ACQUISITION OF THE LA NEGRA MINE IN ALL SHARE
TRANSACTION
COMPANY PLANS TO RESTRUCTURE CONVERTIBLE DEBENTURES ADDING
FINANCIAL FLEXIBILITY
COMPANY PLANS SUBSCRIPTION RECEIPT PRIVATE PLACEMENT TO
FINANCE PROJECT DEVELOPMENT
TORONTO, Jan. 9, 2023
/CNW/ - Excellon Resources Inc. (TSX: EXN) (NYSE: EXN) (FRA:
E4X2) ("Excellon" or the "Company") is pleased
to announce that it has entered into a definitive acquisition
agreement (the "Agreement") to acquire the permitted,
past-producing La Negra Mine ("La Negra") located in
Querétaro State, Mexico from Dalu
S. à r.l. (the "Seller"), an entity owned by an investment
fund managed by Orion Resource Partners ("Orion") for
aggregate consideration of US$50
million paid through upfront payments totalling US$20m, payable in common shares of the Company,
and a further US$30m of deferred,
contingent consideration payable in common shares of the Company or
in cash at the Company's option, following the restart of
commercial production (the "Acquisition").
Concurrent with the execution of the Agreement, Excellon has
entered into a binding term sheet with holders representing
approximately 66 2/3% of the principal amount of
outstanding convertible debentures (the "Debentures")
to convert 25% of the Debentures into equity and reprice and extend
maturity of remaining principal outstanding upon closing the
Acquisition, providing greater flexibility to the Company.
La Negra Highlights:
- La Negra, a past producing mine with historical production
averaging +3.0 million silver-equivalent ("AgEq") ounces ("oz")
annually1
- Brownfields site with permits to restart production,
existing infrastructure including a 3,000 tonne per day mill, mine
development, camp facilities, all-season highway access and
existing workforce
- Completed Preliminary Economic Assessment ("PEA") with an
effective date of March 31, 2022
supported by an NI 43-101 technical report (the "La Negra Technical
Report")2
- Indicated Mineral Resources of approximately 15.1 million oz
AgEq and Inferred Mineral Resources of approximately 41.8 million
oz AgEq3
- PEA demonstrates a Post-tax NPV5% of US$132.4 million4
- Polymetallic production mix: 43% Ag, 26% Zn, 23% Cu, 7% Pb
by NSR contribution3,4
- Near-term restart of La Negra: 12-18 month development plan
de-risking mine restart
- New labour agreement in place, local workforce and
communities strongly support a restart
- Local partner, Grupo Desarrollador Migo, S.A.P.I. de C.V.
("M Grupo") to become key shareholder in Excellon
- Located in Querétaro, one of the most stable states to
operate in Mexico
- Opportunities to expand current Mineral Resource estimates
with multiple untested near-mine exploration target areas
- Significant exploration potential along the regional
structures controlling mineralization and below unconstrained skarn
bodies
_________________________________________
|
1 Average
annual production from 2013 to 2015 at throughput of approximately
2,500 tpd.
|
2 See
Cautionary Statements regarding "Preliminary Economic Assessments"
at the end of this news release. Refer also to the La Negra
Technical Report, which will be filed within 45 days of the date of
this news release.
|
3 Mineral
Resource Estimate effective as at March 31, 2022 prepared in
accordance with National Instrument 43-101 – Standards of
Disclosure for Mineral Projects ("NI 43-101") of the
Canadian Securities Administrators ("CSA"). See also
Cautionary Statements on "Mineral Resources" and to "U.S. Readers"
at the end of this news release. Once filed, refer also to
the La Negra Technial Report which, as noted, the Company expects
to file under its profile at www.sedar.com within 45 days, and will
announce by news release upon such filing.
|
4 Long-term
commodity price estimates used in analysis: US$22.00/oz Ag,
US$1.15/lb Zn, US$3.60/lb Cu, US$0.95/lb Pb
|
|
Shawn Howarth, President and
CEO commented, "Excellon has a long history of operational
excellence in Mexico. The
acquisition of La Negra will be transformational for Excellon, with
the goal of returning the Company to producer status on an
accelerated timeline. La Negra stands out as a permitted, near-term
restart opportunity capable of generating significant value. Our
strategy is to restart the mine following a 12-18 month de-risking
process that we believe will position the Company for operational
readiness by early 2024. We also see significant upside potential
in the currently defined Mineral Resource estimates, which despite
La Negra's 50-year production history, remains relatively
under-explored, and the system remains open along strike and at
depth. An infill drill program has been budgeted for and is
considered to be a critical component of longer-term success."
