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  4. Excellon to acquire La Negra Mine in Mexico

Excellon to acquire La Negra Mine in Mexico

Published by , Editorial Assistant
Global Mining Review,

Excellon Resources Inc. has announced that it has entered into a definitive acquisition agreement to acquire the permitted, past-producing La Negra Mine, located in Querétaro State, Mexico from Dalu S. à r.l. (the seller), an entity owned by an investment fund managed by Orion Resource Partners, for aggregate consideration of US$50 million paid through upfront payments totalling US$20 million, payable in common shares of the company, and a further US$30 million of deferred, contingent consideration payable in common shares of the company or in cash at the company’s option, following the restart of commercial production.

Concurrent with the execution of the agreement, Excellon has entered into a binding term sheet with holders representing approximately 66 2/3% of the principal amount of outstanding convertible debentures to convert 25% of the debentures into equity and reprice and extend maturity of remaining principal outstanding upon closing the acquisition, providing greater flexibility to the company.

La Negra Highlights:

  • La Negra, a past producing mine with historical production averaging more than 3.0 million oz/yr of silver-equivalent (AgEq).
  • Brownfields site with permits to restart production, existing infrastructure including a 3000 t per day mill, mine development, camp facilities, all-season highway access and existing workforce.
  • Completed preliminary economic assessment (PEA) with an effective date of 31 March 2022 supported by an NI 43-101 technical report.
  • Indicated mineral resources of approximately 15.1 million oz AgEq and inferred mineral resources of approximately 41.8 million oz AgEq.
  • PEA demonstrates a post-tax NPV5% of US$132.4 million.
  • Polymetallic production mix: 43% Ag, 26% Zn, 23% Cu, 7% Pb by NSR contribution.
  • Near-term restart of La Negra: 12 – 18 month development plan de-risking mine restart.
  • New labour agreement in place, local workforce and communities strongly support a restart.
  • Local partner, Grupo Desarrollador Migo, S.A.P.I. de C.V. (M Grupo) to become key shareholder in Excellon.
  • Located in Querétaro, one of the most stable states to operate in Mexico.
  • Opportunities to expand current mineral resource estimates with multiple untested near-mine exploration target areas.
  • Significant exploration potential along the regional structures controlling mineralisation and below unconstrained skarn bodies.

Shawn Howarth, President and CEO commented:

“Excellon has a long history of operational excellence in Mexico. The acquisition of La Negra will be transformational for Excellon, with the goal of returning the company to producer status on an accelerated timeline. La Negra stands out as a permitted, near-term restart opportunity capable of generating significant value. Our strategy is to restart the mine following a 12 – 18-month de-risking process that we believe will position the company for operational readiness by early 2024. We also see significant upside potential in the currently defined mineral resource estimates, which despite La Negra’s 50-year production history, remains relatively under-explored, and the system remains open along strike and at depth. An infill drill program has been budgeted for and is considered to be a critical component of longer-term success.”

Read the article online at: https://www.globalminingreview.com/mining/11012023/excellon-to-acquire-la-negra-mine-in-mexico/

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