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Tuesday, January 31, 2017 Derek Macpherson

EXN Ops Continue Transition with Ongoing Optimization


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Excellon Resources Inc. (TSX:EXN) reported Q4 and 2016 production results and provided an update on the ongoing optimization program at its La Platosa mine in Durango, Mexico. Production in Q4 2016 increased by 4% QoQ and 3% YoY on an AgEq basis when adjusting for metal price differences. Operations continue to be impacted by water management challenges, limiting development into higher grade areas; however, the company continues to progress its optimization program which is expected to be completed in Q1 2017, resulting in dry mining conditions in Q2 2017. The completion of the optimization program is the key step to accelerate development and increase production while reducing costs at La Platosa.


Quarterly production improved although mine conditions remain challenging. Production in 2016 was 1.44M oz AgEq which represents a ~11% decrease YoY if you adjust for metal price differences. Due to challenging conditions, substantial production in Q4 originated from the fringes and areas outside of the Rodilla Manto’s block model, which increased dilution and reduced grades. However, quarterly metal production increased by 4% QoQ and 3% YoY when adjusting for metal price differences. As mining conditions improve on the back of the ongoing optimization program, Excellon plans to progress mine development towards the higher grade 623 Manto and the Rodilla core, which is one of the mine’s deepest areas and is currently below the water table. We expect production to increase later this year when the optimization program is completed.


Water management program progressing. Excellon reported that over the course of Q4, two submersible pumps were commissioned, resulting in drawdown of over one meter during the first week of operations, which is 150% higher than what was expected. In addition, drilling of nine out of fourteen wells has been completed. The company is now expecting the optimization program to be completed later this quarter with dry mining conditions achieved in Q2 2017. In our view, the completion of optimization measures is critical to improve mining conditions, reduce costs and increase production.


Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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Excellon Resources Inc. - TSX:EXN - 2,4

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