WEBULL

Is Excellon Resources (CVE:EXN) Using Too Much Debt?

Simply Wall St · 2d ago

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Excellon Resources Inc. (CVE:EXN) does carry debt. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Excellon Resources Carry?

The image below, which you can click on for greater detail, shows that at September 2025 Excellon Resources had debt of US$12.2m, up from US$3.16m in one year. However, it also had US$10.1m in cash, and so its net debt is US$2.13m.

debt-equity-history-analysis
TSXV:EXN Debt to Equity History December 12th 2025

How Healthy Is Excellon Resources' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Excellon Resources had liabilities of US$10.7m due within 12 months and liabilities of US$13.9m due beyond that. On the other hand, it had cash of US$10.1m and US$3.11m worth of receivables due within a year. So its liabilities total US$11.4m more than the combination of its cash and short-term receivables.

Since publicly traded Excellon Resources shares are worth a total of US$88.6m, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. When analysing debt levels, the balance sheet is the obvious place to start. But it is Excellon Resources's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for Excellon Resources

Given its lack of meaningful operating revenue, investors are probably hoping that Excellon Resources finds some valuable resources, before it runs out of money.

Caveat Emptor

Importantly, Excellon Resources had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$2.8m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$6.3m of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Excellon Resources (of which 3 make us uncomfortable!) you should know about.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.