Excellon Resources’ shares drop after failed bid to acquire La Negra silver mine

Excellon Resources’ (TSX: EXN; NYSE: EXN) shares plummeted following the news that its $50-million planned acquisition of the past-producing La Negra silver mine in Mexico, announced in January, has fallen through.

In a Thursday release, Excellon said the seller, Dalu, an entity owned by an investment fund managed by Orion Resource Partners, had unexpectedly sent it a notice this week to terminate the transaction.

“Prior to the receipt of the termination notice, the company had been in discussions with Orion regarding options to advance the acquisition of La Negra to closing, including securing necessary financing,” the precious metals miner said in a statement.

The company also said it was in discussions with holders of more than two-thirds of the principal of its outstanding convertible debentures in the amount of $17.9 million. 

Excellon warned last month it was struggling to source financing associated with the purchase due to challenging market conditions. 

The botched deal seems to have triggered the resignation of two members of the board, Jeff Swinoga and Zoya Shashkova, effective from July 23.

The Toronto-based miner noted it had reconstituted the board’s audit committee with immediate effect. Laurie Curtis, independent chair of the board, will remain a member of the audit committee and Craig Lindsay and Brendan Cahill were appointed to fill the vacancies, Excellon said.

The La Negra silver-zinc-copper-lead mine, in Mexico’s Querétaro state, historically produced an average of 3 million silver-equivalent oz. a year. The brownfield site is permitted to restart production and has existing infrastructure, including a 3,000 tonne-per-day mill, camp facilities, all-season highway access and existing workforce.

Excellon had expected to restart La Negra within 12 to 18 months of the acquisition close, positioning the company for operational readiness by early 2024.

La Negra was supposed to offset a production drop caused by the closure of the company’s La Platosa, one of Mexico’s highest grade silver mines.

Excellon shares were down more than 37% to 13¢ apiece on Friday morning in Toronto, valuing the company at $5.2 million. The drop saw its shares hit a new low after the previous 52-week range of 19¢ and 29¢.