Excellon Resources Inc (TSX:EXN, OTCQB:EXNRF) said on Friday it has signed a non-binding agreement with subsidiaries of Glencore PLC (LSE:GLEN) to support the restart of its Mallay Silver Mine in Peru.

The agreement includes a pre-export finance loan facility and a concentrate offtake deal, which together are expected to provide the core funding for the mine’s rehabilitation and restart.

Excellon said total capital available for the project, including a recently closed equity financing, now stands at up to $18 million.

Under the terms of the deal, Glencore will provide up to US$7.5 million in funding through a secured loan facility. The debt will be repaid from future concentrate sales, which Glencore has committed to purchase under a long-term offtake agreement that runs through 2028 or 2029, depending on certain conditions.

The initial tranche of the facility includes a six-month grace period before repayments begin, giving Excellon more financial flexibility during the ramp-up phase of operations.

“Partnering with Glencore – one of the world’s foremost mining and commodity firms, with an extensive operational framework in Peru – is a transformational step for Excellon,” said Shawn Howarth, CEO of Excellon. “Glencore’s commitment is a strong vote of confidence in the quality and potential of the Mallay Mine and in our team’s plan to bring the operation back into production.”

Glencore’s offtake commitment covers 100% of the mine’s zinc-lead concentrate, which contains silver by-product. The agreement secures a long-term purchaser for the output and positions Excellon to benefit from potential upside in metal prices.

The company said proceeds from the facility will be used to fund mine rehabilitation, mill commissioning, and working capital needs.

Excellon expects to finalize the offtake and financing agreement with Glencore by the end of June.

The Mallay Mine, which previously produced silver and base metals, is located in Peru’s prolific mining region.

Source : Mining Company News