TORONTO, March 31, 2020 /CNW/ - Excellon Resources
Inc. (TSX:EXN, EXN.WT, OTC:EXLLF and FRA:E4X1) ("Excellon" or the
"Company") is pleased to report financial results for the
three- and twelve-month periods ended December 31, 2019.
2019 Financial and Operational Highlights (compared to
2018)
- Revenues of $26.5 million (2018 –
$24.3 million)
- Silver equivalent ("AgEq") production of 2.0 million ounces
(2018 – 1.9 million AgEq ounces)
- AgEq ounces payable sold of 1.8 million ounces (2018 – 1.6
million AgEq ounces payable)
- Mined tonnage 30% higher to 74,876 tonnes, a record for the
Platosa Mine (2018 – 57,475 tonnes)
- Total tonnage processed, including toll milling, increased 11%
to 89,478 tonnes, a record for the Miguel Auza Processing Facility
(2018 – 81,004 tonnes)
- Gross loss of $1.4 million (2018
– profit of $0.7 million)
- Total cash cost per Ag oz payable of $13.01 (2018 – $9.48)
- All-in sustaining cost net of byproducts per Ag oz payable
("AISC") of $23.57 (2018 –
$20.69)
- Net loss of $10.0 million or
$0.10/share (2018 – net loss of
$7.7 million or $0.08/share)
- Net working capital totaled $7.6
million at December 31, 2019
(2018 – $7.9 million)
- Acquired an option to earn 100% interest on Silver City Project
in Saxony, Germany
Q4 2019 Financial Highlights (compared to Q4 2018)
- Revenues of $6.4 million (Q4 2018
– $5.9 million)
- AgEq production of 469,707 ounces (Q4 2018 – 509,043 AgEq
ounces)
- AgEq ounces payable sold of 408,899 (Q4 2018 – 408,235 AgEq
ounces payable)
- Gross loss of $0.5 million (Q4
2018 – loss of $0.2 million)
- Total cash cost per Ag oz payable of $14.36 (Q4 2018 – $11.76)
- AISC per Ag oz payable of $26.76
(Q4 2018 – $21.06)
- Net loss of $1.1 million or
$0.01/share (Q4 2018 – net loss of
$4.1 million or $0.04/share)
Agreement with Wallbridge Mining on Beschefer
Property
- In Q1 2020, the Company entered an agreement with Wallbridge
Mining Company Limited ("Wallbridge") in satisfaction the option
agreement on the Beschefer Property (Quebec), pursuant to which Wallbridge has
issued to Excellon an additional three million common shares ("WM
Shares") and 500,000 warrants to purchase WM Shares with an
exercise price of $1.00 and a term of
five years
- Excellon currently holds 3.5 million WM Shares valued at C$X
(based on Wallbridge's closing price on March 30, 2020)
"Both the Platosa Mine and Miguel Auza Mill realized record
production tonnage during 2019," stated Brendan Cahill, President and CEO. "At Platosa,
mined tonnage was the highest since production commenced in 2005.
At Miguel Auza, total tonnage
processed from Platosa and San Sebastián was a record,
demonstrating scalability as we move towards a formal arrangement
with Hecla Mining Company to toll mill ore from San Sebastián on
long-term basis. These improvements were in large part due to the
integration of new members of our senior management team, both at
the business units and at the corporate level; we commend and
appreciate their dedication."
Mr. Cahill continued, "Despite increases in metal production,
higher electricity costs, treatment and refining charges and lower
base metal prices continue to significantly impact costs. We are
addressing the factors we can control by implementing business
improvement initiatives, including switching to a private energy
provider in Q2 2020 and investing in further optimizations and
automated processes. With the current global energy environment and
rapidly changing outlooks for precious and base metal prices, we
expect external factors to move in our favour over the coming 12-18
months."
"Operationally, we have taken numerous steps to ensure the
health of our people and local communities during the ongoing
COVID-19 pandemic, consistent with steps implemented by peer mining
and metals companies globally. We continue to closely monitor and
adjust accordingly to global trends in best practice and
recommendations for managing the issue from authorities in
Mexico, Canada and internationally."
"The next months will be challenging, but we look forward with
optimism. We anticipate closing the acquisition of Otis Gold in late April and moving forward with
our intention to apply for a listing on the NYSE American, LLC
exchange. We are considering market conditions closely and will aim
to complete the required consolidation to support the application
at the most appropriate time. We also look forward to providing
updates on the integration and development plans for Otis Gold's Kilgore Project in Idaho, as well as following up on exploration
successes in Mexico and commencing
the first ever drilling program for precious metals on our Silver
City Project in Saxony, Germany."
