Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) said it continues to pursue its proposed acquisition of the past-producing La Negra silver-zinc-copper-lead mine in Mexico as challenging market conditions have caused the company to struggle to source financing associated with the purchase.
In January, the company announced that it had entered into a definitive agreement to acquire the mine for aggregate consideration of US$50 million, including US$20 million upfront in shares of the company and a further US$30 million payable in shares or cash following the restart of commercial production at the mine.
Excellon in April launched an up to C$10 million non-brokered private placement, which it said would provide the funds necessary to advance initial development activities for the planned restart of mining operations at La Negra, exploration, and general working capital purposes.
It continues to engage with potential investors on the C$10 million financing but is also reviewing potential scenarios that would allow the company to close the financing at a lower amount while supporting initial advancement at La Negra and adequately capitalizing its broader business, Excellon said on Monday.
“We continue to advance our proposed acquisition of La Negra, though recent market conditions have made the associated previously announced subscription receipts financing challenging,” said Excellon CEO Shawn Howarth in a statement.
“Key stakeholders in this transaction, including Orion and Excellon's debenture holders, remain engaged. We will provide further updates to the market in due course, as further details become available.”
Excellon shares have lost almost 50% of their value in the year to date, currently trading at about C$0.25.
Contact the author at emily.jarvie@proactiveinvestors.com
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