Mr. Shawn Howarth reports

EXCELLON ANNOUNCES SALE OF INTEREST IN NON-CORE OAKLEY PROJECT AND PROVIDES CORPORATE UPDATE

Excellon Idaho Gold Inc., a wholly owned subsidiary of Excellon Resources Inc., has entered into a definitive agreement with Centerra (U.S.) Inc., a wholly owned subsidiary of Centerra Gold Inc., to sell Excellon's remaining minority interest in the Oakley project for $1-million (U.S.) in cash.

Highlights

• Liquidity update:
  • Sale of Oakley will provide Excellon with $1-million (U.S.) in cash;
  • Excellon expects to arrange an additional up to $1-million (U.S.) in liquidity from non-dilutive sources, targeting early Q4 2023.
• Debenture restructuring:
  • Continuing discussions with debentureholders on a potential restructuring, repricing and extension of existing convertible debentures.
• Excellon asset portfolio update:
  • Oakley project: Successful monetization through sale of remaining minority interest to Centerra;
  • Kilgore project: Update on 2022 drill results in Q3 2023 and reassess exploration program for 2024;
  • Silver City: Creation of a new Europe-focused precious and base metals explorer, leading with the 340-square-kilometre Silver City land package, one of the largest mineral tenures in Saxony, Germany;
  • Mexican operations: Exploring strategic options following wind-down of Platosa.

Shawn Howarth, president and chief executive officer of Excellon, commented: "First, we are pleased to reach an agreement with Centerra on the sale of Oakley. By selling Oakley, Excellon secures necessary financial liquidity in the short term while mitigating future cash outflows that would otherwise be required to maintain pro forma interest in the project."

Mr. Howarth added: "Excellon's future growth is currently underpinned by its core assets, the Kilgore and Silver City projects. The company sees tremendous value potential in both assets and has invested significant capital and effort to advance these projects, at a time when the Excellon narrative was overshadowed by headwinds at our Mexican operations and the wind-down of Platosa. With Kilgore, we see significantly greater exploration potential and are excited to be able to announce 2022 drill results shortly. With Silver City, we see optionality in a district-scale exploration growth story, or the ability to capitalize on expected market trends as new Europe-focused exploration opportunities begin to emerge."

Sale of Oakley

Excellon Idaho, a wholly owned subsidiary of Excellon, has entered into the purchase agreement with Centerra to sell its remaining 30-per-cent minority interest in Oakley for $1-million (U.S.) paid in cash.

Immediately prior to the execution of the purchase agreement, Centerra had earned into a 70-per-cent interest in Oakley by spending $7-million (U.S.) in exploration expenditures since 2020. As per the terms of the earn-in agreement with Centerra, Excellon would be required to finance future expenditures on a 70-per-cent/30-per-cent pro rata basis. If Excellon chose to waive its pro rata expenditures, the company would be diluted to an effective 2-per-cent net smelter return royalty on Oakley.

The completion of the transaction is subject to customary conditions for a transaction of this nature, including the receipt of necessary regulatory and third party approvals. The transaction is expected to close prior to Sept. 30, 2023.

Debenture restructuring update

The company is in advanced discussions with debentureholders representing approximately 66-2/3 per cent of the aggregate principal amount of the 5.75 per cent secured convertible debentures of the company on a potential restructuring, repricing and further extension of the debentures. While all parties are committed to seeing an agreeable outcome, there can be no guarantee such agreement will be reached, or the terms of such agreement.

The company will continue to provide further updates when available.

Capital resources, 12-month outlook and next steps

Current liquidity

By early Q4 2023, the company expects to have up to $2-million (U.S.) in liquidity available through the sale of non-core assets, German VAT (value-added tax) receivables and other non-dilutive sources of financing under review.

These proceeds will be used to restructure accrued payables, unsecured liabilities and finance continuing near-term working capital.

The following 12-month plan is subject to obtaining additional financial resources and therefore expectations for the projects may change based on market conditions. While the company does not anticipate selling or liquidating further assets, there can be no assurance additional financing will be received, or the timing of obtaining additional capital.

