Excellon Closes Initial Financings for Mallay Silver Mine Acquisition and Provides Update
Excellon Closes Initial Financings for Mallay
Silver Mine Acquisition and Provides Update
Toronto, Ontario--(Newsfile Corp. - December 3, 2024) -
Excellon Resources Inc. (TSX: EXN) (FSE:
E4X2)
("
Excellon
" or the "
Company
") is pleased to announce closing of the initial approximately
C$3.79 million financing in support of the Company's proposed acquisition of the Mallay Silver Mine and
Tres Cerros Gold-Silver Exploration Project in Peru, which provide potential opportunities for a near-
term return to silver production and highly prospective gold-silver exploration.
As previously announced, the Company arranged a non-brokered private placement offering (the "
Unit
Offering
") of 19,500,000 units of the Company ("
Units
") at a price of C$0.105 per Unit for aggregate
gross proceeds of C$2,047,500
(approximately US$1.46 million) and a non-brokered private placement
offering (the "
Note Offering
" and together with the Unit Offering, the "
Offerings
") of US$1,250,000
aggregate principal amount of unsecured non-convertible promissory notes of the Company ("
Notes
").
The aggregate offering size was approximately C$3.79 million (approximately US$2.71 million).
Shawn Howarth, President and CEO of Excellon, commented, "The Mallay acquisition is expected to be
accretive for Excellon shareholders, positioning the Company for a potential return to silver production by
mid-2025. We are looking to acquire a silver mine that saw US$115 million in historical investment and
produced over 18 million silver equivalent ounces from 2012-2018, prior to temporary suspension of
operations due to prevailing silver prices at the time
1
."
"The closing of these financings will fund the proceedings to realize on the acquisition, enabling us to
resolve legacy debt tied to the assets, while preserving the growth potential. With the Mallay Silver
Mine's advanced infrastructure and the gold-silver exploration upside of Tres Cerros, we are prepared to
unlock long-term value for our shareholders and stakeholders."
Update on the Mallay Acquisition
Acquisition Opportunity
On October 31, 2024, Excellon announced an agreement with Adar Mining Corp. ("
Adar
") to acquire,
subject to the satisfaction of certain conditions, all of the issued and outstanding shares ("
Minera
Shares
") in the capital of Minera CRC S.A.C. ("
Minera CRC
"), which owns the Mallay Silver Mine and
Tres Cerros Exploration Property in Peru (the "
Acquisition
").
The Mallay Mine is fully permitted to restart production and was built and operated by Buenaventura from
2012 to 2018, with US$115 million historical investment. The mine went into care and maintenance in
2018 due to low silver prices (~US$16.00 per ounce) and a change in strategic priorities at
Buenaventura. Annual production by Buenaventura (2013 to 2017) averaged 1.3 million ounces of silver,
9,100 tonnes of zinc and 6,500 tonnes of lead
1
.
The Tres Cerros Project is a highly prospective gold-silver exploration project approximately five
kilometres northwest of the Mallay Mine. The project's prime area of interest is a 2.5 kilometre by 0.5
kilometre corridor of gold-silver mineralization and coincident IP/resistivity anomalies, indicative of a bulk
tonnage, high sulfidation epithermal system.
Numerous historical grab samples were taken across the
2.5 kilometre fault, which are being analyzed to determine further follow-up exploration work
1
.
Further details on the Mallay Mine and Tres Cerros Project are provided in the
news release
announcing
the Acquisition.
Acquisition Summary
Adar is a secured creditor of Premier Silver Corp., which currently owns the Minera Shares, and will bid
for the Minera Shares pursuant to receivership proceedings (the "
Realization Proceedings
") under the
Bankruptcy and Insolvency Act
(Canada) (the "
BIA
"). Adar is owed approximately US$24 million and
plans to bid part or all of its debt for the Minera Shares, pursuant to which the outstanding debt owed to
Adar will be exchanged for 100% ownership of Minera CRC, if there is no higher or better bid obtained.
On completion of the Realization Proceedings, assuming Adar is the successful bidder, Excellon will
acquire the Minera Shares, free and clear of encumbrances, in exchange for commitments to provide
equity in Excellon, restart funding for the Mallay Mine and contingency payments linked to future
production. The Acquisition resolves significant debt at Mallay, while positioning Excellon in respect of
its goal of being a near-term emerging silver producer.
