Excellon Reverses $22 Million Litigation Liability
www.excellonresources.com
EXCELLON REVERSES $22 MILLION LITIGATION LIABILITY
Toronto, Ontario – April 3 , 202 3 – Excellon Resources Inc. (TSX:EXN, OTCQB:EXNRF and FRA:E4X2)
(“Excellon” or the “Company”) is pleased to announce the reversal of a US$22 million liability from its March
31, 2023 consolidated balance sheet , relating to the previously disclosed judgment against one of the
Company’s subsidiaries in Mexico.
“The announcement today effectively removes a US$22 million overhang that has been with the Company
since 2019,” stated Shawn Howarth, President and CEO. “Over the past four months, I’m very proud of our
management team that has successfully addressed major discounts to Excellon’s value potential: the
pending maturity of our outstanding convertible debentures, for US$ 11 million1, and this provision for
litigation.”
Mr. Howarth continued, “With the proposed acquisition of the La Negra Mine, we have taken steps to create
a compelling valu e proposition for investors . We have reset Excellon’s corporate strategy, restructured
current liabilities by over US$33 million and added to a portfolio of already high-quality, long-term assets in
particular at La Negra 2 and Kilgore3, with additional exploration and transactional upside at the Silver City
and Oakley projects4. Following today’s announcement, we can now focus on advancing this value potential
for the benefit of our shareholders.”
Background
On November 30, 2022, the Company’s wholly-owned Mexican subsidiary, San Pedro Resources, S.A. de
C.V. (“San Pedro”), voluntarily filed a petition for bankruptcy with the Mexican Bankruptcy Court (Instituto
Federal de Especialistas de Concursos Mercantile) which was accepted by the Court on December 15, 2022.
In early March 2023, the Court -appointed auditor completed its review of San Pedro’s petition and, on
March 28, 2023, the Court declared San Pedro bankrupt. In due course, the Court will be appointing a
trustee to take possession and control of, and administer, San Pedro for the benefit of its creditors. At the
time it was declared bankrupt by the Court, San Pedro had been on care and maintenance since late October
2022. There were no San Pedro assets recorded on the consolidated balance sheet of the Company at
December 31, 2022, and the bankruptcy proceedings are not expected to have any operational impact on
the Company’s current or future business.
As a result of the bankruptcy declaration, the Company will deconsolidate the liabilities of San Pedro from
Excellon’s consolidated balance sheet at March 31, 2023 , which will remove all San Pedro’s liabilities from
the consolidated balance sheet, including the US$22 million provision for litigation.
1 Proposed convertible debenture restructuring, for further details see the Company’s corresponding news release dated January
9, 2023 as well as the AIF.
2 La Negra has an NPV5% US$132 million at long-term commodity price estimates of US$22.00/oz Ag, US$1.15/lb Zn, US$3.60/lb Cu,
US$0.95/lb Pb. For further details regarding the La Negra acquisition and the project itself (including economics), see the Company’s
corresponding news release on January 9, 2023 and its April 3, 2023 annual results news rele ase providing an update on the
transaction, as well as the Company’s annual information form dated March 31, 2023 (the “ AIF”) and the technical report for the
project with an effective date of March 31, 2022, all of which are available under Excellon’s profile on SEDAR (www.sedar.com) and
on its website (www.excellonresources.com).
3 For details regarding the Kilgore project (including economics) see the AIF as well as the technical report for the project having an
effective date of July 30, 2019, available on the Company’s website and on SEDAR under the Otis Gold profile.
4 For further details regarding the Silver City and Oakley projects see the AIF. See also, the Silver City project technical report, with
an effective date of March 21, 2022, available under the Company’s profile on SEDAR and on its website, and the Oakley projec t
technical report with an effective date of August 8, 2016, available on the Company’s website and on SEDAR under the Otis Gold
profile, as well as the Company’s news release dated March 20, 2023, available on its website and under its profile on SEDAR.
