TORONTO, Nov. 16, 2021 /CNW/ - Excellon Resources
Inc. (TSX: EXN) (NYSE: EXN) (FRA:
E4X2) ("Excellon" or the "Company") is pleased to
report financial results for the three- and nine- month periods
ended September 30, 2021.
Q3 2021 Financial and Operational
Highlights (compared to Q3 2020)
- Revenues of $9.2 million (Q3
2020 – $9.9 million)
- Gross profit of $1.8 million
(Q3 2020 – $2.7 million)
- Total cash cost net of byproducts per silver ounce payable
improved to $11.02 (Q3 2020 –
$12.55)
- All-in sustaining cost ("AISC") per silver ounce payable
increased to $21.52 (Q3 2020 –
$19.09), partially due to increased
underground exploration at Platosa following up on the discovery of
the 817 Zone, a new, high-grade and vertical zone of
mineralization, with the discovery hole intersecting 2,860 g/t
silver equivalent ("AgEq") over 7.5 metres
- Production cost per tonne of $281 per tonne (Q3 2020 – $227 per tonne)
- Fifth consecutive quarter of over 21,000 tonnes mined and
milled, with sizeable stockpiles of ore and concentrate at
quarter-end that were processed and/or delivered in early
October
- Exploration expenditures increased 27% to $2.5 million (Q3 2020 – $2,001), with increased drilling expenditures at
Silver City
- Cash and marketable securities of $5.0 million at September
30, 2021 (December 31, 2020 –
$10.7 million)
"Platosa continued to generate cash in Q3, which allowed us to
realize our highest quarterly exploration expenditure since Q1
2013," stated Brendan Cahill,
President and CEO. "We continue to drill with two rigs at Silver
City and aggressively follow-up on the 817 Zone at Platosa, where
we discovered a new, high-grade and vertical zone of mineralization
beneath an area that was mined in 2017. We expect to release new
results from 817 shortly."
"Revenues and costs have remained fairly stable over the past
five quarters, though we have seen certain increases for
electricity and labour – the latter due to labour law amendments in
Mexico that took effect in Q3.
Strong base metal prices and strengthening silver prices were
beneficial in Q3 and have subsequently increased further. We also
had ore in stockpile representing approximately 58,000 AgEq ounces
at quarter-end, which will contribute to Q4 sales."
"We continue to seek a just resolution regarding the judgment
received in Q3 against our subsidiary, San Pedro Resources. As
stated previously, we do not expect this judgment to impact any of
our other assets, including Platosa, Kilgore, Oakley and Silver
City or foresee any significant cash outflow from Excellon or
San Pedro. Under accounting rules,
however, we were required to take a provision for this litigation,
which had a significant non-cash impact on our financial results.
Despite the injustice of this judgment, we remain open to a fair
and rational settlement with the plaintiff, while also pursuing
avenues through our labour, community and government relationships
and investigating remedies under international law. San Pedro continues to operate in the ordinary
course."
