answered my question. I was going to ask about the production at Tucano because if you take the 15,000 ounces from June and multiply that 6x, we get 90,000 ounces during the second half of the year. And if you add that to the 60,000 from the first half, that would be 150 and your guidance says 120 to 130, that same shade indicate a rather significant drop off in production. So I guess you're saying that your grades are not going to be as higher or do you think you might have a chance of beating that 130,000 number?

[Robert Henderson:]

Thanks for the question, Roger. Yes. Tucano, we've got a series of different pits with [indiscernible] get slightly different characteristics. In June, we were mining right at the bottom of raccoon, which is very high grade with a high prototype. We are going to the Tapereba pits in the second half of the year, so which does have a different characteristic. I think we're maintaining our guidance. I don't think we're going to hit those spectacular results we hit in June. If we do, it will be a nice surprise, but we certainly think we're on line for guidance and the plan is staying consistent.

[Unidentified Analyst:]

So according to your guidance, I knew you expect somewhere around 30,000 to 35,000 ounce range for the third quarter and the fourth quarter.

[Robert Henderson:]

Yes. I think fourth quarter will be slightly better than the third because typically you get the weather working for you there, so third quarter is probably going to be one of our weaker quarters in terms of gold production.

[Unidentified Analyst:]

Thank you. Okay. Well, thank you very much and congratulations again on a great numbers.

[Robert Henderson:]

Thank you, Roger.

[Operator:]

There are no further questions registered at this time. I would like to turn the conference back over to Rob Henderson for any closing remarks.

[Robert Henderson:]

Thank you very much, operator. Q2 was a milestone quarter for us. We achieved the new production record at Tucano. We delivered strong free cash flow from all of our mines, and this was achieved in spite of the significant challenges of COVID-19. And I certainly believe it's a testament to the strength of our team and good oversight from our new Board. And I'm confident that we've got a very solid platform to drive growth and benefit from the increased gold and silver prices that we're currently seeing. So thank you very much for your participation today. On behalf of everyone here at Great Panther, I look forward to sharing our progress with you in the next quarter.

[Operator:]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.