Tis rigor and not law

BALANCE SHEETS ARE FUN!!! (excellon resources edition)

Let us applaud the responsible attitude toward financial reporting shown by Excellon Resources (EXN.to) this morning. We quote:

Net working capital totaled $0.9 million (excluding provision for litigation) at March 31, 2022 (December 31, 2021 – $0.3 million), with cash and marketable securities of $3.5 million (December 31, 2021 – $4.5 million)

Hmmm…litigation, eh? So, let’s see how EXN would like to have filed its balance sheet:

And this despite the minor, technical details of the litigation, such as the one you read in Note 9 of the 1q22 financials:

San Pedro’s appeal of this decision to the federal courts of Mexico was dismissed on July 1, 2021, a decision that was formally communicated to the Company in August 2021, and as the Judgment is not subject to further legal appeal in Mexico, the Company recorded a Provision for litigation of $22,175 in Q3, 2021.

So, $22.175m and no further appeals possible, but EXN doesn’t think it counts. Telling the world straight, Three Valley Copper should hire Brendan Cahill immediately, they’d be able to scrub out the $74m or so in loans they owe and report a +$10m working capital.

EXN goes on to they that “it believes” the judgment against its wholly-owned subsidiary won’t be enforceable against other company assets, which is the same way it believed it would win the suit in the first place, I suppose. Or win the appeal. But that’s not all, because further down the NR today, EXN tells us of its expansion plans in Mexico:

“…actively pursuing acquisition opportunities for producing and development stage assets in Mexico.”

That’s wonderful. How are they planning to buy any new project? In cash? Sorry, going to need cash to pay down the trade payables when Platosa is mothballed. In shares? Only the dumbest gringo ever to have tried his hand at mining in Mexico would think a company could buy a mining asset in Mexico using pure paper when that same company owed over $22m in compensation to another Mexican national. Any idea who that might be, Brendan?

1 Comment

    Tim A small off the grid cabin in the woods. 19/05/22 3:42 pm

    From a technical perspective, this disaster was telegraphed years ago if you understood the underground dewatering issues. They got some fools to prop them up financially for a couple years but this horse was flogged dead long ago.


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