Exclusive: Setting the Record Straight on Great Panther Silver, Part 2

As I watched shares of Great Panther Silver (AMEX: GPL  ) take a bit of a dive Tuesday -- after a sharply negative blog post crossed the wires replete with allegations and insinuations -- I realized this was one of those key moments when retail investors would benefit from a clear and thorough restatement of the factual record.

As of this writing, the blog post in question has been taken down (here is the original link). Because truth matters, I am proceeding with my rebuttal nonetheless.

In Part 1 of my rebuttal, I offered investors a more comprehensive understanding of the company's underlying story than that depicted in the aforementioned post. Here in Part 2, I will directly challenge the content of that now-stricken blog post.

First cracks in the foundation of an allegation
The piece sought to spin a tale of Great Panther Silver as some sort of pump-and-dump vehicle, but nothing could be further from the truth. Let's begin with the fact that there was no dump!

In his post, the blogger alleged that Great Panther Silver executive chairman Kaare Foy had sold "all his 200,000 shares" in the company. Oddly, the source he linked to was a discussion-board post rather than an actual filing. I spoke directly with Foy on Tuesday, and he indicated that his "direct personal holdings in Great Panther actually increased at that time." He also added that he "currently owns more shares in Great Panther than he did a year ago." What the blogger in question might have discovered through a more thorough examination of the public record, as Foy avows, is that all of the share sales cited were for shares held indirectly by Foy's investment company and were therefore wholly unrelated to his direct personal holdings in the company.

Great Panther CEO Robert Archer, meanwhile, reiterated to me Tuesday that he presently owns or controls about 1.55 million shares of Great Panther.

You can't have a pump-and-dump without a dump, and you can't keep an allegation afloat once a crack of that size has been revealed. In the interest of setting entire record straight, though, let's continue to scrutinize the content from this post that Bob Archer called "so full of holes that it makes the Titanic look airtight."

Oh, here's another one
The blogger also offered a truly ludicrous characterization of Great Panther Silver's price history with the stock supported by hype only and then a collapse after the hype died. To reveal the uninformed nature of that characterization of Great Panther's prior price performance, I offer this single piece of visual evidence. This is a five-year chart showing the price performance of Great Panther Silver, alongside that of fellow Mexican silver producers Fortuna Silver, Endeavour Silver, Impact Silver, and First Majestic Silver.

Source: Yahoo! Finance.

Now, what was it that caused Great Panther's stock to drop back into penny-stock range? Was it really that the "hype died down," or could it have had a little something to do with the commodity and precious-metals correction of a lifetime? You be the judge.

Nope … not quite right, either
The blogger then attempted to slam Great Panther's management for allegedly hiring a rather notorious stock promoter. But there's just one problem (well, two actually -- see below): The company did not hire him. As one of the blogger's own linked references will attest, the promoter in question was contracted by another firm called B&D Capital that Great Panther had turned to for help getting its story to the public after that brutal industrywide stock collapse. While of course some measure of responsibility always remains with a company's CEO, a fair assessment of the facts would reveal that, as CEO Archer attests:

None of us knew of or had any prior dealings with Mr. Lebed. He was referred to B&D by a broker in New York as being someone who could increase our exposure and trading volume. At the time, we were trying to maintain a "reasonable" share price, coming out of the depths of the crash, to do a financing and figured it was worth a try. At the time, we had no knowledge of Mr. Lebed's unorthodox methodologies.

It is very important to note that B&D Capital contracted Lebed for only a single, one-month contract! Furthermore -- and here comes problem No. 2 -- this was during September 2009, and not 2010 as the blogger alleged! Because the blogger attempted to connect Great Panther's late-2010 stock surge to that particular one-month contract, the fact that he misstated the timing by a full year represents a fatal error that causes his entire thesis to take on water and sink.

So just what is a pump-and-dump, without the pump or the dump? Hmmm … sounds like a whole lot of nothing to me!

Still more?
Just when you think you couldn't have any more holes in the piece and still have words left on the screen, they just keep coming. The blogger mischaracterized Great Panther as a high-cost high-leverage silver company. In fact, quite the opposite is true as Great Panther has long been viewed as an impressively low-cost silver producer, particularly for a producer of its humble scale and rapid production growth. The miner achieved a 2010 cash cost of $7.43 per ounce. Its 2009 cash cost came in at $5.58 per ounce; comfortably situated among the stable of low-cost producers. That same year, major producer Pan American Silver (Nasdaq: PAAS  ) achieved a cost of $5.53 per ounce. Fellow low-cost growth sensation First Majestic Silver (NYSE: AG  ) posted a 2009 cash cost of $5.61.

