Excellon reports 2013 annual and fourth quarter financial results

March 27, 2014

TORONTO, March 27, 2014 /CNW/ – Excellon Resources Inc. (TSX:EXN; OTC:EXLLF) (“Excellon” or
the “Company”)
, Mexico’s highest grade silver producer, is pleased to report financial results for three and twelve month
periods ended December 31, 2013.

2013 Annual and Q4 Highlights

        --  Revenue of $33.3 million (Q4 - $7.4 million)
        --  Sales of 2,038,295 AgEq ounces (Q4 - 545,428 AgEq ounces),
            including 1,403,783 oz Ag, 7,237,003 lb Pb and 9,683,329 lb Zn
        --  Mine operating earnings of $8.7 million (Q4 - $0.2 million)
        --  Net loss of $5.0 million or $0.09/share (Q4 - net loss of $2.4
            million or $0.04/share), including a deferred tax accounting
            adjustment of $0.8 million recognized in Q4 as a result of the
            recently enacted Mexican tax reforms
        --  Cash flow from operations of $1.7 million or $0.03/share before
            changes in working capital (Q4 - $0.8 million or $0.01/share)
        --  Net cash costs per payable silver ounce of $10.51 (Q4 - $13.02)
        --  All-in costs per payable AgEq ounce of $17.29 (Q4 - $16.09)
        --  Cash corporate administrative costs reduced by $2.2 million or
            36% relative to 2012
        --  Cash, marketable securities and current accounts receivable
            totaled $7 million at December 31, 2013
        --  Working capital totaled $10.3 million at December 31, 2013

“During 2013, and particularly during the third quarter, we demonstrated
our ability to generate cash flow at Platosa despite the significant
decrease in silver prices,” stated Brendan Cahill, President and Chief
Executive Officer. “The biggest impact on our profitability was the
significant volatility in the silver price, particularly during the
second and fourth quarters. We have now taken steps to reduce the
effect of these fluctuations and we are confident that these
adjustments will improve cash flow and profitability going forward.
Additionally, just as we realized cost reductions throughout the year,
we will continue to further reduce costs at the mine site level through

“Our strong, dedicated and valuable operations team should be proud of
producing the most ounces from Platosa since 2009 and the most tonnes
in the mine’s history. In 2014, we aim to build on this improved
production profile, while continuing to enhance our commitment to the
highest levels of health and safety protocols and training.”

Financial and Operating Highlights

Financial results for the three and twelve month periods ended December
31, 2013 and 2012 are as follows:

      ('000's of USD, except amounts per
                and per ounce)            Q4 2013 Q4 2012    2013     2012

    Revenue                                 7,445   9,113   33,332   36,273

    Production costs                      (5,987) (4,153) (20,692) (16,401)

    Depletion and amortization            (1,260)   (860)  (3,910)    2,788

    Cost of sales                         (7,247) (5,013) (24,602) (19,189)

    Gross profit (loss)                       198   4,100    8,730   17,084

    Corporate administration              (1,448) (1,854)  (5,831)  (7,338)

    Exploration                             (212) (3,650)  (6,718)  (9,907)

    Other (incl. finance cost)                512   (417)      202      685

    Income tax recovery (expense)         (1,457)   8,481  (1,423)    7,884

    Net income (loss)                     (2,406)   6,660  (5,041)    8,408

    Earnings per share - basic             (0.04)    0.12   (0.09)     0.15

    Cash flow from operations (1)             790     124    1,699    3,631

    Cash flow from operations per share -    0.01    0.00     0.03     0.07

    Net cash cost per payable silver        13.02    9.88    10.51     6.80
    ounce ($/Ag oz)

    All-in cost per payable silver          16.09   18.85    17.29    16.78
    equivalent ounce
    ($/AgEq oz)

    (1)     Cash flow from operations before changes in working capital

Revenues during 2013 decreased 8% from 2012, despite a 52% increase in
tonnes produced, due to a 33% decrease in the average realized silver
price from $31.03 to $20.93. The decrease in the silver price resulted
in lower revenues as well as significant charges against revenue during
2013, both of which affected income and cash flow (as further described
below). Total revenues for 2013 were also lower than anticipated due
to inclement weather at year-end on the west coast of Mexico delaying
the delivery of $1.0 million in concentrate until early 2014. Costs of
sales increased 28% during 2013 due to the significant increase in
produced tonnage during the year.

