Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) shares moved higher as silver prices hit a 13-year high and as Red Cloud Securities initiated coverage on the silver miner with a ‘Buy (speculative)’ and a C$0.52 price target.
Shares of Excellon added 15.4% at C$0.38 in the early afternoon on Friday.
Red Cloud sees the company’s acquisition of the fully permitted Mallay silver-lead-zinc mine and the Tres Cerros gold-silver exploration target as a high-upside opportunity.
“Excellon appears to have captured lightning in a bottle,” the analysts wrote.
“Since announcing the deal to acquire the Mallay silver-lead-zinc mine and Tres Cerros exploration target in Peru in late 2024, the share price has tripled.”
Other developments have positioned Excellon to restart production and begin exploration in the near term, Red Cloud believes.
These include a C$8 million equity raise in May, upsized due to strong demand, and a C$10 million loan facility and concentrate off-take agreement with Glencore, providing the capital needed to move forward.
“Excellon finds itself cashed up with the capital required to restart the mine and initiate exploration to expand the resource base,” the analysts noted.
The Mallay mine, previously in production, is expected to resume operations in early 2026. The analysts model a seven-year mine life producing 6.9 million ounces of silver and 69,000 tonnes of base metals at an all-in sustaining cost (AISC) of $20.81 per ounce of silver equivalent (AgEq).
Exploration upside is a major component of the valuation, according to Red Cloud. The company believes it can more than triple the historic resource at Mallay through drilling high-grade ore shoots and exploring nearby vein systems.
Meanwhile, Tres Cerros, located less than 6 kilometers away, offers additional scale. Sampling at the gold-silver prospect returned average grades of 1.6 grams per ton (g/t) gold, 196 g/t silver, and 3.4 g/t gold equivalent (AuEq) across 113 samples, with 86% of those returning over 1 g/t AuEq.
The analyst’s net asset value (NAV) model attributes roughly 80% of its valuation to the Mallay and Tres Cerros projects.
Key upcoming milestones include an updated resource estimate in Mallay and initial drilling at the project to expand resources in Q3 and early exploration results from Tres Cerros in Q4. In 2026, the analysts noted ore production, expected in Q1 to Q2, and first drill results from Tres Cerros, set for Q3 to Q4.
“In our opinion, the potential upside provided by the [Mallay] mine combined with the discovery potential at Tres Cerros outweighs the execution and exploration risks associated with both Mallay and Tres Cerros,” the analysts concluded.