TORONTO, Nov. 8, 2022
/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, 2022.
Q3 2022 Financial
and Operational Highlights (compared to Q3
2021)
- Revenues of $7.0 million (Q3 2021
– $9.2 million), impacted by lower
base metal grades and provisional repayments due to lower metal
prices
- Production cost per tonne decreased 26% to $208 per tonne (Q3 2021 – $281 per tonne)
- Total cash cost net of by-products per silver ounce payable
decreased 11% to $9.78 (Q3 2021 –
$11.02)
- All-in sustaining cost ("AISC") per silver ounce payable
decreased 34% to $14.31(Q3 2021 –
$21.52)
Shawn Howarth, President and CEO
commented, "We thank all our employees for a safe and successful
wind down of operations at Platosa and Miguel Auza in October, as we transitioned
both facilities to care-and-maintenance. We are very proud of the
cooperation and support received from our communities over the
years and we will continue to ensure responsible environmental
stewardship throughout care-and-maintenance. Strategic priorities
for the Company remain to be advancing our Kilgore project in Idaho, a contemplated spin-out of Silver City
and pursuing M&A where our operational experiences add value to
new development opportunities. We look forward to updating
investors as these initiatives progress."
Financial Results
Financial results for the periods indicated
below were as follows:
|
('000s of USD, except amounts per
share and per ounce)
|
Q3
2022
|
Q3
2021
|
9-mos
2022(7)
|
9-mos
2021
|
|
Revenue
(1)
|
6,982
|
9,151
|
23,260
|
28,649
|
|
Production
costs
|
(4,579)
|
(5,567)
|
(16,000)
|
(17,557)
|
|
Write-down of materials
and supplies
|
-
|
-
|
(532)
|
24
|
|
Depletion
and amortization
|
(1,153)
|
(1,809)
|
(6,370)
|
(5,372)
|
|
Cost of sales
|
(5,732)
|
(7,376)
|
(22,902)
|
(22,905)
|
|
Gross profit
|
1,250
|
1,775
|
358
|
5,744
|
|
|
|
|
|
|
Corporate
administration
|
(1,279)
|
(1,453)
|
(3,781)
|
(5,436)
|
|
Exploration and holding
expense
|
(2,344)
|
(2,538)
|
(4,299)
|
(5,411)
|
|
Other (expense)
income
|
(247)
|
(6)
|
786
|
(844)
|
|
Provision for
litigation
Impairment
losses
Finance
expense
|
-
-
(985)
|
(22,277)
(752)
(688)
|
-
-
(3,086)
|
(22,277)
(752)
(2,438)
|
|
Income tax
expense
|
(174)
|
(4,921)
|
(194)
|
(4,913)
|
|
Net loss
|
(3,779)
|
(30,860)
|
(10,216)
|
(36,327)
|
|
Adjusted net loss
(2)
|
(3,779)
|
(4,755)
|
(9,687)
|
(10,242)
|
|
Loss per share – basic
and diluted
|
(0.11)
|
(0.94)
|
(0.30)
|
(1.12)
|
|
Adjusted Loss per share
– basic and diluted (2)
|
(0.11)
|
(0.15)
|
(0.26)
|
(0.28)
|
|
Cash flow (used in)
from operations (3)
|
(1,651)
|
(9)
|
223
|
1,867
|
|
|
|
|
|
|
Production cost per
tonne (4)
|
208
|
281
|
261
|
284
|
|
Cash cost per silver
ounce payable net of by-products ($/Ag oz)
|
9.78
|
11.02
|
11.35
|
12.14
|
|
AISC per silver ounce
payable ($/Ag oz) (5)
|
14.31
|
21.52
|
17.29
|
24.79
|
|
|
|
|
|
|
Realized prices:
(6)
|
|
|
|
|
|
Silver –
($US/oz)
|
19.14
|
24.11
|
21.48
|
25.71
|
|
Lead –
($US/lb)
|
0.88
|
1.07
|
0.97
|
0.99
|
|
Zinc –
($US/lb)
|
1.49
|
1.36
|
1.67
|
1.31
|
|
(1)
|
Revenues are net of
treatment and refining charges ("TC/RCs").
