TORONTO, June 1, 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-month period ended March 31,
2020.
Q1 2020 Financial and Operational Highlights (compared to Q1
2019)
- Revenues of $6.6 million (Q1 2019
– $5.2 million)
- Production of 523,742 silver equivalent ("AgEq") ounces (Q1
2019 – 522,261 AgEq ounces)
- AgEq ounces payable sold of 434,190 (Q1 2019 – 383,438 AgEq
ounces payable)
- Gross loss of $0.1 million (Q1
2019 – loss of $0.6 million)
- Total cash cost net of byproducts per Ag oz payable of
$15.35 (Q1 2019 – $11.71)
- All-in sustaining cost net of byproducts per Ag oz payable
("AISC") of $26.52 (Q1 2019 –
$25.35)
- Net loss of $6.4 million or
$0.06/share (Q1 2019 – net loss of
$3.8 million or $0.04/share)
- Cash and cash equivalents of $8.4
million at March 31, 2020
(December 31, 2019 – $6.3 million)
- Successful completion of the acquisition of Otis Gold Corp.
("Otis")
- Preparations underway for safe restart of Mexican operations
following the suspension of non-essential activities in accordance
with Mexican government directives to combat COVID-19 (refer to
additional press release issued this morning)
"We are looking forward to resuming operations at Platosa and
Miguel Auza in a safe and healthy
manner and doing our part to prevent the further spread of COVID-19
in Mexico," stated Brendan Cahill, President and CEO. "Fortunately,
our people have not suffered any cases of the disease and
incidences in our surrounding communities have been minimal."
"Our markets are beginning to improve after the extreme swings
of recent months in metal prices, currencies and input costs, which
significantly impacted our financial results in the first quarter,
despite a strong quarter operationally. Looking forward, the
improving gold to silver ratio is positive for the entire precious
metals space and the better outlook on industrial metals is
particularly positive for Platosa."
Financial Results
Financial results for the three-month periods ended March 31, 2020 and 2019 were as follows:
|
|
|
('000s of USD, except
amounts per share
and per ounce)
|
Q1
2020
|
Q1
2019
|
Revenue
(1)
|
6,615
|
5,179
|
Production
costs
|
(5,479)
|
(4,612)
|
Depletion and
amortization
|
(1,269)
|
(1,169)
|
Cost of
sales
|
(6,748)
|
(5,781)
|
Gross profit
(loss)
|
(133)
|
(602)
|
|
|
|
Corporate
administration
|
(1,163)
|
(1,361)
|
Exploration
|
(373)
|
(1,005)
|
Other
|
(1,659)
|
(274)
|
Net finance
cost
|
(2,091)
|
(52)
|
Income tax recovery
(expense)
|
(953)
|
(491)
|
Net income
(loss)
|
(6,372)
|
(3,785)
|
Income (loss) per
share – basic
|
(0.06)
|
(0.04)
|
|
|
|
Cash flow from (used
in) operations (2)
|
(1,778)
|
(977)
|
|
|
|
Production cost per
tonne (3)
|
292
|
272
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
15.35
|
11.71
|
All-in sustaining
cost ("AISC") per silver ounce payable ($/Ag oz)
|
26.52
|
25.35
|
|
|
|
Realized
prices:(4)
|
|
|
Silver –
($US/oz)
|
15.04
|
15.45
|
Lead –
($US/lb)
|
0.79
|
0.92
|
Zinc –
($US/lb)
|
0.90
|
1.26
|
|
|
(1)
|
Revenues are net of
treatment and refining charges ("TC/RCs").
|
(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 28% to $6.6
million (Q1 2019 – $5.2
million) due to higher payable silver and lead metals
produced and sold. Net revenues were impacted by materially higher
TC/RCs of $1.8 million (Q1 2019 –
$0.6 million).
Cost of sales, including depletion and amortization increased
17% in Q1 2020 compared to Q1 2019, driven primarily by higher
production costs resulting from high electricity and labour
expenses. The Company is currently implementing several initiatives
to materially reduce operating costs, including entering a new
energy contract and permanently reducing the labour force.
The Company recorded a net loss of $6.4
million in Q1 2020 (Q1 2019 – net loss of $3.8 million). The primary contributors to the
loss were unrealized foreign exchange losses, unrealized losses
from currency hedges and a negative variance in costs of goods
sold. These losses were partially offset by an overall $1.4 million net increase in revenue,
$0.6 million lower exploration cost
and $0.4 million lower share-based
compensation expense.
Exploration drilling focused on the Evolución Project with one
diamond drill rig drilling approximately 1,158 meters (Q1 2019 –
2,545 metres at Evolución and 2,143 metres at Platosa).
