Excellon Resources - cannminingresearch

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Excellon Resources
Project: La Platosa State: Durango 6D Status: Depleting
Corporate Details
Name
Excellon Resources Inc
Registered
Canada
Address
20 Victoria Street, Suite 900
Toronto, ON M5C 2N8
Telephone
+1 416 364 1130
Email
[email protected]
Website
www.excellonresources.com
Share Information: 4 April 2014
Listed
TSX, OTC
Ticker
EXN, EXLLF
Shares in issue
55.0 million
Share price
C$1.36
52-wk
high: C$2.25
Market Cap
C$75 million
Excellon’s wholly-owned subsidiary, Minera
Excellon de Mexico SA de CV, operates the La
Platosa silver-lead-zinc mine on the 100%-owned
41,000 ha La Platosa property, 45 km north of
a major industrial city, Torreón. Production is
royalty-free, however, a 3% NSR applies to a
portion of the property where no resources have
been outlined to date
Rail and power transmission lines are adjacent
to the property and run parallel to the nearby
Highway 49, which is a major trucking route. The
project area is easily accessible year-round with
two-wheel-drive vehicles.
low: C$0.90
Company Description
• Excellon Resources is a Canadian precious metals company
focused on high grade, low cost production at the La Platosa
silver (and base metals) underground mine, in Durango.
• La Platosa is the highest grade silver mine in Mexico and the
second highest grade silver mine globally.
• In 2013, the mine achieved guidance of 2.1 Moz AgEq,
including 1.4 Moz of silver.Total cash costs for the year were
US$10.51/oz payable silver.
• Drilling at the Rincon del Caido prospect, 1 km from the
existing mine, has indicated potential for a large scale, skarnrelated, silver (polymetallic) deposit, similar to those that
support major silver operations regionally along trend.
Directors & Key Management
Chairman Emeritus: Richard Brissenden; Executive Chairman:
Peter Crossgrove; President & CEO: Brendan Cahill. Other
directors:Thor Eaton, Alan McFarland, Joanne Ferstman, André
Fortier,Tim Ryan, Oliver Fernández. COO: Rob Moore; CFO:
Rupy Dhadwar;Vice President of Exploration: John Sullivan;
Director of Investor Relations: Nisha Hasan.
Funding & Financial Position
Cash and equivalents and marketable securities stood at
US$7 million at the end of 2013.The company is debt-free.
In May 2013, the company completed a 5-for-1 share
consolidation.
Excellon acquired La Platosa in 1996 but
optioned it out for exploration until 2001 when
it regained control. The company subsequently
delineated a grouping of high grade deposits
and began test mining in 2004, sending crushed
ore for toll treatment initially to Penoles and
then to the Miguel Auza concentration facility
of Silver Eagle Mines Inc, located 220 km to
the south in Zacatecas State. In mid-2009, the
company acquired Silver Eagle and acquired
the 650 t/d capacity Miguel Auza concentrator
(valued currently at C$15 million).
Geology
The La Platosa mining area consists of several
limestone-hosted, epigenetic, intrusion-related,
sulphide-dominant, lead-zinc-silver-bodies
called mantos. Mantos are part of large, multicomponent mineralised systems known as
carbonate replacement deposits (CRD),
which commonly occur in clusters associated
with regional geological structures and major
igneous intrusions.
La Platosa lies near a major northwest fault
structure, the Platosa Structural Zone (PSZ). The
PSZ sits on a regional trend of major, structurallycontrolled CRD systems, within which La
Platosa is roughly central. The La Platosa mantos
are gently east-dipping (flat-lying in respect to
stratigraphy), often connected by local, small
chimney structures forming a stair-step pattern.
Sulphide mineralisation is massive, banded,
65
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The minesite
at La Platosa (Photo courtesy of Excellon Resources)
occasionally disseminated and fracture-filling,
fine- to-coarse-grained galena and sphalerite, with
very minor accessory pyrite. The primary silver
mineral is acanthite, which occurs as coarse blebs
and fine-grained intergrowths with galena. Native
silver and proustite occur locally.
Silver Sales (Moz)
2.0
1.5
Production
1.0
Deposits are accessed with trackless ramp and
lateral development methods. Ore is mined
using a modified room and pillar method then
crushed on site before being trucked to the
company’s flotation mill at Miguel Auza. Silver-lead
and silver-zinc concentrates are shipped to the
port of Manzanillo and sold through an off-take
agreement with a Trafigura Group subsidiary.
0.5
0.0
The table below shows the recent annual
production history and the chart alongside shows
silver sales over the past five years.
