TORONTO, March 27, 2014 /CNW/ - Excellon Resources Inc.
(TSX:EXN; OTC:EXLLF) ("Excellon" or the "Company"),
Mexico's highest grade silver
producer, is pleased to report financial results for three and
twelve month periods ended December 31,
2013.
2013 Annual and Q4 Highlights
- Revenue of $33.3 million (Q4 -
$7.4 million)
- Sales of 2,038,295 AgEq ounces (Q4 - 545,428 AgEq ounces),
including 1,403,783 oz Ag, 7,237,003 lb Pb and 9,683,329 lb
Zn
- Mine operating earnings of $8.7
million (Q4 - $0.2
million)
- Net loss of $5.0 million or
$0.09/share (Q4 - net loss of
$2.4 million or $0.04/share), including a deferred tax accounting
adjustment of $0.8 million recognized
in Q4 as a result of the recently enacted Mexican tax
reforms
- Cash flow from operations of $1.7
million or $0.03/share before
changes in working capital (Q4 - $0.8
million or $0.01/share)
- Net cash costs per payable silver ounce of $10.51 (Q4 - $13.02)
- All-in costs per payable AgEq ounce of $17.29 (Q4 - $16.09)
- Cash corporate administrative costs reduced by $2.2 million or 36% relative to 2012
- Cash, marketable securities and current accounts receivable
totaled $7 million at December 31, 2013
- Working capital totaled $10.3
million at December 31,
2013
"During 2013, and particularly during the third
quarter, we demonstrated our ability to generate cash flow at
Platosa despite the significant decrease in silver prices," stated
Brendan Cahill, President and Chief
Executive Officer. "The biggest impact on our profitability was the
significant volatility in the silver price, particularly during the
second and fourth quarters. We have now taken steps to reduce the
effect of these fluctuations and we are confident that these
adjustments will improve cash flow and profitability going forward.
Additionally, just as we realized cost reductions throughout the
year, we will continue to further reduce costs at the mine site
level through 2014."
"Our strong, dedicated and valuable operations
team should be proud of producing the most ounces from Platosa
since 2009 and the most tonnes in the mine's history. In 2014, we
aim to build on this improved production profile, while continuing
to enhance our commitment to the highest levels of health and
safety protocols and training."
Financial and Operating Highlights
Financial results for the three and twelve month
periods ended December 31, 2013 and
2012 are as follows:
|
|
|
|
|
('000's of USD, except amounts
per share
and per ounce) |
Q4 2013 |
Q4 2012 |
2013 |
2012 |
Revenue |
7,445 |
9,113 |
33,332 |
36,273 |
Production costs |
(5,987) |
(4,153) |
(20,692) |
(16,401) |
Depletion and amortization |
(1,260) |
(860) |
(3,910) |
2,788 |
Cost of sales |
(7,247) |
(5,013) |
(24,602) |
(19,189) |
Gross profit (loss) |
198 |
4,100 |
8,730 |
17,084 |
|
|
|
|
|
Corporate administration |
(1,448) |
(1,854) |
(5,831) |
(7,338) |
Exploration |
(212) |
(3,650) |
(6,718) |
(9,907) |
Other (incl. finance cost) |
512 |
(417) |
202 |
685 |
Income tax recovery (expense) |
(1,457) |
8,481 |
(1,423) |
7,884 |
Net income (loss) |
(2,406) |
6,660 |
(5,041) |
8,408 |
Earnings per share - basic |
(0.04) |
0.12 |
(0.09) |
0.15 |
|
|
|
|
|
Cash flow from operations
(1) |
790 |
124 |
1,699 |
3,631 |
Cash flow from operations per share - basic |
0.01 |
0.00 |
0.03 |
0.07 |
|
|
|
|
|
Net cash cost per payable silver ounce ($/Ag
oz) |
13.02 |
9.88 |
10.51 |
6.80 |
All-in cost per payable silver equivalent
ounce
($/AgEq oz) |
16.09 |
18.85 |
17.29 |
16.78 |
(1) Cash flow from operations
before changes in working capital |
Revenues during 2013 decreased 8% from 2012,
despite a 52% increase in tonnes produced, due to a 33% decrease in
the average realized silver price from $31.03 to $20.93. The decrease in the silver price
resulted in lower revenues as well as significant charges against
revenue during 2013, both of which affected income and cash flow
(as further described below). Total revenues for 2013 were
also lower than anticipated due to inclement weather at year-end on
the west coast of Mexico delaying
the delivery of $1.0 million in
concentrate until early 2014. Costs of sales increased 28%
during 2013 due to the significant increase in produced tonnage
during the year.
