TORONTO, April 29, 2013 /CNW/ - The share price of Excellon Resources, a Canadian mining company operating in Mexico, has declined dramatically despite feel-good announcements of possible new ore finds, share buybacks, major insider purchases and a strategic plan including a reverse stock split.
Following a 62-per-cent share price decline over the last two years, more trouble can be expected for Excellon unless there is a meaningful change in direction from company management, the United Steelworkers (USW) says.
"The company has sought to undermine the National Miners' and Metalworkers' Union of Mexico (known as Los Mineros), the only democratic union seeking to represent workers," noted Ken Neumann, USW National Director.
"Excellon has refused to engage in any serious dialogue with communal landowners at its La Platosa mine in Mexico - the company's chief source of revenue," Neumann said.
"This company is a long way from being out of the woods. Shareholders and new investors should exert caution until the company moves to negotiate settlements with Los Mineros and the communal landowners."
Excellon's latest annual report to shareholders lists $8 million in net profits. However, this was almost entirely due to the same amount of deferred tax credits that will be used to offset future taxes, the USW points out.
In 2012, Excellon actually saw an 86-per-cent decline in earnings before interest, taxes, depreciation and amortization (EBITDA), which is a real measure of profitability and cash flow, a USW analysis of the company shows.
The USW has sent a letter to Excellon shareholders, stating, in part:
Since July 5, 2012, when a union election tainted by the presence of thugs and company interference was held at the La Platosa mine in Mexico, the Company's share price dropped by 43%, as compared to a 24% decline for comparable Mexican mining companies trading primarily on the Toronto Stock Exchange. Had Excellon's stock performance merely mirrored the activity of comparable companies, its share price would be 33% higher.
The USW maintains that investor confidence cannot be restored unless Excellon management changes direction.
The union previously sent letters to Excellon shareholders to raise awareness of questionable management actions; highlight concerns over the company's corporate governance; and point to the resignations of the CEO and CFO in 2012 as evidence of internal disarray.
The USW joined with the Canadian Labour Congress (CLC), representing over three million members, in filing a complaint under guidelines established by the Organization for Economic Cooperation and Development (OECD) for multinational corporations.
The USW also condemned the June 2012 destruction of a peaceful encampment that was established at the La Platosa mine to protest Excellon's treatment of communal landowners and attacks on Los Mineros. The CLC raised concerns about Excellon directly with the Canadian embassy in Mexico.
"It would be a mistake by investors to believe that Excellon's problems are behind it," said Neumann.
"The company clearly has credibility problems and we believe management intransigence will risk further damage to its reputation and decrease shareholder value."
Excellon's annual meeting will be held Tuesday, April 30, in Toronto.
SOURCE: United Steelworkers (USW)
For further information:
Ken Neumann, USW National Director for Canada, 416-544-5951
Joe Drexler, USW Strategic Campaigns, 416-544-6009, 416-434 7907, [email protected]
Bob Gallagher, USW Communications, 416-544-5966, 416-434-2221, [email protected]