Financial Results
Financial results for the three- and twelve-month periods ended
December 31, 2019 and 2018 were as
follows:
|
|
|
|
|
('000s of USD, except
amounts per share
and per ounce)
|
Q4
2019
|
Q4
2018
|
2019
|
2018
|
Revenue
(1)
|
6,414
|
5,955
|
26,469
|
24,313
|
Production
costs
|
(5,757)
|
(5,213)
|
(23,216)
|
(19,566)
|
Depletion and
amortization
|
(1,250)
|
(1,004)
|
(4,708)
|
(4,016)
|
Cost of
sales
|
(7,007)
|
(6,217)
|
(27,924)
|
(23,582)
|
Gross profit
(loss)
|
(593)
|
(262)
|
(1,455)
|
731
|
|
|
|
|
|
Corporate
administration
|
(1,282)
|
(595)
|
(4,822)
|
(4,521)
|
Exploration
|
(1,023)
|
(1,115)
|
(3,853)
|
(3,897)
|
Other
|
1,222
|
51
|
782
|
4
|
Write-down of
investors
|
-
|
-
|
|
-
|
Net finance
cost
|
753
|
203
|
295
|
1,899
|
Income tax recovery
(expense)
|
(256)
|
(2,432)
|
(1,022)
|
(1,916)
|
Net income
(loss)
|
(1,181)
|
(4,150)
|
(10,075)
|
(7,700)
|
Income (loss) per
share – basic
|
(0.01)
|
(0.04)
|
(0.10)
|
(0.08)
|
|
|
|
|
|
Cash flow from (used
in) operations (2)
|
(1,707)
|
(1,507)
|
(4,031)
|
(2,908)
|
|
|
|
|
|
Production cost per
tonne (3)
|
286
|
268
|
300
|
252
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
14.36
|
11.76
|
13.01
|
9.48
|
All-in sustaining
cost ("AISC") per silver ounce payable ($/Ag oz)
|
26.76
|
21.06
|
23.57
|
20.69
|
Realized
prices:(4)
Silver –
($US/oz)
Lead –
($US/lb)
Zinc –
($US/lb)
|
17.12
0.87
1.04
|
14.74
0.89
1.17
|
16.07
0.88
1.12
|
15.37
0.98
1.28
|
|
|
(1)
|
Revenues are net of
treatment and refining charges
|
(2)
|
Cash flow from
operations before changes in working capital
|
(3)
|
Production cost per
tonne includes mining and milling costs excluding depletion and
amortization
|
(4)
|
Average realized
price is calculated on current period sale deliveries and does
not include the impact of prior period provisional adjustments in
the period
|
Annual net revenues increased by 9% to $26.5 million (2018 – $24.3 million) as AgEq payable ounces sold
increased to 1.8 million ounces. In Q4 2019, net revenues increased
by 8% to $6.4 million (Q4 2018 –
$5.9 million) due to higher silver
and lead prices of $17.12/oz and
$0.94/lb, respectively ($14.74/oz and $0.92/lb in Q4 2018) and higher payable lead and
zinc metals sold.
Cost of sales, including depletion and amortization increased
18% in 2019 compared to 2018 due to higher electricity costs,
increased administration costs relating to a new security
contractor, recruiting fees for key positions at both Platosa and
Miguel Auza and higher consumable
costs and usage. In Q4 2019, cost of sales increased 13% for the
same reasons as described above.
The Company recorded a net loss of $10.0
million in 2019 (2018 – net loss of $7.7 million) with contributors being increased
cost of sales and the exercise of the $0.50 Warrants, which were previously recorded as
a non-cash derivative liability. In Q4 2019, the decrease in net
loss of $3.6 million compared to Q4
2018 primarily resulted from realized and unrealized gains from
currency hedges, a gain related to the reversal of a legal
provision and a gain on the exercise of the $0.50 Warrants. These gains were partially offset
by higher production costs and share-based compensation
expense.
Exploration drilling from surface continued at Platosa, with
approximately 11,700 metres completed over three targets (11,000
metres in 2018) of which 800 metres were drilling during Q4 2019
(1,800 metres in Q4 2018). Drilling also continued on the Evolución
property targeting the Lechuzas, Laika and Negrillas exploration
targets with 10,600 metres drilled (7,800 metres in 2018) of which
5,300 metres were drilled in Q4 2019 (Q4 2018 – 3,700 metres).
Cash cost net of by-products per silver ounce payable (or Total
Cash Cost) increased in 2019 to $13.01 $9.48 in
2018) as treatment and refining charges ("TCRCs") materially
increased by $2.1 million or
approximately 180%. In Q4 2019, cash costs were higher as a result
of lower silver ounces produced and higher cash operating costs,
primarily relating to a 300% increase in TCRCs. These increased
TCRCs were in line with the global zinc and lead concentrate
producing industry, which saw a marked increase in TCRCs in 2019,
which has continued into 2020.
