TORONTO, Nov. 6, 2019 /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 nine-month periods ended September 30, 2019.
Q3 2019 Financial Highlights (compared to Q3 2018)
- Revenues of $5.9 million (Q3 2018
– $2.6 million)
- Silver equivalent ("AgEq") production of 427,131 ounces (Q3
2018 – 300,766 AgEq ounces)
- AgEq ounces payable sold of 370,376 (Q3 2018 – 258,920 AgEq
ounces payable)
- Mined tonnage 39% higher in 9-mos 2019 relative to 9-mos
2018
- Gross loss of $0.9 million (Q3
2018 – loss of $3.5 million)
- Total cash cost per Ag oz payable of $18.18 (Q3 2018 – $29.94)
- All-in sustaining cost net of byproducts per Ag oz payable
("AISC") of $28.46 (Q3 2018 –
$44.02)
- Net loss of $2.9 million or
$0.03/share (Q3 2018 – net loss of
$3.6 million or $0.04/share)
- Net working capital totaled $9.0
million at September 30, 2019
(June 30, 2019 – $3.8 million), following CAD$11.5 million equity financing to advance
exploration and capital expenditures
- Acquired an option to earn 100% interest on Silver City Project
in Saxony, Germany
"Metal recoveries were lower than planned this quarter, which
impacted revenues and by-product credits," stated Brendan Cahill, President and CEO. "Revenue was
also impacted by delayed ore processing and concentrate delivery
late in the quarter and we have taken steps to improve these
logistics going forward. Despite this, mining operations at Platosa
were steady, with ongoing improvement in silver grades through our
efforts to reduce dilution. Our focus going forward is to improve
grades and recoveries. The mine has now accessed the 910 elevation
in the Pierna Manto, which is expected to improve base metal grades
in the fourth quarter. Additionally, we changed management at our
processing facility in mid-October and have begun to realize
improved recoveries with the implementation of flow sheet
optimizations."
Financial Results
Financial results for the three- and nine-month periods ended
September 30, 2019 and 2018 were as
follows:
|
|
|
|
|
('000s of USD, except
amounts per share
and per ounce)
|
Q3
2019
|
Q3
2018
|
9-Mos
2019
|
9-Mos
2018
|
Revenue
(1)
|
5,943
|
2,570
|
19,795
|
18,358
|
Production
costs
|
(5,790)
|
(5,221)
|
(17,199)
|
(14,353)
|
Depletion and
amortization
|
(1,140)
|
(876)
|
(3,458)
|
(3,012)
|
Cost of
sales
|
(6,930)
|
(6,097)
|
(20,657)
|
(17,365)
|
Gross profit
(loss)
|
(987)
|
(3,527)
|
(862)
|
993
|
|
|
|
|
|
Corporate
administration
|
(1,151)
|
(1,021)
|
(3,540)
|
(3,926)
|
Exploration
|
(858)
|
(1,021)
|
(2,829)
|
(2,782)
|
Other
|
(200)
|
368
|
(439)
|
(47)
|
Net finance
cost
|
(71)
|
1,081
|
(459)
|
1,696
|
Income tax recovery
(expense)
|
365
|
538
|
(765)
|
516
|
Net income
(loss)
|
(2,902)
|
(3,582)
|
(8,894)
|
(3,550)
|
Income (loss) per
share – basic
|
(0.03)
|
(0.04)
|
(0.09)
|
(0.04)
|
|
|
|
|
|
Cash flow from (used
in) operations (2)
|
(1,554)
|
(4,125)
|
(2,324)
|
(1,401)
|
|
|
|
|
|
Production cost per
tonne (3)
|
339
|
291
|
304
|
246
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
18.18
|
29.94
|
12.58
|
8.50
|
All-in sustaining
cost ("AISC") per silver ounce payable ($/Ag oz)
|
28.46
|
44.02
|
22.51
|
20.54
|
Realized
prices:(4)
|
|
|
|
|
Silver –
($US/oz)
|
17.65
|
14.51
|
15.78
|
15.74
|
Lead –
($US/lb)
|
0.94
|
0.92
|
0.88
|
1.02
|
Zinc –
($US/lb)
|
1.07
|
1.11
|
1.15
|
1.30
|
|
|
(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.
|
Net revenues increased by 31% to $5.9
million in Q3 2019 ($2.6
million in Q3 2018) due to increased AgEq ounces payable of
370,376 (258,920 AgEq ounces payable) and higher realized silver
prices, partially offset by lower zinc prices.
Cost of sales, including depletion and amortization, increased
14% between Q3 2019 and Q3 2018 due to higher labour cost, higher
depreciation and amortization cost, increased administration cost
related to the replacement of the security contractor and
recruiting fees for key positions at both Platosa and Miguel Auza.
These increases were partially offset by improved efficiencies
realized at the mine leading to lower consumable items, in
particular, reduced use of explosives due to optimized drilling,
loading practices and load design.
The Company recorded a net loss of $2.9
million in Q3 2019 (Q3 2018 – net loss of $3.6 million). The primary contributors to the
loss were increased cost of sales, a fair value adjustment
difference in finance cost resulting from the outstanding
$0.50 warrants in Q3 2019 and a
difference in unrealized gains from currency hedges.
Exploration drilling continued on the Platosa property with
2,940 metres drilled in Q3 2019 (Q3 2018 – 1,809 metres).
Exploration costs of $0.9 million (Q3
2018 – $1.0 million) were lower
during the current quarter as the Company completed geophysics
programs at Platosa in 2018. Drilling also continued on the
Evolución property with 2,775 metres drilled in Q3 2019 (Q3 2018 –
2,933 metres).