I believe I have poked enough gaping holes in that recent blog post -- which sought to sling a heap of negativity toward Great Panther Silver -- to render a rebuttal of the remaining insinuations totally redundant. Rather than debunking each individual effort to assail the biographical record of Great Panther's principles, I will close with the most solid source of reassurance that investors could ever seek: the unabashed praise of a direct competitor.

Not only had Endeavour Silver (NYSE: EXK  ) CEO Bradford Cooke already stated during this 2010 interview that he "admire[s] the work that Bob Archer has done at Great Panther," but on Tuesday Endeavour's VP for corporate communications -- Hugh Clarke -- proved eager to go on the record with a strong statement of support for Archer to counteract those baseless insinuations. Clarke affirmed what I've known to be true since I first became a Great Panther shareholder many years ago: that Archer is "a good man, an honest man … a man of upstanding character."

I look forward to further increasing my own personal stake in Great Panther Silver if even a sliver of this recent share-price retreat remains intact beyond my requisite waiting period. I remain a thoroughly delighted shareholder of multiple high-quality silver producers -- most notably Great Panther, Endeavour Silver, Silver Wheaton (NYSE: SLW  ) , Alexco Resource (AMEX: AXU  ) , and silver-rich gold producer AuRico Gold (NYSE: AUQ  ) . I intend to hold these positions like a fortress throughout the remainder of this secular bull market for precious metals. There is simply no way that a spurious attack replete with unsubstantiated allegations will separate this Fool from any of his core precious-metal holdings. I've already held strong through that ridiculous market correction depicted in the chart above … I'm not going anywhere.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Alexco Resource, AuRico Gold, Endeavour Silver, Great Panther Silver, and Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a fully fact-checked disclosure policy.


Read/Post Comments (36) | Recommend This Article (60)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 18, 2011, at 4:19 PM, EvilEmpire wrote:

    Here's a link to the cached article by goldmingXpert (Ian Bezek):

    http://webcache.googleusercontent.com/search?q=cache:ciAM-q9...

  • Report this Comment On August 18, 2011, at 4:26 PM, Jbay76 wrote:

    Kudos Chris +1!

  • Report this Comment On August 18, 2011, at 4:32 PM, dragonLZ wrote:

    Your article has (at least) one hole too.

    "The blogger" did not say GPL hired Mr. Lebed in 2010. He clearly said 2009 (click on EE's link above).

  • Report this Comment On August 18, 2011, at 4:32 PM, wolverine1987 wrote:

    It's official after this article--goldminingexpert is a good investor in CAPS, but his credibility as an author of opinion pieces is from this moment on obliterated.

  • Report this Comment On August 18, 2011, at 4:33 PM, wolverine1987 wrote:

    Dragon--that is a hole? Uh, ok.

  • Report this Comment On August 18, 2011, at 4:34 PM, dragonLZ wrote:

    "Because the blogger attempted to connect Great Panther's late-2010 stock surge to that particular one-month contract, the fact that he misstated the timing by a full year represents a fatal error that causes his entire thesis to take on water and sink."

  • Report this Comment On August 18, 2011, at 4:35 PM, dragonLZ wrote:

    Wolverine, not a hole?

    Fatal error maybe?

  • Report this Comment On August 18, 2011, at 4:38 PM, wolverine1987 wrote:

    Dragon, you are correct I suppose, the words we'd use differ as a characterization, it is a mistake. But clearly, the great balance of mistakes or holes, or error, are revealed now to be on Ian's side.

  • Report this Comment On August 18, 2011, at 4:42 PM, wolverine1987 wrote:

    Chris, Can this article be posted to SA? that would help.

  • Report this Comment On August 18, 2011, at 4:47 PM, XMFSinchiruna wrote:

    Again, from the above-cached link:

    "The paid-for promotional blitz worked, as shares took off in the later half of 2010."

    The clear attempt there is to link a one-month contract from September 2009 to an increase in the share price one year later.

