Press Release Source: Excellon Resources Inc.
Excellon Reports Nine Month Earnings of $11,751,506 and Third Quarter Earnings of $3,906,859
Monday June 18, 9:02 am ET
TORONTO, ONTARIO--(CCNMatthews - June 18, 2007) -
Excellon Resources Inc. (TSX VENTURE:EXN - News) reports earnings of $11,751,506 for the nine month period ended April 30, 2007, and $3,906,859 for the three month period ended April 30, 2007. Other results from the three and nine month periods ended April 30, 2007 include:
3 months ended 9 months ended
30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06
--------------------------------------------------
Revenue $ 10,244,135 $ 7,810,749 $ 30,931,023 $ 15,990,935
Cost of production
(including
amortization for 3
month period
of $309,731 (2006 -
$939,712); 9 month
period of $761,073
(2006 - $2,187,073)) 1,390,135 1,514,789 4,650,381 4,005,336
--------------------------------------------------
8,854,000 6,295,960 26,280,642 11,985,599
--------------------------------------------------
Expenses:
Non-cash items 601,474 8,956,829 4,618,352 16,876,647
Exploration 749,036 617,358 3,311,072 1,704,509
Other 1,739,678 1,253,853 4,205,701 3,124,503
Provision for
income taxes -
current 2,803,876 - 5,469,868 -
Provision for
income taxes -
future (946,923) - (3,075,857) -
--------------------------------------------------
4,947,141 10,828,040 14,529,136 21,705,659
--------------------------------------------------
Net gain/(loss) for
the period $ 3,906,859 $ (4,532,080) $ 11,751,506 $ (9,720,060)
--------------------------------------------------
--------------------------------------------------
Earnings/(loss) per
share - basic $ 0.027 $ (0.034) $ 0.081 $ 0.072
--------------------------------------------------
--------------------------------------------------
- diluted $ 0.025 $ (0.034) $ 0.074 $ 0.072
--------------------------------------------------
--------------------------------------------------
Cash provided by
(used in) operating
activities $ (2,280,014)$ 1,446,688 $ 1,843,466 $ 1,209,091
--------------------------------------------------
--------------------------------------------------
Test-Mining Operations
Production for the quarter ended April 30, 2007 improved from the prior quarter, but was still below our target of 15,000 tonnes. Shipments to the Naica milling facility of Industrias Penoles S.A. de C.V. ("Penoles") were 12,095 tonnes during the period compared with 13,483 tonnes for the quarter ended April 30, 2006 and 8,546 tonnes for the quarter ended January 31, 2007. Although the Company's operations at Platosa could have maintained the targeted production rates, continuing difficulties experienced at the Naica mill reduced the shipments it could receive from Platosa. Shipments improved during February and the Company has averaged 4,200 tonnes per month in the last three months ending May 31, 2007.
The following are the production statistics for the three and nine month periods April 30, 2007 and 2006 and the year ended July 31, 2006:
3 months ended 9 months ended Year Ended
30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06 31-Jul-06
--------- --------- --------- --------- ----------
Tonnes of ore shipped 12,095 13,483 32,178 31,400 44,413
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Contained metal
Silver (ozs.) 408,029 501,751 1,893,036 1,198,881 1,711,719
Lead (lbs.) 2,544,365 3,065,521 7,465,042 7,813,280 10,921,062
Zinc (lbs.) 3,606,838 3,941,718 6,030,533 9,156,018 12,776,263
Average grade:
Silver (oz/ t)(1) 33.7 37.2 58.8 38.2 38.5
Silver (g/ t) 1,049.7 1,157.5 1,829.6 1,188.6 1,198.0
Silver (oz/ T) 30.6 33.8 53.4 34.7 34.9
Lead (%) 9.5 10.3 10.5 11.3 11.2
Zinc (%) 13.5 13.3 8.5 13.2 13.1
Payable metal:
Silver - (ozs.) 318,437 385,847 1,464,164 921,939 1,322,969
Lead - (lbs.) 1,878,925 2,452,415 5,818,762 6,250,623 8,750,605
Zinc - (lbs.) 2,323,119 2,286,197 3,759,210 5,310,490 7,361,702
(1) Oz/t is not a generally accepted unit measure as it combines imperial and metric units. However, it is the unit of measure upon which our settlements with Penoles are based. The generally accepted units of measure are g/t and oz/T.
