huuuuuuuuuuuuuuuuuuuuuuuuuugnn Platosa mmm mmmm MMMMMmmmm
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| Halve production and double costs |
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| even the exchange rate works in their favour |
An IRR of just 118% with some very conservative metal prices. This mine must make money hand over fist. So why have Brendan and his team raised ~C$41.6M since Q3, 2015?
- C$6.6M in Nov 2015
- C$2M in Osisko (Oban) shares for the DeSantis Property
- C$3M in march 2016 from Sprott
- C$15.2M in July 2016
- C$14.8M in Sept 2017
According to the PEA, this mine should produce an embarrassing amount of money?
Let us check that visually, this is just a quick graph showing cumulative net profits or loss compared to cumulative funds raised.
Ohh, so they've actually made a cumulative loss of ~C$24M since mid-2015, with just 1 quarter (Q4, 2017) out of the past 11 where they have made a profit, and even after the "turnaround"
It is nice to see another successful mining company with a mine matching its PEA.
What is cool is, their current working capital is ~C$14.5M, which means that they have already started to chip away at the C$14.8M they raised last year, so hopefully with the Hecla lease they'll actually make some money before they have to raise some more.....
Compare to Titan Mining. T.TI on the TSX see what you think. Titan is shipping zinc concentrate and moving towards commercial production.
ReplyDeleteSo why did they not complete a Feasibility Study? A Preliminary Econonomic Analysis is based on Inferred Resources, and some economic assumptions. It does not generate Ore Reserves. A PEA is not intended to be a Reserves Document, or a definitive mine plan. It's really risky to start mining on a PEA, as it appears they are finding out.
ReplyDeleteThis is a mine that operates on minimal reserves due to the nature of the deposits. It's not unusual, particularly in Mexico for mines to proceed on only resources. I know of several others. In the case of this PEA, it looks like it was done to justify the roughly $10M capital dewatering cost. You're right that proceeding on a PEA is risky, as Rubicon recently discovered at their Red Lake deposit. However La Platosa is/was an operating mine with no capital investment required, other than the dewatering investment. The calculated IRR was based on that amount, not on the total value previous capital invested, which was considered sunk.
DeleteAlmost all of their resources were considered measured or indicated, which means a higher level of confidence...assuming the geologist who calculated them was good at doing resources.
DeleteOn the face of it one would think this is a small but "can't miss" deposit. However....It appears that they have some significant unavoidable costs, including high dewatering and lengthy (220 km) travel distance to the mill. Mine head grades are roughly 60% of resource grades...why is this? Dilution?? Mine output is supposed to reach 300 tpd but was only 21,000 t in 2017. Why?
ReplyDeleteAll of the above are significant cost additions or revenue subtractions. One wonders about their HO costs. How many VP's are they carrying on the back of this poor little silver mine?
They are pumping at an average rate of 18,600 gpm, which is a phenomenal pump rate for a tiny mine. Their power cost alone for pumping must be very high, as would operation and maintenance of their pumping system. I also found their corporate cost....about $4.2 million per year. Sounds high for such a small company.
DeleteSeven executives...not excessive for a public company but perhaps high by one or two. Executive salaries are quite reasonable...maybe even low by public corporate standards. BOD is large...10 people with average compensation of $150k per year. Seems excessive based on what I've seen. I know one of the members...good guy but also a member of other boards. It's a good gig if you can get it. Anyone want to hire me???
DeleteThe individual ore bodies, although are high-grade, are very small and irregular. This means that they can't be mined on a large/mechanized scale without having massive dilution (compare the head grade vs the resource grades).
DeleteSo you have a small, complicated mine with large fixed costs. Not a good situation to be in at current metal prices.
However, at $20/oz silver they should make money...maybe
I worked at some silver mines in the NWT back in the early '80's that were very similar, although we had no water to deal with. (Permafrost). We could only manage to keep about a year's production in front of us at a time and had drills going constantly to find new veins. Most of the stopes were shrinkage. Luckily, silver hit a peak of $50 when I was there.
Delete"Net working capital totalled $14.5-million at March 31 (Dec. 31, 2017: $13.8-million), increasing to $17.5-million as of April 30."
ReplyDeletewill they have made a second profit in Q2,2018?
DeleteAccording to this article they lost money hand over fist in Q1 and won't make any until the Hecla lease.
Delete"What is cool is, their current working capital is ~C$14.5M, which means that they have already started to chip away at the C$14.8M they raised last year, so hopefully with the Hecla lease they'll actually make some money before they have to raise some more....."
I pointed out to you that working capital is actually $17.5 million as of April 30. Why don't you change the quoted paragraph above to reflect the true conditions of the companies treasury? The working capital is actually increasing yet you write a hit piece saying this is Mexico's highest cost silver mine. Correct this article or delete it.
And yes the mine will make a profit in Q2 which will be spent on exploration of the properties so the company will most like likely post a loss and the working capital may go down.
Hello Mike,
DeleteI was using the working capital from the Q1, 2018 MD&A and on page 21 it states that working capital was $14.463M and in the latest presentation (page 26), Excellon state that their working capital is $14.5m.
May I ask where the $17.5M figure came from?
Regarding costs - mining and milling costs at Platosa have averaged $283/tonne for the last couple of years. This is probably >$75/tonne more expensive than other similar sized mines (Topia - Great Panther resources costs were $196/tonne in Q1, 2018 for a slightly smaller operation)
I look forward to the Q2 figures
http://www.excellonresources.com/news/details/index.php?content_id=185
DeleteThanks for that. It will be interesting to see where that $3M increase in working capital came from, was it from the mine or exercise of warrants?
