Canadian firm Excellon Resources has agreed to acquire the La Negra mine in Mexico from an entity owned by investment fund manager Orion Resources, for a total consideration of $50m.

The permitted, past-producing La Negra silver mine, which is located in Querétaro, Mexico, will be acquired from Dalu S. à r.l.

As part of the deal, Excellon will make total upfront payments of $20m in shares and a $30m deferred payment in shares or cash, following the restart of the mine’s commercial operations.

Approximately 60% of the aggregate consideration will be paid to Dalu S. à r.l for the acquisition of all of the outstanding shares of the holding company of the La Negra mine.

The remaining 40% will be paid to local partner Grupo Desarrollador Migo, S.A.P.I. de C.V. (M Grupo). The payment is related to the termination of the existing joint venture (JV) arrangements regarding the La Negra mine.

Orion earlier signed an agreement with its local joint venture partner and construction company, M Grupo, whereby the latter would receive 40% of the proceeds from a sale of the La Negra mine.

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By GlobalData

Excellon Resources president and CEO Shawn Howarth said: “The acquisition of La Negra will be transformational for Excellon, with the goal of returning the company to producer status on an accelerated timeline.”

The Canadian firm is planning to undertake a 12-18 month de-risking process for the mine with an aim to enter operational readiness by early 2024.

Howarth added: “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 programme has been budgeted for and is considered to be a critical component of longer-term success.”

The mine is estimated to have indicated mineral resources of about 15.1 million ounces (Moz) AgEq and inferred mineral resources of approximately 41.8Moz AgEq3.

The La Negra mine historically produced three-million silver-equivalent ounces on average annually. The brownfield site comprises existing infrastructure, including a 3,000tpd mill.