Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) has every reason to be excited about Idaho.
Recent drilling at the Kilgore project in the state has confirmed mineralization in a previously under-drilled area, suggesting a potential extension of mineralization southwest of the known deposit.
Notable results include significant high-grade mineralization in the Aspen sediments, with intercepts of 1.37 grams per tonne of gold (g/t Au) over 81.21 meters.
These findings will contribute to a better understanding of grade contouring and inform future resource modeling and exploration efforts.
Drill-ready project
Excellon CEO Shawn Howarth sees untapped potential at Kilgore.
“Idaho is an exceptional jurisdiction for our work, boasting strong relationships with the US Forest Service and consistently ranking as a safe mining jurisdiction, despite some naysayers,” Howarth told Proactive.
“From the perspective of resource developers, the government's support and our strong relationships make it essentially a drill-ready project. We've conducted extensive work, with 90,000 meters drilled to date, revealing substantial potential beyond the existing mineralization.
“Considering the geological characteristics of epithermal systems in the region, including those on the rim of a caldera, there's considerable untapped potential waiting to be explored.”
By leveraging geological data and applying it across the property, Howarth and the Excellon team believe there's much more than just a million ounces of potential, challenging the market's perception of the project's size and level of exploration effort.
Maximizing Kilgore's value
It’s been a long road for Excellon to get to Idaho. Known in the past as a silver producer in Mexico, Excellon was on the hunt for another company-maker once production at its flagship Platosa mine started to wind down. While still an exploration-stage project, Kilgore fit the bill as a caldera-related epithermal gold deposit, boasting substantial indicated and inferred resources totaling 825,000 and 136,000 ounces of gold, respectively.
Excellon acquired Kilgore through an all-stock deal with Otis Gold in 2020 under former CEO Brendan Cahill, who now sits on the board of Excellon. Historical mine workings from the early 1900s and subsequent drilling in the 1980s highlighted the potential for mineralization beyond the current resource area, drawing parallels to Kinross Gold’s Round Mountain Mine. A preliminary economic assessment conducted in 2019 suggests the feasibility of a low capital intensity, low operating cost, open-pit, heap-leach mining operation.
CEO Howarth came on board roughly 18 months ago, resolving to intensify the firm’s focus on a renewed exploration thesis. As Vice President, Corporate Development at Harte Gold, Howarth played a key role in the development of the Sugar Zone mine, as well as overseeing the company's restructuring and eventual sale.
“Our primary focus remains on maximizing Kilgore’s value through strategic exploration and resource development,” Howarth explained. “Our drilling efforts are aimed at updating the mineral reserve estimates, paving the way for future resource expansion and a potential feasibility study.”
That plan is contingent upon securing adequate funding, Howarth acknowledged. Excellon recently completed a financing round, raising $1.3 million in total.
“Our ultimate goal is to delineate a clear path forward for Kilgore, ensuring its economic viability and sustainability in the long run,” the CEO said.
Leveraging European assets
There is another project in the mix that could offer upside for shareholders. Across the pond in Germany, Silver City is a high-grade epithermal silver project that was acquired a couple of years ago. Excellon has since drilled about 12,000 meters, and while it's still in the pre-resource stage, Howarth is excited about the project's potential.
“This is a ‘keep your ear to the ground’-type project,” he said.
“Right now, the deposit is very much overlooked. People say there's no value. We hear a lot, ‘who wants to be in Germany?’ Or concerns about mining narrow, high-grade silver veins. For us, the key is actually educating investors on the potential.”
Excellon has publicly disclosed the possibility of spinning out Silver City or implementing an RTO structure to transfer the asset to a new entity, thereby delivering value to shareholders. Options such as distributing shares as dividends could provide shareholders with ownership of Kilgore within Excellon and Silver City within a new entity in Germany.
“Given where silver has been trading, I think we're actually starting to see a lot of interest,” Howarth said. “We spent $7 million in exploration costs at Silver City alone, and we're not getting that in our $20 million market cap right now. I think there's value to get out, and it's just a matter of finding the right deal that makes sense for shareholders.”
Excellon’s focus is now on taking action to realize the development potential of its main assets. “This thing could really run,” Howarth said.
“We've got the right kind of shareholder base right now, and we have a large, supportive German shareholder base that do see a lot of value potential in (Silver City). It’s up to us to get it going and launch that vehicle. I think it’s exciting.”