TORONTO, Nov. 16, 2020 /CNW/ - Excellon Resources
Inc. (TSX: EXN) (TSX: EXN.WT) (NYSE: EXN) (FRA:
E4X2) ("Excellon" or the "Company") is pleased to
report financial results for the three- and nine-month periods
ended September 30, 2020. All dollar
amounts are expressed in U.S. dollars unless otherwise
specified.
Q3 2020 Financial and Operational Highlights (compared to Q3
2019)
- Revenues increased by 56% to $9.7
million during Q3 2020 ($6.2
million in Q3 2019)
- Gross profit improved to $2.5
million (Q3 2019 – loss of $1.0
million)
- Production increased 23% to 524,312 silver equivalent
("AgEq") oz (Q3 2019 – 427,131 AgEq oz), while sales increased 31%
to 485,841 AgEq oz (Q3 2019 – 370,376 AgEq oz)
- Total cash cost net of by-products per silver ounce payable
decreased 31% to $12.60 (Q3 2019 –
$18.18)
- AISC per silver ounce payable decreased 34% to $18.92 (Q3 2019 – $28.46)
- Production cost per tonne decreased 33% to $227 per tonne (Q3 2019 – $339 per tonne)
- Net working capital totaled $10.5
million at September 30, 2020
(December 31, 2019 – $7.6 million)
- Cash and marketable securities of US$10.1 million as at September 30, 2020 and improved liquidity
following C$17.91 million convertible
debenture issuance and repayment of Sprott Private Resource Lending
US$6 million bridge loan
- Other highlights during the quarter included:
-
- listed and commenced trading on the NYSE American, LLC
exchange (the "NYSE American")
- released updated Mineral Resource Estimate on the Evolución
Project in Zacatecas, Mexico,
totaling an indicated resource of 35.1 million AgEq oz grading 170
g/t AgEq and an inferred resource of 64.8 million AgEq oz grading
135 g/t AgEq
- Finalized transition to private electricity supplier at
Platosa, with substantial operational cost savings expected going
forward
"This quarter was one of our best in years, with record tonnage,
excellent metal recoveries and solid cost reductions, all in a
rising metal price environment," stated Brendan Cahill, President and CEO. "We are
confident that we can improve further by realizing the benefit of
the new lower-cost electricity contract that is now in place and
through other optimizations underway. Our teams in Mexico deserve great credit for continuing to
improve the operation, while ensuring the safe operation of the
business during the ongoing COVID pandemic."
Mr. Cahill continued, "On the exploration front, we currently
have three rigs operating at Platosa and one at Silver City, and we
expect to start drilling at Oakley in the near term. Our focus over
the coming quarters is resource growth and discovery, supported by
cashflows from our improving Mexican operations."
Financial Results
Financial results for the three- and nine-month periods ended
September 30, 2020 and 2019 were as
follows:
|
|
|
|
|
('000s of USD, except
amounts per share
and per ounce)
|
Q3
2020
|
Q3
2019
|
9-Mos
2020
|
9-Mos
2019
|
Revenue
(1)
|
9,667
|
6,203
|
17,173
|
20,055
|
Production
costs
|
(5,875)
|
(6,050)
|
(13,994)
|
(17,199)
|
Depletion and
amortization
|
(1,269)
|
(1,140)
|
(3,204)
|
(3,458)
|
Cost of
sales
|
(7,144)
|
(7,190)
|
(17,198)
|
(20,917)
|
Gross profit
(loss)
|
2,523
|
(987)
|
(25)
|
(862)
|
|
|
|
|
|
Corporate
administration
|
(1,502)
|
(1,151)
|
(5,009)
|
(3,540)
|
Exploration
|
(2,001)
|
(858)
|
(2,631)
|
(2,829)
|
Other expenses,
net
|
(744)
|
(200)
|
(1,435)
|
(439)
|
Finance expenses,
net
|
(292)
|
(71)
|
(1,829)
|
(459)
|
Income tax recovery
(expense)
|
1,776
|
(365)
|
919
|
(765)
|
Net loss
|
(240)
|
(2,902)
|
(10,010)
|
(8,894)
|