Mr. Howarth added "The transaction further highlights the
strengths each party is delivering in an all-share deal. At
Excellon, we believe that we have the management experience and
operational know-how to successfully restart La Negra. We are
pleased that M Grupo, who has the in-country relationships at the
community, labour and government levels to support a seamless
transition, will become a new significant shareholder of the
Company and a continuing local resource for La Negra. We are also
excited to be partnering with Orion as another new, significant
shareholder and expected long-term strategic supporter of the asset
and the Company."
A presentation on the Acquistion and La Negra is available on
the Company's website under
https://excellonresources.com/investors/presentations under a link
entitled La Negra Acquisition. In addition, the Company plans to
file the La Negra Technical Report within 45 days of the date of
this news release and will announce such filing by news
release.
Acquisition and Debenture
Restructuring Highlights
- All-Share Acquisition of the La Negra Mine
-
- Up to US$50 million aggregate
consideration, of which 60% will be paid to the Seller in respect
of the acquisition of all of the outstanding shares of the holding
company of La Negra, and 40% will be paid to M Grupo in
satisfaction of the termination of existing joint venture
arrangements regarding La Negra.
- Orion previously entered into an agreement with its local joint
venture partner, M Grupo, a privately held, Querétaro-based
infrastructure and construction company with a more than 30 year
track record and long-standing in-state and national relationships,
that specified that 40% of the proceeds from a sale of La Negra
would be for the account of M Grupo.
- Up front US$20 million payment
will be paid 60% to the Seller in respect of the purchase of the
shares and 40% to M Grupo in satisfaction of the termination of the
joint venture arrangements.
- Deferred payments of US$30m in
the aggregate (payable in two tranches, as described below),
contingent on successfully achieving commercial production, payable
to Orion and M Grupo on the same 60% / 40% basis.
- Restructuring of the Debentures
-
- Conversion of C$4.5 million, or
25%, of the Debentures principal to equity upon closing the
Acquisition at a conversion price of C$0.48 per Excellon Share
- Adjustment of conversion price for the remaining principal to
C$0.535 per share
- Extension of maturity of remaining principal from July 30, 2023 to April 30,
2027
- Private placement for a minimum of US$10 million (the "Closing Private
Placement")
-
- Planned subscription receipt financing to provide development
capital
- Proceeds to fund 12-18 month development plan and general
corporate purposes
Excellon Restart Strategy for La
Negra: 12 to 18-month Timeline
Excellon is targeting a restart timeline of 12 to 18 months for
La Negra. While the Company believes there is potential to optimize
this timeline, critical work streams need to be completed prior to
reassessing restart timing.
La Negra is a prior producer that has historically operated at
2,500+ tpd throughput. A Preliminary Economic Assessment
("PEA") was completed for the asset, with an effective date
of March 31, 20222. The
PEA concluded there was adequate detail and information to support
a positive economic outcome and recommended restart of La Negra,
particularly as this is a brownfields site with existing
infrastructure, equipment, development, operating permits and
labour force.
A summary of the PEA conceptual life-of-mine ("LOM")
statistics is provided in the following table (and additional
detail is set out below under the heading "Summary of the PEA for
La Negra")2:
La Negra PEA Summary – LOM
Statistics
|
|
Unit
|
Value
|
Mine Life5
|
Years
|
7.4
|
LOM Tonnage
|
kt
|
6,223
|
LOM Average Silver (Ag) Grade
|
g/t
|
63
|
LOM Average Lead (Pb) Grade
|
%
|
0.4
|
LOM Average Zinc (Zn) Grade
|
%
|
1.5
|
LOM Average Copper (Cu) Grade
|
%
|
0.4
|
LOM Process Rate
|
tpd
|
2,500
|
Average Annual Payable Metal
|
|
|
Silver
|
000 oz
|
1,227
|
Lead
|
000 lbs
|
5,521
|
Zinc
|
000 lbs
|
19,126
|
Copper
|
000 lbs
|
4,262
|
Economics6
|
|
|
Restart Capital
|
US$m
|
$20.9
|
AISC7
|
US$/oz AgEq
|
$12.95
|
Post-Tax NPV 5%
|
US$m
|
$132.4
|
Post-Tax NPV 7.5%
|
US$m
|
$119.0
|
__________________________________________
|
5 Based on
current Mineral Resource Estimate
|
6 AgEq
calculated utilizing the metals price assumptions in the PEA and
provided in the table under Economic Analysis below
|
7All-in
sustaining cost, or AISC, is a non-GAAP financial measures with no
standardized meaning under IFRS and therefore, may not be
comparable to similar measures presented by other issuers. AISC for
La Negra is a forward-looking non-GAAP financial measure without
historical equivalents given the lack of recent operations at La
Negra.