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ReplyDeleteI agree ACE just finding a gas station with gas or reliable electricity can be tough in mexico. Running pumps running 24/7 in narco land is no small feat. I wish them luck but will leave my capital in less risky operations.
ReplyDeleteThe local infrastructure isn't the issue as the mine is close to a major highway with easy access, plenty of gas stations and a decent power supply.
DeleteOver my 50 years I've seen some wet ones, including a couple at around 3,000 gpm. But never have I seen 18,600 gpm. That's one hell of an aquifer!
ReplyDeleteHi angrygeologist, your article is pure garbage and shows zero understanding of high grade manto's and what a crd system is. EXN is the highest grade mine in Mexico moron. Eric Sprott who is 500 times more regarded the you believes in EXN but I should believe a guy who hides behind a fake allows.
ReplyDeleteThank you for reading my article. Paltosa may be high-grade (check the mined garde vs the reserves - do they match?), but if no-one can bring the ore out of the ground profitably, then it doesn't matter.
DeleteThe problem with Platosa is that it will always be small and as a result, when silver prices go to >$20/ounce, it will make a profit, just not a huge amount as there is a big size constraint. Where can they increase production to >5Moz Ag/year? Other companies (e.g Endeavor Silver, Hecla, Coeur etc.) have the potential to take more advantage of silver any silver price increases.
If you have a fetish for grade - Alexco is very interesting. However, will they be bale to bring it into production quick enough to catch any surging metal prices?
You really shouldn't be writing a piece on a company your uneducated about. The mine made money for years but was very wet and it became dangerous when it was wet. So they dewatered the mine which cost them a year of time and mining plus 15 million dollar in cost. If you knew anything you would be buying shares now as they have money, a mine finely running well (dry), a wicked exploration program going on and they're other mine (20 million ounces infer/indicated) about to also get explored.
DeleteNope my money is with Richard Warke's money and invested in Titan Minings upstate New York restarted zinc mine. Warke with 41 million shares keeps buying more. What does that tell you?
DeleteHello Aaron - I've followed the company since 2003. I've always been turned away by the small resource (even though it was high-grade). The project has always been challenging and in my opinion has become a 'millstone project' for Excellon that has prevented them from growing. If you compare them with Endeavour Silver, Great Panther, Impact, First Majestic, Fortuna - they have managed to grow beyond their original operations (with varying levels of success), whereas, Excellon are always needing to throw more money at Platosa to resolve its 'problems'. Even if they do solve 'everything' - the mine will always be small and with minimal expansion potential.
DeleteRichard Warke does have a good pedigree in finding projects, and Titan looks interesting, I'll just need to dig through the data one day.
DeleteThanks, looking forward to updates from Titan soon as production ramp up continues and your analysis.
DeleteI believe Eric Sprott also believes in a nickel project (Garibaldi) in BC doesn't he? As well, he has no formal background in geology or engineering.
DeleteAG, I am a big fan of your blogs. With respect to Excellon, a lot will change in the next 30 days when the NI 43-101 report with updated resources is published.
ReplyDeleteI am on the side of wait and see. It would be good if you have a chance to review and compare the new and the old one.
I look forward to reading it. I'll be interested to see how the deposit has grown and how much of the resource is above and below the current water table, as it is one thing to maintain the water level and another to lower it.
DeleteDo not think the water is a problem no more and here are the facts - Exn currently mines from 3 to 4 workings hat have been already dewatered. Same sites also happened to be the mantos from where the new mineral resources will come from.
DeleteI personally expect to see in the updated 43-101 report at least 500,000 tones in M&I category and that should be good for 5 years of LOM.
If I was a shareholder i would be disappointed that EXN would be aiming only to mine 285 tpd (100000/350), that will just keep them at the ~2Moz AgEq annual production level. Where is the growth upside?
DeleteFair point, AG. I think we will know about Exn next week after the Platosa resources update.
DeleteI think Exn immediate growth will come from increasing production to 300 tpd at Platosa. Further growth ought to come from new mantos discoveries. In 200-2010 Exn were actively drilling and discovering new mantos. It remains to be seen whether Exn will be lucky to find new mantos. Samje applies to their second property - there is potential there, but it requires a lot of drliing as in Platosa.
Must get tiring for you AG. When did Sprott become a god no one questions? Every time I see his name these days it is attached to one turd or another. No mojo.
ReplyDeleteHello Doug,
DeleteSprott has money, so he can get involved in companies doing 'distressed' share sales. As he has a reputation, the retail boys dive in and push the price up and Sprott makes a packet and gilts his reputation.
How do you look now after the production numbers this week? 220 percent increase in production. Thanks for being wrong.
ReplyDeleteYou are welcome!! As I haven't been following the stock, I assume that there was a corresponding 220% increase in the share price?
Deletethe 220% increase is true, when compared to Q2, 2017, but actually a bit less when you compare it to Q1, 2018
Q2, 2018 = 22872 tonnes
Q1, 2018 = 18885 tonnes
An increase of 3987 tonnes, a 20% increase, but we can see that ~1200 tonnes of the increase was from processing stockpiled material.
What cause the jump in silver production was, for a first time in a long while, the material extracted from the mine was actually just over 500 g/t.
I'll have to check the MD&A to see if they list the amount of stockpiled material they have as it is >25% of the materiel they process.