Ben Kramer-Miller • Mon, Nov. 3
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- Excellon reported rising production costs and lower production.
- While I was bearish, this is even worse than I expected.
- This is before we saw the silver price fall below its support level, the company is burning through cash and I remain bearish.
- Excellon Resources reports lower production and higher costs, resulting in an FCF-negative situation.
- The negative free cash flow surprises me a bit, but confirms my bearish thesis.
- The investment thesis remains unchanged; Excellon will need to increase its resources to justify its market cap.
Update: Excellon Resources Reports Declining Q3 Production, Lower Ore GradesBen Kramer-Miller • Tue, Oct. 14
- Excellon Resources' Q3 production fell year over year as the company is processing lower grade ore.
- This is worse than the already gloomy estimate I put forth in July.
- Costs will likely rise faster than I thought, the company is losing money, and I remain bearish despite the lower share price.
Update: Excellon's Production Remains On Track, But Less Silver Produced Than Last YearThe Investment Doctor • Tue, Oct. 14
- Excellon's Q3 production is lower than expected, due to some operational problems.
- As every mine encounters some issues every now and then, investors shouldn't be surprised.
- The investment thesis remains unchanged. Excellen needs to find more ore to extend its mine life and increase the NPV.
- Excellon Resources reported a Q2 loss of $0.7 million and operating cash-flow of $1.6 million.
- This is roughly in line with my estimate laid out earlier this month given that cash-costs were below my expectations and sustaining costs were above them.
- The company remains overvalued given its rapidly depleting assets, and investors are encouraged to sell and to find opportunities elsewhere.
Dwindling Resources And Rising Costs Make Excellon Resources A 'Sell'
- Excellon Resources brags that its Platosa Project contains the highest grade silver ore in Mexico.
- But the company suffers from a myriad of other problems from rising costs to a limited resource that will limit production.
- Even in the most generous scenarios the company's cash-flow doesn't justify the current market capitalization; discounted cash-flow looks much worse. .
- Even if we incorporate exploration success the resource size would have to more than double in order to justify an investment in a very generous scenario. .
- It follows that the stock is significantly overvalued and that investors who wish to own a silver miner should look for opportunities elsewhere.
Excellon Resources Is Still Processing Ultra-High Grade Ore But Has Only 6.5 Years Left
- Excellon Resources is producing from its ultra high-grade silver-lead-zinc project but is running out of time.
- The remaining mine life is just 6.5 more years, and is a situation which should be addressed shortly.
- Fortunately the company realizes the importance of a longer mine life and has just announced a 10,000 meter (33,000ft) drill program to find more mineralization.
- However, the market already seems to have included additional resources in its valuation as the current share price is higher than the after-tax NPV8% per share.
- That's why I prefer to stand at the sidelines until there's a clear sign the mine life will indeed be extended.
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EXLLF vs. ETF Alternatives
Excellon's 100%-owned La Platosa Mine in Durango is Mexico's highest grade silver mine, with lead and zinc by-products making it one of the lowest cash cost silver mines in the country. The Company is positioning itself to capitalize on undervalued projects by focusing on increasing La Platosa's... More
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