|
|
The following key areas need to be assessed to further advance
the PEA and de-risk restart planning:
- Tailings management: The PEA contemplates
construction of a filtered tailings facility to replace historical
hydraulic tailings deposition. Approximately 50% of the
restart capital is allocated to filtered tailings and
conveyance.
- Infill drilling: The Company plans to undertake an
infill drill program aimed to better define mineralization
scheduled for the initial three years of the current conceptual
Life of Mine production plan.
- Mine plan and equipment review: Explore
opportunities for planning optimization, based on information
gathered during infill drilling and further assessment of mining
equipment and infrastructure at site.
- Processing analysis and metallurgical test
work: The historical mill requires refurbishment to return
it to operational status. During this refurbishment period
the Company will also undertake metallurgical test work to explore
opportunities to optimize metallurgical recoveries.
La Negra Mineral Resource
Estimate3
The Mineral Resource estimate presented in the following table
is derived from the La Negra Technical Report and is effective as
at March 31, 2022 and is reported at
a base case cut-off grade of US$28/t
net smelter return ("NSR") accounting for value from Ag, Pb,
Zn and Cu, treatment and refining charges, and penalties from
arsenic (As) and iron (Fe).
A drill program was completed in 2021 consisting of 35
underground diamond drill holes totaling 9,800 metres. The global
database contains 47,000 underground and surface drill hole
assays.
The mineral resources have been estimated using Ordinary Kriging
with assay data collected from diamond drilling, channel sampling,
and long-hole production sampling. Samples have been selected and
the block model has been defined by 35 mineral zone solids
constructed via implicit modelling using a mineral domain spatial
cut-off of US$20/t as a general
guide.
La Negra Mineral Resource
Estimate3
|
|
|
Grade
|
Contained
Metal
|
Classification
|
Tonnes
(m)
|
Ag (g/t)
|
Zn
(%)
|
Cu (%)
|
Pb (%)
|
Ag (m
oz)
|
Zn (m
lbs)
|
Cu (m
lbs)
|
Pb (m
lbs)
|
Indicated
|
2.46
|
64.0
|
1.95 %
|
0.50 %
|
0.27 %
|
5.1
|
105.8
|
27.1
|
14.6
|
Inferred
|
6.42
|
80.0
|
1.80 %
|
0.40 %
|
0.65 %
|
16.5
|
254.8
|
56.6
|
92.0
|
See Cautionary
Statements on "Mineral Resources" at the end of this news release.
Mineral Resources are stated as undiluted. Quantity and grades are
estimates and are rounded to reflect the fact that the resource
estimate is an approximation. NSR includes the following price
assumptions: Ag US$20.0/oz, Pb US$0.90/lb, Zn US$1.10/lb and Cu
US$3.30/lb based on the Q3 2021 Q3 long-term forecasts provided by
Duff & Phelps (D&P). NSR includes varying recovery with the
averages of 80% Ag, 68% Pb, 80% Zn, and 66% Cu
|
|
Detailed Terms of the
Acquisition
Excellon has agreed to acquire all of the issued and outstanding
shares of Minera La Negra, S.A de
C.V. ("MLN"), the Mexican company that holds title to La
Negra. Excellon has agreed to pay an aggregate of up to
US$50,000,000 in connection with the
purchase of MLN. Upon closing of the Acquisition, Excellon
will issue the Seller and M Grupo an aggregate of 56,191,666 common
shares of Excellon ("Excellon Shares") at a price of
C$0.48 per Excellon Share (33,715,000
Excellon Shares to be issued to the Seller and 22,476,666 to be
issued to a subsidiary of M Grupo), for a deemed value of
US$20,000,000 upon closing of the
Acquisition (the "Closing Date Consideration Shares").