The Company's net losses during 2013 and Q4 were
primarily the result of $2.0 million
(Q4 - $0.9 million) in negative price
adjustments relating to decreases in the price of silver between
the deliver date and final settlement date (up to four months
later) of concentrate sold during the periods (including
$0.6 million of unsettled deliveries
marked-to-market at the end of Q4 2013).
The Q4 revenue adjustments of $0.9 million were the major contributor to the
relatively low mine operating earnings of $0.2 million during the quarter. The
Company has entered into new concentrate purchase terms, which are
expected to reduce the effect of similar revenue adjustments in
2014/2015.
Other significant items contributing to the
Company's net losses during 2013 and Q4 include: (i) a one-time
non-cash income tax provision of $0.8
million resulting from the initial recognition of the
Mexican mining tax reform; (ii) expensed drilling and exploration
totaling $6.7 million during the
year; (iii) an unrealized loss of $1.5
million (Q4 - $0.4 million)
from a decrease in the fair value of 344,000 units of the Sprott
Physical Silver Trust held by the Company, representing an
underlying investment in 134,732 ounces of silver; and (iv)
non-cash charges totaling $1.6
million (Q4 - $0.5 million) in
respect of share based compensation.
Net working capital decreased $5 million during 2013 to $10.3 million (December
31, 2012 - $15.3 million),
primarily due to exploration expenditures of $6.7 million and cash repayments of $4.5 million during the year related to the
negative revenue reductions discussed above. Cash, marketable
securities and current accounts receivable decreased to
$7 million at December 31, 2013 ($15.3
million at December 31,
2012).
Cash corporate administration expenses decreased
by approximately $2.2 million or 36%
during 2013 relative to 2012 as the Company implemented cost
reduction measures in the Toronto
office. Cash compensation, in particular, was $1.4 million or 45% lower in 2013 than in 2011
and 2012.
During the first two quarters of 2013, the
Company expended $6.2 million in
drilling and exploration expenditures at Platosa and the Beschefer
and DeSantis properties. Subsequent to May 2013, exploration expenses were reduced
significantly. Due to current silver prices and market
conditions, the Company has suspended drilling at La Platosa,
though drill rigs remain on site and available to resume
exploration at short notice.
The Company has committed going forward to
providing costs per silver equivalent ounce on a "payable" basis,
rather than on a "produced" or "sold" basis, as the payable basis
provides a more accurate measure of the cash income received from
each silver equivalent ounce sold by the Company. On the payable
metric, costs per ounce appear higher than they may historically
have appeared when reported on a produced or sold basis.
Cash cost per payable silver ounce net of
by-products increased during 2013 to $10.51 (2012 - $6.80). This increase was primarily
attributable to lower grades of silver (-15%) and zinc (-32%) in
the mantos mined during 2013 relative to 2012, lower recoveries in
respect of lead and zinc (as discussed in Operating Highlights,
below) and related lower by-product credits on silver production,
as well as higher costs in respect of certain consumables that are
not expected to recur in 2014. All-in cost per payable silver
equivalent ounce was slightly higher relative to 2012 at
$17.29 versus $16.78.
Relative to Q3 2013, net cash costs and all-in
costs increased, primarily due to lower grades mined during Q4 (684
g/t Ag in Q4 versus 975 g/t Ag in Q3) offsetting the increased
tonnage milled (21,186 tonnes in Q4 versus 16,707 tonnes in
Q3). As in Q3, during Q4 (i) significant expenditures were
made on electricity to manage water inflows in the 6A Manto (which
were resolved in late February 2014),
(ii) the areas mined during the quarter contained lower lead and
zinc grades, reducing by-product credits and silver equivalent
ounces, and (iii) recoveries were lower than in previous periods
(see Operating Highlights for a further discussion). The
Company realized significant improvements in each of these respects
in early 2014.