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As previously disclosed in detail, San Pedro was party to an action by a claimant (the “ Plaintiff”) in respect
of damages under a property agreement regarding the non-material mineral concession , La Antigua. On
final appeal, in late 2019, the Plaintiff was awarded US$22 million (the “ Judgment”), which San Pedro and
the Company both believe is multiple times greater than any amount that could possibly have become
payable under the agreement. With n o further right of appeal, the Company recorded a corresponding
provision for litigation of US$22 million commencing from the Q3 2021 consolidated financial
statements. The Judgment is solely against San Pedro as defendant and the Company believes that th e
Plaintiff has no recourse against the Company’s other assets in Mexico, Idaho, Saxony, Germany or Canada.
For further details on the Judgment and San Pedro bankruptcy proceedings refer to the
Company’s consolidated financial statements and MD&A for the years ended December 31, 2022 and 2021,
and the AIF.
About Excellon
Excellon’s vision is to realize opportunities for the benefit of our employees, communities and shareholders,
through the acquisition of advanced development or producing assets with further potential to gain from
an experienced operational management team. The Company is 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 no modern
exploration. The Company has also entered into an agreement to acquire La Negra, a past-producing Ag-Zn-
Cu-Pb mine with exploration potential, located in Querétaro State, Mexico.
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
Daniel Hall, Chief Financial Officer
www.excellonresources.com
CAUTIONARY STATEMENTS ON FORWARD-LOOKING STATEMENTS AND OTHER MATTERS
Forward-Looking Statements
All statements, other than statements of historical fact, contained 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: “acquire”, “accrual”,
“additional”, “advancing”, “anticipates”, “believe”, “compelling”, “conditions”, “considered”, “contingencies”,
“continuing”, “could”, “development”, “due course”, “expected”, “exploration”, “estimate”, “focus”, “forward-
looking”, “further”, “future”, “indicat ed”, “initial”, “liability”, “long-term”, “may”, “modeling”, “occur”,
“opportunities”, “option”, “pending”, “pipeline”, “pivot”, “planning”, “position”, “potential”, “program”, “project”,
“proposed”, “proposition”, “prospects”, “provide”, “provision”, “risk”, “should”, “steps”, “strategy”, “study”, “subject
to”, “testing”, “timeline”, “uncertainties”, “upside”, “viability”, “vision”, “will” and “would”, or variations of such words,
and similar such words, expressions or statem ents that certain actions, events or results can, could, may, should, will
(or not) be achieved, occur, provide, result 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 potential financing, corporate development, strategic and other opportuni ties; advancing a portfolio of
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assets; the La Negra acquisition and its related transactions including restructuring of the Company’s outstanding
convertible debentures and the proposed equity offering (including discussions with potential investors) (collectively,
the “La Negra Transactions”) and completion thereof and benefits thereof (including value proposition, quantum and
use of proceeds of any equity offering) ; valuation, value proposition or potential or upside of the Company’s various
projects and/or La Negra; restart of mining operations and/or commercial production at La Negra mineral property;
the implications of the Judgment (including there being no recourse against the Company’s other assets in Mexico,
Idaho, Saxony, Germany or Canada); the bankruptcy proceedings of the Company’s Mexican subsidiary San Pedro and
implications thereof (including reversal of the litigation provision and/or the underlying or other liabilities relating to
such subsidiary and deconsolidation of such from Excellon’s consolidated balance sheet at March 31, 2023 ); project
preliminary economic assessments and other models and studies (including economics and other results thereof) for La
Negra and Kilgore , and the Company’s other project s, (including NPV and underlying mineral resources which are
estimates only); and any benefits or any other implications of any of the foregoing. Although the Company belie ves
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. The estimates, expectations and opinions referenced or
contained in this news release which may prove to be incorrect, are subject to a number of assumptions which include
those set forth or referenced herein as well as Management’s Discussion & Analysis of Financial Results for year ended
December 31, 2022 (together with the accompanying financial statements for the same period, the “2022 Financial
Disclosure”); the Company’s Annual Information Form dated March 31, 2023 (the “AIF”); the current technical reports
for the Company’s projects and La Negra, as referenced in this news release (collectively, the “Technical Reports”); the
Company’s other news releases referenced in this news release (collectively, the “Referenced News Releases”), and the
