TORONTO, July 29, 2021 /CNW/ - Excellon Resources
Inc. (TSX: EXN) (TSX: EXN.WT) (NYSE: EXN) and (FRA:
E4X2) ("Excellon" or the "Company") is pleased to
report financial results for Q2 and H1 2021.
Q2 2021 Financial and Operational
Highlights (compared to Q2 2020)
- Revenues increased to $9.7
million (Q2 2020 – $0.7
million) and in line with Q1 2021
- Gross profit improved to $2.1
million (Q2 2020 – loss of $2.6
million) and increased by 16% compared to Q1 2021
- Total cash cost net of byproducts per silver ounce payable
decreased to $11.96 (Q2 2020 –
$51.14) and decreased by 11% from Q1
2021
- All-in sustaining cost ("AISC") per silver ounce payable
decreased to $26.69 (Q2 2020 –
$105.49) and increased by 10% from Q1
2021
- Production cost per tonne decreased to $273 per tonne (Q2 2020 – $2,498 per tonne) and decreased by 8% from
Q1 2021
- Fourth consecutive quarter of over 21,000 tonnes mined and
milled, with record tonnes mined (86,316) and milled (88,648) over
trailing twelve months, with sizeable stockpiles of ore and
concentrate at quarter-end that were processed and/or delivered in
early July
- Exploration expenditures increased 597% to $1.8 million (Q2 2020 – $258,000) and increased 80% from Q1 2021 as
drilling continued to ramp-up, including:
-
- Commencement of drilling and addition of second rig at
Silver City in Saxony following approval of the 2021 Drilling
Operation Plan;
- Surface and underground drilling on multiple targets at the
Platosa Mine and broader property; and
- Commencement of drilling at the Oakley Project in
collaboration with and funded by Centerra Gold Inc.
- Cash and marketable securities of $7.1 million at June 30,
2021 (December 31, 2020 –
$10.7 million)
"We realized another good quarter at Platosa, with financial
results partially impacted by delayed processing and delivery of
ore and concentrate at the quarter-end by weather conditions,"
stated Brendan Cahill, President and
CEO. "The operation delivered good improvements in cost-per-tonne
and cash costs, while AISC was higher in the quarter due to
sustaining capital expenditures, a part of which had been deferred
from earlier periods. Most importantly, we continued to ramp-up
exploration on our projects, with Platosa ongoing and Silver City
and Oakley getting started. We look forward to drilling results
from our resource growth and discovery-focused projects through the
remainder of the year."
Financial Results
Financial results for Q2 and H1 2021 and
2020 were as follows:
('000s of USD, except amounts per
share and per ounce)
|
Q2
2021
|
Q2 2020
(6)
|
H1
2021
|
H1 2020
(6)
|
Revenue
(1)
|
9,717
|
687
|
19,498
|
6,248
|
Production costs
|
(5,814)
|
(2,641)
|
(11,967)
|
(8,120)
|
Depletion and amortization
|
(1,773)
|
(666)
|
(3,563)
|
(1,935)
|
Cost of sales
|
(7,587)
|
(3,307)
|
(15,530)
|
(10,055)
|
Gross profit (loss)
|
2,130
|
(2,620)
|
3,968
|
(3,807)
|
|
|
|
|
|
Corporate
administration
|
(1,640)
|
(2,345)
|
(3,983)
|
(3,508)
|
Exploration
|
(1,800)
|
(258)
|
(2,873)
|
(631)
|
Other
(1)
|
(188)
|
1,172
|
(837)
|
567
|
Net finance
cost
|
(1,025)
|
554
|
(1,750)
|
(1,537)
|
Income tax recovery
(expense)
|
(22)
|
97
|
8
|
(855)
|
Net loss
|
(2,545)
|
(3,400)
|
(5,467)
|
(9,771)
|
Loss per share – basic
and diluted
|
(0.08)
|
(0.12)
|
(0.17)
|
(0.38)
|
Cash flow from (used
in) operations (2)
|
959
|
(4,038)
|
1,901
|
(5,885)
|
Production cost per
tonne (3)
|
273
|
2,498
|
285
|
432
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
11.96
|
51.14
|
12.74
|
21.55
|
AISC per silver ounce
payable ($/Ag oz) (4)
|
26.69
|
105.49
|
25.46
|
42.82
|
Realized
prices:(5)
|
|
|
|
|
Silver –
($US/oz)
|
26.89
|
14.60
|
26.59
|
14.70
|
Lead –
($US/lb)
|
0.97
|
0.76
|
0.95
|
0.76
|
Zinc –
($US/lb)
|
1.33
|
0.85
|
1.29
|
0.86
|
(1)
|
Revenues are net of treatment and refining charges ("TC/RCs").