AISC net of by-products per silver ounce payable increased in
2019 to $23.57 due to higher Total
Cash Cost (2018 – $20.69). Excluding
non-cash items, AISC was $22.26 in
2019. AISC in Q4 2019 of $26.76 was
impacted by higher cash costs as described above and overall higher
AISC.
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 press release should
be read in conjunction with the Company's unaudited condensed
interim consolidated financial statements for the three and twelve
month periods ended December 31, 2019
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 references to "cash flow from operations before changes in
working capital items", "production cost per tonne", "cash cost per
silver ounce payable", and "AISC per silver ounce payable", 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 three- and twelve-month periods ended December 31, 2019, for a reconciliation of these
measures to reported IFRS results.
Operating Results
Operating performance for the periods indicated below was as
follows:
|
|
|
|
|
|
Q4
2019
|
Q4
2018
|
2019
|
2018
|
Tonnes of from
Platosa:
|
19,622
|
16,570
|
74,876
|
57,475
|
Ore processed
(t):
|
19,828
|
16,132
|
73,797
|
56,874
|
Historical stockpile
processed (t):
|
-
|
5,209
|
1,450
|
24,130
|
Platosa ore processed
(t):
|
19,828
|
21,341
|
75,247
|
81,004
|
Ore
grades:
|
|
|
|
|
|
|
Silver
(g/t)
|
435
|
556
|
497
|
488
|
|
Lead (%)
|
4.84
|
4.90
|
4.82
|
4.87
|
|
Zinc (%)
|
6.39
|
6.07
|
6.93
|
6.90
|
Historical stockpile
grades:
|
|
|
|
|
|
Silver
(g/t)
|
-
|
152
|
123
|
163
|
|
Lead (%)
|
-
|
1.49
|
1.22
|
1.55
|
|
Zinc (%)
|
-
|
1.57
|
1.44
|
1.95
|
Blended head grade
(ore and historical stockpiles):
|
|
|
|
|
|
Silver
(g/t)
|
-
|
458
|
409
|
391
|
|
Lead (%)
|
-
|
4.07
|
4.75
|
3.88
|
|
Zinc (%)
|
-
|
4.97
|
6.82
|
5.42
|
Recoveries:
|
|
|
|
|
|
|
Silver (%)
|
91.7
|
89.7
|
89.9
|
89.2
|
|
Lead (%)
|
80.2
|
81.2
|
79.2
|
79.4
|
|
Zinc (%)
|
76.5
|
79.4
|
77.7
|
80.8
|
Production(1)
|
|
|
|
|
|
|
Silver –
(oz)
|
259,282
|
274,324
|
1,054,029
|
917,714
|
|
AgEq ounces
(oz)(2)
|
469,707
|
509,043
|
2,002,036
|
1,929,092
|
|
Lead –
(lb)
|
1,690,610
|
1,498,851
|
6,134,888
|
5,446,218
|
|
Zinc –
(lb)
|
2,062,018
|
1,824,406
|
8,425,221
|
7,894,186
|
Payable:(3)
|
|
|
|
|
|
|
Silver ounces –
(oz)
|
232,034
|
242,857
|
962,355
|
805,550
|
|
AgEq ounces
(oz)(2)
|
408,899
|
408,235
|
1,823,005
|
1,642,519
|
|
Lead –
(lb)
|
1,563,313
|
1,401,515
|
5,766,608
|
5,073,038
|
|
Zinc –
(lb)
|
1,614,046
|
1,021,891
|
7,410,202
|
6,075,147
|
San Sebastián ore
processed (t)
|
6,398
|
-
|
14,231
|
-
|
|
|
(1)
|
Period deliveries
remain subject to assay and price adjustments on final settlement
with concentrate purchaser(s). Data has been adjusted to reflect
final assay and price adjustments for prior period deliveries
settled during the period. All 2018 tonnes mined from Platosa are
in wet metric tonnes (WMT)
|
(2)
|
AgEq ounces
established using average realized metal prices during the period
indicated applied to the recovered metal content of the
concentrates to reflect the revenue contribution of base metal
sales during the period
|
(3)
|
Payable metal is
based on the metals delivered and sold during the period, net of
payable deductions under the Company's offtake arrangements, and
will therefore differ produced ounces
|
(4)
|
Average realized
price is calculated on current period sale deliveries and does not
include the impact of prior period provisional adjustments in the
period
|
During 2019, a record 74,876 tonnes of ore was mined from
Platosa, the highest annual tonnage achieved since mining commenced
in 2005. Similarly, at the Miguel Auza Mill a record 89,478 tonnes
were processed in 2019, including 26,226 tonnes in Q4 2019 from
Platosa and Hecla's San Sebastián
Mine, demonstrating continued scalability of the facility.
