Excellon closes offtake, financing deal with Glencore

[Redator]

Shares of Excellon Resources (TSXV: EXN) rose on Wednesday after closing an offtake and financing agreement with Glencore to support the restart of its Mallay silver mine in Peru.

The parties first entered into the agreement in late May, under which Glencore would provide up to $7.5 million in pre-export loan secured by concentrate production from the Mallay mine. The loan comprises an initial drawdown of up to $5 million, followed by a six-month grace period, and an optional second amount of $2.5 million available until March 2026.

The Anglo-Swiss trading giant also committed to buy all of the mine’s zinc-lead production until 2028-2029.

Shares of Excellon traded 5.5% higher at C$0.24 apiece on the announcement. This gives the Toronto-based silver miner a market capitalization of C$59.2 million.

“The closing of our agreement with Glencore marks a major milestone in our journey to return Excellon to silver production,” stated Shawn Howarth, Excellon’s CEO. “With additional and flexible funding now secured, we continue to execute on our restart plan at Mallay — a project with exceptional infrastructure and near-term cash flow potential.”

Past producer

Mallay is the site of a former mine that was operated by Compañía de Minas Buenaventura between 2012 and 2018. During that period, it produced 6 million oz. silver, 45 million lb. zinc and 35 million lb. lead.

The site, about 220 km north of the capital Lima, includes a 600-tonnes-per-day flotation plant, underground development, tailings facilities and grid power access. Excellon, which acquired the project in June, has sights on restarting the operation through rehabilitating the underground workings, conducting technical studies and completing near-mine drilling.

Analysts at Red Cloud Securities have modeled a seven-year life for Mallay, producing 6.9 million silver oz. and 69,000 tonnes of base metals at an average all-in sustaining cost of $20.81 per oz. silver-equivalent. This is based on a JORC-compliant reserve estimate of 133 million tonnes grading 203 grams silver per tonne, 3.68% lead and 6.75% zinc.

The company plans to release an NI 43-101-compliant resource update for Mallay some time this year.