TORONTO, May 16, 2022
/CNW/ - Excellon Resources Inc. (TSX: EXN) (NYSE: EXN)
(FRA: E4X2) ("Excellon" or the "Company") is pleased to
report financial results for the three-month period ended
March 31, 2022.
Q1 2022 Financial
and Operational Highlights (compared to Q1
2021)
- Revenues of $8.5 million (Q1 2021
– $9.8 million), despite realizing
minimal production in March due to the labour action (the "Labour
Action") at Platosa (resolved on April
1st)
- Gross profit of $0.6 million (Q1
2021 – $1.8 million)
- Silver equivalent ("AgEq") production of 384,007 oz (Q1 2021 –
516,715 AgEq oz), with results being impacted by the Labour Action,
including:
-
- Silver production of 209,381 oz (Q1 2021 – 328,747 oz)
- Lead production of 1.2 million lb (Q1 2021 – 2.1 million
lb)
- Zinc production of 1.7 million lb (Q1 2021 – 2.4 million
lb)
- Total cash cost net of byproducts per silver ounce payable
decreased to $10.49 (Q1 2021 –
$13.43)
- All-in sustaining cost ("AISC") per silver ounce payable
decreased to $18.92 (Q1 2021 –
$24.67)
- Production cost per tonne increased to $373 per tonne (Q1 2021 – $297 per tonne)
- Net working capital totaled $0.9
million (excluding provision for litigation) at March 31, 2022 (December
31, 2021 – $0.3 million), with
cash and marketable securities of $3.5
million (December 31, 2021 –
$4.5 million)
"We have ramped up production smoothly following the labour
action that disrupted production in March," stated Brendan Cahill, President and Chief Executive
Officer. "Despite limited production in Q1, we achieved good
revenues and lower all-in sustaining costs, largely due to strong
base metal prices and improved concentrate treatment terms. As we
head towards the wind-down of Platosa operations in Q3, we are
preparing for our exploration programs in H2 and actively pursuing
acquisition opportunities for producing and development stage
assets in Mexico."
Financial Results
Financial results for the three-month periods ended
March 31, 2022 and
2021 were as follows:
('000s of USD, except amounts per
share and per ounce)
|
Q1 2022(6)
|
Q1 2021
|
Revenue
(1)
|
8,496
|
9,781
|
Production costs
|
(5,635)
|
(6,153)
|
Depletion and amortization
|
(2,278)
|
(1,790)
|
Cost of sales
|
(7,913)
|
(7,943)
|
Gross profit
|
583
|
1,838
|
|
|
|
Corporate
administration
|
(1,311)
|
(2,342)
|
Exploration and holding
expense
|
(1,116)
|
(1,073)
|
Other income
(expense)
|
992
|
(651)
|
Finance
expense
|
(915)
|
(725)
|
Income tax
recovery
|
67
|
31
|
Net loss
|
(1,700)
|
(2,922)
|
Loss per share – basic
and diluted
|
(0.05)
|
(0.09)
|
Cash flow from
operations (2)
|
1,911
|
919
|
|
|
|
Production cost per
tonne (3)
|
373
|
297
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
10.49
|
13.43
|
AISC per silver ounce
payable ($/Ag oz) (4)
|
18.92
|
24.67
|
|
|
|
Realized
prices:(5)
|
|
|
Silver –
($US/oz)
|
23.71
|
26.32
|
Lead –
($US/lb)
|
1.06
|
0.92
|
Zinc –
($US/lb)
|
1.66
|
1.25
|
(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)
|
AISC per silver ounce
payable excludes 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.
|
(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)
|
Q1 2022 results were
impacted by the Labour Action which resulted in negligible
production for the month of March 2022.
|
Revenues decreased by $1.3 million
or 13% during Q1 2022 compared to Q1 2021, driven primarily by
lower production due to the Labour Action, which reduced AgEq
ounces payable by 26%, partially offset by a 15% and 33% increase
in realized lead and zinc prices, respectively.
