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Excellon Resources Inc (2)
Symbol C : EXN
Shares Issued 99,269,912
Close 2019-08-01 C$ 1.18
Recent Sedar Documents

Excellon loses $2.2-million (U.S.) in Q2

2019-08-01 16:36 ET - News Release

Mr. Brendan Cahill reports

EXCELLON REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS

Excellon Resources Inc. has released financial results for the three- and six-month periods ended June 30, 2019. Amounts are in U.S. dollars unless otherwise stated.

Second quarter 2019 financial highlights (compared with second quarter 2018):

  • All-in sustaining cost per silver ounce payable (AISC) excluding non-cash items of $16.11 versus $21.97 in first quarter 2019 (second quarter 2018: $7.15);
  • Strong revenue of $8.7-million despite lower metal prices (second quarter 2018: $9.9-million);
  • Silver equivalent (AgEq) production of 582,937 ounces (second quarter 2018: 637,205 AgEq ounces);
  • AgEq ounces payable sold of 660,292 (second quarter 2018: 568,370 AgEq ounces payable);
  • Mined tonnage 30 per cent higher in first half 2019 versus second half 2018;
  • Gross profit of $700,000 (second quarter 2018: $3.9-million);
  • Total cash cost per Ag oz payable of $9.18 (second quarter 2018: negative $1.07);
  • Net loss of $2.2-million or two cents per share (second quarter 2018: net income of $1.3-million or one cent per share);
  • Net working capital totalled $3.8-million at June 30, 2019 (March 31, 2019: $5.5-million), with an additional $900,000 (Canadian) pending from 50-cent warrants expiring Nov. 27, 2019.

"During the recent period of low metal prices, we continued to make capital investments and advance exploration programs at both of our projects, leaving us well positioned for the improving silver price environment that we are now seeing," stated Brendan Cahill, president and chief executive officer. "Our ongoing optimization work has delivered results, reducing AISC by 27 per cent quarter over quarter. We still have a number of opportunities to follow up on to further reduce costs and increase metal production. Toll milling of ore from Hecla's San Sebastian mine commenced in second quarter and is expected to ramp up in third quarter, bolstering cash flow. With silver prices now almost $1.50 per ounce higher than the average price realized during second quarter, we will continue to focus on increasing cash flow and exploring for discoveries at both Platosa and Evolucion."

Financial results

Financial results for the three- and six-month periods ended June 30, 2019, and 2018, were as set out in the attached financial highlights table.

                                            FINANCIAL HIGHLIGHTS  
                      (000s of U.S. dollars, except amounts per share and per ounce) 

                                                                     Q2 2019      Q2 2018       H1 2019         H1 2018

Revenue (1)                                                           $8,674       $9,877        $13,853        $15,788
Production costs                                                      (6,797)      (5,173)       (11,409)        (9,132)
Depletion and amortization                                            (1,149)        (854)        (2,318)        (2,136)
                                                                     -------      -------        -------        -------
Cost of sales                                                         (7,946)      (6,027)       (13,727)       (11,268)
                                                                     -------      -------        -------        -------
Gross profit (loss)                                                      728        3,850            126          4,520
Corporate administration                                              (1,028)      (1,428)        (2,389)        (2,905)
Exploration                                                             (967)      (1,053)        (1,972)        (1,761)
Other                                                                     34         (497)          (240)          (415)
Net finance cost                                                        (335)        (409)          (387)           615
Income tax recovery (expense)                                           (640)         845         (1,131)           (22)
                                                                     -------      -------        -------        -------
Net income (loss)                                                     (2,208)       1,254         (5,993)            32
Income (loss) per share -- basic                                       (0.02)        0.01          (0.06)          0.00
Cash flow from (used in) operations (2)                                  208        2,253           (769)         2,724
Cash flow from (used in) operations per share -- basic                  0.00         0.02          (0.01)          0.03
Production cost per tonne (3)                                            304          225            289            227
Cash cost per silver ounce payable net of byproducts ($/Ag oz)          9.18        (1.07)         10.06           0.90
All-in sustaining cost (AISC) per silver ounce payable ($/Ag oz)       16.89         9.75          19.82          12.21
Realized prices (4)
Silver ($U.S./oz)                                                      14.93        16.56          14.95          16.54
Lead ($U.S./lb)                                                         0.85         1.08           0.86           1.08
Zinc ($U.S./lb)                                                         1.23         1.41           1.25           1.42
                                                                     -------      -------        -------        -------
(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.
(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.

Net revenues decreased by 12 per cent to $8.7-million in second quarter 2019 ($9.9-million in second quarter 2018) due to a combination of significantly lower realized metal prices (silver: 10 per cent, lead: 22 per cent and zinc: 13 per cent) partially offset by higher silver equivalent ounces payable of 660,292 sold (568,370 in second quarter 2018).

