Excellon Resources Inc.

Excellon Resources Inc.

March 09, 2009 14:46 ET

Excellon Reports Q2 Financial Results

TORONTO, ONTARIO--(Marketwire - March 9, 2009) - Excellon Resources Inc. (TSX:EXN) (the "Company" or "Excellon") reports net loss of $857,377 for the three month period ended January 31, 2009. (For full details, please see the Company's Management Discussion & Analysis, which was filed on SEDAR, www.sedar.com, on March 9, 2009.)


- Shipped 273,646 ounces of silver, 1,476,337 pounds of lead, and 1,269,544 pounds of zinc

- Additional high-grade silver, lead and zinc assays reported for the recently-discovered NE-1 Manto

- Resumed normal operations following suspension of mining activities after successfully resolving unexpected mine water inflow

- Suspended construction of Platosa mill and initiated evaluation of processing options

- Loss of $0.005 per share

Financial Highlights

The following are the financial highlights for the three and six months
ended January 31, 2009 and 2008.

Three months ended Six months ended
31-Jan-09 31-Jan-08 31-Jan-09 31-Jan-08
------------- ------------- ------------ ------------
Sales $ 3,587,992 $ 5,828,649 $ 4,608,366 $14,206,040
Cost of production
amortization for 3
month period
of $157,892 (2008 -
$763,134); 6 month
period of $297,536
(2008 - $1,896,163)) 1,128,248 1,856,380 2,900,334 4,123,973
------------- ------------- ------------ ------------
2,459,744 3,972,269 1,708,032 10,082,067
------------- ------------- ------------ ------------

Non-cash items 1,495,306 1,452,078 3,574,347 1,792,832
expenditures 375,183 1,313,616 2,533,401 2,980,303
Other 1,577,486 1,646,200 2,842,800 3,811,004
Provision for
(recovery of) income
taxes - current (306,377) 407,447 (437,471) 1,514,322
Provision for
(recovery of) income
taxes - future 175,523 747,615 (13,970) 538,483
------------- ------------- ------------ ------------
3,317,121 5,566,956 8,499,107 10,636,944
------------- ------------- ------------ ------------

Net loss for the
period $ (857,377) $ (1,594,687) $(6,791,075) $ (554,877)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

Loss per share
- basic $ (0.005) $ (0.012) $ (0.043) $ (0.004)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

- diluted $ (0.005) $ (0.012) $ (0.043) $ (0.004)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

Cash provided by
(used in) operating
activities $ 222,668 $ 1,829,307 $ (960,913) $ 2,544,057
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

Cash, short-term
investments and
silver bullion $ 2,866,425 $ 5,370,903 $ 2,866,425 $ 5,370,903
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

Working capital
surplus (deficiency) $ (2,491,079) $ 818,886 $(2,491,079) $ 818,886
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

The Company believes that cash flow from its operations will not be sufficient to meet its objectives. As a result, the Company has taken a number of steps to prudently reduce costs and conserve cash. These measures include the suspension of exploration drilling until later in calendar 2009, a reduction in planned general and administrative expenditures and temporary halt to construction of the Platosa mill. The Company is also actively pursuing external financing alternatives.

Corporate Developments

On March 5, 2009 the Company and Silver Eagle Mines Inc. ("SEG") announced that they have signed a letter of intent providing for the acquisition by the Company of all of the issued and outstanding common shares of SEG. This proposed transaction will allow the Company to immediately process its ore at SEG's Miguel Auza mill, located approximately 220 km from the Platosa mine. Please refer to the joint press release of the Company and SEG issued on March 5, 2009 for further details.

Mining Operations

Shipments of crushed ore to the Naica milling facility ("Naica mill") of Minera Maple, S.A. de C.V. (a subsidiary of Penoles) were 6,250 tonnes for the three months ended January 31, 2009 compared with 10,802 tonnes for the same period in the previous year. Shipments of crushed ore to Naica mill were 14,053 tonnes for the six months ended January 31, 2009 compared with 25,153 tonnes for the same period in the previous year.

In early October 2008 the Company temporarily suspended production at the Platosa mine due to an unexpected water inflow that occurred when a water-bearing fault was intersected during normal mine development. This event occurred because Company procedures designed to prevent such situations were not followed. The Company has strengthened its internal control procedures to ensure that all protocols are followed in the future. No employees were injured during the event and in late November drilling and grouting operations to seal the fault were completed. Normal production resumed on December 1, 2008.

During the temporary suspension to production, the Company completed the excavation of a well and installed a second large-capacity submersible pump that accelerated the mine dewatering and now serves as back-up to the existing underground pumping capacity. Excellon continues to work with its hydrology consultants on the design and implementation of a water monitoring and control program to minimize the impact of water on future mine development and production activities. The Company continues with its short-term plan (six to nine months) to mine from areas unlikely to encounter unexpected water inflow.

Subsequent to January 31, 2009, shipments of crushed ore were indefinitely suspended due to a strike at the Penoles smelter facility in Torreon. This strike has impacted the Naica mill's ability to ship concentrates and receive shipments of crushed ore from the Company, which are back-hauled in the concentrate trucks returning to Naica. Furthermore, the Company and Penoles have not come to terms on a new agreement for ore shipments subsequent to January 31, 2009. The Company no longer plans to ship ore to the Naica mill.

The average grades of ore shipped during the three months ended January 31, 2009 were 1,362.6 g/t silver (2008 - 931.9 g/t), 10.7% lead (2008 - 10.1%) and 9.2% zinc (2008 - 10.9%) . The ore was primarily mined from the northwestern part of the Guadalupe Manto and included several higher grade zones that were discovered during mine development and were outside the area of the 2008 Mineral Resource estimate.

