TORONTO, March 21, 2019 /CNW/ - Excellon Resources
Inc. (TSX:EXN; OTC:EXLLF) ("Excellon" or the
"Company") is pleased to report financial results for the
three- and twelve-month periods ended December 31, 2018.
2018 Financial and Operational Highlights (compared to
2017)
- Revenue of $24.3 million (2017 –
$21.2 million)
- Silver equivalent ("AgEq") production of 1.9 million ounces
(2017 – 1.5 million AgEq ounces)
- AgEq ounces payable of 1.6 million ounces (2017 – 1.3 million
AgEq ounces payable)
- Gross profit of $0.7 million
(2017 – $0.4 million)
- Total cash cost per Ag oz payable of $9.48 (2017 – $10.38)
- All-in sustaining cost per Ag oz payable ("AISC") of
$20.69 (2017 – $27.97)
- Net loss of $7.7 million or
$0.08/share (2017 – Net loss of
$5.7 million or $0.07/share)
- Net working capital totaled $7.9
million at December 31, 2018
(December 31, 2017 – $13.8 million)
Q4 2018 Financial and Operational Highlights (compared to Q4
2017)
- Revenue of $6.0 million (Q4 2017
– $7.1 million)
- Production of 509,043 AgEq ounces (Q4 2017 – 475,007 AgEq
ounces)
- AgEq ounces payable of 408,235 AgEq ounces (Q4 2017 – 435,924
AgEq ounces payable)
- Gross loss of $0.3 million (Q4
2017 – profit of $1.0 million)
- Net loss of $4.2 million or
$0.04/share (Q4 2017 – net income of
$1.6 million or $0.02/share)
- Total cash cost per Ag oz payable of $11.76 (Q4 2017 – $6.27), a reflection of lower byproduct credits
and prices, as well as higher electricity costs
- AISC per Ag oz payable of $21.06
(Q4 2017 – $18.42)
"We made good operational improvements at Platosa during 2018,
though lower metal prices and higher electricity prices during the
second half of the year were a significant headwind on the
business," stated Brendan Cahill,
President and CEO. "During 2019, we intend to continue increasing
productivity and focusing on cost reduction by accessing lower
electricity rates through the private market and improving our
milling operation. During Q4, electricity accounted for 38% of our
operating cost – lowering this input is an important opportunity.
In this metal price and cost environment, we simply must do
better."
Mr. Cahill continued, "Working with external consultants, we
have been upgrading our processing facility at Miguel Auza in advance of the bulk sample from
Hecla's San Sebastian Mine. The
bulk sample size has been increased to 25,000 tonnes and has begun
arriving. During the upgrade and commissioning, we periodically
paused milling operations and as a result we expect to have a large
stockpile of unmilled ore at the end of the quarter, which will be
milled in April, with the delay affecting metal production in Q1
2019. Mine production has been strong at 227 tonnes-per-day to date
in the quarter."
"As further described below and in our MD&A, security in the
Miguel Auza area has recently
deteriorated. During investigation of certain incidents late last
year, we learned that a portion of our concentrate had been stolen
while in transit from Miguel Auza
to the port at Manzanillo. We have
taken remediative steps to prevent further incidents and we are
working with the Mexican authorities to improve security in the
region."
"Looking ahead, we plan to follow up on the exploration
successes achieved in 2018, with strong results from Platosa and
the first drill program at Miguel
Auza (Evolución) since 2010, successfully growing the
mineralized system to depth and along strike. High priority drill
targets to be tested during 2019 include Jaboncillo and PDN on the Platosa property and
further drilling on Evolución. Drilling at Jaboncillo, 11 kilometres northwest of the
Platosa mine, begins early in the second quarter."
