Excellon Resources Bets on Depth as Peru's Mallay Silver Restart Gathers Pace

• Excellon Resources restarted its fully permitted Mallay silver mine in Peru in July 2026, and it has since produced and sold its first concentrate to Glencore under a commercial offtake agreement.
• CEO Shawn Howarth expects Mallay to run consistently at 400 to 600 tonnes per day by early-to-mid 2027, which at full capacity equals around 2 million ounces of silver equivalent a year.
• Management sees the current resource of about 16 million ounces of silver equivalent likely understates the deposit as previous owner drilled only two to three years ahead of mining, and Excellon's first 2026 drilling shows grades holding up at depth.
• Excellon has no debt, about US$10 million in cash and an undrawn US$5 million credit facility from Glencore.
• Deep drilling below the mine, permitting at the nearby Tres Cerros gold-silver project and the proposed spin-out of Silver City in Germany give investors upside that the core restart does not rely on.

Reopening a permitted mine has become one of the quicker routes to new silver production. A greenfield project can spend a decade in studies and permitting. A past producer with its mill, power and camp still standing can compress that into months. Excellon Resources Inc. (TSXV:EXN) is testing that proposition at the Mallay silver mine in central Peru. The company restarted the Mallay concentrator in July 2026 on a pre-commissioning basis and has produced and sold its first concentrate. Speaking with Crux Investor in Beaver Creek, President and CEO Shawn Howarth set out the path to the plant's rated 600 tonnes per day (tpd), explaining why he believes the system below the current workings could support a larger operation than the one the previous owner ran.

A Repositioned Company

Howarth joined Excellon in 2022, and over 2022 and 2023 the company exited its past-producing silver assets in Mexico. It agreed to acquire Mallay from Compañía de Minas Buenaventura S.A.A. (Buenaventura) in late 2024 and closed the deal in 2025. Howarth said Excellon has since raised about $30 million in three tranches. That capital reopened the underground, restarted the mill and funded drilling. Chief Operating Officer Paul Keller leads the operation and brings prior mine development experience in Peru.

Why a Major Let Mallay Go

Buenaventura built Mallay in 2012 and ran it as a narrow-vein, high-grade underground mine. By 2018, with silver prices far below today's levels, a mine producing around 2 million ounces a year was non-core for a company of its size. Excellon saw working infrastructure, including state grid power and an operational 600 tpd ball mill that needed upgrades rather than replacement. The mine was also fully permitted at acquisition, which removed much of the early restart risk.

The February 2026 National Instrument (NI) 43-101 Mineral Resource Estimate (MRE) contains 12.0 million ounces (Moz) of silver equivalent (AgEq) Indicated at 420 g/t AgEq, plus 4.0 Moz AgEq Inferred at 344 g/t AgEq. Howarth argues this understates the system. Buenaventura drilled only two to three years ahead of mining, and the resource extends only about 300 metres below the lowest workings.

The Ramp-Up Path

The mill restart tested about 10,000 tonnes of stockpiled ore in batches at 400 tpd and 600 tpd. Current feed comes largely from narrow remnant stopes of around 1.5 metres width. The 400 Ramp, a decline built by Buenaventura, has been dewatered and its rehabilitation is expected to finish later this year. It opens about 60 metres of vertical access below the 4090 Level, the mine's lowest level. At depth Excellon is targeting ore shoot widths of 3 to 5 metres, which would allow a shift from jackleg mining to mechanised stoping.

Excellon released its first batch of 2026 underground drilling results, headlined by 3.4 metres at 495 g/t AgEq. Howarth said the results show grade continuity at depth. The drilling will feed an updated resource estimate and detailed mine schedule targeted for year-end or the first quarter of 2027. Formal guidance has not been issued. Howarth expects consistent throughput of 400 to 600 tpd by early-to-mid 2027, equivalent to around 2 Moz AgEq a year at full rate.

Interview with Shawn Howarth, President & CEO of Excellon Resources

Offtake, Liquidity and Economics

Mallay produces a lead concentrate, from which the silver is recovered, and a zinc concentrate. Silver makes up about 40% of revenue at current prices. Offtake is contracted with Glencore, which also bought Mallay concentrate under Buenaventura. The company carries no debt, held about US$10 million in cash at the end of July and has an undrawn US$5 million credit facility with Glencore. Asked by Matt Gordon how the ramp-up will be funded, Howarth said the capital raised so far has gone into drilling and mill upgrades, leaving current cash and the facility for working capital. He is confident in the economics at a target head grade of 200 g/T silver.