12-month outlook

Management believes in the value potential of the company's core assets and that the following plans are executable and can return value to Excellon shareholders, upon successful completion.

Kilgore project, Idaho

Kilgore is an advanced exploration-stage project located in Clark county, Idaho. A preliminary economic assessment was completed on Kilgore in 2019 that demonstrated potential as a low-cost, open-pit, heap leach mining operation. The company acquired Kilgore for approximately $20-million (U.S.) in 2020 at a time when the average gold price was approximately $1,600 (U.S.)/ounce.

Management sees greater upside potential for Kilgore in a renewed focus on exploration and the potential for mineralization growth. During the summer of 2022, Excellon embarked on a phase 1 drill program testing high-grade structure within the existing pit, and continuity of mineralization into the Aspen formation. The company plans to release the remainder of assays pending by end of September. A second phase of the drill program will test known stepout areas and continue to refine targets for further mineralization growth.

Financing additional work at Kilgore is contingent on raising additional equity, proceeds from asset sales or an exploration joint venture on the project. The company will provide further updates on financing in due course.

Silver City project, Germany

Silver City, in the heart of the ore mountains of Germany, comprises four mineral licenses totalling 340 square km. Excellon's focused drill program in 2021 and 2022 invested approximately $8-million in exploration expenditures including over 22,000 metres.

Saxony, Germany, is an area incredibly rich in a wide range of mineralization including both precious and critical minerals such as lithium, graphite, cobalt and other electric vehicle minerals previously considered uneconomic. As modern mining and processing techniques are applied to these critical mineral veins, the exploration potential in Saxony, Germany, is shifting. The Silver City project is located at the heart of this activity.

Excellon was successful intersecting high-grade silver, lead and zinc epithermal vein mineralization. The potential exists, however, that additional mineralization could be discovered and modern exploration techniques allow the company to efficiently explore beyond where historic regional mining took place.

Excellon believes this is an opportune time to be exploring for minerals in Europe. The European framework for minerals investment is rapidly changing to support domestic supply security and the new Saxon raw materials strategy was recently published supporting the importance of promoting a local mining industry.

Excellon will continue to assess the market for a spinout of the project. Priorities with a spinout are to raise sufficient capital to adequately finance the next exploration campaign and a valuation that justifies return on historical exploration capital. Excellon maintains excellent relationships with the local government and as the holding costs for Silver City are exceptionally low relative to other exploration jurisdictions globally, Excellon has the benefit of optionality and timing to successfully deliver the project into the capital markets.

Mexican operations

The company holds two mineralized properties in Mexico. The Platosa mineral concessions are located approximately five kilometres north of the town of Bermejillo and 45 kilometres north of the city of Torreon. The historically mined deposit consisted of a series of high-grade carbonate replacement deposits (CRD) occurring as mantos. The Evolucion property covering 310 square km covers a 17 km strike along the Fresnillo trend, hosting epithermal quartz veins proximal to the San Sebastian mine.

As the Platosa mine was placed on care and maintenance in early Q4 2022, the company is assessing its strategic options, including the potential sale of select properties or complete divestiture of the Mexican operations. The company will provide further updates on the Mexican operations as necessary.

Annual meeting of shareholders

The company also announces that it has been granted a further extension by the Toronto Stock Exchange to hold its annual meeting of shareholders by no later than Nov. 10, 2023. The company will provide further details regarding its annual meeting in due course.

About Excellon Resources Inc.

Excellon's vision is to realize opportunities through the acquisition of advanced development or producing assets with further potential to gain from an experienced management team for the benefit of its employees, communities and shareholders. The company is advancing a portfolio of silver, base metals and precious metals assets including Kilgore, an advanced gold exploration project in Idaho, and Silver City, a high-grade epithermal silver district in Saxony, Germany, with 750 years of mining history and no modern exploration.

We seek Safe Harbor.