Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) announced it has entered into an agreement to acquire all shares of Minera CRC S.A.C., the owner of the Mallay Silver Mine and Tres Cerros Exploration Property in Peru for $2.5 million.
The Mallay property includes the Mallay Mine, a former Buenaventura project producing silver, zinc, and lead until 2018.
The Tres Cerros property offers bulk tonnage potential with a gold-silver mineralized corridor, several drill targets, easy truck access, and a large exploration area in a region with a strong mining history.
The acquisition is contingent upon certain conditions being met, including Minera CRC’s shares being acquired by Adar Mining through a bankruptcy proceeding, according to a statement.
The acquisition deal sees Excellon providing $1.25 million in cash and issuing shares equal to 12.9% of its common stock. The transaction includes deferred payments, consisting of a 1% net smelter returns royalty and a metal stream arrangement for zinc and lead once the mine resumes operations.
Excellon, which is targeting a mid-2025 restart for the Mallay Mine, aims to leverage the site's existing infrastructure—estimated at $115 million in historical investment by previous owner Buenaventura. The mine is permitted for immediate production and includes a processing mill and underground development, which Excellon will utilize to support an initial three-year mine plan.
“This highly accretive transaction benefits Excellon shareholders, as the agreement with Adar resolves the existing debt burden on the asset, paving a clear path for value creation,” said Excellon CEO Shawn Howarth.
Laurie Curtis, Excellon’s chair, told investors that the company “worked hard to reach a comprehensive agreement” to refresh the Mallay Mine after a long period of downtime. “With strong momentum in the metals market, we are confident this project is positioned for substantial success and renewed operational strength."
Excellon plans to update its resource estimates and conduct further exploration to expand mineralized zones.
Excellon will act as operator of Tres Cerros and plans a $7.5 million investment in exploration, with back-in options available to Adar and a third party after a preliminary economic assessment.
The company has arranged approximately $3.8 million in funding to cover initial acquisition costs and working capital during the realization proceedings.