Financial Results
Financial results for the three- and nine- month
periods ended September 30, 2021
and 2020 were as follows:
('000s of USD, except amounts per
share and per ounce)
|
Q3
2021
|
Q3
2020
|
9-Mos
2021
|
9-Mos 2020
(7)
|
Revenue (1)
|
9,151
|
9,857
|
28,649
|
16,105
|
Production costs
|
(5,567)
|
(5,875)
|
(17,533)
|
(13,994)
|
Depletion and amortization
|
(1,809)
|
(1,269)
|
(5,372)
|
(3,204)
|
Cost of sales
|
(7,376)
|
(7,144)
|
(22,905)
|
(17,198)
|
Gross profit (loss)
|
1,775
|
2,713
|
5,744
|
(1,093)
|
|
|
|
|
|
Corporate
administration
|
(1,453)
|
(1,502)
|
(5,436)
|
(5,009)
|
Exploration
|
(2,538)
|
(2,001)
|
(5,411)
|
(2,631)
|
Other (1)
(2)
|
(22,283)
|
(934)
|
(23,121)
|
(367)
|
Impairment
loss
|
(752)
|
-
|
(752)
|
-
|
Net finance
cost
|
(688)
|
(292)
|
(2,438)
|
(1,829)
|
Income tax recovery
(expense)
|
(4,921)
|
1,776
|
(4,913)
|
919
|
Net loss
|
(30,860)
|
(240)
|
(36,327)
|
(10,010)
|
Adjusted
net loss (2)
|
(4,775)
|
(240)
|
(10,242)
|
(10,010)
|
Loss per share – basic
and diluted
|
(0.94)
|
(0.01)
|
(1.12)
|
(0.36)
|
Adjusted loss per share
– basic and diluted
|
(0.15)
|
(0.01)
|
(0.31)
|
(0.36)
|
Cash flow from (used
in) operations (3)
|
(9)
|
223
|
1,892
|
(5,513)
|
Production cost per
tonne (4)
|
281
|
227
|
284
|
324
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
11.02
|
12.55
|
12.14
|
16.93
|
AISC per silver ounce
payable ($/Ag oz) (5)
|
21.52
|
19.09
|
24.79
|
29.08
|
Realized
prices:(6)
|
|
|
|
|
Silver –
($US/oz)
|
24.11
|
24.82
|
25.71
|
20.18
|
Lead –
($US/lb)
|
1.07
|
0.84
|
0.99
|
0.80
|
Zinc –
($US/lb)
|
1.36
|
1.10
|
1.31
|
0.99
|
|
(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)
|
Adjusted net loss
excludes $22.3 million related to the Provision for litigation
(included in Other expenses), the related $0.8 million impairment
loss and $3.1 million deferred tax asset derecognition (included in
Income tax expense).
|
(3)
|
Cash flow from
operations before changes in working capital.
|
(4)
|
Production cost per
tonne includes mining and milling costs excluding depletion and
amortization.
|
(5)
|
AISC per silver ounce
payable excludes general and administrative and share-based payment
costs attributable to the Company's non-producing projects and
includes underground drilling costs. The comparatives have been
revised to conform with the current allocation.
|
(6)
|
Average realized
price is calculated on current period sale deliveries and does not
include the impact of prior period provisional adjustments in the
period.
|
(7)
|
Results for the
comparative nine-month period ended September 30, 2020 were
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 decreased by $0.7 million
(or 7%) during Q3 2021 compared to Q3 2020, driven by a 5% decrease
in silver-equivalent ounces payable and a 3% decrease in the
realized silver price, partly offset by 27% and 24% increases in
realized lead and zinc prices, respectively. Revenue increased by
$12.5 million (or 78%) for the 9-Mos
2021, reflecting the impact of higher metal prices ($7.5 million) and higher volumes sold
($5.0 million). As discussed above,
the Suspension resulted in negligible metal sales and revenue
during Q2 2020, which impacted 9-Mos 2020.
In 9-Mos 2021, Platosa generated net cash inflow of $6.3 million (9-Mos 2020 – outflow of
$4.0 million) from collected revenue
of $30.6 million (9-Mos 2020 –
$15.2 million) net of production
costs of $18.5 million (9-Mos 2020 –
$13.7 million) and capital
expenditures of $5.8 million (9-Mos
2020 – $5.5 million).
Cost of sales increased by $0.2
million during Q3 2021, primarily driven by an increase of
$0.5 million in depletion and
amortization as a result of the amortization of assets commissioned
since Q3 2020, and partly offset by a $0.3
million decrease in production costs mainly driven by a
variance in the inventory adjustment relating to the build-up of
ore and concentrate inventories at period end. Cost of sales
increased by $5.7 million for the
nine-month period ended September 30,
2021 relative to the comparative period, primarily due to
the Suspension.
Administrative expense in Q3 2021 were consistent with Q3 2020.
Administrative expenses increased by $0.4
million during 9-Mos 2021 mainly due to higher insurance
expense relating to the Company's NYSE American listing, which was
completed in late Q3 2020.
Increased exploration expense in Q3 2021 primarily reflects
drilling expenditures at the Silver City Project which increased
$0.5 million compared to the
comparative period. During 9-Mos 2020, Exploration programs were
limited by the initial outbreak of COVID-19 globally in 2020
resulting in lower expenditures.