In addition, Excellon has agreed that it will pay aggregate
deferred, consideration of US$30,000,000 through two payments (the
"Deferred Consideration Payments") to the Seller and M
Grupo:
|
(a)
|
within three days after
the declaration of commercial production at the La Negra Mine,
Excellon will pay an aggregate of US$15,000,000 to the Seller and M
Grupo; and
|
|
|
|
|
(b)
|
twelve months after the
declaration of commercial production at the La Negra Mine, Excellon
will make a further aggregate payment of US$15,000,000 to the
Seller and M Grupo.
|
|
|
|
With respect to the Deferred Consideration Payments, 60% of such
payments will be made to the Seller and 40% will be made to M
Grupo. The Agreement provides that commercial production at the La
Negra Mine will be achieved upon the restart of the La Negra mine
and the associated plant and the production of saleable concentrate
for three consecutive months at 75% of the nameplate capacity of
the plant.
Excellon may, at its sole election, satisfy either or both
Deferred Consideration Payments by issuing Excellon Shares at a
price equal to the 20-day volume-weighted average trading price for
the Excellon Shares on the Toronto Stock Exchange (the
"TSX") ending on the day prior to the issuance of such
Excellon Shares, or in cash.
In connection with the Acquisition, Excellon, the Seller and M
Grupo have agreed to terminate the Joint Venture Agreement between
the Seller and M Grupo (the "La Negra JV Termination") upon
M Grupo's (or a subsidiary thereof) receipt of 40% of the Closing
Date Consideration Shares and as mentioned above, M Grupo will
thereafter be entitled to similarly receive 40% of
the Deferred Consideration Payments. As a result of the
Acquisiton, it is expected that Orion and M Grupo will become
significant shareholders of Excellon. Upon completion of the
issuance of the Closing Date Consideration Shares, it is expected
that the Seller and M Grupo will hold approximately 26% and 17%,
respectively, of Excellon's then issued and outstanding common
shares, depending on the aggregate number of Excellon Shares issued
pursuant to the Company's anticipated Closing Private
Placement.
In recognition of their significant anticipated holdings, the
Company has agreed to enter into an investor rights agreement with
Orion and M Grupo upon closing of the Acquisition. The
investor rights agreement will, among other things, provide each of
Orion and M Grupo with the right to nominate one qualifying
individual to the Board of Directors of the Company. The Company
currently anticipates that Victor
Flores, a nominee of Orion, and Pablo Reynoso, a nominee of M Grupo, will be
proposed for addition to the Board of Directors of the Company at
the special meeting of shareholders of Excellon to be called in
connection with the Acquisition (as further discussed below).
In addition, each of Orion and M Grupo will be provided with
customary registration rights, participation
rights and the right to participate in a technical
committee regarding La Negra. The investor rights agreement will
require that Orion and M Grupo vote in accordance with management
proposals to Excellon shareholders that are approved by the
Company's independent directors, other than in respect of matters
requiring supermajority approval, for a period of 18 months
following closing of the Acquisition.
The Excellon Shares issuable to Orion and M Grupo will also be
subject to contractual restrictions on transfer pursuant to the
investor rights agreement. The Closing Date Consideration Shares
will be subject to the following restrictions on resale: (i) 25%
will be restricted for a period of twelve months from closing of
the Acquisition, (ii) an additional 25% will be restricted for a
period of fifteen months from closing of the Acquisition, and (iii)
50% will be restricted for a period of eighteen months from closing
of the Acquisition. Concurrent with the execution of the Agreement,
the La Negra JV Termination will be completed.
Completion of the Acquisition is subject to approval of the TSX.
As the Excellon Shares to be issued in connection with the
Acquisition will exceed 25% of the issued and outstanding Excellon
Shares and as the Acquisition will result in Orion holding
sufficient shares to materially affect control of Excellon (within
the meaning of applicable requirements of the TSX), approval by at
least 50.1% of Excellon shareholders is required under the TSX
listing rules. Excellon expects to convene a special meeting of
Excellon shareholders to consider and approve the issuance of
Excellon Shares in connection with the Acquisition and related
matters by April 15, 2023. Completion
of the Acquisition is expected to occur on or before April 30, 2023. Additional information regarding
the Acquisition will be provided in the Company's management
information circular in connection with the special meeting.
The Agreement and the transactions contemplated therein are
subject to customary conditions for transactions of similar size
including receipt of Excellon shareholder approval, conditional
listing approval of the TSX, as well as the La Negra JV
Termination, completion of the Debenture restructuring, and
delisting of Excellon Shares from the NYSE American and
deregistration with the U.S. Securities and Exchange
Commission which the Company has concurrently
announced by separate news release.
