Excellon posts bigger loss, cuts production outlook

Wed Nov 14, 2012 12:23pm EST
 

(Reuters) - Canadian silver miner Excellon Resources Inc EXN.TO posted a bigger quarterly loss and slashed its longstanding output forecast for the current quarter after it lost about three months of production at its only mine due to a blockade.

Protests at the La Platosa mine, in the northern Mexican state of Durango, began on July 8 when landowners and union members blocked the entrance to the mine, which produced 1.3 million ounces of silver in 2011.

Excellon resumed mining in mid-October, about a month after the landowners lifted the blockade.

The company said on Wednesday it had returned to full production at the mine.

It expects cash costs of $7.00 to $7.50 per ounce for the fourth quarter and expects to return to ordinary course net cash costs of $4.25 to $5.00 per ounce in the first quarter of 2013.

"Projection is based on the fact that if we are not running at full production for the whole quarter, costs will get impacted," said Brendan Cahill, executive vice-president.

Excellon, which also produces lead and zinc, said it expects fourth-quarter production to drop to between 250,000 ounces and 270,000 ounces from its earlier budgeted expectation of 380,000-420,000 ounces.

"We are ramping back to production after this long layoff. We are being conservative as well because we do not want to overestimate," Cahill said.

Excellon's third-quarter loss jumped to $4.4 million from $976,000 a year earlier. Revenue plunged 99.5 percent to $60,000.

Shares of the company, which had a market value of about C$116 million as of Tuesday close, fell as much as 4 percent to 40.5 Canadian cents on the Toronto Stock Exchange on Wednesday. The stock has lost 28 percent of its value so far this year.

(Reporting by Sandhya Vijayan and Bhaswati Mukhopadhyay in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)