As announced on August 10, 2021,
the Company received the formal written decision regarding the
litigation involving the Company's subsidiary, San Pedro Resources
("San Pedro"), in respect of the La Antigua mineral concession (the
"Judgment"). The Company recorded a Provision for litigation of
$22.2 million in Q3 2021 as required
under IFRS's International Accounting Standard 37 – Provisions,
Contingent Liabilities and Contingent Assets (included in Other
Expenses). The uncertainty related to the Judgment also contributed
the $0.8 million impairment loss and
the $3.1 million deferred-tax asset
derecognition (included in income tax expense). Excluding the
Provision for litigation, other expense decreased by $0.9 million in Q3 2021, as Q3 2020 included
unrealized losses on marketable securities and warrants and
unrealized foreign exchange losses that were not significant in Q3
2021. For 9-Mos 2021 compared to 9-Mos 2020, the $0.5 million increase in other expenses before
the Provision for litigation mainly reflects changes in the values
of marketable securities and warrants, partly offset by a decrease
in foreign exchange losses.
Net finance expense in Q3 2021 consists primarily of interest
expense on the 5.75% secured convertible debentures (the
"Convertible Debentures") issued in Q3 2020. Net finance expenses
for Q3 2020 included a $0.3 million
unrealized gain on currency hedges, which have since been
settled.
Net finance expense of $2.4
million for 9-Mos 2021, was $0.6
million higher than 9-Mos 2020, reflecting interest on the
Convertible Debentures ($2.4 million,
of which $0.6 million relates to
coupon interest and $1.8 million
represents the accretion of the face value of the Convertible
Debentures), which exceeds prior-year interest costs of
$1.1 million ($0.4 million on Convertible Debentures and
$0.7 million interest on the
$6 million credit facility with
Sprott Private Resource Lending II (Collector), LP), partially
offset by a $0.7 million unrealized
loss on currency hedges in 2020, which have since been settled at a
net realized loss of $40,000.
The Company's assets in Mexico,
including those held in San Pedro,
are security for the Convertible Debentures. The Company is
monitoring and assessing whether the Judgment and actions taken by
the plaintiff to date in connection with enforcing the Judgment
could be considered to constitute an event of default under the
trust indenture dated July 30, 2020
governing the outstanding Convertible Debentures (the "Indenture").
While the Company does not consider that an event of default has
occurred under the Indenture, the Debenture holders may try to take
the position that an event of default has occurred under the
Indenture. An event of default under the Indenture, if not cured or
waived, could result in the acceleration of all the Company's debt
under the Debentures and could materially and adversely affect the
Company's future operations, cash flows, earnings, results of
operations, financial condition and the economic viability of its
projects. San Pedro has not
received any notice that the plaintiff has initiated any insolvency
proceedings or any enforcement proceedings that could result in
San Pedro losing control of the
toll milling operations.
Adjusted net loss increased by $4.5
million in Q3 2021 over Q3 2020, mainly due to lower gross
profit (by $1.0 million) and a
$3.6 million change in tax expense
reflecting the Q3 2021 non-cash utilization of deferred tax assets
($1.2 million) to offset taxable
profits, the derecognition of deferred tax assets as a result of a
legal restructuring of subsidiaries in response to changes in
Mexican labour laws ($0.3 million),
and the $1.8 million non-cash
recovery of deferred taxes in Q3 2020. Exploration and finance
expenses increased (by $0.5 million
and $0.4 million respectively), while
unrealized foreign exchange losses improved by $0.7 million. For 9-Mos 2021, adjusted net loss
increased $0.2 million mainly driven
by improved gross profit in 2021, as discussed above, more than
offset by increases of $2.8 million
in exploration expenses and $2.8
million in tax expense, relative to the comparative
period.
Total cash cost per silver ounce payable decreased by 12% for
the three-month period ended September 30,
2021 relative to the comparative period, primarily driven by
a 15% or $0.6 million decrease in
cash costs net of by-product credits, reflecting a 29% or
$0.7 million reduction in TC/RCs,
partly offset by a 3% decrease in silver ounces payable in
2021.