The Board of Directors of Excellon has considered and
unanimously approved the entering into the Agreement and the
completion of the transactions contemplated by the Agreement.
Cormark Securities Inc. has provided an independent fairness
opinion to the Board of Directors of Excellon stating that, as of
the date of such opinion, and based upon and subject to the
assumptions, limitations and qualifications stated in such opinion,
the consideration to be paid under the Acquisition is fair, from a
financial point of view, to Excellon.
Debenture Restructuring
The Company has entered into a binding term sheet with holders
representing approximately 66 2/3% of the aggregate principal
amount of the Debentures outstanding, to restructure the Debentures
based on the following key terms:
- Conversion of C$4.5 million (25%)
of the aggregate principal amount of the Debentures upon closing of
the Acquisition at a price of C$0.48
per Excellon Share
- Extension of the maturity date from July
30, 2023 to April 30,
2027
- Reprice the conversion price of the remaining principal to
C$0.535 per share
- Interest rate of 6.5% (payable semi-annual in cash to maturity)
or 10.0% payable in Excellon Shares, at the Company's election
- Option to call the Debentures at the Company's election after
12 months if the trading price of the Excellon Shares is above
C$1.50 for at least 20 consecutive
trading days
- Option for the Debentureholders to put the Debentures to the
Company for repayment in cash, on or after December 31, 2025
- Issuance to current Debentureholders of 6.7 million warrants to
purchase Excellon Shares, exercisable at C$0.85 per share within 48 months
In consideration for the Debenture amendments, Debentureholders
will also receive one special warrant per Debenture. The special
warrants will, for a period of 60 months, entitle the holders to
22.5% (in the aggregate) of the issued and outstanding common
shares of the Excellon subsidiary holding the Company's Silver City
project, which will be deemed to be automatically exercised for no
additional consideration, with no further action required by the
holder upon a spin-out of such project by public offering or other
prescribed disposition or dissolution of such subsidiary or the
project. Consent of the holders of the special warrants will be
required prior to any sale, transfer or other disposition of the
company holding the Silver City project or any sale, transfer or
other disposition of all or substantially all of its property or
assets.
Completion of the Debenture restructuring is subject to approval
of the TSX and approval of at least 66 2/3% of holders of the
aggregate principal amount of Debentures outstanding, which is
expected to be obtained based on such percentage having signed the
binding term sheet.
Planned Financing
Prior to closing of the Acquisition, Excellon intends to
complete the Closing Private Placement for gross proceeds of
at least US$10 million. The Closing
Private Placement is expected to be an offering of subscription
receipts, with proceeds being placed into escrow pending closing of
the Acquisition. Proceeds from the Closing Private Placement would
be expected to be released from the subscription receipt escrow
upon closing of the Acquisition. Proceeds of the financing will be
used to fund development activities for the planned restart of
mining operations at La Negra and for general corporate purposes.
Further details regarding the financing will be announced in due
course once final terms have been determined.
Summary of the PEA for La
Negra2
The PEA was completed by an independent consultant with an
effective date of March 31, 2022 and
prepared in accordance with NI 43-101.
La Negra Location and Background:
The La Negra Mine is located in the State of Querétaro, in
Central Mexico. La Negra was first
developed by Industrias Peñoles S.A. de C.V. in the 1960s and
achieved commercial production in 1971. Mining and processing at La
Negra proceeded to operate almost continuously since then as other
deposits have been discovered and developed.
The mine was closed in March 2020
due to the COVID-19 shutdown. During this period of
care-and-maintenance, a new labour contract was negotiated with the
union and went into effect in April
2021, a 15-year extension to the land-use agreement was
signed in July 2021 and a 9,800 metre
drill program was completed that formed the basis of an updated
Mineral Resource Estimate.
La Negra has all the permits required to restart operations as
contemplated by the PEA. An amendment is required to the
environmental impact statement in order to support filtered
tailings deposition at the primary tailings storage facility. It is
expected the amendment will be completed prior to the restart of
the mine.
Geology and Mineralization:
The La Negra property is located in the Sierra Gorda range,
belonging to the Sierra Madre Occidental physiographic
province. The main sedimentary host rocks consist of late
Jurassic - Cretaceous carbonates which were intruded by Eocene
granodiorites along favourable structural corridors leading to the
formation of skarn bodies.
