Hecla Completes Acquisition of Klondex Mines

Hecla Mining (NYSE:HL) has completed its acquisition of Klondex Mines (TSX:KDX,NYSE American:KLDX) for approximately US$153 million and 75 million shares, Hecla announced on Monday (July 23).

The deal will result in Hecla owning three high-grade mines in Nevada, which is considered one of the best mining districts in the world.

“These assets immediately add production and cash flow, and because they are a good fit with Hecla’s expertise, we believe there is significant opportunity for improvement in the mines’ productivity and consistency,” said Phillips S. Baker, Jr., president and CEO.

Klondex shareholders receiving share consideration will obtain 0.6272 of a Hecla share in exchange for their Klondex shares. Klondex shareholders who chose to receive combined cash and share consideration will receive US$0.8411 in cash and 0.4136 of a Hecla share in exchange for their Klondex shares.

Meanwhile, for those Klondex shareholders who settled on cash consideration, they were subject to proration and will receive US$0.8867 in cash and 0.4020 of a Hecla share in exchange for their Klondex shares.

Klondex shareholders will also receive 0.125 of a common share of Havilah Mining (TSXV:HMC), a freshly-formed spinout that will retain Klondex’s Canadian operations, as part of the consideration received in exchange for each of their Klondex shares.

For its part, Havilah has been approved to list its common shares on the TSX Venture Exchange, with trading to begin around Wednesday (July 25). Klondex has also received approval to delist its common shares from the Toronto Stock Exchange, which is also expected to take place on Wednesday when the markets open.

As for the NYSE American Stock Exchange, Klondex shares were delisted on Monday.

As part of the agreement, Hecla subscribed for 3,539,332 common shares of Havilah, on a private placement basis at a price of C$2.61 per share for a gross purchase price of C$9,242,800.

Last week, Hecla announced its Q2 results and revealed that it had produced 2.6 million ounces of silver during the quarter, as well as 10.5 million ounces of silver equivalent.

“Hecla’s second quarter mine production exceeded expectations due to continued improvements in the mines. Greens Creek had higher than expected grades and had about 5 percent of the tons coming from automated headings. Casa Berardi exceeded expectations due to higher grades and the flexibility of having sources of ore from the underground and the surface,” Baker stated.

“San Sebastian production, while lower than last year, was higher than we expected due to higher grades. This outperformance put the cash position at the second highest in the past six years, which we expect to deploy to acquire Klondex early in the third quarter,” he added.

As of 11:30 a.m. EST, Hecla Mining was trading at US$3.48.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.