Cash cost net of by-products per silver ounce payable (or Total
Cash Cost) were $18.18 in Q3 2019 (Q3
2018 – $29.94). AISC net of
byproducts per silver ounce payable in Q3 2019 of $28.46 resulted from higher Total Cash Cost (Q3
2018 – $44.02). AISC excluding
non-cash items was $27.38 in Q3 2019
(Q3 2018 – $41.44).
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 nine
month periods ended September 30,
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 nine-month periods ended September 30, 2019, for a reconciliation of these
measures to reported IFRS results.
Operating Results
Operating performance for the periods indicated below was as
follows:
|
Q3
|
Q3
|
9-Mos
|
9-Mos
|
|
2019
|
2018
|
2019
|
2018
|
Tonnes of ore
mined:
|
18,167
|
10,974
|
56,967
|
40,905
|
Tonnes of ore
processed:
|
17,235
|
11,141
|
53,968
|
40,743
|
Tonnes of historical
stockpile processed:
|
-
|
6,765
|
1,450
|
18,921
|
Total tonnes
processed:
|
17,235
|
17,907
|
55,419
|
59,663
|
Ore
grades:
|
|
|
|
|
|
|
Silver
(g/t)
|
512
|
416
|
520
|
461
|
|
Lead (%)
|
4.44
|
3.74
|
4.81
|
4.85
|
|
Zinc (%)
|
5.97
|
4.33
|
7.13
|
7.23
|
Historical stockpile
grades:
|
|
|
|
|
|
Silver
(g/t)
|
-
|
151
|
123
|
166
|
|
Lead (%)
|
-
|
1.36
|
1.22
|
1.57
|
|
Zinc (%)
|
-
|
1.45
|
1.44
|
2.05
|
Blended head grade
(ore and historical stockpiles):
|
|
|
|
|
|
Silver
(g/t)
|
512
|
316
|
509
|
367
|
|
Lead (%)
|
4.44
|
2.84
|
4.72
|
3.81
|
|
Zinc (%)
|
5.97
|
3.24
|
6.98
|
5.59
|
Recoveries:
|
|
|
|
|
|
|
Silver (%)
|
87.2
|
89.9
|
89.2
|
89.2
|
|
Lead (%)
|
77.7
|
74.2
|
78.9
|
78.8
|
|
Zinc (%)
|
76.5
|
78.2
|
78.1
|
81.3
|
Production(1)
|
|
|
|
|
|
|
Silver –
(oz)
|
257,497
|
171,227
|
794,746
|
643,390
|
|
AgEq ounces
(oz)(2)
|
427,131
|
300,766
|
1,532,330
|
1,420,050
|
|
Lead –
(lb)
|
1,304,538
|
823,982
|
4,444,278
|
3,947,367
|
|
Zinc –
(lb)
|
1,654,175
|
1,005,767
|
6,363,203
|
6,069,780
|
Payable:(3)
|
|
|
|
|
|
|
Silver ounces –
(oz)
|
227,350
|
147,308
|
730,322
|
562,693
|
|
AgEq ounces
(oz)(2)
|
370,376
|
258,920
|
1,414,106
|
1,234,284
|
|
Lead –
(lb)
|
1,182,211
|
758,761
|
4,203,295
|
3,671,523
|
|
Zinc –
(lb)
|
1,322,133
|
826,310
|
5,796,157
|
5,053,256
|
|
|
(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.
|
(2)
|
AgEq ounces
established using average realized metal prices during the period
indicated applied to the recovered metal content of the
concentrates.
|
(3)
|
Payable metal is
based on the metals shipped and sold during the period and may
differ from production due to these reasons.
|
Outlook
During Q3 2019, the operation accessed multiple ore faces with
significantly improved grades relative to Q3 2018. Development has
accessed the 910 elevation in the Pierna Manto, which is expected
to further improve base metal grades in the fourth quarter. The
Company will continue to implement efficiencies underground to
improve dilution and grades to achieve steady production rates. In
addition, the Company recently entered into an energy contract with
a private provider to reduce electricity costs at Platosa. The
benefits of this agreement are expected to be realized in H1
2020.
In Q4, the Company expects to achieve increased recoveries and
throughput at the processing facility as flow sheet upgrades are
implemented and approximately 1,000 tonnes of fresh ore that
remained in stockpile at quarter-end in Q3 are processed.
As noted above, minor adjustments at the Miguel Auza processing
facility are ongoing and the mill is processing a bulk sample from
Hecla's San Sebastian Mine. During
Q3 2019, approximately 6,635 tonnes were processed with a total of
12,000 tonnes processed year‐to‐date. The 25,000 tonne bulk sample
program is expected to continue into Q1 2020 with a formal
commercial milling arrangement to be determined in due course.
The Company is currently preparing to mobilize a drill rig to
the PDN target, located two kilometers north of the Platosa mine.
PDN is a skarn-style target believed to be related to
mineralization encountered by the Company nearby in 2012.
Additionally, underground access for a new exploration drift is
currently being established to in-fill and define mineralization
along the eastern extent of the Pierna and Rodilla mantos. The
Company is also drilling the Lechuzas structure on the Evolución
Property with drill results pending. Furthermore, preparation of
drill permitting for the Silver City Project in Saxony,
Germany is underway.
Management Update
The Company also announced that Marcello Locatelli has
stepped down as as Vice President Special Projects, but will
continue to provide consulting services to the
Company.
About Excellon
Excellon's 100%-owned Platosa Mine has been Mexico's highest-grade silver mine since
production commenced in 2005. The Company is focused on optimizing
Platosa's cost and production profile, discovering further
high-grade silver and carbonate replacement deposit mineralization
on the 21,000-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.