EXN up .10 today to .93.
Excellon Resources Inc (C-EXN) - News Release
Excellon Resources earns $7.62-million in Q1
2006-12-18 16:55 ET - News Release
Shares issued 145,238,657
EXN Close 2006-12-18 C$ 0.84
Mr. Richard Brissenden reports
EXCELLON REPORTS FIRST QUARTER EARNINGS OF $7.6 MILLION
Excellon Resources Inc. has recorded earnings of $7.6-million for the three-month period ended Oct. 31, 2006. Excellon generated operating cash flow of $2.2-million in the period and the company had $12.8-million cash on hand as at Oct. 31, 2006. As at Dec. 14, 2006, the company has in excess of $14-million cash on hand. Other results from the period ended Oct. 31, 2006, include:
FINANCIAL HIGHLIGHTS
For the three months
ended Oct. 31,
2006 2005
Revenue $ 12,274,681 $ 3,273,783
Cost of production (including
amortization of $300,366;
2005 -- $596,136) 1,230,757 1,142,246
---------------- --------------
11,043,924 2,131,537
---------------- --------------
Expenses
Non-cash items 918,259 1,762,143
Exploration 1,152,789 68,638
Other 1,016,039 910,951
Provision for income taxes 328,586 -
---------------- --------------
3,415,673 2,741,732
---------------- --------------
Net income/(loss) for the period $ 7,628,251 $ (610,195)
================ ==============
Earnings (loss) per share --
basic and diluted $ 0.05 $ (0.01)
================ ==============
Cash provided by (used in)
operating activities $ 2,248,335 $ (914,088)
================ ==============
During the three months ended Oct. 31, 2006, the company recorded net income of $7,628,251, compared with a net loss of $610,195 in 2005. Gross operating income for the period was $11,043,924, compared with $2,131,537 in 2005. Operating income for the period was $7,854,189, compared with a loss of $610,195 in 2005. Included in net income is a loss resulting from the valuation of the company's silver debenture of $572,283 (2005 -- $727,958). Excluding this valuation loss, the company would have reported net income of $8,200,534 (2005 -- $117,763).
During the three months ended Oct. 31, 2006, the company produced 15,988 tonnes (2005 -- 9,620) of ore and shipped 11,536 tonnes (2005 -- 8,363 tonnes) of ore. Revenues during the period were $12,274,681 (2005 -- $3,273,783) and cost of production was $1,230,757 (2005 -- $1,142,246), resulting in gross operating income from mining operations of $11,043,924 (2005 -- $2,131,537). Although the amount of ore shipped during the three months ended Oct. 31, 2006, was only 38 per cent greater than in 2005, revenues were significantly increased due to the higher grade of the material shipped and substantial increase in metal prices realized.
Operating expenses increased from $2,741,732 in 2005 to $3,189,735 in 2006. This increase was due to increased mine administration costs of $371,802 (2005 -- $206,871), travel and business development costs of $292,528 (2005 -- $182,376), professional fees of $127,739 (2005 -- $85,229) and exploration expenditures of $1,152,789 (2005 -- $68,638). Mine administration costs and professional fees were higher than in 2005 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 2005 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 2006 due to the company's increased participation in trade and investor relations conferences.
Operating expenses were offset by the reduced silver debenture valuation loss of $572,283 (2005 -- $727,958), stock-based compensation costs of nil (2005 -- $77,000), consulting fees of $70,203 (2005 -- 180,000) and amortization of acquisition costs of $298,788 (2005 -- $550,323), as well as a foreign exchange gain $79,484 (2005 -- loss of 259,004). Amortization of acquisition costs was lower due to the impact of the expanded mineral resource.
As at Dec. 14, 2006, the company's total cash and short-term investments were in excess of $14-million.
Test mining program
Through the quarter ending Oct. 31, 2006, the company maintained continuous production from the underground test mining of the high-grade resource defined in 2002 and mined since May, 2005. Although ore production was 37.8 per cent higher than the same period in 2005, it continues to be lower than planned. This shortfall is due primarily to difficulties experienced by Industrias Penoles SA de CV in optimizing the blending of the higher-grade Platosa mineralization with its own production to achieve the best mill recoveries at its Naica milling facility.
Despite the shortfall in the tonnage shipped to Penoles, the mining progressed into some of the higher-grade mineralization resulting in the total silver shipped exceeding the same period in 2005 by 155 per cent. During the current period, a small quantity of very-high-grade silver and lead was shipped directly to the Penoles lead smelter on a trial basis. This activity will be extended in the next quarter when the right combination of high silver and lead grades in conjunction with low zinc grades can be selectively mined as the value in zinc that is lost under the direct smelting terms must be less than the improved return for the silver and lead.
During the period, mineralization at the test mine continued to be expanded with the combination of underground mine development and exploration drilling from both surface and underground. High-grade production during the period was primarily maintained from the resources originally defined in 2002. Underground development progressed toward the new mineralization discovered in December, 2005, and expanded since that time. The company is awaiting assay results on the newly discovered mineralization.
The following are the production statistics for the quarters ended Oct. 31, 2006, and Oct. 31, 2005, and the year ended July 31, 2006:
PRODUCTION STATISTICS
For the three months For the year
ended Oct. 31, ended July 31,
2006 2005 2006
Tonnes of ore shipped 11,536 8,363 44,413
========== ========== ===========
Contained metal
Silver (ounces) 946,834 371,227 1,711,719
Lead (pounds) 3,285,664 2,493,414 10,921,062
Zinc (pounds) 1,626,235 1,558,652 12,776,263
Average grade
Silver (oz/t) 82.1 44.4 38.5
Lead (per cent) 12.9 13.5 11.2
Zinc (per cent) 6.4 8.5 13.1
Payable metal
Silver -- 76.9
per cent (ounces) 729,507 285,473 1,322,969
Lead -- 80.0 per cent
(pounds) 2,630,767 1,994,732 8,750,605
Zinc -- 58.0 per cent
(pounds) 932,298 904,019 7,361,702
Silver withheld for repayment
of silver-backed debentures(i) 364,754 140,228 658,976
(i) Including ore shipments to Nov. 15, 2006, the silver withheld for
repayment of the debentures totalled 1,066,000 ounces
Exploration
Drilling continues around the old Zorra mine, four kilometres to the west of the Platosa test mine. The Zorra Chimney was a carrot-shaped body, roughly 30 metres in diameter, mined for 85 metres vertically. Alteration in this area is very strong and there are numerous prospect pits that have yielded strong silver-lead-zinc anomalies. Drilling also continues at the Crestoncitos area 1.5 kilometres south of the Platosa test mine and the Canon Colorado area five kilometres to the north. The drilling is focusing on intrusion and alteration centres with moderate geochemical signatures.
Qualified persons
Dr. Peter Megaw, PhD, CPG, and G. Ross MacFarlane, PEng, have acted as the qualified persons, as defined in National Instrument 43-101, for this disclosure, and each has supervised the preparation of a portion of the technical information on which this management discussion and analysis are 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 and his company are shareholders.
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 the chief operating officer and a shareholder.
We seek Safe Harbor. |