Refer to Note 18 of the Q1 2021 Condensed Consolidated
Financial
Statements for detail of the comparative period reclassification of
foreign exchange differences on provisionally priced
sales.
|
(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)
|
AISC per silver ounce
payable excludes general and administrative and share-based payment
costs attributable to the Company's non-
producing projects. The comparative has been revised to conform
with the current allocation.
|
(5)
|
Average realized price is calculated on current period sale deliveries and does not include the impact of prior period
provisional adjustments in the period.
|
(6)
|
Q2 2020 results were
significantly impacted by the suspension of mining operations by
the Government of Mexico from
April 2nd to June 1st, 2020 (the
"Suspension") in response to the COVID-19 pandemic.
|
Revenues increased by $9.0 million
during Q2 2021 and $13.3 million in
H1 2021 relative to the comparative periods due to the Suspension
and resulting negligible revenues in Q2 2020, and also due to
ongoing strong metal prices and operational performance in Q2 and
H1 2021. Revenues of $9.7 million in
Q2 2021 were consistent with Q1 2021 revenues ($9.8 million) as payable metal sold and average
realized prices were stable over H1 2021.
Cost of sales increased by $4.3
million during Q2 2021 and $5.5
million for H1 2021 relative to the comparative periods,
primarily due to the Suspension. Production costs in Q2 2021 were
$0.4 million lower than Q1 2021,
partly reflecting $0.6 million in
incremental energy costs incurred in Q1 2021 relating to the polar
vortex and resulting significant increases in electricity costs in
February 2021. The increase in
depletion and amortization was driven primarily by increased
production following the Suspension in Q2 2020.
Administrative expense increased by $0.5
million in H1 2021 compared to H1 2020, primarily driven by
higher insurance expense relating to the Company's NYSE American
listing. Administrative expenses in Q2 2021 decreased $0.7 million relative to Q2 2020, including a
decrease of $0.8 million in
share-based payment expense as annual compensation grants were made
in Q1 2021 (and in Q2 in 2020).
The $1.5 million increase in
exploration expenditures in Q2 2021 primarily reflects increased
drilling at Platosa ($0.8 million),
permitting activity at the Kilgore Project ($0.2 million) and permitting and drilling at
Silver City ($0.5 million).
Exploration programs were limited by the initial outbreak of
COVID-19 globally in 2020 resulting in lower expenditures in the
comparative periods.
Net finance expense in Q2 2021 consists primarily of
$1.0 million of interest expense, of
which $0.6 million relates to the
accretion of the face value of the convertible debentures issued in
Q3 2020 and $0.4 million represents
the coupon interest payment on such convertible debentures at a 10%
rate, paid in common shares at the Company's election. The Company
elected to issue shares valued at $0.7
million to settle the coupon interest expense for H1
2021.
Net loss decreased by $0.9 million
in Q2 2021 and by $4.3 million in H1
2021 relative to the comparative periods, mainly driven by improved
gross profit, partly offset by higher exploration, finance and
other expenses in H1 2021 as discussed above.