Financial Results
Financial results for the three- and twelve-month periods ended
December 31, 2018 and 2017 as
follows:
('000s of USD, except
amounts per share
and per ounce)
|
Q4
2018
|
Q4
2017
|
2018
|
2017
|
Revenue
(1)
|
5,955
|
7,123
|
24,313
|
21,208
|
Production
costs
|
(5,213)
|
(4,796)
|
(19,566)
|
(16,978)
|
Depletion and
amortization
|
(1,004)
|
(1,277)
|
(4,016)
|
(3,831)
|
Cost of
sales
|
(6,217)
|
(6,073)
|
(23,582)
|
(20,809)
|
Gross profit
(loss)
|
(262)
|
1,050
|
731
|
399
|
|
|
|
|
|
Corporate
administration
|
(595)
|
(1,159)
|
(4,521)
|
(4,228)
|
Exploration
|
(1,115)
|
(345)
|
(3,897)
|
(1,909)
|
Other
|
51
|
(415)
|
4
|
1,840
|
Recovery
(impairment)
|
|
(568)
|
|
(568)
|
Net finance
cost
|
203
|
820
|
1,899
|
(2,262)
|
Income tax
recovery
|
(2,432)
|
2,170
|
(1,916)
|
1,037
|
Net income
(loss)
|
(4,150)
|
1,553
|
(7,700)
|
(5,691)
|
Income (loss) per
share – basic
|
(0.04)
|
0.02
|
(0.08)
|
(0.07)
|
|
|
|
|
|
Cash flow from (used
in) operations (2)
|
(1,507)
|
571
|
(2,908)
|
(699)
|
Cash flow from (used
in) operations per share – basic
|
(0.02)
|
(0.01)
|
(0.03)
|
(0.01)
|
|
|
|
|
|
Production cost per
tonne (3)
|
244
|
267
|
242
|
266
|
Cash cost per payable
silver ounce ($/Ag oz)
|
11.76
|
6.27
|
9.48
|
10.38
|
All-in sustaining
cost ("AISC") per silver ounce payable ($/Ag
oz)
|
21.06
|
18.42
|
20.69
|
27.97
|
|
|
(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
|
The operation improved during 2018, with dry mining conditions,
improved ground control and record tonnage processed at the
Miguel Auza processing facility.
Production from multiple ore faces in the Rodilla, 623,
Guadalupe South and Pierna mantos
resulted in total production of 1.9 million AgEq ounces. The
Company continues to identify and pursue opportunities to increase
metal production and daily tonnage while maintaining ore
grades.
Annual net revenues increased by 15% to $24.3 million (2017 – $21.2 million) as AgEq payable ounces increased
by 22% to 1,642,519 oz (2017 – 1,345,500 oz). In Q4 2018, net
revenues fell by 16% to $6.0 million
(Q4 2017 – $7.1 million) due to
significantly lower metal prices and lower AgEq ounces payable of
408,235, the latter due to deliveries made just after year-end.
Cost of sales, including depletion and amortization, increased
13% in 2018 compared to 2017 due to increased production and
electricity cost and was comparable between Q4 2018 and Q4 2017.
During 2018, electricity prices in Mexico increased from approximately
$0.06/kWh in late 2017/early 2018 to
as high as $0.13/kWh during Q4 2018,
before decreasing to a current price of $0.09/kWh. Electricity price has a material
impact on operating costs due to the significant pumping required
for the Platosa operation, as demonstrated by the impact increased
prices had on Q4 2018 operating costs, with electricity expense of
$2.0 million or 61% higher relative
to Q4 2017. The Company is currently reviewing offers for lower
cost supply in the private market; however, such an arrangement may
require up to 12 months to become effective. Additionally, the
market for zinc concentrate has changed significantly since
mid-2018, with treatment charges ("TCs") for zinc concentrate
increasing materially due to increased production of complex
concentrates globally and decreased zinc smelter capacity. While
the zinc TCs have returned to historical norms from the
exceptionally low range of recent years, the increase is expected
to negatively impact revenue by $1-$2 million
during 2019 relative to 2018 depending on production volumes and
metal prices.
The Company recorded a net loss of $7.7
million in 2018 (2017 – net loss of $5.7 million), with the contributors being
increased cost of sales and exploration expenditures, the reversal
of deferred tax assets for expired loss carryforwards and lower
realized metal prices. Contributors to increased net loss of
$4.2 million in Q4 2018 (Q4 2017 –
net income of $1.6 million) included
increased exploration expenditures and the reversal of deferred tax
assets noted above.