Cost of sales, including depletion and amortization, increased 32 per cent between second quarter 2019 and second quarter 2018 due to increased tonnage mined, higher electricity prices, inventory variance of $600,000 due to the processing of stockpiled material from first quarter 2019, and higher depreciation and amortization cost of $300,000.

The company recorded a net loss of $2.2-million in second quarter 2019 (second quarter 2018: net income of $1.3-million), with the contributors being lower revenues as a result of lower metal prices, increased cost of sales and a $1.5-million difference in deferred income taxes.

Exploration drilling continued on the Platosa property with 5,495 metres drilled in second quarter 2019 (6,221 metres in second quarter 2018), resulting in slightly lower exploration expenses than in second quarter 2018.

Cash cost net of byproducts per silver ounce payable (or total cash cost) of $9.18 in second quarter 2019 was higher due to a combination of lower byproduct credits due to materially lower metal prices, offset by higher silver ounces recognized in the quarter.

AISC net of byproducts per silver ounce payable in second quarter 2019 of $16.89 resulted from higher total cash cost as described herein (second quarter 2018: $9.75). AISC excluding non-cash items of $16.11 in second quarter 2019 was 27 per cent lower than first quarter 2019 of $21.97.

All financial information is prepared in accordance with international financial reporting standards, 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 interim consolidated financial statements for the three- and six-month periods ended June 30, 2019, and associated management's discussion and analysis, which are available from the company's website and under the company's profile on SEDAR.

Operating highlights

Operating performance is indicated for the periods in the attached operating highlights table.

                                        OPERATING HIGHLIGHTS
                                                               Q2           Q2           H1           H1
                                                             2019         2018         2019         2018

Tonnes of ore mined                                        18,717       16,146       38,801       29,930
                                                        ---------    ---------    ---------    ---------
Tonnes of ore processed                                    19,964       16,580       36,733       29,601
Tonnes of historical stockpile processed                        -        6,291        1,450       12,155
Total tonnes processed                                     19,964       22,872       38,183       41,756
                                                        ---------    ---------    ---------    ---------
Ore grades 
Silver (g/t)                                                  514          507          523          478
Lead (%)                                                     4.97         5.67         4.99         5.27
Zinc (%)                                                     7.40         8.38         7.67         8.32
                                                        ---------    ---------    ---------    ---------
Historical stockpile grades
Silver (g/t)                                                    -          172          123          174
Lead (%)                                                        -         1.76         1.22         1.68
Zinc (%)                                                        -         2.38         1.44         2.39
                                                        ---------    ---------    ---------    ---------
Blended head grade (ore and historical stockpiles)
Silver (g/t)                                                  514          415          508          390
Lead (%)                                                     4.97         4.59         4.85         4.23
Zinc (%)                                                     7.40         6.73         7.44         6.59
                                                        ---------    ---------    ---------    ---------
Recoveries
Silver (%)                                                   90.6         89.6         90.2         89.2
Lead (%)                                                     83.6         80.2         79.5         80.8
Zinc (%)                                                     79.6         82.2         78.9         82.9
                                                        ---------    ---------    ---------    ---------
Production (1)
Silver (oz)                                               276,805      277,701      537,249      472,163
AgEq ounces (oz) (2)                                      582,937      637,205    1,105,198    1,119,284
Lead (lb)                                               1,763,316    1,874,967    3,139,740    3,123,385
Zinc (lb)                                               2,499,403    2,810,564    4,709,028    5,064,014
Payable (3)
Silver ounces (oz)                                        328,778      249,309      502,972      415,385
AgEq ounces (oz) (2)                                      660,292      568,370    1,043,730      975,364
Lead (lb)                                               2,130,372    1,773,097    3,021,084    2,912,762
Zinc (lb)                                               2,554,290    2,392,204    4,474,024    4,226,947
                                                        ---------    ---------    ---------    ---------
  
(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.
(2) Silver equivalent 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.

During second quarter 2019, operations at Platosa accessed multiple ore faces. Efficiencies implemented in previous quarters continued to deliver results with lower dilution, higher grades and steady metal production rates. As a result, payable metals increased, and average tonnes per day decreased to 213 tonnes per day in second quarter 2019 versus 226 tonnes per day in first quarter 2019. Total tonnage processed of 19,964 tonnes in second quarter 2019 was 13 per cent lower relative to second quarter 2018. Production for first half 2019 was generally in line with first half 2018.

Mining operations are expected to continue at a steady rate as development has progressed toward the next production horizon in levels 916 in Manto 623 and 913 in Manto Pierna. The company will continue to implement efficiencies underground to improve dilution and grades. As previously discussed, minor adjustments at the Miguel Auza processing facility are continuing, and the mill is processing a bulk sample from Hecla's San Sebastian mine.

About Excellon Resources Inc.

Excellon's 100-per-cent-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-per-cent-owned 45,000-hectare Evolucion property, and capitalizing on current market conditions by acquiring undervalued projects in the Americas.

We seek Safe Harbor.

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