Excellon Receives Initial Revenues from Mallay Silver Mine and Advances Pre-Commissioning

Excellon Resources Inc. (EXN) has released a pre-commissioning and operations update for its 100%-owned Mallay Silver-Lead-Zinc Mine in central Peru, alongside details on a base-metals stream restructuring and initial deep skarn exploration results. The company reported that it has collected US$4.4 million to date on initial concentrate shipments under its Glencore offtake agreement. Since restarting the mill on July 2, 2026, three pre-commissioning milling campaigns have been completed, processing 19,884 tonnes of ore and recovering 52,860 ounces of silver in concentrate.

Recovery rates during this pre-commissioning phase stand at 84% for silver, 84% for lead, and 81% for zinc. Management stated these figures align with expected recoveries for this stage of operations. The company has set a target of 600 tonnes per day rated mill capacity by mid-2027, with the ramp-up schedule to be confirmed in an updated mine plan at year-end 2026.

To support future planning, SGS has been engaged to update the February 18, 2026 NI 43-101 mineral resource estimate. This update will incorporate the calc-silicate zone and other previously unmodelled material, utilizing data from up to 27 new drill holes and new 4090-level channel sampling, with completion targeted for year-end 2026. Concurrently, SRK Consulting is updating the block model and two-year mine plan, also targeted for year-end 2026.

Operational milestones include the dewatering of the 400 Ramp, with rehabilitation work involving grouting and ground support now targeted for completion in Q1 2027. A new mining contractor has been selected, with a binding production mining contract expected in Q4 2026 and full crew mobilization scheduled for Q1 2027. Production milestones indicate that first mechanized longhole stoping at Clavo 3 is targeted for late 2026, with ramp-up into Q2 2027, while Clavo 6 is expected to enter production in Q2 2027.

Exploration efforts have begun with the DHEM deep drilling program. Hole DHEM26-001 hit skarn-altered limestone from approximately 600 m downhole, returning core lengths of 0.95 m at 0.31% Cu and 0.65 m at 0.27% Cu with anomalous Ag, Pb, and Zn. A second hole is currently at approximately 800 m, with downhole EM surveys pending.

In a significant financial restructuring, Excellon amended its Adar stream agreement on October 28, 2026. The company pre-purchased 4 million lb of lead and 4 million lb of zinc for a total consideration of US$5.675 million. This consideration consists of US$1.0 million in cash payable in two instalments over 90 days, US$4.0 million via the issuance of 24,412,274 common shares, and US$0.675 million via a waiver of the Company's own set-off rights. The implied consideration on the pre-delivered 8 million lb is approximately US$0.71/lb, which Excellon stated represents a ~46% discount to the tonnage-weighted LME average on October 28, 2026 (lead US$0.87/lb, zinc US$1.75/lb).

Remaining delivery obligations of 8 million lb of each metal commence on January 1, 2031. The commercial production covenant date has moved to December 31, 2030, and the stream buy-back option has been removed. Additionally, Adar NSR royalty agreements on Mallay and Tres Cerros have been amended, with royalty payments and an 18-month royalty buy-down window commencing on closing.

The company reported liquidity of US$5 million in cash on hand, the mobilization of the US$5 million Glencore credit facility, and expected revenues. In housekeeping matters, Excellon issued 1,400,000 shares at a deemed C$0.495 to settle a termination payment, subject to TSXV conditional approval, and awarded 452,990 DSUs to non-executive directors. The company confirmed its OTCQB listing (EXNRF) effective September 3, 2026, and DTC eligibility.

Excellon emphasized that there is no PEA, pre-feasibility, or feasibility study, and no mineral reserves have been declared. The mill restart is not based on demonstrated economic viability, processing is currently in the pre-commissioning phase, and no commercial production has been declared. Revenue figures cited are internal, unaudited, and subject to final settlement.

Excellon Resources Inc. (EXN) has produced its first concentrate and initiated initial shipments, a milestone the company pre-signaled in an August 5, 2026 release. That earlier statement indicated that payment was expected during the quarter and that approximately 12,000 tonnes had been processed to yield roughly 29,200 ounces of silver. The current figures of 19,884 tonnes processed and 52,860 ounces of silver recovered represent an incremental build on that disclosed base. Since August 5, three campaigns have processed roughly 7,900 tonnes and recovered approximately 23,700 ounces of silver.

Recovery metrics have improved modestly compared to the August data set. The recovered silver grade rose to about 3.0 oz/t in the post-August tonnes, compared to about 2.4 oz/t in the initial ~12,000 tonnes. Recoveries are now explicitly quantified at 84% for silver, 84% for lead, and 81% for zinc, whereas no comparable figure was provided in the August release.

The mill was restarted on July 2. By August 5, it had processed ~12,000 tonnes, averaging approximately 355 tonnes per day over 34 days at a controlled rate of ~400 t/d. Between August 5 and October 29, the mill processed roughly 7,900 additional tonnes across ~85 days, resulting in an average of approximately 93 tonnes per day. Campaign milling includes idle gaps, so this figure does not represent a continuous throughput test. The company’s target is 600 t/d continuous operation by mid-2027, which would require roughly a six-fold increase in average daily tonnes processed from the recent run-rate. This target requires a quantified ramp schedule, which the company has deferred to the year-end mine plan. Additionally, the recoveries achieved are below the 89% Ag, 88% Pb, and 87% Zn recoveries embedded in the February 2026 resource estimate.