Loss per share –
basic and diluted
|
(0.01)
|
(0.14)
|
(0.36)
|
(0.44)
|
|
|
|
|
|
Cash flow used in
operations (2)
|
(166)
|
(1,548)
|
(5,902)
|
(2,298)
|
|
|
|
|
|
Production cost per
tonne (3)
|
227
|
339
|
324
|
304
|
Cash cost per silver
ounce payable net of byproducts ($/Ag oz)
|
12.60
|
18.18
|
16.80
|
12.58
|
All-in sustaining
cost ("AISC") per silver ounce payable ($/Ag oz)
|
18.92
|
28.46
|
29.28
|
22.51
|
|
|
|
|
|
Realized prices:
(4)
|
|
|
|
|
Silver –
($US/oz)
|
24.82
|
17.65
|
20.18
|
15.78
|
Lead –
($US/lb)
|
0.84
|
0.94
|
0.80
|
0.88
|
Zinc –
($US/lb)
|
1.10
|
1.07
|
0.99
|
1.15
|
(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.
|
Revenues increased by 56% to $9.7
million during Q3 2020 ($6.2
million in Q3 2019), driven by a 36% increase in silver
ounces payable and a 41% increase in the average realized silver
price relative to the comparative period.
Direct mining and milling costs included in cost of sales
decreased 12% in Q3 2020 compared to Q3 2019, despite increases of
20% in ore mined and 31% in ore milled in Q3 2020, reflecting lower
personnel costs and efficiencies realized following the
pandemic-driven suspension in Q2 2020. Total cost of sales was flat
with the comparative quarter after adjusting for movements in ore
and concentrate inventories ($0.8 million) and no toll milling revenue in
the current quarter ($0.3
million).
Net loss in Q3 2020 reflects a $2.7
million improvement over the prior year period based on
higher revenues (by $3.5 million) and
a $1.8 million non-cash recovery of
deferred taxes, partly offset by higher exploration expenses (by
$1.1 million), unrealized foreign
exchange losses of $0.4 million and
higher interest and other expenses of $0.8
million.
General and corporate administration expenses increased 30% or
$0.3 million, including an increase
of $0.1 million related to
stock-based compensation and $0.2
million in administrative expenses, including certain
one-time costs related to corporate development activities, listing
on the NYSE American and the related share consolidation.
The $1.1 million increase in
exploration expenditures over Q3 2019 primarily reflects increased
exploration activity at Silver City ($0.9
million) and work conducted on the Kilgore Project
($0.5 million), partially offset
by a delay of exploration activities in Mexico. Work continued on the Oakley Project,
which is under option to and funded by Centerra Gold Inc.
Cash cost net of by-products per silver ounce payable (or Total
Cash Cost) decreased to $12.60 in Q3
2020 (Q3 2019 – $18.18) driven by an
82% or $1.9 million increase in
by-product credits and a 36% increase in silver ounces payable,
partially offset by a 236% or $1.7
million increase in TC/RCs relative to the comparative
quarter. The increased TC/RCs were in line with charges in the
global zinc and lead concentrate industry, which saw the marked
increase in TC/RCs in 2019 continue into 2020. Q3 2020 TC/RCs were
pursuant to a renegotiated offtake agreement in respect of zinc
concentrate, which delivered lower charges, but the operation
incurred higher penalties for deleterious elements,
particularly antimony, during the period. The Company plans to
mitigate these penalties through increased ore blending in the
future.
AISC net of by-products per silver ounce payable decreased to
$18.92 in Q3 2020 due to lower total
cash and sustaining costs and the increase in silver ounces
payable. Excluding non-cash items, AISC was $17.82 in Q3 2020 (Q3 2019 – $27.38).
All financial information is prepared in accordance with IFRS.