The principal minerals at La Negra consist of sphalerite
(marmatite), galena, and chalcopyrite, with silver present in
association with galena and as argentite and pyrargyrite.
Conceptual Mine Plan:
Mining is expected to be completed by way of long-hole open
stoping, using a top-down approach. Mineralized zones will be mined
using existing mine infrastructure, supplemented by new drift and
ramp development, water handling and ventilation, as needed. Mine
production is based on 2,500 tonnes per operating day, or 842,500
tonnes per annum. All phases of mining, with the exception of
haulage to surface, will be carried out by experienced La Negra
personnel, with haulage to the surface portal anticipated to be
managed by a local contractor.
Recommended stope geometry is 20 metres long by 20 metres high
and 6 metres wide.
The mineral resource model3 was adjusted to account
for expected mining dilution as historically achieved.
Process Plant:
The existing process facility at La Negra consists of standard
crushing, grinding, flotation and filtration circuits producing a
lead-silver, copper-silver and zinc concentrates. The
concentrator has a designed (or nameplate) capacity of 3,000 tonnes
per day.
Set out below is a summary of the life of mine ("LOM")
production schedule based on the PEA2.
The process plant is currently not operational and capital for
refurbishment is required to ensure a successful restart.
Capital Cost:
Estimated restart capital based on the PEA is US$20.9 million. The cost estimate includes
refurbishing the process plant, upgrading the existing mining
fleet, mine development, purchasing additional equipment and
constructing a new tailings facility to support filtered tailings
deposition.
Of the restart capital, approximately US$13.5 million was estimated for construction of
the tailings filter, tailings conveyor, and engineering of the
tailings storage facility.
Operating Cost:
LOM operating cost estimates for La Negra average approximately
US$28.00/tonne and include mining,
processing, tailings, geotechnical services and G&A. The
cost per tonne milled is based on an annual processing rate of
842,500 tonnes (2,500 tonnes per day).
The LOM operating cost excludes offsite costs such as treatment
charges, refining charges, other concentrate penalties/losses and
concentrate transportation.
The all-in sustaining cost ("AISC") is estimated to
average US$12.95 per ounce AgEq,
based on commodity price assumptions as summarized below in the
Economic Analysis section.7
Economic Analysis2:
The following table outlines metals prices and foreign exchange
assumptions used in the economic analysis.
The PEA returned an after-tax NPV5% of US$132.4 million at base case commodity price and
FX assumptions. The NPV was sensitized to metals prices of
-20%, -10%, +10% and +20% relative to the base case, as summarized
in the following table.
The NSR contribution is primarily silver, zinc, copper and
lead. The distribution by metal is provided in the following
table:
Advisors
Osler, Hoskin & Harcourt
LLP is acting as legal counsel to Excellon on the Acquisition.
Bennett Jones LLP is acting as legal counsel on the Debenture
restructuring. Canaccord Genuity is acting as financial
advisor to Excellon. Cormark provided an independent fairness
opinion to the Excellon Board of Directors.
None of the securities to be issued pursuant to the Acquisition
have been or will be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities
Act"), or any state securities laws, and any securities
issuable in the Acquisition are anticipated to be issued in
reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. news
press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities.
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 operational
management team for the benefit of our employees, communities and
shareholders. The Company is advancing a portfolio of silver, base
metals and precious 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. As discussed above, 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
Mexico.
Additional details on Excellon's properties are available at
www.excellonresources.com.
About Orion
Orion Mine Finance Group is one of the world's leading
mining-focused private equity businesses. In addition, the Orion
team has experience in the physical metals markets, such as
facilitating the purchase, metal financing, transporting,
processing and selling of a mine's output to end customers.
About M Grupo
Grupo Desarrollador Migo, S.A.P.I. de C.V. ("M Grupo") is
a Querétaro-based infrastructure company. M Grupo has business
interests in real estate, infrastructure construction and in
mining, through La Negra. M Grupo's focus is labour relations,
community support and social responsibility.
Technical Information
Mr. Paul Keller, P. Eng.,
Chief Operating Officer of the Company and a Qualified Person as
defined in NI 43–101 (a "QP"), reviewed, verified and
approved the scientific and technical information in this news
release relating to operations and production. Mr. Jorge Ortega, M.Sc., P.Geo., Vice President
Exploration of the Company and a QP, reviewed, verified and
approved any scientific and technical information relating to
geological interpretation and results contained in this news
release.