All financial information is prepared in
accordance with IFRS, and all dollar amounts are expressed in U.S.
dollars unless otherwise specified. The information in this news
release should be read in conjunction with the Company's unaudited
consolidated financial statements for the year ended December 31, 2013 and associated management
discussion and analysis ("MD&A") which are available from the
Company's website at www.excellonresources.com and under the
Company's profile on SEDAR at www.sedar.com.
The discussion of financial results in this
press release includes reference to "cash flows from operations
before changes in working capital items", "cash cost per payable
silver equivalent ounce net of byproducts" and "all-in cost per
payable silver equivalent ounce," which are non-IFRS performance
measures. The Company presents these measures to provide additional
information regarding the Company's financial results and
performance. Please refer to the Company's MD&A for the year
ended December 31, 2013, for a
reconciliation of these measures to reported IFRS results.
Production Highlights
Mine production for the three and twelve months
periods ended December 31, 2013 and
2012 was as follows:
|
|
|
|
|
|
|
|
Q4 |
Q4 |
Year |
Year |
|
2013* |
2012 |
2013* |
2012 |
Tonnes of ore produced |
20,481 |
11,139 |
70,490 |
46,495 |
Tonnes of ore processed |
21,186 |
11,452 |
69,862 |
48,199 |
Ore grades: |
|
|
|
|
|
|
Silver (g/t) |
684 |
751 |
718 |
846 |
|
Silver (oz/T) |
19.96 |
21.89 |
20.94 |
24.67 |
|
Lead (%) |
5.27 |
6.59 |
6.14 |
6.75 |
|
Zinc (%) |
5.08 |
11.21 |
8.00 |
11.81 |
Recoveries: |
|
|
|
|
|
|
Silver (%) |
89.9 |
94.4 |
92.6 |
93.4 |
|
Lead (%) |
71.2 |
85.7 |
79.4 |
82.1 |
|
Zinc (%) |
75.8 |
83.7 |
80.2 |
84.8 |
Production: |
|
|
|
|
|
|
Silver - (oz) |
411,277 |
251,065 |
1,409,852 |
1,081,165 |
|
Silver equivalent ounces
(oz) (1) |
545,428 |
360,831 |
2,055,567 |
1,550,964 |
|
Lead - (lb) |
1,720,303 |
1,393,067 |
7,342,108 |
5,731,160 |
|
Zinc - (lb) |
1,857,066 |
2,387,785 |
9,876,955 |
10,450,813 |
Sales: |
|
|
|
|
|
|
Silver ounces - (oz) |
393,908 |
233,773 |
1,403,783 |
1,060,211 |
|
Silver equivalent ounces
(oz) (1) |
513,568 |
337,642 |
2,038,295 |
1,523,422 |
|
Lead - (lb) |
1,530,833 |
1,324,026 |
7,237,003 |
5,638,330 |
|
Zinc - (lb) |
1,660,102 |
2,253,698 |
9,683,329 |
10,316,726 |
Payable: |
|
|
|
|
|
|
Silver ounces - (oz) |
360,285 |
208,702 |
1,279,364 |
951,707 |
|
Silver equivalent ounces
(oz) (1) |
466,391 |
326,729 |
1,841,335 |
1,476,413 |
|
Lead - (lb) |
1,453,171 |
1,254,681 |
6,868,685 |
5,331,554 |
|
Zinc - (lb) |
1,376,336 |
1,892,706 |
8,117,208 |
8,660,607 |
Realized prices:
(2) |
|
|
|
|
|
|
Silver - ($US/oz) |
20.02 |
35.56 |
20.93 |
31.03 |
|
Lead - ($US/lb) |
0.96 |
1.03 |
0.94 |
0.91 |
|
Zinc - ($US/lb) |
0.87 |
0.93 |
0.86 |
0.90 |
* |
Q4 data remains subject to adjustment following
settlement with concentrate purchaser, Q3, Q2 and Q1 data has been
adjusted to reflect settlement with concentrate purchaser. |
|
(1) Silver equivalent ounces
established for each period using prices of US$24 per oz Ag,
US$0.90 per lb Pb, and US$0.90 per lb Zn applied to the recovered
metal content of the concentrates. |
|
(2) Average realized price is
calculated on current period sale deliveries and does not include
prior period provisional adjustments in the period. A
complete reconciliation of net realized prices is set out in the
Company's 2013 MD&A. |
|
Note: "t"= tonne; "T"= ton |
Production of over 1.4 million ounces of silver
was the Company's highest annual production at La Platosa since
2009. The Company realized a significant improvement in tonnes per
day ("tpd") of production during the latter half of the year from
~175 tpd during Q1/Q2 to ~210 tpd in Q3/Q4 (including 223 tpd in
Q4) as the benefits of underground development work during the
first half of the year were realized and the Company began
identifying further operational efficiencies and improving water
management. Production of 2.1 million silver equivalent ounces
during the year was in line with the Company's revised target
(announced September 17, 2013) and
silver grades were generally in line with budget (718 g/t Ag versus
728 g/t Ag budgeted).