Company’s other applicable public disclosure (collectively, “ Company Disclosure”), all available under the Company’s
profile on SEDAR (www.sedar.com) and/or on its website at www.excellonresources.com. 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 materia lly 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 timing, completion or non -completion of the La Negra Transactions, including due to the
parties failing to receive, in a timely manner and on satisfactory terms, commitments in respect of the proposed equity
financing (or other financing), and the necessary securityholder, Toronto Stock Exchange and other approvals or the
inability of the parties to satisfy or waive in a timely manner the other conditions to the closing , conditions precedent
or covenants, as applicable, of the La Negra Transactions and the inability to complete such transactions; inability to
achieve the benefits, synergies or value proposition anticipated from the La Negra Transactions; variations in mineral
resources, mineral production, grades or recovery rates; the accuracy of the results (including economics such as NPV),
conclusions and recommendations of summarized in the Technical Reports; production, construction and technological
risks related to Excellon and La Negra; capital requirements and operating risks associated with the operations or an
expansion of the operations of Excellon including La Negra; dilution due to the La Negra Transactions and any other
future equity financing; fluctuations in silver, lead, zinc, copper, gold and other precious metal prices and currency
exchange rates; uncertainty relating to future production and cash resources; inability to successfully restart La Negra
or other projects within the timelines and at the cost anticipated; adverse changes to market, political and general
economic conditions or laws, rules and regulations applicable to E xcellon and La Negra; the possibility of project cost
overruns or unanticipated costs and expenses; accidents, labour disputes, community and stakeholder protests and
other risks of the mining industry; risk of an undiscovered defect in title or other adve rse claim; as well as the “Risk
Factors” in the AIF, and the risks, uncertainties, contingencies and other factors identified in the 2022 Financial
Disclosure, the Technical Reports, the Referenced News Releases and other applicable 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 AIF and the
other aforementioned Company Disclosure. Although Excellon has attempted to identify important factors that could
cause plans, actions, events or results to differ materially from those described in forward -looking statements in this
news release and the other Company Disclosure referenced herein, there may be other factors that cause plans, actions,
events or results not to be as anticipated, estimated or intended. There is no assurance that such statements will prove
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to be accurate as actual plan s, results and future events could differ materially from those anticipated in such
statements or information. Accordingly, readers should not place undue reliance on forward-looking statements in this
news release, nor in the documents incorporated by reference herein. Readers are cautioned not to place undue reliance
on forward -looking statements. The forward -looking statements referenced or contained in this news release are
expressly qualified by these Cautionary Statements as well as the Cautionary Sta tements in the 2022 Financial
Disclosure, the AIF, the Technical Reports, the Referenced News Releases and other applicable 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.
Mineral Resources
Until mineral deposi ts are actually mined and processed, mineral resources must be considered as estimates only.
Mineral resource estimates that are not classified as mineral reserves do not have demonstrated economic viability.
The estimation of mineral resources is inherently uncertain, involves subjective judgement about many relevant factors
and may be materially affected by, among other things, environmental, permitting, legal, title, taxation, socio-political,
marketing, or other relevant risks, uncertainties, contingencies and other factors described in the foregoing Cautionary
Statements on Forward-Looking Statements. The quantity and grade of reported “inferred” mineral resource estimates
are uncertain in nature and there has been insufficient exploration to define “in ferred” mineral resource estimates as
an “indicated” or “measured” mineral resource and it is uncertain if further exploration will result in upgrading
“inferred” mineral resource estimates to an “indicated” or “measured” mineral resource category. The accuracy of any
mineral resource estimates is a function of the quantity and quality of available data, and of the assumptions made
and judgments used in engineering and geological interpretation, which may prove to be unreliable and depend, to a
certain extent, upon the analysis of drilling results and statistical inferences that may ultimately prove to be inaccurate.