Production costs decreased by $0.5
million or 8% during Q1 2022 relative to Q1 2021.
Consumables, transport and other operational costs decreased by
$0.4 million due to the Labour
Action. Electricity costs decreased $0.7
million in Q1 2022, though the comparative period included
$0.6 million in incremental energy
costs due to the increase in natural gas prices following the
February 2021 polar–vortex. The
$0.5 million variance in inventory
adjustment reflects the net drawdown of ore and concentrate
inventories in Q1 2022. Depletion and amortization expense was
$0.5 million higher in Q1 2022
compared to the comparative period, driven primarily by the
reduction in expected mine life.
Gross profit decreased by $1.3
million in Q1 2022 relative to Q1 2021, driven by the
$1.3 million decrease in
revenue.
Administrative expense decreased by $1.0
million or 44% in Q1 2022 reflecting primarily lower
share-based compensation (by $0.6
million) and salary expense (by $0.3
million), driven by the timing of annual compensation
expenses (in Q1 in 2021) and a reduction in personnel since the
comparative period.
Exploration and holding expenses in Q1 2022 were consistent
with those in Q1 2021. Silver City exploration increased
$0.3 million relative to the
comparative period driven by Q1 2022 drilling costs, while costs in
Mexico and at Kilgore decreased
$0.2 million and $0.1 million in Q1 2022, respectively. For
detailed breakdown see Note 12 of the Q1 2022 Condensed
Consolidated Financial Statements.
Other income or expense includes realized and unrealized foreign
exchange gains and losses, unrealized gains and losses on
marketable securities and warrants, interest income and other
non-routine income or expenses. The $1.6
million improvement in other income or expense in Q1 2022
includes the collection of $0.6
million in insurance proceeds, a $0.6
million improvement in foreign exchange gains and losses,
and a $0.5 million reduction in fair
value losses on marketable securities and warrants, compared to the
comparative period.
Net finance expense in Q1 2022 comprises primarily $0.8 million (Q1 2021 – $0.6 million) of interest expense on the 5.75%
secured convertible debentures (the "Convertible Debentures")
issued in Q3 2020, which are recorded at amortized cost and
accreted to the principal amount over the term of the Convertible
Debentures. This interest expense consists of $0.2 million in coupon interest (Q1 2021 –
$0.2 million), and the $0.6 million accretion of the face value of the
Convertible Debentures using the effective interest rate method (Q1
2021 – $0.4 million).
Net loss improved by $1.2 million
in Q1 2022 over Q1 2021 despite the $1.3
million decrease in gross profit discussed above. This
$2.5 million positive variance was
primarily driven by a $0.6 million
decrease in share-based compensation expense, a $0.4 million reduction in other administrative
expenses, and a $1.6 million
improvement in other income/expenses including the collection of
$0.6 million in insurance proceeds, a
$0.6 million improvement in foreign
exchange gains and losses and a $0.5
million reduction in fair value losses on marketable
securities and warrants compared to the comparative period.
Production cost per tonne milled increased by 26% in Q1 2022
relative to Q1 2021, driven by a 33% decrease in tonnes milled,
partially offset by a 16% reduction in production costs before
depletion, amortization and inventory adjustments, as discussed
above.
Total cash cost per silver ounce payable decreased by 22% for Q1
2022 relative to Q1 2021, despite a 36% decrease in silver ounces
payable driven by the Labour Action. Total cash costs net of
by-product credits decreased by $2.0
million or 50% reflecting a $0.5
million decrease in cash production costs as discussed
above, a $0.3 million increase in
by-product credits reflecting higher lead and zinc realized prices
partially offset by lower production, and a $1.2 million decrease in TC/RCs reflecting
renegotiated offtake agreements and lower production.
AISC per silver ounce payable decreased by 23% to $18.92 compared to $24.67 in the comparative period, driven by a 50%
reduction in total cash costs net of by-product credits as
discussed above, a $0.6 million
decrease in sustaining capital expenditures, a $0.5 million decrease in share-based compensation
and a $0.4 million decrease in
administrative costs driven by the timing of annual compensation
expenses (in Q1 in 2021) and a reduction in personnel since the
comparative period, partially offset by lower silver ounces payable
(by 36%).