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 nine-month periods ended
September 30, 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 nine-month periods ended September 30, 2019, for a reconciliation of these
measures to reported IFRS results.
Operating Results &
Outlook
Operating performance for the periods indicated below was as
follows:
|
Q3
|
Q3
|
9-Mos
|
9-Mos
|
|
2020
|
2019
|
2020
|
2019
|
Tonnes of ore
mined:
|
21,877
|
18,167
|
45,046
|
56,967
|
Ore processed
(t):
|
22,612
|
17,235
|
42,941
|
53,968
|
Historical stockpile
processed (t):
|
-
|
-
|
-
|
1,450
|
Platosa ore processed
(t):
|
22,612
|
17,235
|
42,941
|
55,418
|
Blended head grade
(ore and historical stockpiles):
|
|
|
|
|
|
Silver
(g/t)
|
483
|
512
|
510
|
509
|
|
Lead (%)
|
5.26
|
4.44
|
5.34
|
4.72
|
|
Zinc (%)
|
6.81
|
5.97
|
6.80
|
6.98
|
Recoveries:
|
|
|
|
|
|
|
Silver (%)
|
93.0
|
87.2
|
91.4
|
89.2
|
|
Lead (%)
|
85.0
|
77.7
|
84.0
|
78.9
|
|
Zinc (%)
|
80.9
|
76.5
|
78.3
|
78.1
|
Production(1)
|
|
|
|
|
|
|
Silver –
(oz)
|
326,909
|
257,497
|
642,109
|
794,746
|
|
AgEq ounces
(oz)(2)
|
524,312
|
427,131
|
1,082,978
|
1,532,330
|
|
Lead –
(lb)
|
2,227,511
|
1,304,538
|
4,247,172
|
4,444,278
|
|
Zinc –
(lb)
|
2,746,328
|
1,654,175
|
5,036,098
|
6,363,203
|
Payable:(3)
|
|
|
|
|
|
|
Silver ounces –
(oz)
|
310,295
|
227,350
|
605,101
|
730,322
|
|
AgEq ounces
(oz)(2)
|
485,841
|
370,376
|
1,001,710
|
1,414,106
|
|
Lead –
(lb)
|
2,183,574
|
1,182,211
|
4,038,174
|
4,203,295
|
|
Zinc –
(lb)
|
2,287,459
|
1,322,133
|
4,353,738
|
5,796,157
|
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 have 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 from 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.
|
The Mexican operations continued to realize improvements from
organizational changes implemented prior to and during the
pandemic-mandated shutdown. During Q3 2020, a record 21,877 tonnes
of ore was mined from Platosa (Q3 2019 – 18,167) driven primarily
by improved mine efficiency and increased equipment reliability. At
the Miguel Auza Mill, significant improvements in metal recoveries
reflect modifications and improvements made to the mill flotation
circuits early in 2020, and better management of the thickening
process and reagent use, resulting in silver production of
326,909 oz (Q3 2019 – 257,497 oz), the strongest quarter of
silver production since Q2 2014.
Ongoing business improvements and lower electricity prices from
the newly activated power contract at Platosa are expected to
continue improving the operation's economics. With recent metal
price increases, the Company expects to be able to generate
positive cash flows for the remainder of 2020.
COVID-19 Update
COVID-19 prevention, hygiene and safety measures, health
screening, travel restrictions, contact tracing, testing and
quarantine protocols are in place and have so far proven effective
in protecting the workforce from confirmed COVID-19 cases that
originated from community spread.
Other than due to the Q2 2020 suspension mandated by the
Government of Mexico, to date
there has been no material impact to production or shipment of
concentrate from any of the Company's operations as a result of
COVID-19. Additionally, there has been no significant disruption to
the supply chain of the Company's operations. Excellon continues to
monitor and implement business continuity measures to mitigate and
minimize to the extent possible any potential impacts of the
pandemic that might emerge in our operations, procurement and
commercial activities.
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 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, 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. 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.