Excellon Commitments
Equity:
Common shares in the capital of the Company ("
Common Shares
") representing 12.9%
of the issued and outstanding Common Shares prior to any future capital raise (including the
Restart Funding, below);
Restart Funding for the Mallay Mine:
Allocate US$6.5 million towards commencing mine
operations at the Mallay Mine, including rehabilitation and initial upgrades; and
Contingency Payments, only payable on successful restart of the mine:
A 1% net smelter returns royalty with the right to buy back 0.5% for US$1,500,000; and
A base metals stream of 5% of zinc and lead production, increasing to 8% after a minimum
delivery threshold (representing approximately three years of production).
Realization Proceedings Timeline
Excellon anticipates the completion of the Realization Proceedings within an approximately 14-week
timeline, subject to the requirements under the BIA and ordinary course delays that are attendant in such
proceedings. Updates on the process will be provided as relevant.
Next Steps
The Company has commenced various funding discussions for the Mallay Mine restart, including offtake
prepay financing, strategic partnerships, other debt financing solutions and minority equity investment.
The Realization Proceedings afford Excellon significant opportunity to arrange a beneficial financing
package and finalization of such financing is expected to align with completion of the Realization
Proceedings.
Unit Offering
On December 3, 2024, the Company closed the Unit Offering. Each Unit was comprised of one
Common Share and one half of one common share purchase warrant of the Company (each whole
warrant, a "
Warrant
"). Each Warrant entitles the holder thereof to acquire one Common Share at a price
of $0.15 per Common Share for a period of 24 months from the closing date of the Unit Offering.
The Unit Offering remains subject to the final approval of the Toronto Stock Exchange.
Note Offering
On November 1, 2024, the Company closed the Note Offering. The Notes will mature on May 1, 2026,
being the date that is 18 months following the closing date of the Note Offering (the "
Maturity Date
"). On
the Maturity Date, any outstanding principal amount of the Notes plus any accrued and unpaid interest
thereon shall be repaid by the Company in cash. The Notes bear interest at a rate of 10% per annum.
Interest on the principal amount outstanding under the Notes will accrue during the period commencing
on the closing date of the Note Offering until the Maturity Date and will be payable in cash on the Maturity
Date, subject to earlier prepayment or exercise of the Tres Cerros Prepayment Election (as defined
below).
If, prior to the Maturity Date, the Acquisition is completed, the holder of the Notes will be able to elect to
direct that the principal amount of the Notes plus any accrued and unpaid interest thereon be applied as
a prepayment against a portion of the purchase price payable by the holder to exercise its back in right
pursuant to a back in right agreement to be entered into in connection with the Acquisition (the "
Tres
Cerros Prepayment Election
").
If, prior to the Maturity Date, the Acquisition is not completed on or before the outside date for
completion of the Acquisition, the Company will be required, within 30 calendar days following expiry of
such outside date, to prepay in cash any outstanding principal amount of the Notes plus any accrued and
unpaid interest thereon.
The Company may elect, at any time, to prepay in cash any or all of the principal amount of the Notes
plus any accrued interest on such principal amount being prepaid.
The Company intends to use the net proceeds of the Offerings to fund acquisition costs, including upfront
cash payments in respect thereof, and for working capital and general corporate purposes.
The securities were offered: (a) by way of private placement in each of the provinces of Canada pursuant
to applicable exemptions from the prospectus requirements under applicable Canadian securities laws;
(b) in the United States or to, or for the account or benefit of, U.S. persons, by way of private placement
pursuant to the exemptions from the registration requirements provided for under the United States
Securities Act of 1933, as amended (the "
U.S. Securities Act
"); and (c) in jurisdictions outside of
Canada and the United States on a private placement or equivalent basis. The securities issued
pursuant to the Offerings are subject to a four-month hold period in Canada pursuant to applicable
Canadian securities laws.
The securities offered have not been, nor will they be, registered under the U.S. Securities Act, or any
state securities laws, and may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons absent registration or an exemption from such registration requirements. This
news release shall not constitute an offer to sell or the solicitation of an offer to buy in the United States
nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be
unlawful.
Qualified Person
Paul Keller, Chief Operating Officer of Excellon and a qualified person within the meaning of National
Instrument 43-101 -
Standards of Disclosure for Mineral Projects
, has reviewed and approved the
scientific and technical information in this news release.
About Excellon
Excellon's vision is to realize opportunities through the acquisition of advanced development or
producing assets with further potential to gain from an experienced management team for the benefit of
our employees, communities and shareholders. Excellon recently announced an agreement to acquire
the past-producing Mallay Silver Mine and Tres Cerros Exploration Project in Peru. The Company is also
advancing a portfolio of gold, silver and base metals assets including Kilgore, an advanced gold
exploration project in Idaho; and Silver City, a high-grade epithermal silver district in Saxony, Germany
with 750 years of mining history and little modern exploration.