|
|
(2)
|
Adjusted net loss for
2021 periods exclude $22.3 million related to the Provision for
litigation, the related $0.8 million impairment loss and $3.1
million deferred tax asset derecognition expenses (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, materials and
supplies write-down, and inventory adjustments.
|
|
(5)
|
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.
|
|
(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)
|
9-mos 2022 results were
impacted by the labour action in March 2022 (the "Labour Action"),
which resulted in negligible production for the month of March
2022.
|
Revenues decreased by $2.2 million
or 24% during Q3 2022 compared to Q3 2021, driven primarily by
lower metal grades in the pillars and remnants mined resulting in
lower lead and zinc payable metal sold by 17% and 45% respectively,
and lower realized silver and lead prices by 21% and 18%
respectively, partially offset by a 10% increase in realized zinc
prices. Revenues decreased by $5.4
million or 19% during 9-mos 2022 compared to 9-mos 2021,
impacted by the Labour Action which eliminated production for the
month of March 2022; and lower
payable metals sold as well as lower realized silver and lead
prices as discussed above.
Production costs decreased by $1.0
million during Q3 2022 relative to Q3 2021, driven primarily
by a $0.7 million decrease in
electricity costs as a result of reduced dewatering drawdown rates
at Platosa. Total production costs for the 9-mos 2022 decreased
$1.0 million relative to the
comparative period, driven primarily by a $1.5 million decrease in electricity costs, a
function of reduced dewatering at Platosa and a $0.6 million incremental polar-vortex related
energy cost in 2021, partly offset by $0.5
million in mine closure related costs recorded in Q2 2022
and a $0.9 million change in
inventory adjustment.
Administrative expense decreased by $0.2
million in Q3 2022 reflecting the lower valuation of
share-based compensation compared to Q3 2021. For 9-mos 2022,
administrative expense decreased $1.7
million, driven by the reduction in personnel since the
comparative period ($0.5 million) and
lower value of share-based compensation compared to 9-mos 2021.
Exploration and holding expense in Q3 2022 included $1.9 million at Kilgore (including 1,925 metres drilled),
$0.2 million at Silver City and
$0.3 million in Mexico. For the 9-mos 2022, spend included
$2.3 million at Kilgore, $0.9
million at Silver City (including 1,223 metres drilled in Q1
2022) and $1.1 million in
Mexico. For a detailed breakdown,
see Note 12 of the Q3 2022 Condensed Consolidated Financial
Statements.
Other income or expense included 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. Other expenses for Q3 2022
increased $0.2 million compared to
the comparative period, primarily driven by unrealized foreign
exchanges losses in Q3 2022. For the 9-month periods the
$1.6 million positive variance
includes the 2022 collection of $0.6
million in insurance proceeds, a $0.3
million improvement in foreign exchange gains and losses and
a $0.7 million reduction in fair
value losses on marketable securities and warrants compared to the
comparative period.
Net finance expense in Q3 2022 comprises primarily $0.9 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 (Q3 2021 – $0.7 million).
This interest expense consists of $0.6
million in coupon interest for both Q3 2022 and Q3 2021 and
$0.3 million accretion in Q3 2022 (Q2
2021 – $0.1 million) of the face
value of the Convertible Debentures using the effective interest
rate method. Net finance expense in 9-mos 2022 comprises primarily
$2.9 million of interest expense on
the Convertible Debentures, which are recorded at amortized cost
and accreted to the principal amount over the term of the
Convertible Debentures (9-mos 2021 – $2.4
million). This interest expense consists of $0.9 million in coupon interest for both 9-mos
2022 and 9-mos 2021 and $2.0 million
accretion in 9-mos 2022 (9-mos 2021 – $1.5
million) of the face value of the Convertible Debentures
using the effective interest rate method.