Cash cost net of by-products per silver ounce payable (or Total
Cash Cost) increased to $15.35 in Q1
2020 ($11.71 in Q1 2019) despite 41%
higher silver production as TC/RCs increased by $1.2 million or approximately 200%. These
increased TC/RCs were in line with the global zinc and lead
concentrate producing industry, which saw another marked increase
in TC/RCs in 2019, which continued into 2020. In recent months, the
market for concentrates has improved and the Company is reviewing
options to improve TC/RCs.
AISC net of by-products per silver ounce payable increased to
$26.52 in Q1 2020 due to higher
all-in production costs, TC/RCs and capital expenditures.
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 March 31, 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.
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 March 31, 2020, for a reconciliation of these
measures to reported IFRS results.
Operating
Results
Operating performance for the periods indicated below was as
follows:
|
Q1
|
Q1
|
|
2020
|
2019
|
Tonnes of from
Platosa:
|
19,899
|
19,496
|
Ore processed
(t):
|
19,042
|
16,769
|
Historical stockpile
processed (t):
|
-
|
1,450
|
Platosa ore processed
(t):
|
19,042
|
18,219
|
Ore
grades:
|
|
|
|
|
Silver
(g/t)
|
542
|
534
|
|
Lead (%)
|
5.44
|
5.01
|
|
Zinc (%)
|
6.78
|
8.00
|
Historical stockpile
grades:
|
|
|
|
Silver
(g/t)
|
-
|
123
|
|
Lead (%)
|
-
|
1.22
|
|
Zinc (%)
|
-
|
1.44
|
Blended head grade
(ore and historical stockpiles):
|
|
|
|
Silver
(g/t)
|
-
|
502
|
|
Lead (%)
|
-
|
4.71
|
|
Zinc (%)
|
-
|
7.48
|
Recoveries:
|
|
|
|
|
Silver (%)
|
89.3
|
89.7
|
|
Lead (%)
|
82.8
|
74.6
|
|
Zinc (%)
|
74.9
|
78.1
|
Production(1)
|
|
|
|
|
Silver –
(oz)
|
296,281
|
260,445
|
|
AgEq ounces
(oz)(2)
|
523,742
|
522,261
|
|
Lead –
(lb)
|
1,890,456
|
1,376,423
|
|
Zinc –
(lb)
|
2,131,034
|
2,209,624
|
Payable:(3)
|
|
|
|
|
Silver ounces –
(oz)
|
246,062
|
174,194
|
|
AgEq ounces
(oz)(2)
|
434,190
|
383,438
|
|
Lead –
(lb)
|
1,514,285
|
890,712
|
|
Zinc –
(lb)
|
1,805,672
|
1,919,733
|
San Sebastián ore
processed (t)
|
4,785
|
-
|
|
|
(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. Tonnes Mined and Ore processed are in
DMT.
|
(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 Q1 2020, the operation accessed multiple ore faces with
improved silver and lead grades. Zinc grades were more variable
than expected due to grade variability among the four mantos,
leading to lower zinc recoveries. Development continues to
progress towards the next production horizons utilizing 730
and 731 ramps in Pierna and Rodilla in the 895 and 903 elevations
respectively and the 725 ramp in 623 to access the 890
elevation.
COVID-19 Update
March 31, 2020, the Mexican
government directed the suspension of all non-essential activities,
including mining and related operations, in response to the growing
concerns around the spread of COVID-19. During the temporary
suspension, the Company progressed several initiatives that are
expected to materially reduce operating costs once Platosa
restarts, including switching to a new energy provider, reducing
the labour force and negotiating or implementing a series of other
optimization or cost-saving initiatives. As the state of emergency
has been lifted, the Company has commenced activities to restart
operations. Please also refer to the Company's news release dated
June 1, 2020. Procedures have been
developed to protect workers and the community from COVID-19,
incorporating best practice from the U.S. Centers for Disease
Control, the Mexican government and the mining industry. These will
facilitate a safe restart of operations in Mexico.
As a result of COVID-19 exploration plans were delayed.
Jurisdictions around the world, including Mexico, Germany and the
United States are now beginning phased restarts of
operations, and the Company expects 2020 exploration activities to
resume accordingly.
Management Update
The Company also announces that Nisha Hasan has stepped
down as Vice President Investor Relations to pursue other
opportunities.
"Nisha has been an incredible member of the Excellon team since
2013," stated Mr. Cahill. "She has been at the forefront of the
many challenges we have faced and has weathered the storms with
calmness and cheer. We wish her the very best of success in her
future endeavours in the industry."
Excellon has engaged the services of Adelaide Capital Markets
Inc. to provide investor relations and related services to the
Company.
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 gold development
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 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.