During the fourth quarter, ore was produced
primarily from the 5A, 6A and Guadalupe
North mantos. Tonnes milled represented a 27% increase on
the previous quarter for a total of 21,186 tonnes. Grades were in
line with estimates for the La Platosa resources mined during the
period. As in the third quarter, recoveries were slightly
lower due to (i) significant remnant grouting from historical water
management measures in certain areas mined, (ii) oxide
mineralization in the 5A manto, and (iii) similar lead and zinc
grades affecting the mill's differential separation of each metal.
Recoveries of all metals have exceeded budget to date in 2014.
Outlook
Excellon is targeting 2014 production of 1.4 to
1.6 million ounces of silver, 7.5 to 8.5 million pounds of lead and
9.0 to 10 million pounds of zinc or 2.1 to 2.3 million silver
equivalent ounces (based on $24
silver, $0.90 lead and $0.90 zinc).
In December 2013,
Mexico passed tax reform
legislation that took effect January 1,
2014. The reform includes, among other items, cancellation
of the reduction in the Mexican corporate tax rate from 30 per cent
to 28 per cent by 2015, a special mining duty of 7.5% on taxable
mining profits, fewer allowable deductions excluding interest and
capital depreciation, and a 0.5-per-cent environmental tax on gold
and silver revenue. The tax reform is expected to impact the
Company's future earnings and cash flows. The Company intends to
minimize the impact of these reforms to the full extent possible
and, additionally, still holds significant loss carry forwards from
its acquisition of Silver Eagle Mines Inc. in 2009, which may be
applied against profits going forward.
Corporate Governance Updates
The Board of Directors of the Company is also
pleased to announce the implementation of a Majority Voting Policy
and the approval of an Advance Notice Bylaw, each as further
described below.
Advance Notice Bylaw
The Advance Notice Bylaw requires that advance
notice be provided to the Company in circumstances where
nominations of persons for election to the Board are made by
shareholders other than pursuant to: (i) a requisition to call a
shareholders meeting; or (ii) a shareholder proposal, in each case
as made in accordance with the provisions of the Business
Corporations Act (Ontario) (the
"Act"). Among other things, the Advance Notice Bylaw fixes a
deadline by which shareholders must notify the Company of
nominations of persons for election to the Board and provide that
the same information about the proposed nominee as one would be
required to include in a dissident proxy circular under applicable
securities laws must be provided to the Company by the
deadline.
In the case of an annual meeting of
shareholders, notice to the Company must be made not less than 30
and not more than 65 days prior to the date of the annual meeting;
provided however, that in the event that the annual meeting is to
be held on a date that is less than 40 days after the date on which
the first public announcement of the date of the annual meeting was
made, notice may be made not later than the close of business on
the 10th day following such public announcement.
In the case of a special meeting of shareholders
(which is not also an annual meeting) notice to the Company must be
made no later than the close of business on the 15th day following
the day on which the first public announcement of the date of the
special meeting was made.