Additionally, flow sheet upgrades completed during Q4 2019 resulted
in improved silver recoveries of over 91.7%.
Mine production during Q4 2019 accessed multiple ore faces,
although silver production was lower due to grade variability in
one of the main production stopes. Development continues to
progress towards the next production horizons utilizing the
730 and 731 ramps in Pierna and Rodilla to access the 895 and 903
elevations respectively and the 725 ramp in 623 to access the 890
elevation.
Outlook
The Company is currently focusing on several business
improvement initiatives to further stabilize production, reduce
costs and generate cashflow at the Platosa and Miguel Auza operations. The Company has
entered into an energy contract with a private Mexican energy
provider, which is expected to commence in Q2 2020 and result in up
to 20% savings on electricity prices. Additional opportunities to
realize cost savings include, (i) an improved maintenance program,
(ii) technology investments, including an underground mine
communications system and (iii) an enterprise resource planning
system to further optimize and automate procurement and
administrative processes. The Company expects the operations to be
modestly cashflow positive by the end of the 2020, assuming no
material changes to the current business environment from COVID-19,
commodity prices and cost fluctuations.
Additionally, after a successful bulk sample program on San
Sebastián ore at the Miguel Auza Mill, Excellon's senior operations
team will be working with San Sebastián's operations team to
discuss the timeline, required modifications and development plans
to process San Sebastián ore on a long-term basis.
The Company's 2020 exploration priorities include resource
growth and progressing its multiple projects by drill testing high
priority targets, upgrading existing targets and continuing to
develop new targets through field work and data interpretation. The
schedule for these programs depends on receiving required permits;
these timelines will depend on the stabilization of the COVID-19
pandemic situation and associated developments.
In Mexico, exploration plans
include ongoing underground drilling for resource definition and
expansion at Platosa, which recommenced in Q1 2020, and the
expansion of known mineralization at the Evolución Project where
the Company has commenced reassaying, recategorizing and relogging
of mineralization associated with the historical Calvario vein and
other secondary structures. The Company intends to incorporate
these results and drilling on the Lechuzas zone into a mineral
resource estimate and associated technical report. Additionally,
field work has commenced on the Evolución concession on targets
generated from remote sensing and regional compilation work.
At Silver City in Germany, the
Company has identified several high-priority drill targets based on
compilation of historical data, mapping, geochemistry surveys,
fluid inclusion studies and geophysical surveys. An initial 1,500 –
2,000 metre drill program is planned with permitting in
progress.
The Company expects to complete its acquisition of Otis in
April 2020 with integration
immediately thereafter. The Company will review current development
and exploration plans and strategies of the Kilgore asset and will provide further updates
in Q2 2020.
The Company also intends to file a listing application for the
NYSE American, LLC exchange (the "NYSE American") in Q2 2020,
depending on market conditions. The intended listing is
expected to create additional investor interest from the United States, Canada and other jurisdictions, improve
trading liquidity and investor confidence, and potentially result
in less volatility in the price of the Company's shares. A higher
post-consolidation share price could also help generate interest in
Excellon among certain investors. A higher share price may meet
investing criteria for certain institutional investors and
investment funds that may be prevented under their guidelines from
otherwise investing in Excellon at current prices.
Many North American focused precious metal production and
development companies are listed on the NYSE American, and Excellon
believes that such U.S.-listed companies generally have greater
access to U.S. institutional and retail investors and have better
overall trading liquidity compared to Excellon today. Excellon also
believes that any potential listing on the NYSE American would
increase the visibility of the Company's strategic position within
the U.S. relative to other publicly traded precious metal
companies.
About Excellon
Excellon's 100%-owned Platosa Mine has been Mexico's highest-grade silver mine since
production commenced in 2005. Excellon is focused on optimizing
Platosa's cost and production profile, discovering further
high-grade silver and carbonate replacement deposit mineralization
on the 14,000-hectare Platosa Project and epithermal silver
mineralization on the 100%-owned 45,000-hectare Evolución Property,
and capitalizing on current market conditions by acquiring
undervalued projects. The Company also holds an option on the 164
km2 Silver City Project in Saxony, Germany, a high-grade epithermal silver
district with 750 years of mining history and no modern
exploration.
Additional details on Excellon's 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, 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, and particularly the September
7, 2018 NI 43-101 technical report prepared by SRK
Consulting (Canada) Inc. with
respect to the Platosa Property. 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.