  • Report this Comment On August 18, 2011, at 4:51 PM, goldminingXpert wrote:

    Furthermore -- and here comes problem No. 2 -- this was during September 2009, and not 2010 as the blogger alleged! Because the blogger attempted to connect Great Panther's late-2010 stock surge to that particular one-month contract, the fact that he misstated the timing by a full year represents a fatal error that causes his entire thesis to take on water and sink.

    -- Please remove this factually incorrect section. My post correctly dated it as 2009.

    ---------------------------------------------------------

    Your cash cost section is also extremely flawed, given that I noted that cash costs this quarter surged THUS disproving the theory they were a low-cost producer. Using GPL's cash cost from 2010 is entirely unjustified. The $11.84 cash cost GPL operated at during the most recent quarter is close to double all the other cash costs quoted in your section, thus providing justification for my cash cost claim. Furthermore, you left out negative cash cost producers such as Fortuna who are ultra low-cost producers.

  • Report this Comment On August 18, 2011, at 4:54 PM, dragonLZ wrote:

    Oh, OK, I guess I was wrong. He indeed did try to "connect Great Panther's late-2010 stock surge to that particular one-month contract".

    I looked only at the part that said Lebed was hired in 2009.

    My bad - no hole there.

  • Report this Comment On August 18, 2011, at 5:10 PM, goldminingXpert wrote:

    Dragon: Lebed continued promotioning Great Panther in 2010. For example: http://bulletinboardprofiles.com/newletters/lebed-biz-alert-...

    ---

    Regardless, I am willing to retract/correct my article assuming the insider sales information Chris quoted is correct, I am awaiting response from a company representative. The article is under the dispute process, and I am glad to make any corrections to factual errors I may have made.

  • Report this Comment On August 18, 2011, at 5:12 PM, mihrtrn wrote:

    Ian,

    Face it , you got smacked down by Chris and others and embarrassed with that garbage story of yours. Seeking Alpha took it down, too. YOU MUST BE FLATTERED !!!! Does Seeking Alpha still publish you after costing them so much credibility ?????? Thanks for the cheap shares, though ! Just wondering WAS YOUR STORY LEAKED TO ANYONE AHEAD OF TIME ????

    ( Some caps especially for you .)

  • Report this Comment On August 18, 2011, at 5:20 PM, wolverine1987 wrote:

    goldminingXpert--

    I almost admire your attempt to stand by your article after it has been decimated in it's key points--not simply countered, but decimated. But it's not admirable.

    Your clear implication, the main objective of your article--which was clearly NOT really about low cost production--was to raise investor doubts about GPL as a product of stock promotion/pump and dump. Your key "evidence" in support of that point has been blown to smithereens.

    There are legitimate questions to ask of GPL. a couple of which were in your article. No stock looks perfect or everyone would be in it. But is a far different thing to ask legitimate questions about financials/prospects, etc. vs. questioning the legitimacy and ethics of a company and it's management. You did the latter and have been proved wrong. You should apologize.

  • Report this Comment On August 18, 2011, at 5:29 PM, SN3165 wrote:

    And the truth shall set you free. Good riddance, goldminingxpert.

  • Report this Comment On August 18, 2011, at 5:31 PM, mihrtrn wrote:

    Wolverine - Great Post ! I agree with you, but I think Seeking Alpha NEEDS TO ISSUE AN APOLOGY STATEMENT for letting this poor excuse for a story be published. Many weak hands lost money on it. Ian also posted in the comment section on Seeking Alpha that GPL didn't have a great cash position. That would have stayed, had I not corrected him. I also think Seeking Alpha needs to investigate him to ensure that he didn't leak this garbage story to shorts. The weak handed investors who lost money NEED TO KNOW.

  • Report this Comment On August 18, 2011, at 6:56 PM, mrudolph72 wrote:

    Good work as usual Chris. +1 rec

  • Report this Comment On August 19, 2011, at 7:40 AM, MoneyWorksforMe wrote:

    Excellent job Chris! I thoroughly enjoyed both articles, which are replete with insightful information.I particularly enjoyed the quotes from the CEO's--very compelling.

  • Report this Comment On August 19, 2011, at 8:26 AM, brewersfan81 wrote:

    Chris,

    I can understand how difficult it is to read things you know to be false. The hardest part is knowing that in the end, their call may be right, but it will have been based on facts that are wholly untrue.

    There's a fine line between giving some of these guys too much time and needing to take time out of your day, use the facts, and rebut them.

