This Little-Known Silver Miner Is Flying High

You might not have heard of Excellon Resources [stock_market_widget type="inline" template="generic" color="default" assets="EXN.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"], but this silver mining company has set the market on fire this year. Excellon stock is up almost 40% so far in 2019 as the price of silver has rallied. The stock has seen strong insider buying activity of late as management seems to be betting on more upside on the basis of the silver price rally.

But being a small company with a market cap of just $80 million makes Excellon a risky bet. Excellon shares currently trade in penny stock territory, but there’s a chance that this development stage silver miner can deliver significant upside in the long run. Let’s take a look at its latest results to see what’s in store for the company.

Growth Pains That Investors Need to Keep in Mind

Excellon Resources holds stakes in silver properties in Mexico. In the second quarter of 2019, the company reported 582,937 ounces of silver equivalent production. This was lower than the year-ago period’s silver equivalent production of just over 637,000 ounces.

The lower production on a year-over-year basis can be attributed to Excellon’s strategy of optimizing its assets at a time when silver prices were weak. Brendan Cahill, the company’s CEO, pointed this out in the latest press release:

During the recent period of low metal prices, we continued to make capital investments and advance exploration programs at both of our projects, leaving us well positioned for the improving silver price environment that we are now seeing.

Thanks to the optimization initiatives undertaken by Excellon, the company was able to reduce its all-in sustaining costs to the tune of 27% quarter over quarter. Excellon reported all-in sustaining costs of $16.11 an ounce in the second quarter of 2019, down from $21.97 an ounce in the first quarter.

What’s more, Excellon management points out that the company has room for further reduction in the cost base, while increasing output at the same time. The realized price of silver clocked by Excellon in the second quarter stood at $14.93 an ounce. But now that silver is hovering around $18 an ounce, there’s a good chance that the company’s financial performance will pick up the pace in the coming quarters.

Excellon’s Financial Performance Is Expected to Improve

Analyst estimates compiled by Yahoo Finance suggest that Excellon’s top and bottom lines could improve strongly in this fiscal year and the next one. Its sales are expected to rise 44% in the current fiscal year, followed by a 54% jump in the next one.

Excellon is also expected to turn in earnings of C$0.10 per share in fiscal 2020 as compared to a projected loss of C$0.03 per share in 2019. The company had delivered a loss per share of C$0.10 in fiscal 2018. What’s more, Excellon balance sheet seems to be decent with total cash of C$3.54 million exceeding the total debt of C$1.03 million.

As such, Excellon Resources is a stock that you need to keep on your radar as it can deliver strong upside in the long run.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

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