Hecla Mining Company (NYSE: HL) saw its shares fade in price Tuesday, after concluding a definitive agreement to acquire Alexco Resource Corp. (NYSE American: AXU). Hecla will pick up all of the outstanding common shares of Alexco that Hecla does not already own.
Each outstanding common share of Alexco will be exchanged for 0.116 of a share of Hecla common stock implying consideration of $0.47 U.S. per Alexco common share and a premium of 23% based on the companies' five-day volume weighted average price on the NYSE and NYSE American on July 1 . In addition, Hecla will (i) provide interim financing to provide working capital and ensure the development and exploration at Keno Hill continues to be advanced and (ii) subscribe for additional common shares bringing its ownership stake to 9.9%.
The benefits of such a deal:
A large, high-grade silver property in the Yukon, a top-10 rated jurisdiction by Canada’s Fraser Institute
A fully permitted property with infrastructure that includes a 400-tonne-per-day mill, on-site camp facility, all-season highway access, and connection to the hydropower grid
The deal increases Hecla's silver exposure by increasing proven and probable silver reserves 19% to 237 million ounces, measured and indicated resources 24% to 257 million ounces and inferred resources 7% to 523.7 million ounces
Hecla also has the potential to be Canada's largest silver producer.
HL shares lost 38 cents, or 9.4%, to $3.63, while those for AXU gained slightly to 42 cents.