The Company’s net losses during 2013 and Q4 were primarily the result of
$2.0 million (Q4 – $0.9 million) in negative price adjustments relating
to decreases in the price of silver between the deliver date and final
settlement date (up to four months later) of concentrate sold during
the periods (including $0.6 million of unsettled deliveries
marked-to-market at the end of Q4 2013).

The Q4 revenue adjustments of $0.9 million were the major contributor to
the relatively low mine operating earnings of $0.2 million during the
quarter. The Company has entered into new concentrate purchase terms,
which are expected to reduce the effect of similar revenue adjustments
in 2014/2015.

Other significant items contributing to the Company’s net losses during
2013 and Q4 include: (i) a one-time non-cash income tax provision of
$0.8 million resulting from the initial recognition of the Mexican
mining tax reform; (ii) expensed drilling and exploration totaling $6.7
million during the year; (iii) an unrealized loss of $1.5 million (Q4 -
$0.4 million) from a decrease in the fair value of 344,000 units of the
Sprott Physical Silver Trust held by the Company, representing an
underlying investment in 134,732 ounces of silver; and (iv) non-cash
charges totaling $1.6 million (Q4 – $0.5 million) in respect of share
based compensation.

Net working capital decreased $5 million during 2013 to $10.3 million
(December 31, 2012 – $15.3 million), primarily due to exploration
expenditures of $6.7 million and cash repayments of $4.5 million during
the year related to the negative revenue reductions discussed above.
Cash, marketable securities and current accounts receivable decreased
to $7 million at December 31, 2013 ($15.3 million at December 31,

Cash corporate administration expenses decreased by approximately $2.2
million or 36% during 2013 relative to 2012 as the Company implemented
cost reduction measures in the Toronto office. Cash compensation, in
particular, was $1.4 million or 45% lower in 2013 than in 2011 and

During the first two quarters of 2013, the Company expended $6.2 million
in drilling and exploration expenditures at Platosa and the Beschefer
and DeSantis properties. Subsequent to May 2013, exploration expenses
were reduced significantly. Due to current silver prices and market
conditions, the Company has suspended drilling at La Platosa, though
drill rigs remain on site and available to resume exploration at short

The Company has committed going forward to providing costs per silver
equivalent ounce on a “payable” basis, rather than on a “produced” or
“sold” basis, as the payable basis provides a more accurate measure of
the cash income received from each silver equivalent ounce sold by the
Company. On the payable metric, costs per ounce appear higher than they
may historically have appeared when reported on a produced or sold

Cash cost per payable silver ounce net of by-products increased during
2013 to $10.51 (2012 – $6.80). This increase was primarily
attributable to lower grades of silver (-15%) and zinc (-32%) in the
mantos mined during 2013 relative to 2012, lower recoveries in respect
of lead and zinc (as discussed in Operating Highlights, below) and
related lower by-product credits on silver production, as well as
higher costs in respect of certain consumables that are not expected to
recur in 2014. All-in cost per payable silver equivalent ounce was
slightly higher relative to 2012 at $17.29 versus $16.78.

Relative to Q3 2013, net cash costs and all-in costs increased,
primarily due to lower grades mined during Q4 (684 g/t Ag in Q4 versus
975 g/t Ag in Q3) offsetting the increased tonnage milled (21,186
tonnes in Q4 versus 16,707 tonnes in Q3). As in Q3, during Q4 (i)
significant expenditures were made on electricity to manage water
inflows in the 6A Manto (which were resolved in late February 2014),
(ii) the areas mined during the quarter contained lower lead and zinc
grades, reducing by-product credits and silver equivalent ounces, and
(iii) recoveries were lower than in previous periods (see Operating
Highlights for a further discussion). The Company realized significant
improvements in each of these respects in early 2014.

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 news release should be read in
conjunction with the Company’s unaudited consolidated financial
statements for the year ended December 31, 2013 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
reference to “cash flows from operations before changes in working
capital items”, “cash cost per payable silver equivalent ounce net of
byproducts” and “all-in cost per payable silver equivalent ounce,”
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, 2013, for a reconciliation of these
measures to reported IFRS results.