Total cash cost per silver ounce payable decreased by 77% and
41% for Q2 2021 and H1 2021, respectively, relative to the
comparative periods, primarily driven by the increase in silver
ounces payable in 2021 compared to negligible production in Q2 2020
due to the Suspension. Total cash cost per silver ounce payable
decreased by 11% from Q1 2021 ($13.43) driven by a 4% decrease in cost of sales
and a 14% increase in by-product credits, partly offset by a 10%
decrease in silver ounces payable due to lower silver grades and
recoveries in Q2 2021.
AISC per silver ounce payable decreased by 75% and 41% for Q2
and H1 2021 relative to the respective comparative periods in 2020,
primarily driven by the increase in silver ounces payable in 2021
following the negligible production in Q2 2020 due to the
Suspension. AISC per silver ounce payable increased by 10%
from Q1 2021 ($24.34) driven
primarily by a 10% decrease in silver ounces payable due to lower
silver grades and recoveries in Q2 2021. Offsetting the Q1 2021
volume variance was a 20% or $0.8
million decrease in total cash costs net of by-product
credits, as discussed above, and a $0.4
million decrease in share-based payment costs (as annual
grants were made in Q1 2021), offset by an increase of $1.3 million or 124% in sustaining capital
expenditures in Q2 2021, which had been partially deferred from
earlier periods.
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
consolidated financial statements for the three- and six-month
periods ended June 30, 2021 and 2020,
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 and EDGAR at www.sec.com/edgar.
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 six-month periods ended June 30, 2021 and 2020, for a reconciliation of
these measures to reported IFRS results.
Operating Results & Outlook
Operating performance was as follows,
for the periods indicated below:
|
Q2
|
Q2
|
H1
|
H1
|
|
2021
|
2020
(4)
|
2021
|
2020
(4)
|
Tonnes
mined:
|
21,772
|
3,270
|
42,984
|
23,170
|
Tonnes
milled:
|
21,646
|
1,288
|
43,410
|
20,330
|
Grades:
|
|
|
|
|
|
Silver (g/t)
|
489
|
492
|
506
|
539
|
|
Lead (%)
|
5.14
|
5.37
|
5.24
|
5.44
|
|
Zinc (%)
|
6.48
|
6.91
|
6.61
|
6.78
|
Recoveries:
|
|
|
|
|
|
Silver (%)
|
87.0
|
92.9
|
88.4
|
89.5
|
|
Lead (%)
|
78.6
|
84.7
|
80.2
|
82.9
|
|
Zinc (%)
|
79.4
|
80.9
|
77.1
|
75.3
|
Production(1)
|
|
|
|
|
|
Silver
– (oz)
|
296,013
|
18,919
|
624,760
|
315,200
|
|
AgEq ounces (oz)(2)
|
487,009
|
34,924
|
1,004,825
|
558,666
|
|
Lead – (lb)
|
1,927,048
|
129,204
|
4,026,790
|
2,019,660
|
|
Zinc – (lb)
|
2,456,137
|
158,735
|
4,868,595
|
2,289,769
|
Payable:(3)
|
|
|
|
|
|
Silver ounces – (oz)
|
261,854
|
48,744
|
553,821
|
294,806
|
|
AgEq ounces (oz)(2)
|
425,654
|
81,679
|
868,981
|
515,869
|
|
Lead – (lb)
|
1,735,593
|
340,315
|
3,595,525
|
1,854,599
|
|
Zinc – (lb)
|
2,045,905
|
260,607
|
3,848,335
|
2,066,279
|
San Sebastián ore processed (t)
|
|
|
|
4,785
|
(1)
|
Subject to adjustment
following settlement with concentrate purchaser.
|
(2)
|
AgEq ounces
established using average realized metal prices during the period
indicated, applied to the recovered metal content
of the concentrates. AgEq ounces produced during Q1 2021
were lower than Q1 2020 as silver prices increased significantly
more
than base metal prices, resulting in base metal production
contributing less to silver equivalency.
|
(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
from produced ounces.
|
(4)
|
The comparative
results for Q2 and H1 2020 were significantly impacted by the
Suspension.
|
Strong and consistent production continued in Q2 2021 with
continued focus on improving maintenance practices at both sites
and enhancing the geological and engineering teams at Platosa. Head
grades were lower in Q2 2021 compared to Q2 2020 due to
higher mining dilution in narrower sections of the ore body.
