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- Excellon Resources Inc. (TSX:EXN) and Silver
Eagle Mines Inc. (TSX:SEG) are pleased to announce that they have
signed a letter of intent (the "Letter of Intent") providing for
the acquisition by Excellon of all of the issued
and outstanding common shares of Silver Eagle (the "Transaction").
Under the terms of the proposed Transaction, Silver Eagle shareholders will
receive 0.2704 Excellon common shares in exchange
for each Silver Eagle share held. Following the acquisition, Excellon will have approximately 176 million shares
issued and outstanding. The Transaction is expected to be completed by way of
statutory plan of arrangement under the Business Corporations Act (Ontario).
The completion of the Transaction will be subject to, among other things,
completion of due diligence, Excellon completing
its financing arrangements, the entering into a definitive agreement,
obtaining Silver Eagle shareholder approval (not less than 66 2/3% of the
votes cast at a special shareholder meeting) and obtaining all required court
and regulatory approvals.
Excellon has also agreed to provide Silver Eagle
with a bridge loan of US$500,000 plus any additional amounts that are
reasonably agreed to, that are required to facilitate the closing of the
transaction. The first $250,000 of the bridge loan has been advanced to
Silver Eagle with a further $250,000 to be advanced on the signing of the
definitive agreement. The bridge loan is secured by the shares of Silver
Eagle's Mexican Subsidiary, San Pedro Resources, S.A.
de C.V. As part consideration for providing the bridge loan, Silver Eagle has
agreed that, in the event that the Transaction is not consummated, Silver
Eagle will provide Excellon with the use of their
mill at the Miguel Auza site for a period of one
year on reasonable commercial terms to be agreed.
Silver Eagle's primary asset is its fully permitted Miguel Auza mine, mill and adjacent properties located in
Zacatecas State, Mexico. The Miguel Auza property
is located 220 kilometres from Excellon's
Platosa Property. As previously announced,
Silver Eagle temporarily suspended all operations and put the Miguel Auza mine and their recently expanded mill on a care and
maintenance basis in mid-December 2008 while they considered all options and
strategic alternatives.
The Transaction has been approved by the board of directors of Silver Eagle,
following the unanimous recommendation of a special committee comprised of
independent Silver Eagle directors. The Transaction has also been approved by
the board of directors of Excellon. Under the
Letter of Intent, Silver Eagle has agreed to certain exclusivity terms.
Haywood Securities Inc. has provided an oral opinion to the special committee
of the board of directors of Silver Eagle that, subject to their assumptions
and limitations and their review and analysis of current market conditions,
the consideration to be received by the shareholders of Silver Eagle in
connection with the Transaction, as set out in the Letter of Intent, is fair,
from a financial point of view.
Excellon's previously announced plan to construct
its own mill at its Platosa site will be put on
hold indefinitely as it will be able to immediately utilize the Miguel Auza mill to process all ore produced from its Platosa mine. As a result, Excellon
will be able to increase near-term production at its Platosa
mine to 150 tonnes per day (4,500 tonnes per month) and plans to increase production to 250
tonnes per day (7,500 tonnes
per month) or more in 2010. Excellon will no longer
sell ore to Minera Maple, S.A. De C.V. (a
subsidiary of Industrias Penoles
S.A. de C.V.). Excellon will leave the Miguel Auza mine on a care and maintenance basis as it reviews
its future potential.
"This is a very positive development for Excellon
as it will give us immediate access to a recently expanded, modern mill and
will allow us to start processing our own ore almost immediately. In
addition, we have also acquired a large land package that holds significant
exploration potential" said Peter Crossgrove, Excellon's Chairman and acting CEO. "We also believe
it will allow shareholders from both companies to benefit from the
significant upside potential that the combined properties will have."
About Excellon
Excellon, a mineral resource company operating in
Durango State, Mexico, is committed to building value through production,
expansion and discovery. The Company is producing silver, lead and zinc from
high-grade manto deposits on its Platosa Property, strategically located in the middle of
the Mexican silver belt. In fiscal and calendar 2009, Excellon's
focus is on expanding its operating capacity and increasing its Mineral
Resources through an aggressive exploration program. The Platosa
Property, not fully explored, has several geological indicators of a large
mineralized system.
About Silver Eagle
Silver Eagle is a Canadian-based mining company
exploring and redeveloping an historic silver property in the heart of
the Mexico Silver Belt. The Company's primary asset is the Miguel Auza mine, mill and adjacent properties in Zacatecas
State, Mexico. The property includes the mineral rights to 41,498 hectares
and hosts several past producing mines.
On behalf of
EXCELLON RESOURCES INC.
Peter A. Crossgrove, Chairman
SILVER EAGLE MINES INC.
John Hick, Chairman
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 future results of operations, performance and
achievements of the Companies, 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, the proposed construction of a mill, business and
financing plans, business trends and future operating revenues. Although the
Companies believe that such statements are reasonable, they 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 Companies caution
investors that any forward-looking statements by the Companies 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,
particularly silver, the Companies' inability to obtain any necessary
permits, consents or authorizations required for their activities, to produce
minerals from their properties successfully or profitably, to continue their
projected growth, to raise the necessary capital or to be fully able to
implement their business strategies. All of the Companies' public disclosure
filings may be accessed via www.sedar.com and readers are urged to review these
materials, including the technical reports filed with respect to the
Companies' mineral properties. 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.
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