Production Highlights

Mine production for the three and twelve months periods ended December
31, 2013 and 2012 was as follows:

                                         Q4        Q4      Year       Year

                                      2013*      2012     2013*       2012

    Tonnes of ore produced           20,481    11,139    70,490     46,495

    Tonnes of ore processed          21,186    11,452    69,862     48,199

    Ore grades:                                                           

                Silver (g/t)            684       751       718        846

                Silver (oz/T)         19.96     21.89     20.94      24.67

                Lead (%)               5.27      6.59      6.14       6.75

                Zinc (%)               5.08     11.21      8.00      11.81


                Silver (%)             89.9      94.4      92.6       93.4

                Lead (%)               71.2      85.7      79.4       82.1

                Zinc (%)               75.8      83.7      80.2       84.8


                Silver - (oz)       411,277   251,065 1,409,852  1,081,165

                Silver equivalent   545,428   360,831 2,055,567  1,550,964
                ounces (oz)(1)

                Lead - (lb)       1,720,303 1,393,067 7,342,108  5,731,160

                Zinc - (lb)       1,857,066 2,387,785 9,876,955 10,450,813


                Silver ounces -     393,908   233,773 1,403,783  1,060,211

                Silver equivalent   513,568   337,642 2,038,295  1,523,422
                ounces (oz)(1)

                Lead - (lb)       1,530,833 1,324,026 7,237,003  5,638,330

                Zinc - (lb)       1,660,102 2,253,698 9,683,329 10,316,726


                Silver ounces -     360,285   208,702 1,279,364    951,707

                Silver equivalent   466,391   326,729 1,841,335  1,476,413
                ounces (oz)(1)

                Lead - (lb)       1,453,171 1,254,681 6,868,685  5,331,554

                Zinc - (lb)       1,376,336 1,892,706 8,117,208  8,660,607

    Realized prices: (2)                                                  

                Silver - ($US/oz)     20.02     35.56     20.93      31.03

                Lead - ($US/lb)        0.96      1.03      0.94       0.91

                Zinc - ($US/lb)        0.87      0.93      0.86       0.90

    *  Q4 data remains subject to adjustment following settlement with
      concentrate purchaser, Q3, Q2 and Q1 data has been adjusted to
      reflect settlement with concentrate purchaser.

      (1)     Silver equivalent ounces established for each period using
      prices of US$24 per oz Ag, US$0.90 per lb Pb, and US$0.90 per lb Zn
      applied to the recovered metal content of the concentrates.

      (2)     Average realized price is calculated on current period sale
      deliveries and does not include prior period provisional adjustments
      in the period.  A complete reconciliation of net realized prices is
      set out in the Company's 2013 MD&A.

      Note:  "t"= tonne;  "T"= ton

Production of over 1.4 million ounces of silver was the Company’s
highest annual production at La Platosa since 2009. The Company
realized a significant improvement in tonnes per day (“tpd”) of
production during the latter half of the year from ~175 tpd during
Q1/Q2 to ~210 tpd in Q3/Q4 (including 223 tpd in Q4) as the benefits of
underground development work during the first half of the year were
realized and the Company began identifying further operational
efficiencies and improving water management. Production of 2.1 million
silver equivalent ounces during the year was in line with the Company’s
revised target (announced September 17, 2013) and silver grades were
generally in line with budget (718 g/t Ag versus 728 g/t Ag budgeted).

During the fourth quarter, ore was produced primarily from the 5A, 6A
and Guadalupe North mantos. Tonnes milled represented a 27% increase on
the previous quarter for a total of 21,186 tonnes. Grades were in line
with estimates for the La Platosa resources mined during the period.
As in the third quarter, recoveries were slightly lower due to (i)
significant remnant grouting from historical water management measures
in certain areas mined, (ii) oxide mineralization in the 5A manto, and
(iii) similar lead and zinc grades affecting the mill’s differential
separation of each metal. Recoveries of all metals have exceeded budget
to date in 2014.


Excellon is targeting 2014 production of 1.4 to 1.6 million ounces of
silver, 7.5 to 8.5 million pounds of lead and 9.0 to 10 million pounds
of zinc or 2.1 to 2.3 million silver equivalent ounces (based on $24
silver, $0.90 lead and $0.90 zinc).