Results of Operations
Three months ended April 30, 2007 compared to three months ended April 30, 2006
During the three months ended April 30, 2007, the Company recorded net income of $3,906,859 compared to a net loss of $4,532,080 in 2006. Gross operating income for the period was $8,854,000 compared to $6,295,960 in 2006. Operating income for the period was $5,679,977, compared to a loss of $4,547,203 in 2006. Included in net income is a gain resulting from the valuation of the Company's silver debenture of $394,397 (2006 - loss of $4,284,727). Excluding this valuation gain, the Company would have reported net income of $3,512,462 (2006 - net loss of $247,353).
During the three months ended April 30, 2007, the Company produced 13,389 tonnes (2006 - 13,122 tonnes) of ore and shipped 12,095 tonnes (2006 - 13,483 tonnes) of ore. Revenues during the period were $10,244,135 (2006 - $7,810,749) and cost of production was $1,390,135 (2006 - $1,514,789), resulting in gross operating income from mining operations of $8,654,000 (2006 - $6,295,960). Although the amount of ore shipped during the three months ended April 30, 2007 was 10% lower than in 2006, revenues were significantly increased due to the substantial increase in realized metal prices.
Operating expenses decreased from $10,843,163 in 2006 to $3,174,023 in 2007. The decrease was due to a silver debenture valuation gain of $394,397 (2006 - loss of $4,284,727) (resulting from a smaller relative increase in the price of silver over the period compared with the prior period, combined with a strengthening of the Canadian dollar and the impact of foreign exchange on the US dollar denominated debt), consulting fees of $82,896 (2006 - $266,854), stock-based compensation of $nil (2006 - $946,500) as no incentive stock options were granted and lower amortization of acquisition costs of $243,713 (2006 - $1,895,423). Amortization of acquisition costs was lower due to the impact of the expanded identified mineral resource. In addition, during the three months ended April 30, 2006 the Company bought out an existing finder's fee at a cost of $1,315,740 and there was no such cost in the three months ended April 30, 2007.
The operating expense decrease was partially offset by increased salaries of $383,670 (2006 - $199,620), office and rent of $150,194 (2006 - $74,455), travel and business development costs of $277,002 (2006 - $248,974), professional fees of $589,244 (2006 - $137,688), depreciation of $152,205 (2006 - $20,907) and exploration expenditures of $749,036 (2006 - $617,358). Salary costs increased due to the hiring of additional personnel, including a full time Corporate Controller and Vice-President Exploration, as well as Toronto head office staff. Such hirings reflect the continued growth and development of the Company and the consequent requirement for additional full-time staff to run its operations. Professional fees were higher than in 2006 as the Company engaged a Mexican tax advisor to recommend tax planning strategies in Mexico and the Company incurred higher legal fees. In addition, the Company's exploration program has been significantly increased from 2006 as exploration work continues to focus on locating additional mineralization in the vicinity of the existing test-mine as well as testing other regional targets. Travel and business development expenses were higher in 2007 due to the Company's increased participation in trade and investor conferences in order to present information concerning the Company and its operations to an increasingly wide range of potential institutional and retail investors and generally increase its visibility in the investment community. Office and rent were higher in 2007 due to the Company moving into its new head office.
During the three months ended April 30, 2007, the Company did not issue any incentive stock options.
During the three months ended April 30, 2007, the provision for current Mexican income taxes is $2,803,876 (2006 - $nil). The requirements for the payment of taxes in Mexico reflect the fact that the Company has, by virtue of its income-producing operations, now utilized all of its previously available Mexican losses available to offset income. During the current period, the Company increased its valuation of future income tax assets to $3,506,064 (current portion - $500,978) from $2,128,934 (current portion - $755,346). The future tax assets are primarily related to the activities of the Company in Canada. Current future income tax liabilities in the amount of $430,207 have been recognized in the period and are related to the activities of the Company's Mexican subsidiaries. The current future income tax liabilities have arisen due to temporary taxable differences in the books of the Mexican subsidiaries.
During the three months ended April 30, 2007, total mineral properties carried on the balance sheet decreased to $3,812,188 from $4,365,632 as at January 31, 2007. Mineral properties are being amortized on a unit of production basis. As a result, amortization of $553,444 (2006 - 2,835,135) for the period was recorded. Of this amount $309,731 (2006 - $939,712) is included in cost of production and $243,713 (2006 - $1,895,423) is recorded as amortization of acquisition costs. Details of the mineral properties are included in the unaudited Consolidated Financial Statements for the three and nine months ended April 30, 2007.