Cash general and administrative expenses increased by 7% in 2018
compared to 2017 to $3.1 million from
$2.9 million due to increased
corporate development, legal and regulatory expenses. In Q4 2018,
expenses were down by 50% as a $0.3
million stock-based compensation recovery was recognized in
the quarter compared to a $0.3
million stock-based compensation expense in Q4 2017. The net
recovery was a reversal of previously recognized stock-based
compensation expenses for certain performance-based RSUs that
ultimately did not vest before expiry. Cash general and
administrative expenses for Q4 2018 were slightly higher due to
increased corporate development, legal and regulatory fees.
Exploration expenditures totaled $3.9
million in 2018 as drilling increased at Platosa and
commenced at Evolución. During 2018, surface drilling totaled
11,034 metres at Platosa and 6,396 metres at Miguel Auza (2017 – 2,475 metres of surface
drilling at Platosa), both of which were expensed in each period.
Underground drilling during 2018 totalled 6,396 metres (2017 –
6,843 metres). In total, the Company drilled 25,271 metres in 2018
(2017 – 9,318 metres).
Cash costs net of by-products per silver ounce payable (or Total
Cash Costs) improved in 2018 to $9.48
compared to $10.38 in 2017 due to a
21% increase in silver ounces payable. In Q4 2018, costs were
higher as a result of higher production costs and lower byproduct
credits and prices.
The Company's AISC for 2018 improved by 26% to $20.69 compared to 2017, due to 11% lower
sustaining capital expenditures and a 23% increase in payable
silver ounces. Excluding non-cash items, AISC was $18.82 during 2018. AISC in Q4 2018 was impacted
by higher cash costs as described above. AISC in Q4 2018, excluding
non-cash items was $21.93, a higher
amount due to stock option expense reversal recognized in the
quarter.
Excellon defines AISC per silver ounce payable as the sum of
total cash costs (including treatment charges and net of by-product
credits), capital expenditures that are sustaining in nature,
corporate general and administrative costs (including non-cash
share-based compensation), capitalized and expensed exploration
that is sustaining in nature, and (non-cash) environmental
reclamation costs, all divided by the total payable silver ounces
sold during the period to arrive at a per ounce figure.
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 audited consolidated
financial statements for the year ended December 31, 2018 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 year ended December 31,
2018, for a reconciliation of these measures to reported
IFRS results.
Production Highlights
Mine production for the periods indicated below were as
follows:
|
Q4
|
Q4
|
|
|
|
2018
|
2017
|
2018
|
2017
|
Tonnes of ore
produced:
|
16,570
|
16,114
|
57,475
|
57,165
|
Tonnes of ore
processed:
|
16,132
|
15,203
|
56,874
|
54,425
|
Tonnes of historical
stockpile processed:
|
5,209
|
2,775
|
24,130
|
9,316
|
Total tonnes
processed:
|
21,341
|
17,978
|
81,004
|
63,742
|
Ore
grades:
|
|
|
|
|
|
|
Silver
(g/t)
|
556
|
467
|
488
|
429
|
|
Lead (%)
|
4.90
|
4.19
|
4.87
|
4.12
|
|
Zinc (%)
|
6.07
|
6.49
|
6.90
|
5.92
|
Historical stockpile
grades:
|
|
|
|
|
|
Silver
(g/t)
|
152
|
191
|
163
|
181
|
|
Lead (%)
|
1.49
|
1.72
|
1.55
|
1.55
|
|
Zinc (%)
|
1.57
|
2.09
|
1.95
|
1.69
|
Blended head grade
(ore and historical stockpiles):
|
|
|
|
|
|
Silver
(g/t)
|
458
|
424
|
391
|
393
|
|
Lead (%)
|
4.07
|
3.81
|
3.88
|
3.75
|
|
Zinc (%)
|
4.97
|
5.81
|
5.42
|
5.30
|
Recoveries:
|
|
|
|
|
|
|
Silver (%)
|
89.7
|
90.3
|
89.2
|
89.3
|
|
Lead (%)
|
81.2
|
80.0
|
79.4
|
80.9
|
|
Zinc (%)
|
79.4
|
82.2
|
80.8
|
81.4
|
Production:(1)
|
|
|
|
|
|
|
Silver –
(oz)
|
274,324
|
223,349
|
917,714
|
718,460
|
|
AgEq ounces
(oz)(2)
|
509,043
|
475,007
|
1,929,092
|
1,470,650
|
|
Lead –
(lb)
|
1,498,851
|
1,198,286
|
5,446,218
|
4,241,225
|
|
Zinc –
(lb)
|
1,824,406
|
1,897,894
|
7,894,186
|
6,059,922
|
Payable:(3)
|
|
|
|
|
|
|