Total cash cost per silver ounce payable decreased by 28% for
the 9-Mos 2021, primarily driven by a 41% increase in silver ounces
payable in 2021 as the comparative period was impacted by
negligible production in Q2 2020 due to the Suspension.
AISC per silver ounce payable increased by 13% in Q3 2021
relative to Q3 2020 due to the impacts of lower silver ounces
payable (4%) and higher all-in sustaining costs (9%). The
$0.5 million increase in all-in
sustaining costs was primarily driven by a $0.6 million increase in sustaining capital
expenditure, a $0.3 million increase
in sustaining exploration expenditure, and partly offset by total
cash costs which decreased by $0.6
million or 15% as discussed above.
AISC per silver ounce payable decreased by 15% for 9-Mos 2021
relative to 9-Mos 2020, primarily driven by a 41% increase in
silver ounces payable in 2021 as 9-Mos 2020 was impacted by the
negligible production realized in Q2 2020 due to the
Suspension.
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 nine-month
periods ended September 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 "adjusted loss", "adjusted loss per share",
"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, 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:
|
Q3
|
Q3
|
9-mos
|
9-mos
|
|
2021
|
2020
|
2021
|
2020
(4)
|
Tonnes
mined:
|
21,592
|
21,877
|
64,576
|
45,046
|
Tonnes
milled:
|
21,302
|
22,612
|
64,712
|
42,942
|
Grades:
|
|
|
|
|
|
Silver (g/t)
|
526
|
483
|
513
|
510
|
|
Lead (%)
|
4.89
|
5.26
|
5.13
|
5.34
|
|
Zinc (%)
|
5.38
|
6.81
|
6.2
|
6.80
|
Recoveries:
|
|
|
|
|
|
Silver (%)
|
90.9
|
93.0
|
89.2
|
91.4
|
|
Lead (%)
|
81.2
|
85.5
|
80.5
|
84.0
|
|
Zinc (%)
|
78.3
|
80.9
|
77.5
|
78.3
|
Production(1)
|
|
|
|
|
|
Silver
– (oz)
|
326,706
|
326,909
|
951,466
|
642,109
|
|
AgEq ounces (oz)(2)
|
521,160
|
524,312
|
1,527,287
|
1,082,978
|
|
Lead – (lb)
|
1,868,018
|
2,227,511
|
5,894,807
|
4,247,172
|
|
Zinc – (lb)
|
1,977,593
|
2,746,328
|
6,846,188
|
5,036,098
|
Payable:(3)
|
|
|
|
|
|
Silver ounces – (oz)
|
299,508
|
310,295
|
853,329
|
605,101
|
|
AgEq ounces (oz)(2)
|
463,452
|
485,841
|
1,333,239
|
1,001,710
|
|
Lead – (lb)
|
1,715,670
|
2,183,574
|
5,311,195
|
4,038,174
|
|
Zinc – (lb)
|
1,556,559
|
2,287,459
|
5,404,894
|
4,353,738
|
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.
|
(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)
|
Results for the
comparative nine-month period ended September 30, 2020 were
impacted by the Suspension.
|
Mine performance in Q3 2021 continued to benefit from leadership
updates in the superintendencies of geology, technical services and
maintenance, which have led to improvements in mine planning,
geological interpretation and equipment reliability. Silver
grades in Q3 2021 were 9% higher than the comparative period, with
lower lead and zinc grades relative to Q3 2020, reflecting
variation in the mantos mineralization. Recoveries were lower than
Q3 2020 due to lower base metal feed grades and flotation
performance. Grind size, reagent additions and cell
operating-parameter modifications took place late in Q3 2021, which
improved the recovery performance overall. The modifications are
being closely monitored for ongoing sustainability.
Metallurgical investigation is being performed on concentrate and
feed samples in XPS lab (QUEMSCAN) under the supervision of
Excellon's independent metallurgical consultancy. Ore stockpiles at
September 30, 2021 comprised 2,252
tonnes of mineralized material reflecting unprocessed and unsold
production of approximately 58,000 AgEq ounces.
COVID-19 Update
Excellon continues to benefit from robust 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. Vaccination programs are
progressing well in Mexico, with
100% and over 94% of the Company's workforce having received first
and second vaccinations, respectively.
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.