As at April 30, 2007, accounts receivable were $5,839,518 (January 31, 2007: $2,764,752). The increase is due to higher shipments of ore and higher realized metal prices in the current period.
Nine months ended April 30, 2007 compared to nine months ended April 30, 2006
During the nine months ended April 30, 2007, the Company recorded net income of $11,751,506 compared to a net loss of $9,720,060 in 2006. Gross operating income for the period was $26,280,642 compared to $11,985,599 in 2006. Operating income for the period was $13,858,362, compared to a loss of $9,735,183 in 2006. Included in net income is a loss resulting from the valuation of the Company's silver debenture of $2,426,063 (2006 - $8,708,597). Excluding this valuation loss, the Company would have reported net income of $14,177,569 (2006 - net loss of $1,011,463).
During the nine months ended April 30, 2007, the Company produced 32,939 tonnes (2006 - 31,650) of ore and shipped 32,178 tonnes (2006 - 31,400 tonnes) of ore. Revenues during the period were $30,931,023 (2006 - $15,990,935) and cost of production was $4,650,381 (2006 - $4,005,336), resulting in gross operating income from mining operations of $26,280,642 (2006 - $11,985,599). Although the amount of ore shipped during the nine months ended April 30, 2007 was only 2% greater than in 2006, revenues were significantly increased due to the substantial increase in realized metal prices and silver grade.
Operating expenses decreased from $21,720,782 in 2006 to $12,422,280 in 2007. The decrease was due to a reduced silver debenture valuation loss of $2,426,063 (2006 -$8,708,597) (resulting from a smaller relative increase in the price of silver over the period compared with the prior period), reduced consulting fees of $242,258 (2006 -$593,174), lower stock-based compensation of $974,000 (2006 - $1,529,200) due to the fewer number of incentive stock options granted, reduced foreign exchange loss of $108,845 (2006 - loss of $471,746) and lower amortization of acquisition costs of $607,611 (2006 - $4,385,131). Amortization of acquisition costs was lower due to the impact of the expanded identified mineral resource. In addition, during the nine months ended April 30, 2006 the Company bought out an existing finder's fee at a cost of $1,315,740 and there was no such cost in the nine months ended April 30, 2007.
The operating expense decrease was partially offset by increased salaries of $878,248 (2006 - $485,419), mine administration costs of $1,102,337 (2006 - $759,515), office and rent of $401,801 (2006 - $241,271), travel and business development costs of $784,877 (2006 - $620,369), professional fees of $843,847 (2006 - $277,901) and exploration expenditures of $3,311,072 (2006 - $1,704,509). Salary costs increased due to the hiring of additional personnel, including a full time Corporate Controller and Vice-President Exploration, as well as Toronto head office staff. Such hirings reflect the continued growth and development of the Company and the consequent requirement for additional full-time staff to run its operations. Mine administration costs and professional fees were higher than in 2006 due to increased operations at the mine and the resulting activities required to support these operations. In addition, the Company's exploration program has been significantly increased from 2006 as exploration work continues to focus on locating additional mineralization in the vicinity of the existing test mine as well as testing other regional targets. Travel and business development expenses were higher in 2007 due to the Company's increased participation in trade and investor conferences in order to present information concerning the Company and its operations to an increasingly wide range of potential institutional and retail investors and generally increase its visibility in the investment community. Office and rent were higher in 2007 due to the Company moving into its new head office.
During the nine ended April 30, 2007, the Company granted
1,150,000 incentive stock options to directors and employees, as follows:
Number Expiry Date Exercise Price Fair Value
--------------------------------------------------
750,000 Nov. 23, 2011 0.97 $ 570,000
400,000 Jan. 25, 2012 1.41 $ 404,000
--------------------------------------------------
1,150,000 $ 974,000
--------------------------------------------------
--------------------------------------------------
The Company believes that such options are an important component of employee compensation and assist in incentivizing such personnel.
During the nine months ended April 30, 2007, the provision for current Mexican income taxes is $5,469,868 (2006 - $nil). The requirements for the payment of taxes in Mexico reflect the fact that the Company has, by virtue of its income-producing operations, now utilized all of its previously available Mexican losses available to offset income. During the current period, the Company has determined that it is more likely than not that $3,506,064 (current portion - $500,978) of previously unrecognized future income tax assets should now be recognized. The future tax assets are primarily related to the activities of the Company in Canada. Current future income tax liabilities in the amount of $430,207 have been recognized in the period and are related to the activities of the Company's Mexican subsidiaries. The current future income tax liabilities have arisen due to temporary taxable differences in the books of the Mexican subsidiaries.