The quantity and grade of “inferred” mineral resource estimates are uncertain in nature and there has been insufficient
exploration to define “inferred” mineral resource estimates as an “indicated” or “measured” mineral resource and it is
uncertain if further exploration will result in upgrading “inferred” mineral resource estimates to an “indicated” or
“measured” mineral resource category. Miner al resource estimates may have to be re -estimated based on, among
other things: (i) fluctuations in mineral prices; (ii) results of drilling and development; (iii) results of geological and
structural modeling including stope design; (iv) metallurgical testing and other testing; (v) proposed mining operations
including dilution; and (vi) the possible failure to receive and/or maintain required permits, licenses and other
approvals. It cannot be assumed that all or any part of a “inferred”, “indicated” or “m easured” mineral resource
estimate will ever be upgraded to a higher category including a mineral reserve.
Mineral resource estimates disclosed by the Company were estimated and reported in accordance with National
Instrument 43 -101 of the Canadian Securities Administrators (“ NI 43 -101”) using Canadian Institute of Mining,
Metallurgy and Petroleum (“ CIM”) Definition Standards for Mineral Resources and Mineral Reserves (the “ CIM
Standards”), which govern the public disclosure of scientific and technic al information concerning mineral projects by
Canadian issuers such as Excellon , and applying the CIM’s Mineral Resources and Mineral Reserves Best Practices
guidelines (as applicable) . For additional discussion of the Company’s mineral resource estimates at the Company’s
projects and La Negra, as well as an overall more detailed discussion of such projects, the reader should refer to the AIF
and the applicable Technical Reports.
U.S. Readers
The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral
resource” as disclosed by the Company are Canadian mining terms defined in the CIM Standards (collectively, the “CIM
Definitions”) in accordance with NI 43 -101. NI 43-101 establishes standards f or all public disclosure that a Canadian
issuer makes of scientific and technical information concerning mineral projects. These Canadian standards differ from
the requirements of the SEC applicable to United States domestic and certain foreign reporting c ompanies under
Subpart 1300 of Regulation S -K (“S-K 1300”). Accordingly, information describing mineral resource estimates for the
Company’s projects and La Negra, may not be comparable to similar information publicly reported in accordance with
the applicable requirements of the SEC, and so there can be no assurance that any mineral resource estimate for the
Company’s projects or La Negra would be the same had the estimates been prepared per the SEC’s reporting and
disclosure requirements under applicable United States federal securities laws, and the rules and regulations
thereunder, including but not limited to S-K 1300. Further, there is no assurance that any mineral resource or mineral
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reserve estimate that the Company may report under NI 43 -101 would be the same had the Company prepared such
estimates under S-K 1300.
Preliminary Economic Assessments (or PEAs)
A PEA, including the La Negra and Kilgore PEAs, is only a conceptual study of the potential viability of the subject
project’s mineral resource estimates, and the economic and technical viability of the project and its estimated mineral
resources has not been demonstrated. A PEA is preliminary in nature and provides only an initial, high -level review of
the subject project’s potential and design options; there is no certainty that a PEA will be realized. The conceptual LOM
plan and economic model in a PEA include numerous assumptions and mineral resource estimates including inferred
mineral resource estimates. Inferred mineral resource estimates are considered to be too speculative geologically to
have any economic considerations applied to such estimates. Under NI 43-101, estimates of inferred mineral resources
may not form the basis of feasibility studies, pre-feasibility studies or other economic studies, except in prescribed cases,
such as in a preliminary economic assessment under certain circumstances. There is no guarantee that inferred mineral
resource estimates will be converted to indicated or measured mineral resources, or that indicated or measured mineral
resources can be converted to mineral reserves. Mineral resources that are not mineral reserves do not have
demonstrated economic viability, and as such there is no guarantee the economics described in any PEA, including the
La Negra and Kilgore PEAs, will be achieved. Mineral resource estimates may be materially affected by environmental,
permitting, legal, title, taxation, socio -political, marketing, or other relevant risks, uncertainties and other factors, as
more particularly described in the foregoing other Cautionary Statements of this news release.
Qualified Persons
Mr. Jorge Ortega, M.Sc., P.Geo., Vice President Exploration of the Company and a Qualified Person as defined in NI 43‐
101 (a “ QP”), reviewed, verified and approved the scientific and technical information relating to geological
interpretation and results contained in this news release . Mr. Paul Keller, P. Eng., Chief Operating Officer of the
Company and a QP, reviewed, verified and approved the scientific and technical information relating to operations and
production results contained in this news release.