TORONTO, Aug. 10, 2021 /CNW/ - Excellon Resources
Inc. (TSX: EXN) (TSX: EXN.WT) (NYSE: EXN) (FRA: E4X2)
("Excellon" or the "Company") is providing a further
update on litigation involving the Company's subsidiary, San Pedro
Resources SA de CV ("San Pedro") disclosed on December 5, 2019 in respect of the La Antigua
mineral concession ("La Antigua"), which is part of the Evolución
Property in Zacatecas.
Further to the Company's press release of July 2, 2021, Excellon received an initial
electronic notice on July 1, 2021
that San Pedro's appeal to the
federal courts of Mexico in
respect of the litigation was dismissed, despite the lack of
evidence, facts or law to support this outcome. The Company has now
received the formal written decision on the appeal which, based on
initial legal review, appears to uphold the judgment granting the
plaintiff (the "Plaintiff") an award of approximately
US$23 million (the "Judgment") and is not subject to further
legal appeal in Mexico.
"These court decisions are the product of rank corruption and
are a black mark on the judicial system of Mexico," stated Brendan Cahill, President and CEO. "The value
ascribed in the judgment is impossible based on evidence, facts or
law. Simply put, the maximum value realizable by the plaintiff from
the agreement on La Antigua was US$500,000 in the best-case scenario, yet the
Miguel Auza Mine was shut down in 2008 almost immediately after
operations commenced."
"We continue to pursue avenues through our labour, community and
government relationships and are investigating remedies under
international law. In the interim, San
Pedro continues to operate in the ordinary course. We do not
expect this decision to impact any of our other assets, including
Platosa, Kilgore, Oakley and Silver City. Additionally, to
realize on the judgment, the plaintiff will need to contend with
the interests of the 90 people San
Pedro employs in the town of Miguel Auza and the economy of northern
Zacatecas."
La Antigua was included in
Excellon's acquisition of Silver Eagle Mines Inc. ("Silver Eagle")
in 2009 and includes a portion of the Evolución mineral resource at
Miguel Auza. The concession is
subject to an exploration and exploitation agreement with purchase
option (the "Agreement") between San
Pedro (now a subsidiary of Excellon) and the Plaintiff that
provided, among other things, for a minimum payment of US$2,500 plus value added tax per month (the
"Advance Royalty") and the payment of a 3% net smelter return
("NSR") royalty. Pursuant to the Agreement, San Pedro had the right to purchase absolute
title to La Antigua including the NSR royalty upon payment of
US$500,000, a right that was never
exercised as there was no economic sense in doing so. San Pedro has accrued the Advance Royalty on
an ongoing basis.
Though the Miguel Auza Mine never reached commercial production
and was put on care-and-maintenance in December 2008 prior to Excellon's acquisition of
Silver Eagle, the Plaintiff sued San
Pedro for non-compliance with the Agreement and specifically
for not operating the Miguel Auza Mine. The Plaintiff was awarded
damages of approximately US$700,000
in the court of first instance in Torreón, Coahuila. Both San
Pedro and the Plaintiff appealed the decision to the Second
District State Court in the Judicial District of Torreón. In
December 2019, the Court confirmed
the initial decision but, subsequently, pursuant to an order
obtained by the Plaintiff, made the Judgment, predominantly in
damages for the Miguel Auza Mine not being in operation. The book
value of San Pedro's fixed assets
is US$4.8 million.
As previously described, the Judgment is solely against
San Pedro and the Company believes
that the Plaintiff has no recourse against Excellon's other assets
in Mexico (including Platosa),
Idaho, Saxony or Canada. San
Pedro is a wholly-owned, indirect subsidiary of the Company
that holds the Miguel Auza
processing facility and the original Miguel Auza mineral concessions, including the
Evolución mineral resource disclosed in September 2020. San
Pedro generates minimal cash flows from milling fees charged
to the Platosa Mine for ore processing and holds minimal working
capital. The Platosa Mine is owned and operated by an entirely
separate subsidiary.
Additional updates will be provided as necessary in due
course.
About Excellon
Excellon's vision is to create wealth by realizing strategic
opportunities through discipline and innovation for the benefit of
our employees, communities and shareholders. The Company is
advancing a precious metals growth pipeline that includes: Platosa,
Mexico's highest-grade silver mine
since production commenced in 2005; Kilgore, a high quality advanced exploration
gold project in Idaho with strong
economics and significant growth and discovery potential; and an
option on Silver City, a high-grade epithermal silver district in
Saxony, Germany with 750 years of
mining history and no modern exploration. The Company also aims to
continue capitalizing on current market conditions by acquiring
undervalued projects.
Additional details on Excellon's properties are available at
www.excellonresources.com.
Forward-Looking Statements
The Toronto Stock Exchange has not reviewed and does not
accept responsibility for the adequacy or accuracy of the content
of this Press Release, which has been prepared by management. This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 27E of the
Exchange Act. Such statements include, without limitation,
statements regarding the outcome and impact of the legal action in
Mexico in respect of the La
Antigua mineral concession that is part of the Evolución Property
in Zacatecas (including the
dismissal of the appeal by the federal courts of Mexico on July 1,
2021), mineral resources estimates, the future results of
operations, performance and achievements of the Company, including
potential property acquisitions, the timing, content, cost and
results of proposed work programs, the discovery and delineation of
mineral deposits/resources/reserves, geological interpretations,
proposed production rates, potential mineral recovery processes and
rates, business and financing plans, business trends and future
operating revenues. Although the Company believes that such
statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Forward-looking statements
are typically identified by words such as: believe, expect,
anticipate, intend, estimate, postulate and similar expressions, or
are those, which, by their nature, refer to future events. The
Company cautions investors that any forward-looking statements by
the Company are not guarantees of future results or performance,
and that actual results may differ materially from those in forward
looking statements as a result of various factors, including, but
not limited to, variations in the nature, quality and quantity of
any mineral deposits that may be located, significant downward
variations in the market price of any minerals produced, the
Company's inability to obtain any necessary permits, consents or
authorizations required for its activities, to produce minerals
from its properties successfully or profitably, to continue its
projected growth, to raise the necessary capital or to be fully
able to implement its business strategies. All of the Company's
public disclosure filings may be accessed via www.sedar.com and
readers are urged to review these materials. This press release is
not, and is not to be construed in any way as, an offer to buy or
sell securities in the United States.
SOURCE Excellon Resources Inc.