During the nine months ended April 30, 2007, total mineral properties carried on the balance sheet decreased to $3,812,188 from $5,180,872 as at July 31, 2006. Mineral properties are being amortized on a unit of production basis. As a result, amortization of $1,368,684 (2006 - $6,572,204) for the period was recorded. Of this amount $761,073 (2006 - $2,187,073) is included in cost of production and $607,611 (2006 -$4,385,131) is recorded as amortization of acquisition costs. Details of the mineral properties are included in the unaudited Consolidated Financial Statements for the three and nine months ended April 30, 2007.
As at April 30, 2007, accounts receivable were $5,839,518 (July 31, 2006: $3,582,513). The increase is due to higher realized metal prices in the three month period ending April 30, 2007 as compared with the three month period ending July 31, 2006.
Exploration
During the quarter additional mineralization has been discovered in the immediate Guadalupe Manto area, surface diamond drilling has continued with three drill rigs and the Company has received the results from the airborne electromagnetic survey carried out in February 2007.
On April 11, 2007, the Company announced that the apparent 60-metre wide "gap" between the Guadalupe and Guadalupe South Mantos appeared to be at least partially bridged approximately 25 metres above the elevation of these mantos. As part of the ongoing test-mining at Platosa, brecciated sulphide mineralization was traced upwards from the southeast end of the Guadalupe Manto to flat-lying massive silver-galena-sphalerite rich mineralization. Eighty-six metres farther southeast along this trend, Hole LP07-347 intersected 5 metres of similar looking massive and brecciated sulphide mineralization at the same elevation 15 metres to the northwest of the limit of the Guadalupe South Manto. Additional drilling was carried out in this area and Hole LP07-350 intersected 2.0 metres of massive silver-galena-sphalerite rich mineralization. Assays have not been received for either of these holes. It is planned to continue to develop and mine this mineralization in conjunction with ongoing development and mining of the Guadalupe Manto.
Also on April 11, 2007 the Company reported the preliminary results from the property-wide AeroTEMII airborne electromagnetic (EM) and magnetic (Mag) survey flown by Aeroquest International Limited in February 2007. Of particular interest is a strong northwest elongate Mag high along the southwest flank of the range beneath the Zorra and Saltillera areas (four to five kilometres west of the Platosa manto deposits) where widespread marble, hornfels, silicification, skarn and local high-grade mineralization occur. Recent drilling in this area by the Company has encountered significant thicknesses of polyphase granitic intrusions affected by strong pyritization, potassic and sericitic alteration, and sulphide stringers. EM conductors flank this high in several places and locally correspond to Natural Source Audio-Magneto Telluric ("NSAMT") survey conductors delineated during previous Excellon ground surveys. Similar intrusive systems are central to the largest CRD's worldwide and mineralized skarn bodies along their contacts are major sources of silver, lead, zinc and copper in Mexico. Excellon has incorporated the preliminary survey results into its exploration drilling targeting criteria. Final survey results were received in early June, reflecting the general extremely high level of exploration activity worldwide and the consequent difficulty of contractors to provide results on a timely basis. Excellon is in the process of reviewing the final results.
Three drills continue to operate on the property. One is in the immediate test-mine area on 100% Excellon ground, following up on known mineralization and geochemical anomalies. The other two are on ground optioned from Exploraciones Altiplano in which Excellon is earning a 100% interest. The drilling is focusing on intrusion and alteration centres with moderate geochemical signatures. One is operating near the historic Saltillera Mine area four kilometres to the west of the Platosa test-mine. The other is near the historic Refugio Mine one and a half kilometres west of the Platosa test-mine. Both areas host significant alteration, ground geophysical targets and significant structures, some of which are known to be associated with mineralization. In addition to the historic mining in both areas, there are numerous prospect pits that have yielded strong silver-lead-zinc anomalies. Assays for all 2007 drilling are pending and the results will be reported as they are received and analyzed in the context of the overall exploration program.