Silver ounces –
(oz)
|
242,857
|
206,400
|
805,550
|
667,370
|
|
AgEq ounces (oz)
(2)
|
408,235
|
435,924
|
1,642,519
|
1,345,500
|
|
Lead –
(lb)
|
1,401,515
|
1,170,595
|
5,073,038
|
4,134,184
|
|
Zinc –
(lb)
|
1,021,891
|
1,669,739
|
6,075,147
|
5,219,258
|
Realized
prices:(4)
|
|
|
|
|
|
|
Silver –
($US/oz)
|
14.74
|
16.32
|
15.37
|
16.73
|
|
Lead –
($US/lb)
|
0.89
|
1.14
|
0.98
|
1.08
|
|
Zinc –
($US/lb)
|
1.17
|
1.45
|
1.28
|
1.37
|
|
|
|
|
|
|
|
(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
|
(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 2018, Platosa completed the transition to pillarless
mining, using cut and fill in steeply dipping areas and drift and
fill in shallow dipping areas. Cemented rock fill is being
used to construct pillars, which has the effect of increasing
mining recovery. Additionally, the Company commenced
extraction of historical pillars to recover ore that had previously
been left behind. Dry mining conditions have allowed Platosa to
realize the benefits of productivity gained through working
multiple faces.
The Company entered a toll milling arrangement in Q1 2018 with
Hecla to process ore from the San
Sebastian Mine, 42 kilometres northwest of the Miguel Auza mill. The bulk sample was recently
increased to 25,000 tonnes, which began arriving at site in late Q1
2019 with processing to commence in early Q2 2019. Assuming
successful results from the bulk sample, the formal commercial
milling arrangement will commence in due course. During the upgrade
and commissioning, milling operations were periodically paused and
as a result a large stockpile of ore will remain unmilled at the
end of Q1 and will be milled in early Q2. This delay will
affect metal production in Q1 2019. Recoveries during Q1 2019 are
expected to be temporarily affected when compared to recent
periods, reflecting the testing phase of the new flow sheet.
Concentrate Theft
In advance of the the change in federal government in
Mexico in December 2018, the Company recognized a
deterioration in security around Miguel
Auza, the location of the Company's processing facility,
including threats to certain of the Company's employees. A
preliminary investigation of these threats uncovered a scheme
involving the theft of concentrate by criminal elements while in
transit from Miguel Auza to
Manzanillo from 2016 to
October 2018. The amount and value of
concentrate stolen remains uncertain; however, it is currently
estimated that scheme impacted the Company's revenues by
approximately 10% per year during the impacted period.
Investigations indicated that three employees were involved in
facilitating and concealing the theft; these employees have been
terminated. The Company retained experienced consultants to assist
with investigations and developed an action plan to enhance the
security footprint at Platosa and Miguel
Auza and strengthen internal procedures. Additionally, the
Company is working with Mexican authorities to improve security
regionally around Miguel Auza. The
underlying security situation in the area appears to have calmed.
Nevertheless, the Company remains vigilant to protect the safety of
its employees and contractors and to ensure its business is not
further impacted.
Annual Meeting
The annual meeting (the "Meeting") of Excellon shareholders will
be held at 4:00 p.m. (ET) on
May 9, 2019 at the Albany Club
(Presidents' Room) 91 King Street East, Toronto, Ontario M5C 1G3. Shareholders as of
March 22, 2019 will be entitled to
attend and vote their shares at the Meeting. The Management
Information Circular and materials related to the Meeting will be
available on the Company website and SEDAR on or about April 8th pursuant to Notice and
Access rules.
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 (CRD)
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 in the Americas.
Additional details on the La Platosa Mine and the rest of
Excellon's exploration 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.