"At 200 g/t silver, which is what we'd be targeting for head grades and these silver prices and with the current zinc price too, this thing will be economic for many years to come as we continue to develop it out."

Exploration Beyond the Mine

Excellon is drilling a deep hole of around 700 metres for a downhole electromagnetic (DHEM) survey, with a second hole under way. The aim is to locate the intrusive source Howarth believes drove Mallay's epithermal veins. He points to Uchucchacua and Iscaycruz, which mine the same formation at far larger scale. He was careful to separate that ambition from the near-term plan.

"We're getting to 3-5 m widths that supports the mineability and that supports the return. What I would like to find is what is the deeper intrusive that's created this whole system., I think we're looking at a very different operation than just a 600 ton per day yet we're still far away from that."

Nearby Tres Cerros hosts seven gold-silver targets. Excellon expects to file its environmental application by the end of 2026, with first drilling anticipated in the first half of 2027, subject to permits. Outside Peru, the Silver City project in Germany is being spun out into its own vehicle, expected by year-end but not yet completed. Excellon is also weighing a joint venture or restructuring for the Kilgore gold project in Idaho.

The Investment Thesis for Excellon Resources

• Mallay is a fully permitted past producer with a working 600 tpd mill and grid power, which reduces the capital and time needed to reach production.
• The mine has produced and sold concentrate under a Glencore offtake, and Excellon targets consistent 400 to 600 tpd throughput by early-to-mid 2027.
• The 16 Moz AgEq resource was drilled only two to three years ahead of mining, and the first 2026 results indicate grade continuity below the 4090 Level.
• Excellon has no debt, about US$10 million in cash and an undrawn US$5 million facility, although a contractor-led ramp-up could require further funding.
• Investors should monitor completion of the 400 Ramp rehabilitation and the updated resource and mine plan targeted for year-end or Q1 2027.
• Mallay remains in pre-commissioning, and the current resource relies heavily on Buenaventura-era drilling.
• Deep DHEM drilling, Tres Cerros and the proposed Silver City spin-out offer optionality that the restart case does not depend on.

Macro Thematic Analysis

Silver has entered a period in which near-term ounces command a premium. Many new primary silver projects face long permitting timelines and heavy upfront capital. That has pushed investors towards restarts, where the main uncertainty is execution rather than permitting. Mallay fits that profile. Its infrastructure was built by a major, and its permits were in place when Excellon bought it.

Peru strengthens the case. The country is among the world's largest silver and zinc producers, with a deep pool of mining labour and established contractors. Howarth tied the jurisdiction directly to the restart decision.

"Peru was very attractive to us, a very stable jurisdiction if the permits are there. This was a fully permitted operation when we acquired it so a lot of the derisking of an early stage restart is was already in place."

The polymetallic mix also matters. With silver at about 40% of revenue, Mallay's margins depend on lead and zinc as well. Howarth singled out the current zinc price as a support. That diversifies revenue but also exposes the operation to base metal cycles and concentrate treatment terms.

Restarts carry their own pattern of risk. Historic mine plans reflect a previous owner's cost base and priorities. Grade reconciliation, dilution and contractor performance usually decide whether a restart meets its targets. Mallay's move from narrow cut-and-fill stopes to wider mechanised mining is the central test. The 600 tpd plant also caps near-term output. Any step change in scale would need the deeper exploration thesis to succeed and fresh capital to follow. Until then, the investment case rests on reliable delivery at the current plant size.

TL;DR

Excellon Resources (TSXV:EXN) restarted the fully permitted Mallay silver-lead-zinc mine in Peru in July 2026 and has sold its first concentrate to Glencore. The plant is rated at 600 tpd, and CEO Shawn Howarth expects consistent 400 to 600 tpd by early-to-mid 2027, or around 2 Moz AgEq a year at full rate. Rehabilitation of the 400 Ramp will open deeper, wider stopes for mechanised mining. An updated resource and mine plan are targeted for year-end or Q1 2027. The company has no debt, about US$10 million in cash and an undrawn US$5 million Glencore facility. Deep DHEM drilling and Tres Cerros add exploration upside.

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