Processed ore
2009
2010
2011
2012
2013
In Q1 13, the company started to optimise
mining operations to materially improve
Grades
Production
Cash costs
(kt)
(Ag g/t)
(Pb %)
(Zn %)
(Ag Moz)
(Pb Mlb)
(Zn Mlb)
(US$/oz)
2009
43.9
1,114
8.90
8.86
1.48
7.59
8.10
5.26
2010
64.5
814
6.37
7.68
1.32
5.80
8.01
7.18
2011
59.4
796
6.24
9.17
1.31
6.53
8.67
5.29
2012
48.2
846
6.75
11.81
1.08
5.73
10.45
6.80
2013
69.9
718
6.14
8.00
1.41
7.34
9.88
10.51
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Reserves & Resources
production beyond the budgeted 200 t/d rate in
order to increase feed to the Miguel Auza mill,
which had been operating at 55% capacity.
In March 2014, Roscoe Postle Associates
estimated M&I resources of 484 kt at a grade
of 1,277 g/t AgEq for 19.9 Moz AgEq contained.
A full resource breakdown is shown in the
table below.
The optimisation effort focussed on improved
grouting as the mine has had to deal with
excessive groundwater inflow (although it’s been
over three years since the workings last suffered
a major water inflow incident that disrupted
production). During the latter half of 2013,
production improved from 175 t/d to 210 t/d.
As a result of the optimisation programme, initial
mine production guidance for 2014 is targeting
210-220 t/d.
Excellon estimates the current resource accounts
for 6-8 years of operation.
Current Exploration
The La Platosa mine area is interpreted as the
distal portion of a larger CRD system, formed by
interaction of hydrothermal fluids from a felsic
intrusion, or source, with favourable carbonate
units. CRD ore bodies occur in several forms, all
related to the source and range from high grade
distal mantos (eg. La Platosa), through to medial
chimney and deposits, to large proximal skarn
The company is also seeking custom milling
opportunities and small mine acquisitions in
surrounding States to increase mill feed further.
Target production for 2014 is 2.2 Moz AgEq.
Grade
Contained Metal
Category
Tonnes (kt)
Ag (g/t)
Pb (%)
Zn (%)
Ag (Moz)
Pb (Mlb)
Zn (Mlb)
Measured
42
825
8.62
11.31
1.1
7.9
10.4
Indicated
443
772
8.40
10.05
11.0
81.9
98.0
M&I
484
777
8.42
10.15
12.1
89.9
108.4
Inferred
3
2,234
16.93
1.74
0.3
1.3
0.1
Resources are estimated at an incremental NSR cut-off value of US$189/t
NSR metal price assumptions: Ag US$20.00/oz, Pb US$1.00/lb, Zn US$1.00/lb
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Geological concept model of the Rincon del Caido prospect.
9:
deposits. Proximal CRDs typically average 10-15
Mt of ore and range up to 50 Mt.
provided silver prices recover to a level that will
support cash flow to cover costs.
The Excellon exploration strategy has two
aims: to identify and confirm extensions to the
known mineralised area; and to follow alteration
signatures to find a proximal CRD suited to
large-tonnage mining.
The Miguel Auza property has a past producing
mine and several exploration targets. A modest
programme was completed in 2009-2010, which
offered encouragement but the decision was taken
to concentrate exploration spending on La Platosa.
In October 2012, Excellon’s drilling intersected
146 g/t silver, 2.8% lead, 1.9% zinc, and 0.22
g/t gold over 43.4 m at the Rincon del Caido
prospect, 1 km to the northwest of La Platosa.
That intersection included 381 g/t silver, 10.6%
lead, 11.5% zinc, and 0.35 g/t gold over 5.8 m
and was one of numerous holes to encounter
significant mineralised widths and grade in the
Rincon area. Anomalous gold, bismuth and copper
values indicate a proximal intrusive-related setting
within a CRD system. The company continues to
model the mineralisation in order to locate the
centre of the system.
Other Projects
In early 2013, the company conducted drilling
with the aim of delineating additional near
mine, high grade sulphide mineralisation and
to establish the heart of the proximal CRD
mineralisation, but suspended exploration in May
to conserve cash while the market and silver
price remain depressed.
Exploration is due to recommence late in H2 14
Excellon holds a 100% interest in the De Santis
brownfields gold property, which covers 850
ha of the prolific Porcupine Destor Fault Zone
in the Porcupine Mining Division, in Ontario.
The historic underground mine produced more
than 35 koz of gold over three years up to 1942.
Reported head grade was 6.2 g/t and recoveries
better than 90%.
The company also owns the Beschefer property
within the Abitibi Greenstone Belt some 60 km
northeast of the Casa Berardi mine, 80 km eastsoutheast of the Detour mine, and 12 km east
of the past-producing Selbaie mine. The property
hosts the B14 gold zone, identified by Billiton
Canada in 1995.
Excellon completed drill programmes at both
properties over 2012 and in Q1 13. Results
include, 55.60 g/t gold (uncut) over 5.57 m at
Beschefer. Future programmes are planned, but
dates have not been set for follow up work.