Qualified Persons
Dr. Peter Megaw, PhD, CPG, Mr. G. Ross MacFarlane, PEng, and Mr. John Sullivan, BSc., PGeo. have acted as the Qualified Persons, as defined in National Instrument 43-101, for this disclosure and supervised the preparation of the technical information on which this management discussion and analysis is based.
Dr. Megaw has a PhD in geology and more than 25 years of relevant experience focused on silver and gold mineralization, and exploration and drilling in Mexico. He is a Certified Professional Geologist (CPG 10227) by the American Institute of Professional Geologists and an Arizona Registered Geologist (ARG 21613). Dr. Megaw is not independent of Excellon as he is a shareholder.
Mr. MacFarlane is a graduate Mining Engineer with over 30 years of wide ranging experience in the mining industry. His experience includes senior responsibilities in the operation of mines and mills as well as mine project developments from feasibility to construction and the start-up of operations in Canada as well as in South America, Europe and Asia. Mr. MacFarlane is not independent of Excellon as he is an officer and shareholder and holds common share purchase options.
Mr. Sullivan is an economic geologist with over 35 years of experience in the mineral industry. Most recently a senior geologist at a Toronto-based international geological and mining engineering consulting firm, he has evaluated properties and prepared National Instrument 43-101 reports on gold and base metal projects in Canada and internationally. Mr. Sullivan is not independent of Excellon as he is an officer and holds common share purchase options.
Summary Financial Information
Period 30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06
(3 months) (3 months) (9 months) (9 months)
Revenue $ 10,244,135 $ 7,810,749 $ 30,931,023 $ 15,990,935
Operating income
(loss) $ 5,679,977 $ (4,547,203) $ 13,858,362 $ (9,735,183)
Net income (loss) $ 3,906,859 $ (4,532,080) $ 11,751,506 $ (9,720,060)
Net income (loss)
per share - basic $ 0.027 $ (0.034) $ 0.081 $ (0.072)
Net income (loss)
per share - diluted $ 0.025 $ (0.034) $ 0.074 $ (0.072)
Balance Sheet Data
Assets
Cash and short-term investments $ 11,424,240 $ 5,511,682
Accounts receivable 5,839,518 5,090,915
Silver bullion 21,982,533 -
Inventory 128,884 108,091
Future income tax asset - current 500,978 -
Deposits 532,582 643,815
----------- ------------
Total current assets 40,408,735 11,354,503
----------- ------------
Silver bullion - 3,087,784
Mineral properties 3,812,188 5,630,267
Deferred financing costs 58,922 450,002
Future income tax asset 3,005,086 -
Fixed assets, net 2,032,237 533,101
------------ ------------
Total assets $ 49,317,168 $21,055,657
------------ ------------
------------ ------------
Liabilities & Shareholders' Equity
Accounts payable and accrued charges $ 1,686,295 $ 862,308
Taxes payable 4,369,467 -
Future income tax liability - current 430,207 -
Silver debentures - current portion 26,892,810 -
------------ ---------------
Total current liabilities 33,378,779 862,308
------------ ---------------
Silver debentures - 25,317,660
Share capital 28,041,902 23,806,595
Silver debenture warrants - 450,000
Contributed surplus 3,513,358 2,829,200
Deficit (15,616,871) (32,210,106)
------------ ---------------
Total shareholders' equity 15,938,389 (5,124,311)
------------ ---------------
Total liabilities and shareholders'
equity 49,317,168 21,055,657
------------ ---------------
------------ ---------------
About Excellon
Excellon Resources Inc., an emerging silver producer, is test-mining and exploring its Platosa/Saltillera Properties in Durango State, Mexico. The Company continues to build a significant treasury, and will remain self-financed as it expands production and explores to extend the definition of Platosa's high-grade resources and to discover the potential large-tonnage source of the Platosa mineralization system. Excellon has 146,998,657 shares outstanding, and trades on the TSX Venture Exchange under the symbol EXN.
On behalf of
EXCELLON RESOURCES INC.
Richard W. Brissenden, President and Chief Executive Officer
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 future anticipated exploration program results, the discovery and delineation of mineral deposits/resources/reserves, the potential construction and economic impact of a mill at Platosa, business and financing plans, business trends and future production rates and 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 inability of the Naica facility to process all the ore available for shipment by the Company, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to secure all of the equipment necessary for its planned operations in a timely manner, 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, and particularly the September 29, 2006 43-101 resource report prepared by Scott Wilson Roscoe Postle & Associates with respect to the Platosa property.
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.
The TSX Venture 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.