    I think you definitely chose an appropriate time to rebut, and did an excellent job in doing so.

    Now, on to more solid reporting and analysis!

  • Report this Comment On August 19, 2011, at 9:06 AM, XMFSinchiruna wrote:

    If you go back to the original link for that blog post now, you will find the author's retraction:

    http://seekingalpha.com/article/287591-retraction-great-pant...

  • Report this Comment On August 19, 2011, at 9:58 AM, Jbay76 wrote:

    GMX

    What do you have to say about things now that the author you were defending has publicly stated what Sinch has been saying. I think you need to follow in your "friends' foot steps and start some retraction....

  • Report this Comment On August 19, 2011, at 10:31 AM, XMFSinchiruna wrote:

    Jbay...

    the CAPS player you're addressing and the author of the reatrected blog post are the same individual.

  • Report this Comment On August 19, 2011, at 12:32 PM, Jbay76 wrote:

    Oh, really...I had no idea but it makes sense now that you mention it......Thanks for the heads up and I guess I will now retract my previous statement.

  • Report this Comment On August 19, 2011, at 1:09 PM, speedybure wrote:

    Nice Job Chris- Thought I;d put in my own 2 cents. While I've owned GPL since the 50-70 cent range and continue to like it, I vastly prefer Alexco given the close EV and each one potential. Any thoughts on this?

  • Report this Comment On August 19, 2011, at 1:48 PM, XMFSinchiruna wrote:

    speedy, That's like asking me to choose between cake and ice cream. I have to have them both together. :) I own more GPL than AXU, but not by that much. They are my #4 and #6 equity holdings by current value, respectively.

  • Report this Comment On August 19, 2011, at 3:56 PM, rebello15 wrote:

    what is your number 1 holding now Sinch? Is it still SLW?

  • Report this Comment On August 19, 2011, at 4:17 PM, XMFSinchiruna wrote:
  • Report this Comment On August 19, 2011, at 9:41 PM, mihrtrn wrote:

    Chris,

    Thanks to your great article on GPL , I am very impressed with Motley Fool and am going to subscribe.

  • Report this Comment On August 20, 2011, at 1:45 AM, rmondave2 wrote:

    Knowing the past history of many of the sleazy promoters, and the thinly traded silver stocks, I had to dump my GPL at a BIG loss, because who the F knew if the rumors were true. Your uncovering of the "holes" does me absolutely no good.

    Thanks anyway.

  • Report this Comment On August 20, 2011, at 9:59 AM, silverminer wrote:

    rmondave2,

    I am so sorry to hear that, and I completely understand your sense of anger and frustration. It was precisely out of concern that some investors might be exiting their positions on the basis of those careless accusations and insinuations that I set out to set the record straight. I just wish I had been able to circulate my rebuttal even faster, as perhaps then I might have spared some investors from becoming victims of the now-discredited piece.

    Here's a thought: losses are only losses until you earn them back. Wtih careful research, and a commitment to due diligence that could serve to protect you from pieces like that in the future, I would simply point out that the very same silver stock might be just the place to recuperate such a loss. A 15%-or-so swing may seem large, but in the context of the stock's long-term upside potential, it could soon become a distant memory that yielded an important learning experience.

  • Report this Comment On August 20, 2011, at 10:00 AM, silverminer wrote:

    P.S. silverminer = TMFSinchiruna :)

  • Report this Comment On August 20, 2011, at 2:18 PM, HarryCaraysGhost wrote:

    Thanks Chris,

    I was trying to be as ambigous as possible in the comments of the many blogs, but my goal was to learn more about the Company.

    Thank you for sharing your knowledge.

  • Report this Comment On August 31, 2011, at 6:50 AM, skypilot2005 wrote:

    Aug 30, 2011

    Great Panther Silver Extends High Grade Silver-Gold Mineralization and Discovers New Zones at Guanajuato

    http://www.greatpanther.com/s/NewsReleases.asp?ReportID=4760......

    Sky Pilot

    Official Web Link Assistant to Sinch

  • Report this Comment On September 03, 2011, at 1:44 PM, mihrtrn wrote:

    Chris, Ian is bashing SVM on Motley Fool, too. I think you responded. Will an article on SVM be done ????? Thanks !

    http://caps.fool.com/blogs/add-this-core-position-deep/63733...

  • Report this Comment On September 07, 2011, at 9:59 AM, XMFSinchiruna wrote:
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