The average grades of ore shipped during the six months ended January 31, 2009 were 1,201.7 g/t silver (2008 - 901.0 g/t), 8.9% lead (2008 - 9.9%) and 6.8% zinc (2008 - 11.8%) . The ore was primarily mined from the western part of the Guadalupe Manto and included several higher grade zones that were discovered during mine development and were outside the area of the 2008 Mineral Resource estimate.

The following are the shipping statistics for the three and six months ended
January 31, 2009 and 2008:

Three months ended Six months ended Year-Ended
------------------ ---------------- ----------
31-Jan-09 31-Jan-08 31-Jan-09 31-Jan-08 31-Jul-08
--------- --------- --------- --------- ---------
of ore
shipped 6,250 10,802 14,053 25,153 44,946
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Silver (ozs.) 273,646 323,472 542,658 728,220 1,476,676
Lead (lbs.) 1,476,337 2,395,023 2,753,070 5,468,874 9,790,717
Zinc (lbs.) 1,269,544 2,584,489 2,117,270 6,570,805 10,861,297

(oz/t)(1) 43.8 29.9 38.6 29.0 32.9
Silver (g/t) 1,362.6 931.9 1,201.7 901.0 1,022.5
Silver (oz/T) 39.7 27.2 35.0 26.3 29.8
Lead (%) 10.7 10.1 8.9 9.9 9.9
Zinc (%) 9.2 10.9 6.8 11.8 11.0

Silver - (ozs.) 211,255 249,720 418,932 562,186 1,139,994
Lead - (lbs.) 1,122,017 1,820,216 2,092,334 4,156,344 7,440,945
Zinc - (lbs.) 857,367 1,705,762 1,429,167 4,336,731 7,232,364

(1) Oz/t is not a generally accepted unit of measure as it combines imperial
and metric units. However, it is the unit of measure upon which the
Company's settlements with Pe±oles are based. The generally accepted units
of measure are g/t and oz/T.


Reflecting the impact of depressed metal markets and operational difficulties at the mine, which were resolved in early December 2008, the Company's diamond drilling program remained suspended throughout the three month period ended January 31, 2009. The exploration team, however, remained intact and focussed on compiling and interpreting drilling and other geotechnical data and planning for resumption in diamond drilling later in 2009. Surface mapping and selected core relogging and sampling were also carried out. These efforts remain focussed in two geographic areas, the immediate Platosa mine area and the Saltillera area five kilometres west of the mine.

In the immediate mine area there are three primary objectives:

- To further define and add to the known distal-style, high-grade CRD Mineral Resources;

- To pursue the potential for discovery of larger volume medial and proximal CRD mineralization. (Evidence of this potential was discovered during diamond drilling early in 2008); and

- To discover new mantos by drilling the geological, structural, geochemical, biogeochemical and geophysical targets developed by 2008 and previous surveys.

In the Saltillera area, the district-scale search for intrusion-related, large-tonnage proximal-style CRD sulphide mineralization continues. Ground geophysical surveys (induced polarization, magnetic and gravity) were carried out in fiscal 2008 and the results integrated into the Company's targeting protocols. A small geological team was formed and dedicated to compiling and studying all geotechnical data, including, but not limited to, diamond drilling, alteration, intrusion types and host rocks, for the area and preparing recommendations for further drilling.

The Company issued an exploration-focussed press release on November 18, 2008 and this release was discussed in the Company's MD&A for the three month period ended October 31, 2008 (dated December 10, 2008). This release highlighted continued success in adding massive sulphide mineralization in the NE-1 Manto. In particular, hole LP614 intersected an estimated true thickness of 7.60 metres grading 1,064 g/t (31.0 oz/T) silver, 14.55% lead and, 6.15% zinc. The reader is referred to the full press release for assay results of all holes disclosed.

As noted above, recent drill results from the NE-1 Manto have provided evidence of the potential for discovery of large-tonnage proximal sulphide mineralization in the area. This evidence is in the form of multiple or stacked manto-sulphide intersections in several holes and the presence of a silicified zone carrying low but persistent gold values ranging from 0.097 g/t over 1.39 m estimated true thickness to 0.811 g/t over 10.39 m estimated true thickness, lying from 75 to 220 metres above the sulphides. This zone has been encountered in eight holes. The NE-1 Manto may be part of a feeder zone leading to proximal mineralization at depth. The general area remains open in several directions.

Qualified Persons

Mr. John Sullivan, BSc., PGeo. and Dr. Peter Megaw, PhD, CPG, have acted as the Qualified Persons, as defined in NI 43-101, with respect to the disclosure of the scientific and technical information contained in this MD&A and have supervised the preparation of the technical information on which such disclosure is based.

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 directed exploration programs, managed field offices and evaluated properties in Canada, Europe and Latin America. Mr. Sullivan is not independent of Excellon as he is an officer and holds common share purchase options.

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.

About Excellon

Excellon, a mineral resource company operating in Durango State, Mexico, is committed to building value through production, expansion and discovery. The Company is producing silver, lead and zinc from high grade manto deposits on its Platosa Property, strategically located in the middle of the Mexican silver belt. Excellon's focus is on increasing its Mineral Resources through an aggressive exploration program, and expanding its operating capacity with the building of a mill at site. The Platosa Property, not fully explored, has several geological indicators of a large mineralized system.

On behalf of


Peter Crossgrove, Chairman

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, the proposed construction of a mill, 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, and particularly the April 14, 2008 NI 43-101-compliant technical report prepared by Scott Wilson Roscoe Postle Associates Inc. 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 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.

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