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 condensed consolidated financial statements for
the periods ended March 31, 2022 and
2021, 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-month period ended March 31, 2022, for a reconciliation of these
measures to reported IFRS results.
Operating Results &
Outlook
Operating performance
for the periods indicated below was as follows:
|
|
Q1
|
Q1
|
|
|
2022
|
2021
|
Tonnes
mined:
|
|
14,955
|
21,212
|
Tonnes
milled:
|
|
14,585
|
21,764
|
Grades:
|
|
|
|
|
Silver (g/t)
|
504
|
524
|
|
Lead (%)
|
5.27
|
5.35
|
|
Zinc (%)
|
6.67
|
6.73
|
Recoveries:
|
|
|
|
|
Silver (%)
|
88.5
|
89.7
|
|
Lead (%)
|
72.1
|
81.8
|
|
Zinc (%)
|
80.0
|
74.7
|
Production(1)
|
|
|
|
|
Silver
– (oz)
|
209,381
|
328,747
|
|
Lead – (lb)
|
1,219,459
|
2,099,741
|
|
Zinc – (lb)
|
1,715,519
|
2,412,458
|
|
AgEq ounces
(oz)(2)
|
384,007
|
516,715
|
Payable:(3)
|
|
|
|
|
Silver ounces
– (oz)
|
186,407
|
291,967
|
|
Lead – (lb)
|
1,129,553
|
1,859,932
|
|
Zinc – (lb)
|
1,551,092
|
1,802,430
|
|
AgEq ounces
(oz)(2)
|
345,502
|
442,582
|
(1)
|
Period deliveries
remain subject to assay and price adjustments on final settlement
with concentrate purchaser. 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 respective period
applied to the recovered metal content of the concentrates to
calculate 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 from produced ounces.
|
Silver grades in Q1 2022 were 4% lower than the comparative
period due to the mining of remnant and pillar recoveries and hence
less mining of stopes in the current period, and variability in the
mineralization of stopes mined. Lead and zinc grades were
consistent with Q1 2021.
Recoveries of lead and silver were lower than Q1 2021 due to
lower feed grades and high lead oxide ratios. Zinc recoveries were
higher than Q1 2021 following the rebuild of the flotation cells
and modifications to reagent schemes in mid-2021.
Silver, lead, zinc and AgEq production decreased by 36%, 42%,
29% and 26%, respectively, relative to Q1 2021, mainly driven by
lower production, lower silver grades and lower lead
recoveries.
As previously disclosed, drilling continued at Platosa during
much of Q1 2022, however, based on the recent drilling results and
consideration of current and expected economic factors, the Company
expects to wind down operations at Platosa during Q3 2022.
COVID-19 Update
In Q1 2022, none of the Company's projects were suspended or
restricted. The Company has taken action to prevent the spread of
COVID-19 at its sites and protect its employees, contractors and
the communities in which it operates. The Company's actions have
been successful to date and the pandemic has not had any material
impact on production or shipment of concentrate since the
suspension in Q2 2020. The Company is continually modifying its
response to the pandemic to align with industry best practices.
Government vaccination programs for COVID-19 are available in all
regions in which the Company operates. Vaccination programs are
progressing well in Mexico, with
100% of the Company's workforce double-vaccinated and 95%
triple-vaccinated.
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"). NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning
mineral projects. These standards differ from the requirements of
the United States Securities and Exchange Commission (the "SEC")
applicable to United States
domestic and certain foreign reporting companies under Subpart 1300
of Regulation S-K ("S-K 1300"). Accordingly, information included
in this press release that describes the Company's mineral
resources estimates may not be comparable with information made
public by United States and
certain foreign companies subject to the SEC's reporting and
disclosure requirements of S-K 1300.
SOURCE Excellon Resources Inc.