TORONTO (miningweekly.com) – Shares in TSX-listed Silver Eagle Mines dropped 23,8% on Thursday, after the firm announced it had agreed to an all-share buyout by Excellon Resources.

Shareholders in Silver Eagle, which received government approval in December to halt its flagship Miguel Auza mine, in Mexico, for six months, will receive 0,2704 of an Excellon share for every Silver Eagle share held.

Excellon has also agreed to provide Silver Eagle with a bridge loan of $500 000 plus “any additional amounts that are reasonably agreed to” to help facilitate the closing of the transaction, the firms said.

Excellon said that it plans to process ore from its nearby Platosa operation at the Miguel Auza mill, and suspend plans to build its own mill on hold.

“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,” said chairperson and acting CEO Peter Crossgrove.

Excellon currently processes the ore from Platosa at a nearby mill owned by Penoles, but had planned to commission a new on-site 350-t/d lead/zinc flotation mill this year.

The silver/lead/zinc Platosa operation is located about 220 km from Miguel Auza, which was put on care and maintenance in December after low metals prices rendered the silver/lead/zinc mine unprofitable.

Once it has access to the Miguel Ausa mill, Excellon will be able to increase near-term production at Platosae to 150 t/d and plans to increase production to 250 t/d or more in 2010, the firm said on Thursday.

Excellon will leave the Miguel Auza mine on a care and maintenance basis “as it reviews its future potential”.

Silver Eagle shares fell by C$0,025 apiece on Thursday, to C$0,08 a share by 15:18 in Toronto. Excellon shares gained 4,44%, to C$0,235 each, by 15:59.

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