The Advance Notice Bylaw provides a clear
process for shareholders to follow to nominate directors and set
out a reasonable timeframe for nominee submissions along with a
requirement for accompanying information. The purpose of the
Advance Notice Bylaw is to treat all shareholders fairly by
ensuring that all shareholders, including those participating in a
meeting by proxy rather than in person, receive adequate notice of
the nominations to be considered at a meeting and can thereby
exercise their voting rights in an informed manner. In
addition, the Advance Notice Bylaw should assist in facilitating an
orderly and efficient meeting process.
In accordance with the provisions of the Act,
the Advance Notice Bylaw will be subject to confirmation by
shareholders at the next annual meeting of shareholders of the
Company. A copy of the by-law has been filed under the
Company's profile on SEDAR at www.sedar.com.
Majority Voting Policy
Under the Majority Voting Policy, any nominee
for director of the Company who receives a greater number of votes
"withheld" from his or her election than votes "for" such election
shall immediately following the shareholders' meeting tender his or
her resignation from the Board for consideration by the nominating
and corporate governance committee of the Board (the "Committee").
The Committee shall consider the resignation and recommend to the
Board the action to be taken with respect to such resignation,
which may include acceptance of the resignation or rejection of the
resignation. The Committee shall be expected to recommend
acceptance of the resignation unless exceptional circumstances
exist that would warrant the applicable director continuing to
serve on the Board. The Board has 90 days following the date of the
shareholders' meeting at which the election occurred to decide
whether to accept the resignation. Promptly after the Board's
decision, the Company will disseminate a press release disclosing
whether or not the director's resignation was accepted. If
the Board determined not to accept the resignation, the press
release must disclose reason or reasons for rejecting the tendered
resignation. The Majority Voting Policy is accessible on the
Company's website at www.excellonresources.com.
Annual Meeting
The annual meeting of Excellon shareholders will
be held at 4:00 p.m. (ET) on
April 29, 2014 at 330 Bay Street in
Toronto, Ontario. Excellon
shareholders as of March 11, 2014 are
entitled to attend and vote their shares at the annual
meeting. Materials outlining the matters to be approved at
the annual meeting will be mailed in early April 2014.
About Excellon
Excellon's 100%-owned and royalty-free La
Platosa Mine in Durango is Mexico's highest grade silver mine, with lead
and zinc by-products making it one of the lowest cash cost silver
mines in the country. The Company is positioning itself to
capitalize on undervalued projects by focusing on increasing La
Platosa's profitable silver production and near-term mineable
resources.
Additional details on the La Platosa Mine and
Excellon's exploration properties are available at
www.excellonresources.com.
Forward-Looking Statements
The Toronto Stock Exchange has not reviewed
and does not accept responsibility for the adequacy or accuracy of
the content of this Press Release, which has been prepared by
management. This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section
27E of the Exchange Act. Such statements include, without
limitation, statements regarding the future results of operations,
performance and achievements of the Company, including potential
property acquisitions, the timing, content, cost and results of
proposed work programs, the discovery and delineation of mineral
deposits/resources/reserves, geological interpretations, proposed
production rates, potential mineral recovery processes and rates,
business and financing plans, business trends and future operating
revenues. Although the Company believes that such statements are
reasonable, it can give no assurance that such expectations will
prove to be correct. Forward-looking statements are typically
identified by words such as: believe, expect, anticipate, intend,
estimate, postulate and similar expressions, or are those, which,
by their nature, refer to future events. The Company cautions
investors that any forward-looking statements by the Company are
not guarantees of future results or performance, and that actual
results may differ materially from those in forward looking
statements as a result of various factors, including, but not
limited to, variations in the nature, quality and quantity of any
mineral deposits that may be located, significant downward
variations in the market price of any minerals produced
[particularly silver], the Company's inability to obtain any
necessary permits, consents or authorizations required for its
activities, to produce minerals from its properties successfully or
profitably, to continue its projected growth, to raise the
necessary capital or to be fully able to implement its business
strategies. All of the Company's public disclosure filings may be
accessed via www.sedar.com and readers are urged to review these
materials, including the technical reports filed with respect to
the Company's mineral properties. This press release is not, and is
not to be construed in any way as, an offer to buy or sell
securities in the United
States.
SOURCE Excellon Resources Inc.