In December 2013, Mexico passed tax reform legislation that took effect
January 1, 2014. The reform includes, among other items, cancellation
of the reduction in the Mexican corporate tax rate from 30 per cent to
28 per cent by 2015, a special mining duty of 7.5% on taxable mining
profits, fewer allowable deductions excluding interest and capital
depreciation, and a 0.5-per-cent environmental tax on gold and silver
revenue. The tax reform is expected to impact the Company’s future
earnings and cash flows. The Company intends to minimize the impact of
these reforms to the full extent possible and, additionally, still
holds significant loss carry forwards from its acquisition of Silver
Eagle Mines Inc. in 2009, which may be applied against profits going

Corporate Governance Updates

The Board of Directors of the Company is also pleased to announce the
implementation of a Majority Voting Policy and the approval of an
Advance Notice Bylaw, each as further described below.

Advance Notice Bylaw

The Advance Notice Bylaw requires that advance notice be provided to the
Company in circumstances where nominations of persons for election to
the Board are made by shareholders other than pursuant to: (i) a
requisition to call a shareholders meeting; or (ii) a shareholder
proposal, in each case as made in accordance with the provisions of the
Business Corporations Act (Ontario) (the “Act”). Among other things,
the Advance Notice Bylaw fixes a deadline by which shareholders must
notify the Company of nominations of persons for election to the Board
and provide that the same information about the proposed nominee as one
would be required to include in a dissident proxy circular under
applicable securities laws must be provided to the Company by the

In the case of an annual meeting of shareholders, notice to the Company
must be made not less than 30 and not more than 65 days prior to the
date of the annual meeting; provided however, that in the event that
the annual meeting is to be held on a date that is less than 40 days
after the date on which the first public announcement of the date of
the annual meeting was made, notice may be made not later than the
close of business on the 10th day following such public announcement.

In the case of a special meeting of shareholders (which is not also an
annual meeting) notice to the Company must be made no later than the
close of business on the 15th day following the day on which the first
public announcement of the date of the special meeting was made.

The Advance Notice Bylaw provides a clear process for shareholders to
follow to nominate directors and set out a reasonable timeframe for
nominee submissions along with a requirement for accompanying
information. The purpose of the Advance Notice Bylaw is to treat all
shareholders fairly by ensuring that all shareholders, including those
participating in a meeting by proxy rather than in person, receive
adequate notice of the nominations to be considered at a meeting and
can thereby exercise their voting rights in an informed manner. In
addition, the Advance Notice Bylaw should assist in facilitating an
orderly and efficient meeting process.

In accordance with the provisions of the Act, the Advance Notice Bylaw
will be subject to confirmation by shareholders at the next annual
meeting of shareholders of the Company. A copy of the by-law has been
filed under the Company’s profile on SEDAR at www.sedar.com.

Majority Voting Policy

Under the Majority Voting Policy, any nominee for director of the
Company who receives a greater number of votes “withheld” from his or
her election than votes “for” such election shall immediately following
the shareholders’ meeting tender his or her resignation from the Board
for consideration by the nominating and corporate governance committee
of the Board (the “Committee”). The Committee shall consider the
resignation and recommend to the Board the action to be taken with
respect to such resignation, which may include acceptance of the
resignation or rejection of the resignation. The Committee shall be
expected to recommend acceptance of the resignation unless exceptional
circumstances exist that would warrant the applicable director
continuing to serve on the Board. The Board has 90 days following the
date of the shareholders’ meeting at which the election occurred to
decide whether to accept the resignation. Promptly after the Board’s
decision, the Company will disseminate a press release disclosing
whether or not the director’s resignation was accepted. If the Board
determined not to accept the resignation, the press release must
disclose reason or reasons for rejecting the tendered resignation. The
Majority Voting Policy is accessible on the Company’s website at www.excellonresources.com.

Annual Meeting

The annual meeting of Excellon shareholders will be held at 4:00 p.m.
(ET) on April 29, 2014 at 330 Bay Street in Toronto, Ontario. Excellon
shareholders as of March 11, 2014 are entitled to attend and vote their
shares at the annual meeting. Materials outlining the matters to be
approved at the annual meeting will be mailed in early April 2014.

About Excellon

Excellon’s 100%-owned and royalty-free La Platosa Mine in Durango is
Mexico’s highest grade silver mine, with lead and zinc by-products
making it one of the lowest cash cost silver mines in the country. The
Company is positioning itself to capitalize on undervalued projects by
focusing on increasing La Platosa’s profitable silver production and
near-term mineable resources.

Additional details on the La Platosa Mine and 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 [particularly silver], 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. 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.

Source: PR Newswire

comments powered by Disqus