Excellon loses $3.4-million (U.S.) in Q2 2020
2020-08-13 16:46 ET - News Release
Mr. Brendan Cahill reports
EXCELLON REPORTS SECOND QUARTER 2020 FINANCIAL RESULTS
Excellon Resources Inc. has released its financial results for the three- and six-month periods ended June 30, 2020.
Q2 2020 Financial and Operational Highlights
- Successful close of the plan of arrangement with Otis Gold Corp. ("Otis") in late April 2020
- Mining and milling operations resumed from mid-June 2020 following suspension imposed by the Government of Mexico from April 1 st to June 1 st (the "Suspension")
- Positive production and cost reductions progress following restart
- Operations continue to effectively manage COVID-19 response in Mexico
- Cash and marketable securities of US$11 million as at August 4, 2020 following repayment of Sprott Private Resource Lending II (Collector), LP ("Sprott Lending") US$6 million bridge loan
"Our teams at Platosa and Miguel Auza did an exceptional job managing through a very difficult period," stated Brendan Cahill, President and CEO. "We developed protocols to ensure the health of our workforce and to aid the health of our broader communities; our teams on the ground put these plans into practice and deserve great credit for their courage, perseverance and resiliency."
Mr. Cahill continued, "Though we must continue to be diligent in our management of the ongoing pandemic, we also look ahead to brighter times. Our restart of Platosa has gone well, with efforts to reduce costs bearing immediate returns as we resumed production in mid-June. Mill recoveries improved significantly following the restart, and we continue to see these improvements in the third quarter. The key remaining piece of our cost reduction strategy is the shift to a private electricity provider, which we expect will be completed in the third quarter. Above all, we are finally seeing the resurgence in precious metal prices that our industry has been predicting for years and we look forward to taking advantage of this new bull market to our shareholders' benefits."
Financial Results
Financial results for the three- and six-month periods ended June 30, 2020 and 2019 were as follows: ('000s of USD, except amounts per share and per ounce) Q2 2020 Q2 2019 6-Mos 2020 6-Mos 2019 Revenue (1) 891 8,674 7,506 13,853 Production costs (2,641) (6,797) (8,120) (11,409) Depletion and amortization (666) (1,149) (1,935) (2,318) Cost of sales (3,307) (7,946) (10,055) (13,727) Gross profit (loss) (2,416) 728 (2,549) 126 Corporate administration (2,345) (1,028) (3,508) (2,389) Exploration (258) (967) (631) (1,972) Other income (expense) 968 34 (691) (240) Net finance income (cost) 554 (335) (1,537) (387) Income tax recovery (expense) 97 (640) (856) (1,131) Net income (loss) (3,400) (2,208) (9,771) (5,993) Income (loss) per share - basic (0.02) (0.02) (0.08) (0.06) (1)Revenues are net of treatment and refining charges ("TC/RCs"). (2)Cash flow from operations before changes in working capital.
Revenues were negligible during the quarter due to the Suspension, comprising concentrate milled in late Q1 and early Q2 2020 that was delivered in early Q2. Concentrate deliveries resumed in early July.
Cost of sales, including depletion and amortization, primarily related to care and maintenance costs incurred during the quarter, with the predominant components being electricity expenditures on pumping for dewatering purposes at Platosa and labour costs (both at lower rates than under normal operating conditions).
The Company recorded a net loss of $3.4 million in Q2 2020 (Q2 2019 - net loss of $2.2 million). The increase in net loss of $1.2 million between Q2 2020 and Q2 2019 and the increase in net loss of $3.5 million between the six month periods ended June 30, 2020 and 2019 was primarily due to care and maintenance costs and minimal revenues from the Mexican operations due to the Suspension.
Exploration was limited during the period in Mexico due to the Suspension, but the Company expended C$261,000 at Silver City Project ramping up to the drill program that commenced in early Q3 2020 and an additional $63,000 at Kilgore Project following the acquisition of Otis. Additionally, work continued on the Oakley Project under option to Centerra (U.S.) Inc.
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 unaudited condensed interim consolidated financial statements for the three- and six-month periods ended June 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.
Operating Results & Outlook
Operating performance for the periods indicated below was as follows: Q2 2020 Q2 2019 6-Mos 2020 6-Mos 2019 Tonnes of ore mined: 3,270 18,213 23,170 37,709 Ore processed (t): 1,288 19,964 20,330 36,733 Historical stockpile processed (t): - - - 1,450 Platosa ore processed (t): 1,288 19,964 20,330 38,183 Blended head grade (ore and historical stockpiles): Silver (g/t) 492 514 539 508 Lead (%) 5.37 4.97 5.44 4.85 Zinc (%) 6.91 7.40 6.78 7.44 Recoveries: Silver (%) 92.9 90.6 89.5 90.2 Lead (%) 84.7 83.6 82.9 79.5 Zinc (%) 80.9 79.6 75.3 78.9 Production(1) Silver - (oz) 18,919 276,805 315,200 537,249 AgEq ounces (oz)(2) 34,924 582,937 558,666 1,105,198 Lead - (lb) 129,204 1,763,316 2,019,661 3,139,740 Zinc - (lb) 158,735 2,499,403 2,289,769 4,709,028 Payable:(3) Silver ounces - (oz) 48,744 328,778 294,806 502,972 AgEq ounces (oz)(2) 81,679 660,292 515,869 1,043,730 Lead - (lb) 340,315 2,130,372 1,854,600 3,021,084 Zinc - (lb) 260,607 2,554,290 2,066,279 4,474,024 San Sebastian ore processed (t) - - 4,785 -
(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. 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. In Q2 2020, concentrate milled in late-Q1 2020 was delivered in early Q2 2020. Milling recommenced in late-June after the Suspension, with shipping of concentrate resuming in July 2020.
(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.
Production was negligible during Q2 2020 due to the Suspension. The restart of the Company's Mexican operations was completed successfully, with a materially-reduced workforce paying immediate dividends in the form of reduced operating costs on restart. Mill recoveries also improved significantly following the restart. The shift to a private electricity provider is expected to be completed in the third quarter, further reducing operating costs. In addition, the operations continue to pursue various business improvement initiatives designed to deliver further operational efficiencies and cost reductions. The resurgence in precious metal prices is expected to result in positive cashflows in the upcoming quarters.
COVID-19 Update
The restart of operations following the Suspension consisted of providing two days of safety and COVID-19 exposure prevention training, reorganizing the reduced workforce and implementing more efficient work schedules and various ventilation, mining method and business improvements. COVID-19 prevention, health screening, contact tracing, testing and quarantine protocols were developed and implemented early and proved effective in protecting the workforce from confirmed COVID-19 cases that originated from community spread.
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.
We seek Safe Harbor.
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