Excellon's Mallay Silver Mine Acquisition: A Path to Near-Term Production and Growth

Excellon Resources Inc. (TSX: EXN) recently announced the closing of initial financings totaling approximately C$3.79 million in support of its proposed acquisition of the Mallay Silver Mine in Peru. This strategic move positions Excellon for a potential return to silver production by mid-2025, while also addressing significant debt at the mine and setting the stage for long-term value creation.

The Mallay Silver Mine, previously operated by Buenaventura, offers advanced infrastructure and full permits, enabling a rapid restart of operations. With an average annual silver production of 1.3 million ounces from 2012 to 2018, the mine boasts proven and probable reserves of 133,000 tonnes at 626 grams of silver equivalent per tonne, and inferred resources of 251,805 tonnes at 564 grams of silver equivalent per tonne. Excellon's acquisition of the mine, along with the adjacent Tres Cerros Exploration Project, aligns perfectly with its goal of near-term silver production and growth.

The acquisition of the Mallay Silver Mine addresses the debt overhang by exchanging part or all of Adar's debt (approx. US$24 million) for 100% ownership of Minera CRC, which owns the Mallay Mine and Tres Cerros Project. Upon completion of the Realization Proceedings, Excellon will acquire the Minera Shares, free and clear of encumbrances. This deal removes a significant financial burden from the asset, enabling a rapid restart.

Excellon has committed to providing equity in the company, representing 12.9% of the issued and outstanding common shares prior to any future capital raise. Additionally, the company has pledged US$6.5 million towards commencing mine operations at the Mallay Mine, including rehabilitation and initial upgrades. Excellon will also pay a 1% net smelter returns royalty and provide a zinc and lead stream to Adar.

The Mallay Silver Mine's historical production and resource estimates position Excellon to achieve its long-term production targets and increase shareholder value. The mine's advanced infrastructure and full permits offer a fast track to mining, while the Tres Cerros Exploration Project provides potential for further resource expansion. Excellon's operational expertise and commitment to the project set the stage for a rapid restart and long-term value creation.

In conclusion, Excellon's acquisition of the Mallay Silver Mine is a strategic move that addresses a significant debt overhang and positions the company for a potential return to silver production by mid-2025. The mine's advanced infrastructure and full permits, along with the exploration potential at Tres Cerros, offer a path to near-term production and long-term growth for Excellon shareholders.