CAUTIONARY STATEMENTS ON
FORWARD-LOOKING STATEMENTS AND OTHER MATTERS
Forward-Looking Statements
All statements,
other than statements of historical fact, contained, referenced or
incorporated by reference in 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: "accelerate", "advance",
"anticipated", "assessment", "believe", "budgeted", "capable",
"conceptual", "consider", "contemplate", "contingencies",
"contingent", "continuing", "convert", "could", "create",
"deferred", "derisking", "development", "discovery", "estimate",
"expectes", "exploration", "exposure", "flexibility", "following",
"further", "future", "growth", "initial", "innovation", "life of
mine" or "LOM", "long-term", "may", "model", "near-term", "need",
"new", "ongoing", "opportunities", "optimize", "option", "outlook",
"PEA", "pipeline", "plans", "position", "potential", "preliminary",
"program", "project", "provides", "restart", "restructure", "risk",
"schedule", "seeking", "strategy", "studies", "subject to",
"target", "test", "timeline", "transformational", "transition",
"trend", "uncertainties", "untested", "upside", "viability",
"vision", "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, 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 the Acquisition and the details and
merits thereof (including the exploration potential and the
independent fairness opinion), the La Negra Technical Report
(including timing of its filing) and completion of the Acquisition
(including TSX and shareholder approval and timing); the restart of
mining operations at La Negra (including strategy, plans, critical
work streams, development activities and resulting further
analysis, timing, capital requirements, permitting, achieving
commercial production, LOM production, life of mine or LOM, and
tailings management); exploration potential at La Negra (including
infill drilling plans and necessary capital therefor, and openness
of the currently defined La Negra deposit along strike and at
depth); the restructuring of the Debentures (including terms,
implications and required approvals thereof, and any spin out of
Silver City under the special warrants or otherwise); the Closing
Private Placement (including timing thereof, the closing and use of
proceeds thereof); the PEA including the results thereof (including
restart recommendation, NPV, AISC, capital requirements); mineral
resource estimates (including tonnes, grade, and expansion and
conversion of such estimates; see also below in these Cautionary
Statements under "Mineral Resources"), and the benefits of any of
the foregoing to Excellon shareholders and investors. 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 "Risk Factors" in the Company's annual information form
dated March 31, 2022 ("2022
AIF"), and the risks, uncertainties, contingencies and other
factors identified in this news release, the Management's
Discussion & Analysis of Financial Results for the three and
nine months ended September 30, 2022
(together with the accompanying financial statements for the same
period, the "Q3 2022 Financial Disclosure"), the Company's
Management's Discussion and Analysis, and accompanying financial
statements, for the year ended December 31,
2021 and prior quarters ended in 2022 (collectively, the
"FYE 2021 and Prior 2022 Financial Disclosure"), and the
Company's other applicable public disclosure (including the La
Negra Technical Report). 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 2022 AIF and the other aforementioned documents.
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 Q3 2022 Financial
Disclosure, the FYE 2021 and Prior 2022 Financial Disclosure, the
2022 AIF, the La Negra Technical Report and the Company's other
applicable public 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 deposits 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. The quantity and grade of reported
"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. 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. Mineral 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 "measured" mineral
resource estimate will ever be upgraded to a higher category
including a mineral reserve.
The mineral resource estimates referenced in this news
release were estimated, categorized and reported using standards
and definitions using Canadian Institute of Mining, Metallurgy and
Petroleum Definition Standards for Mineral Resources and Mineral
Reserves (the "CIM Standards") in accordance with NI 43-101
of the CSA, which governs the public disclosure of scientific and
technical information concerning mineral projects.
Preliminary Economic
Assessments
The PEA summarized in this news release is only a conceptual
study of the potential viability of La Negra's mineral resource
estimates, and the economic and technical viability of La Negra and
its estimated mineral resources has not been demonstrated. The PEA
is preliminary in nature and provides only an initial, high-level
review of La Negra's potential and design options; there is no
certainty that the PEA will be realized. The PEA conceptual LOM
plan and economic model 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 (or
PEA) 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
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 La Negra economics
described herein 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
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 for 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 United States
Securities and Exchange Commission (the "SEC") applicable to
United States domestic and certain
foreign reporting companies under Subpart 1300 of Regulation S-K
("S-K 1300"). Accordingly, information describing mineral
resource estimates for 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 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 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.
www.excellonresources.com
SOURCE Excellon Resources Inc.