TORONTO (miningweekly.com) – Mexico’s highest-grade silver producer Excellon Resources has swung to a second-quarter loss as revenues fell, mainly owing to lower realised silver prices and weaker grades at its flagship La Platosa mine, in Mexico.
Revenue fell 70% to $4.18-million, compared with $14-million a year earlier. The net loss was $5.03-million, compared with a profit of $478-million.
The average realised silver price fell 28% year-on-year to $21.07/oz, the realised zinc price was down 7% year-on-year to $0.83/lb and that of lead was up 2% at $0.92/lb.
On Thursday, spot silver prices traded at $21.83/oz in New York.
Silver output declined 32% year-on-year to 252 789 oz, compared with 374 204 oz a year earlier.
The Toronto-based company, which published its results after market close on Wednesday, reported a negative revenue adjustment of about $3-million on the final settlement of sales of concentrate delivered at higher prices before the second quarter, and said it did not expect adjustments of a similar magnitude in future periods, assuming that the price of silver stabilised.
Revenues were also affected by lower production tonnage and grades during the quarter as the company undertook necessary development into higher-grade areas.
The cash cost was $12.07/oz of silver, net of by-products, compared with $6.96/oz in the first quarter ended March 31, and $4.25/oz in the second quarter of 2012, attributable to the company’s development activities.
As a result of the lower-than-expected production achieved during the first six months, owing to significant mine development, Excellon expected output to be below its targets of about 1.5-million ounces of silver, 9.6-million pounds of lead and 13-million pounds of zinc.
Improving silver grades during July and August were an “encouraging sign” that the company's development and mine optimisation initiatives would be reflected in future quarters, and more closely align with its original output guidance.
Excellon also expected its cash costs to decrease for the remainder of the year as higher-grade ore areas were accessed and its focus shifted from mine development to cost reduction and efficiency.
The company said it had already implemented a number of changes given the significant reduction in commodity prices this year, and would continue to monitor these items going forward. As was the case with many precious metals miners across the globe, the company was reviewing its capital expenditures and mine planning to ensure that they were optimised for current market conditions.
Exploration drilling at its Mexico property would remain suspended to improve net cash flows at current commodity prices.
Excellon’s shares gained 6.15% in early morning trade on the TSX to change hands at C$1.80 apiece.