Adjusted loss improved by $1.0
million in Q3 2022 relative to the comparative period,
driven primarily by a $1.6 million
change in tax expense reflecting the non–cash utilization and
derecognition of deferred tax assets in Q3 2021, partly offset by
lower gross profit ($0.5 million) in
Q3 2022. Adjusted loss for 9-mos 2022 was consistent with the
adjusted loss of 9-mos 2021 despite the $5.4
million decrease in gross profit and increase in finance
expense ($0.6 million) in Q3 2022,
which were offset by lower general and administrative costs
($1.7 million), lower exploration
expenses ($1.1 million), other
income/expenses ($1.6 million) and
lower income tax expenses ($1.6
million).
Production cost per tonne milled decreased 26% in Q3 2022
relative to Q3 2021, driven by a 21% reduction in production costs
before depletion, amortization, and inventory adjustments, and a 6%
increase in tonnes milled in Q3 2022. For the 9-mos 2022 production
cost per tonne milled decreased 8% driven by a 13% reduction in
production costs before depletion, amortization, materials and
supplies write-downs and inventory adjustments, partly offset by a
6% reduction in the tonnes milled in the 9-mos 2022.
Total cash cost per silver ounce payable decreased by 11% for Q3
2022 relative to Q3 2021 driven primarily by lower cost of sales by
22%, a 59% reduction in TC/RC expenses, partially offset by a 42%
reduction in by-product credits. Total cash cost per silver ounce
payable in 9-mos 2022 decreased by 7% compared to 9-mos 2021,
primarily due to a 57% reduction in TC/RC expenses and an 18%
decrease in by-product credits in 2022, partially offset by a 12%
reduction in silver ounces payable.
AISC per silver ounce payable decreased by 34% to $14.31 in Q3 2022 compared to $21.52 in Q3 2021 driven primarily by a
$1.1 million or 88% decrease in
sustaining capital expenditures and a $0.6
million decrease in sustaining exploration. For 9-mos 2022
relative to 9-mos 2021 AISC per silver ounce payable decreased 30%
to $17.29, primarily driven by a
$1.8 million reduction in total cash
cost as discussed above, a $3.9
million reduction in sustaining capital expenditures, a
$1.2 million reduction in sustaining
exploration and a $0.9 million
reduction in share-based payment costs, partially offset by the 12%
decrease in silver ounces payable due to the Labour Action in
March 2022 and lower grades in the
current period.
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 September 30, 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 and nine-month periods ended September 30, 2022, 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
|
|
2022
|
2021
|
2022
(4)
|
2021
|
|
Tonnes
mined:
|
23,796
|
21,592
|
60,232
|
64,576
|
|
Tonnes
milled:
|
22,683
|
21,302
|
60,819
|
64,712
|
|
Grades:
|
|
|
|
|
|
Silver (g/t)
|
442
|
526
|
460
|
513
|
|
Lead (%)
|
3.69
|
4.89
|
4.26
|
5.13
|
|
Zinc (%)
|
3.14
|
5.38
|
4.59
|
6.20
|
|
Recoveries:
|
|
|
|
|
|
Silver (%)
|
92.5
|
90.9
|
90.7
|
89.2
|
|
Lead (%)
|
76.9
|
81.2
|
75.2
|
80.5
|
|
Zinc (%)
|
78.9
|
78.3
|
81.9
|
77.5
|
|
Production(1)
|
|
|
|
|
|
Silver – (oz)
|
298,091
|
326,706
|
814,966
|
951,466
|
|
Lead – (lb)
|
1,421,741
|
1,868,018
|
4,286,172
|
5,894,807
|
|
Zinc-(lb)
|
1,238,027
|
1,977,593
|
5,053,127
|
6,846,188
|
|
AgEq ounces (oz)(2)
|
459,835
|
521,160
|
1,401,386
|
1,527,287
|
|
Payable:(3)
|
|
|
|
|
|
Silver ounces – (oz)
|
304,788
|
299,508
|
751,890
|
853,329
|
|
Lead – (lb)
|
1,431,989
|
1,715,670
|
3,962,932
|
5,311,195
|
|
Zinc – (lb)
|
852,550
|
1,556,559
|
4,028,225
|
5,404,894
|
|
AgEq ounces (oz)(2)
|
436,996
|
463,452
|
1,244,030
|
1,333,239
|
|
(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.