The Miguel Auza plant continues to focus on improving metal
recoveries. Zinc recoveries improved relative to Q1 2021 following
plant upgrades in the zinc flotation circuit. More generally, metal
recoveries were impacted by weather conditions, power outages and
metallurgical variances. The combination of mill maintenance in
early June and weather conditions in late June resulted in sizeable
stockpiles of ore (1,634 tonnes) and concentrate (154 tonnes of
lead and 134 tonnes of zinc) at quarter-end, which were processed
and/or delivered in early July.
COVID-19 Update
Excellon continues to maintain measures to prevent COVID-19
among the workforce and local communities and to monitor the
effectiveness of these measures in mitigating any potential impact
on business activities. The Company's actions have been successful
to date and the pandemic has not had any material impact on
production or shipment of concentrate.
Miguel Auza Litigation Update
Further to the press release of July 2,
2021 providing a litigation update on San Pedro Resources SA
de CV ("San Pedro," a subsidiary of the Company), the formal
written decision has still not been released or made available for
review by the Company's legal counsel. The Company continues to
operate in the ordinary course and continues to evaluate various
alternatives regarding this matter.
About Excellon
Excellon's vision is to create wealth by realizing strategic
opportunities through discipline and innovation for the benefit of
our employees, communities, and shareholders. The Company is
advancing a
precious metals growth pipeline that includes: Platosa, Mexico's highest-grade silver
mine since production
commenced in 2005; Kilgore, a high quality advanced
exploration gold project in Idaho
with strong economics and significant growth and discovery
potential; and an option on Silver City, a high-grade epithermal
silver district in Saxony, Germany with 750 years of mining history and
no modern exploration. The
Company also aims to continue capitalizing
on current
market conditions by acquiring undervalued projects.
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 impact of the COVID-19 pandemic on the
Company's operations and results, the outcome and impact of the
legal action in Mexico (including
the dismissal of the appeal by the federal courts of Mexico on July 1,
2021) in respect of the La Antigua mineral concession that
is part of the Evolución Property in Zacatecas, mineral resources estimates, 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, the potential of the Company's properties,
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, the ability of the Company to maintain normal
operations during the COVID-19 pandemic, the outcome and impact of
the legal action in Mexico
(including the dismissal of the appeal by the federal courts of
Mexico on July 1, 2021) in respect of the La Antigua
mineral concession that is part of the Evolución Property in
Zacatecas, 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.
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.
Cautionary Note to U.S. Investors: The
terms "mineral resource," "measured mineral resource," "indicated
mineral resource" and "inferred mineral resource," as used on
Excellon's website and in its press releases are Canadian mining
terms that are defined in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects ("NI
43-101"). These Canadian terms are not defined terms under United
States Securities and Exchange Commission ("SEC") Industry Guide 7
and are normally not permitted to be used in reports and
registration statements filed with the SEC by U.S. registered
companies. The SEC permits U.S. companies, in their filings
with the SEC, to disclose only those mineral deposits that a
company can economically and legally extract or
produce. Accordingly, note that information describing the
Company's "mineral resources" is not directly comparable to
information made public by U.S. companies subject to reporting
requirements under U.S. securities laws. U.S. investors are urged
to consider closely the disclosure in the Company's Form 40-F which
may be secured from the Company, or online
at http://www.sec.gov/edgar.shtml.
SOURCE Excellon Resources Inc.