Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) has closed an initial financing of approximately C$3.79 million to support its proposed acquisition of the Mallay silver mine and Tres Cerros gold-silver project in Peru.
The Mallay Silver Mine, previously operated by Buenaventura from 2012 to 2018, received $115 million in historical investment and produced over 18 million silver-equivalent ounces before being placed on care and maintenance due to low silver prices.
Excellon CEO Shawn Howarth said the acquisition positions the company for a potential return to silver production by mid-2025. The mine is fully permitted to restart operations.
"The Mallay acquisition is expected to be accretive for Excellon shareholders," Howarth added, noting the mine's advanced infrastructure and the exploration potential at Tres Cerros.
Excellon has agreed to acquire all outstanding shares of Minera CRC SAC, which owns the Mallay Mine and Tres Cerros Project, from Adar Mining Corp, pending completion of receivership proceedings.
The financing consists of a non-brokered private placement of 19.5 million units priced at C$0.105 each, raising C$2.05 million, and a note offering of $1.25 million in unsecured, non-convertible promissory notes.
To finalize the acquisition, Excellon has committed $6.5 million for mine rehabilitation and upgrades, a 1% net smelter returns royalty, and a base metals stream on zinc and lead production.
The Tres Cerros exploration project, located near the Mallay Mine, includes a promising 2.5-kilometer corridor of gold-silver mineralization and geophysical anomalies indicative of a high-sulfidation epithermal system.
Excellon plans to secure additional funding through strategic partnerships, offtake prepay financing, and other mechanisms to support the Mallay Mine restart.