|
|
(4)
|
9-mos 2022 results were
impacted by the Labour Action which resulted in negligible
production for the month of March 2022.
|
Mine activity in Q3 2022 focused on remnant development and
extraction, pillar recovery and minimal mining of fresh mineral.
Wind down activities continued in Q3 to minimize the work
associated with care and maintenance required in Q4
2022.
Mill feed grades were lower in Q3 2022 versus Q3 2021 mainly
reflecting higher dilution when mining remaining extremities where
mineralized zones thinned. Mill feed contained higher lead-to-lead
oxide ratios leading to lower lead recoveries. Zinc and silver
recoveries were also lower due to lower feed grades in Q3 2022.
Zinc, lead and silver production in Q3 2022 were below Q3 2021
mainly due to lower feed grades and associated lower recoveries.
Ore stockpiles at September 30, 2022
comprised 2,046 tonnes of mineralized material, reflecting
unprocessed and unsold production of approximately 39,772 AgEq
ounces.
In early Q4 2022, production ceased and the Platosa Mine and
Miguel Auza mill
were transitioned into care and maintenance.
The Company is pursuing acquisition opportunities with potential
to further enhance value through Excellon's operating experience in
Mexico. In addition, the Company
is considering various financing, corporate development and
strategic alternatives that may include acquisitions, divestitures,
mergers or spin-offs of the Company's or third parties' assets, as
applicable.
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:
Kilgore, an advanced gold
exploration project in Idaho with
strong economics and significant growth and discovery potential; an
option on Silver City, a high-grade epithermal silver district in
Saxony, Germany with 750 years of
mining history and no modern exploration; and Platosa, a 11,000
hectare exploration package on Mexico's carbonate replacement deposit (CRD)
trend. The Company is also actively seeking to acquire undervalued
projects in the Americas.
Additional details on Excellon's properties are available at
www.excellonresources.com.
CAUTIONARY STATEMENTS ON
FORWARD-LOOKING STATEMENTS AND OTHER MATTERS
Forward-Looking Statements
All statements,
other than statements of historical fact, contained, referenced or
incorporated by reference in press release constitute
"forward-looking statements" and "forward looking information"
(collectively, "forward-looking statements") within the
meaning of applicable Canadian and United
States securities legislation. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as: "advancing", "alternatives",
"believe", "considering", "contemplated", "contingencies", "could",
"create", "development", "discovery", "enhance", "estimate",
"expectations", "exploration", "forward", "further", "future",
"growth", "initiative", "innovation", "look", "may", "modelling",
"new", "ongoing", "opportunities", "option", "outlook", "pending",
"pipeline", "planning", "potential", "priorities", "progress",
"project", "provide", "provisions", "provisional", "pursuing",
"risk", "seeking", "strategic", "subject to", "testing", "trend",
"uncertainties", "viability", "vision", "will" and "would", or
variations of such words, and similar such words, expressions or
statements that certain actions, events or results can, could, may,
should, will (or not) be achieved, occur, provide, result or
support in the future or which, by their nature, refer to future
events. In some cases, forward-looking information may be
stated in the present tense, such as in respect of current matters
that may be continuing, or that may have a future impact or
effect. Forward-looking statements include statements
regarding strategic outlook and initiatives (including any value or
other impacts thereof); advancing a precious metals growth
pipeline; any spin-out of the Silver City Project (including
contemplation thereof, any intention of the Company to seek a
public listing of SpinCo and fulfilling the requirements thereof
(and there can be no assurance of such fulfilment or public
listing), any related financing and purpose thereof and future
operations) and the benefits thereof to Excellon shareholders and
investors (including exposure to the project, valuation re-rate,
being a new market opportunity and improved trading liquidity);
consideration of financing, corporate development and strategic
alternatives and what such may include; acquisition and other
opportunities (including any potential thereof or relating thereto,
benefits of Excellon experience, and ways or potential to generate,
grow or enhance value and the pursuit thereof; exploration
projects, packages, programs or plans; wealth creation; realization
of strategic opportunities (and results thereof); project
economics, development success and discovery potential; and future
impacts of Covid-19 and actions taken to mitigate such. Although
the Company believes that such statements are reasonable, it can
give no assurance that such expectations will prove to be correct,
and any forward-looking statements by the Company are not
guarantees of future actions, results or performance.
