TORONTO (miningweekly.com) – TSX-listed Excellon Resources is working hard to reduce costs and conserve cash, as it believes that cashflow from operations “will not be sufficient to meet its objectives”, the firm said on Monday.
Excellon owns the Platosa silver/lead/zinc mine, in Mexico, and announced last week it would buy fellow Canadian Silver Eagle Mines with shares, so that it can process ore from Platosa at Silver Eagle's Miguel Auza mill.
The Miguel Auza mine was put on care and maintenance in December after low metals prices rendered it unprofitable.
Excellon has been processing ore at a mill owned by a subsidiary of Penoles, and had planned to build its own mill, although this has now been put on ice.
To conserve cash, the firm has also suspended all exploration drilling until later in the year, and has reduced general and administrative spending.
Excellon is also “actively” pursuing external financing alternatives, the company said.
The firm posted a net loss for the three months ended January 31 (the company's financial second quarter) of C$857 337, compared with a loss of C$1,6-million a year earlier.
The company shipped 273 646 oz of silver, 1,48-million pounds of lead, and 1,27-million pounds of zinc during the quarter.
Production at Platosa was halted from early October to early December, while the firm dewatered the mine and sealed off a water-bearing fault that was unexpectedly intersected.
Since January 31, the firm has also been affected by a strike at the Penoles smelter facility in Torreon, which has affected the Naica mill's ability to ship concentrated and receive shipments of crushed ore from Platosa.
The firm has not been able to come to an agreement with Penoles, and no longer plans to ship ore to the Naica mill, Excellon said.
Excellon shares fell 13,2% on Monday, to C$0,23 apiece by 15:58 in Toronto.