Excellon collected US$4.4 million against 19,884 tonnes processed, equating to roughly US$221 per tonne. Using the February 2026 Indicated grade of 195 g/t Ag, 3.33% Pb, and 4.83% Zn, along with US$30/oz silver, US$0.87/lb lead, and US$1.75/lb zinc, and the achieved 84/84/81% recoveries, the gross metal value is roughly US$360 per tonne before treatment and refining charges. This indicates that first-campaign feed is realizing on the order of 60% of resource-grade value. The company stated that grades from surface stockpiles and narrow-vein stopes above the 4090 level are not representative of the mineralization expected to support steady-state operations. The release discloses silver ounces recovered but does not disclose cumulative lead and zinc pounds, which carry the stream obligation and account for roughly half the by-product revenue.

An annual production target of ~1.6 million oz Ag and 2–2.5 million oz AgEq is cited in the October 2026 investor presentation. At 600 t/d and 365 operating days, the February 2026 Indicated grade of 195 g/t and the 89% resource recovery yield roughly 1.2 million oz of recovered silver. Hitting ~1.6 million oz requires either a head grade materially above the current Indicated grade (~250–270 g/t) or additional tonnes. The year-end MRE update incorporating the calc-silicate zone is therefore critical to the stated production ambition.

The stream restructuring is the only new element in this release. It removes all stream-related delivery and cash obligations until January 1, 2031, and extends the commercial production covenant to December 31, 2030. The cost of this restructuring includes US$1.0 million cash within 90 days, 24,412,274 shares representing roughly 5.2% dilution on a ~466.6 million pro forma share count, US$675,000 of the Company's own set-off rights surrendered, and the permanent loss of the stream buy-back option. The implied price on those shares is about US$0.164, versus a C$0.26 close on October 28. The company frames the transaction as a 46% discount to LME spot, but the correct benchmark for extinguishing a stream delivery obligation is the stream's ongoing per-pound production payment, which is not disclosed.

Exploration results from the deep skarn include 0.95 m at 0.31% Cu and 0.65 m at 0.27% Cu. The company calls this confirmation "particularly encouraging," but these two holes of a conceptual, unmodelled, 600–800 m deep target do not add resource value.

Operational progress has been delivered versus expectations, including initial concentrate revenues and the dewatering of the 400 Ramp. However, the 400 Ramp rehabilitation, previously estimated to be approximately three months from early August 2026, is now scheduled for Q1 2027, representing a one-to-two quarter slip. Clavo 3 longhole stoping, targeted for late 2026, now has a ramp-up into Q2 2027. The 600 t/d date remains at mid-2027 but is explicitly contingent on an MRE and mine plan that do not yet exist. Cash holdings have contracted to US$5 million from US$14.8 million in May and US$10.6 million at June 30. The release confirms mechanical progress while deferring schedule-defining numbers to the year-end MRE and mine plan.

Excellon Resources Inc. (TSXV: EXN, OTCQB: EXNRF, FSE: E4X2) is a small-cap silver developer focused on its flagship Mallay Silver-Lead-Zinc Mine in central Peru. The company owns the asset 100% and describes the deposit as a past-producing, replacement-type mesothermal system. Mallay features a 600 t/d concentrator, representing US$115 million of historical investment, and was restarted on a pre-commissioning basis on July 2, 2026. Excellon is not currently a producer; it has not declared commercial production, holds no mineral reserves, and has completed no preliminary economic assessment, pre-feasibility study, or definitive feasibility study. Historical output from the mine totaled 7.7 moz Ag from 2003–2012, with production peaking at approximately 1.755 moz AgEq in 2014 at a throughput of ~500 tpd.

An independent NI 43-101 resource report dated February 18, 2026, prepared by SGS with QP Allan Armitage, defines the asset base. The Indicated category comprises 890,000 t at 195 g/t Ag, 3.33% Pb, and 4.83% Zn, containing 5.57 moz Ag, 65 Mlb Pb, and 95 Mlb Zn, equivalent to 12.01 moz AgEq. The Inferred category includes 362,000 t at 149 g/t Ag, 2.67% Pb, and 4.32% Zn, containing 1.74 moz Ag and 4.00 moz AgEq. These figures utilize a cut-off of 120 g/t AgEq based on metal prices of US$30/oz Ag, US$1.00/lb Pb, and US$1.35/lb Zn, with mining costs of US$60/t and processing costs of US$40/t. The resource represents roughly one million Indicated tonnes, supporting a short mine life unless the calc-silicate zone, the Clavo 3/Clavo 6 extensions, and deeper Isguiz material convert.

The company’s portfolio also includes the Tres Cerros project, a ~11,000 ha area contiguous to Mallay containing seven drill-ready gold-silver targets. Excellon targeted a definitive investment analysis (DIA) for year-end 2026, with maiden drilling planned for the first half of 2027. Additional assets include the Kilgore gold project in Idaho, which holds 825,000 oz Au Indicated and 136,000 oz Au Inferred, and a ~68.1% interest in Saxony Silver, which holds the Silver City project in Germany.