Forward-looking statements are based on assumptions, estimates,
expectations and opinions, which are considered reasonable and
represent best judgment based on available facts, as of the date
such statements are made. If such assumptions, estimates,
expectations and opinions prove to be incorrect, actual and future
results may be materially different than expressed or implied in
the forward-looking statements. The assumptions, estimates,
expectations and opinions referenced, contained or incorporated by
reference in the Q3 2022 Financial Disclosure which may prove to be
incorrect include those set forth or referenced in this press
release, as well as those stated in the Management's Discussion
& Analysis of Financial Results for the three and nine months
ended September 30, 2022 (together
with the accompanying financial statements for the same period, the
"Q3 2022 Financial Disclosure"), the Company's Management's
Discussion and Analysis, and accompanying financial statements, for
the year ended December 31, 2021 and
prior quarters ended in 2022 (collectively, the "FYE 2021 and
Prior 2022 Financial Disclosure"), the Company's annual
information form dated March 31, 2022
("2022 AIF"), the current technical reports for the
Company's projects (collectively, the "Technical Reports"),
and the Company's other applicable public disclosure, all available
on the Company's website at
www.excellonresources.com and under its profile
at www.sedar.com. Forward-looking statements are
inherently subject to known and unknown risks, uncertainties,
contingencies and other factors which may cause the actual results
or performance of the Company to be materially different from any
future results or performance expressed or implied by the
forward-looking statements. Such risks, uncertainties,
contingencies and other factors include, among others, the "Risk
Factors" in the 2022 AIF, and the risks, uncertainties,
contingencies and other factors identified in this press release,
the Q3 2022 Financial Disclosure, the FYE 2021 and Prior 2022
Financial Disclosure, the Technical Reports and the Company's other
applicable public disclosure. The foregoing list of risks,
uncertainties, contingencies and other factors is not exhaustive;
readers should consult the more complete discussion of the
Company's business, financial condition and prospects that is
provided in the 2022 AIF and the other aforementioned documents.The
forward-looking statements referenced or contained in this press
release are expressly qualified by these Cautionary Statements as
well as the Cautionary Statements in the Q3 2022 Financial
Disclosure, the FYE 2021 and Prior 2022 Financial Disclosure, the
2022 AIF, the Technical Reports and the Company's other applicable
public disclosure. Forward-looking statements contained herein are
made as of the date of this press release (or as otherwise
expressly specified) and the Company disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable laws.
Qualified Persons
Mr. Paul Keller, P. Eng.,
Chief Operating Officer of the Company and a Qualified Person as
defined in NI 43–101 (a "QP"), reviewed, verified and
approved the scientific and technical information relating
operations and production results contained in this press release.
Mr. Jorge Ortega, M.Sc., P.Geo.,
Vice President Exploration of the Company and a QP, reviewed,
verified and approved any scientific and technical information
relating to geological interpretation and results contained in this
press release.
www.excellonresources.com
SOURCE Excellon Resources Inc.