Mr. Shawn Howarth reports

EXCELLON ANNOUNCES DEBENTURE RESTRUCTURING

Excellon Resources Inc. has entered into a binding term sheet with holders (debentureholders) representing over 66-2/3 per cent of the principal amount of the outstanding 5.75 per cent secured convertible debentures of the company, to reduce the outstanding principal amount to $7.5-million, representing a 58-per-cent reduction in principal, and to amend the terms of the remaining debentures to, among other things, further extend the maturity date to Aug. 31, 2026.

Highlights:

• Outstanding principal amount of the debentures to $7.5-million, representing a reduction of $10.4-million.
• In exchange for $10.4-million aggregate principal amount of the debentures, Excellon to pay $3.5-million in equity, 25-per-cent interest in Silver City project, plus additional non-dilutive contingency and royalty payments.
• Structure aligns investment return to debentureholders through both equity and asset value growth, a benefit to all stakeholders.
• Maturity date of remaining debentures extended to Aug. 31, 2026.
• No cash repayment or outlay required to restructure the debentures.
• Interest is payable at an annual rate of 6.5 per cent in cash or 10 per cent in shares, at the company's option.
• Provides alignment with shareholders around future equity growth.

Shawn Howarth, president and chief executive officer of Excellon, commented: "We are pleased to reach an agreement with debentureholders. The restructuring announced today reduces debt with zero cash outlay and minimal equity dilution. We also thank debentureholders, who have invested significant capital to support Excellon and continue to believe in the long-term potential of the company."

Mr. Howarth added: "Priorities in the debenture repurchase were to delever the balance sheet, but in a structure that minimizes immediate dilution to Excellon shareholders at current share prices. One-third of the debenture repurchase consideration is equity of Excellon, with the remainder of consideration on successful milestone achievements and advancing the asset portfolio. Current Excellon shareholders will continue to benefit in upside growth with reduced up front dilution."

Debenture restructuring

The company has entered into a binding term sheet with debentureholders representing approximately 66-2/3 per cent of the aggregate principal amount of outstanding debentures to repurchase and cancel $10.41-million aggregate principal amount of the debentures for the consideration set out below, and to amend the terms of the remaining debentures (the debenture amendment and, together with the debenture repurchase, the debenture restructuring).

Debenture repurchase

Pursuant to the debenture repurchase, the company will repurchase and cancel $10.41-million aggregate principal amount of the debentures in exchange for the following consideration payable pro rata to the debentureholders:

• $3.5-million in common shares in the capital of Excellon at a price of nine cents per common share payable on the closing date of the debenture restructuring;
• Contingent value rights providing for three equal cash payments equivalent to 500 troy ounces of gold for each payment, on achieving the following milestones. Each cash payment will be based on ounces multiplied by the average gold price for the five trading days prior to the achievement of the applicable milestone:
  • Milestone 1: Updated resource estimate at the company's Kilgore project;
  • Milestone 2: Revised preliminary economic assessment, feasibility study or economic estimate at the Kilgore project; and
  • Milestone 3: Achieving commercial production at the Kilgore project.
• 2-per-cent NSR (net smelter return) royalty on the Kilgore project;
• 25-per-cent interest in the common shares of Saxony Silver Corp., which holds the company's Silver City project.

Debenture amendment

The key terms of the debenture amendment are as follows:

• Extension of the maturity date from July 31, 2024, to Aug. 31, 2026;
• Reduction of the conversion price to 10 cents per common share, provided that, in the event the company completes an offering of common shares, subscription receipts or other securities convertible, exercisable or exchangeable for common shares (an equity offering) prior to the restructuring closing date, the new conversion price shall be adjusted to a 20-per-cent discount to the equity offering price, provided further that the new conversion price shall not be less than six cents and not more than 16 cents;
• Interest payable at an annual rate of 6.5 per cent in cash or 10 per cent in common shares, at the company's option; and
• No further warrants, restructuring fees or further dilution is contemplated in relation to the debenture amendment.

The debenture amendment extends the maturity date of the debentures to mid-2026 and provides Excellon with significant runway to grow equity value. A floating conversion price is a potential benefit for shareholders that will be fixed by the restructuring closing date.

Completion of the debenture restructuring is subject to, among other things, approval by the requisite majorities of debentureholders and holders of common shares, as well as the approval of the Toronto Stock Exchange. The debenture restructuring is expected to close in the fourth quarter of 2023.

Annual meeting of shareholders

The annual meeting of shareholders has been scheduled for Nov. 7, 2023. The record date is Sept. 25, 2023. Meeting materials will follow 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.