Additional details on Excellon's properties are available at
www.excellonresources.com
.
For Further Information, Please Contact:
Excellon Resources Inc.
Shawn Howarth, President & Chief Executive Officer
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, contained, referenced or incorporated by
reference in this news release constitute "forward-looking statements" and "forward looking
information" (collectively, "
forward-looking statements
") within the meaning of applicable Canadian
and United States securities legislation. Generally, these forward-looking statements can be identified
by the use of forward-looking terminology such as: "actively", "advance", "anticipated", "assess",
"believe", "cause", "commence", "completion", "conditions", "consideration", "continues",
"development", "due course", "expectation", "exploration", "extend", "extension", "flexibility",
"focused", "forward", "further", "future", "if", "implement", "liquidity", "looking", "maturity", "may",
"negotiations", "occur", "opportunities", "options", "outcome", "outstanding", "potential", "providing",
"reach", "restructuring", "risk", "subject to", "to be", "update", "vision", "waive", "when", "will", and
"would", or variations of such words, and similar such words, expressions or statements that certain
actions, events or results can, could, may, should, to, will, would (or not) be achieved, occur, provide,
result, complete or support in the future or which, by their nature, refer to future events. In some cases,
forward-looking information may be stated in the present tense, such as in respect of current matters
that may be continuing, or that may have a future impact or effect. Forward-looking statements include
statements regarding the structure and terms of the Acquisition; the timing and ability of the Company
to complete the Acquisition; the benefits of the Acquisition; the use of proceeds of the Offerings; the
timing and ability of the Company to receive necessary approvals, including the approval of the
Toronto Stock Exchange; the ability of Adar to acquire the Minera Shares pursuant to the Realization
Proceedings; the timing of the Realization Proceedings; the structure and terms of additional
financing transactions; the timing and ability of the Company to complete additional financing
transactions; exploration and drilling programs, including the timing, completion and results thereof;
the ability of the Company to restart production at the Mallay Mine and the timing thereof; exploration
prospects; potential mineralization; and the Company's objectives, goals and future plans and
strategies. Although the Company believes that such statements are reasonable, it can give no
assurance that such expectations will prove to be correct, and any forward-looking statements by the
Company are not guarantees of future actions, results or performance. Forward-looking statements
are based on assumptions, estimates, expectations and opinions, which are considered reasonable
and represent best judgment based on available facts, as of the date such statements are made. If
such assumptions, estimates, expectations and opinions prove to be incorrect, actual and future
results may be materially different than expressed or implied in the forward-looking statements.
Forward-looking statements are inherently subject to known and unknown risks, uncertainties,
contingencies and other factors which may cause the actual results or performance of the Company to
be materially different from any future results or performance expressed or implied by the forward-
looking statements. Such risks, uncertainties, contingencies and other factors include, among others,
the inability of the Company to complete the Acquisition on the terms proposed or at all, the inability
of the Company to receive necessary regulatory approvals, termination of the Agreement, the inability
of Adar to acquire the Minera Shares pursuant to the Realization Proceedings on the terms proposed
or at all; participation of other third parties in the court proceedings; court delays; failure of the
Company to complete additional financing transactions on the terms proposed or at all; the inability to
complete a feasibility study which recommends a production decision, the "Risk Factors" in the
Company's annual information form dated April 1, 2024 (the "
2024 AIF
"), and the risks, uncertainties,
contingencies and other factors identified in the Company's Management's Discussion and Analysis,
and accompanying financial statements, for the year ended December 31, 2023, and the Company's
other applicable public disclosure (collectively, "
Company Disclosure
"). The foregoing list of risks,
uncertainties, contingencies and other factors is not exhaustive; readers should consult the more
complete discussion of the Company's business, financial condition and prospects that is provided in
the 2024 AIF and the other Company Disclosure. The forward-looking statements referenced or
contained in this news release are expressly qualified by these Cautionary Statements as well as the
Cautionary Statements in the other Company Disclosure. Forward-looking statements contained
herein are made as of the date of this news release (or as otherwise expressly specified) and the
Company disclaims any obligation to update any forward-looking statements, whether as a result of
new information, future events or results or otherwise, except as required by applicable laws.
Not for distribution to United States news wire services or for dissemination in the United
States
1
Source: Buenaventura and Minera CRC historical information and public disclosure.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/232393