COEUR D’ALENE, Idaho--(BUSINESS WIRE)--Hecla Mining Company (NYSE:HL) (“Hecla”) announced today that it intends to have an indirect wholly-owned subsidiary make offers to acquire all of the outstanding common shares of U.S. Silver Corporation (“U.S. Silver”) for CDN$1.80 per common share in cash and acquire each outstanding common share purchase warrant for CDN$0.205 (its “in the money” amount based on such price per common share) (together, the “Hecla Offer”).
“Once launched and successful, the all-cash Hecla Offer will provide certainty of value and immediate liquidity at an attractive valuation for U.S. Silver shareholders,” said Hecla’s President and Chief Executive Officer, Phillips S. Baker, Jr. “We believe that the proposed transaction with RX Gold & Silver fails to maximize value for U.S. Silver shareholders and is, by any measure, inferior to the Hecla Offer.”
Hecla Offer Provides Superior Value
Hecla believes the intended Hecla Offer for U.S. Silver will constitute a “superior proposal” relative to the proposed U.S. Silver and RX Gold & Silver transaction for the following reasons:
- Hecla’s intended offer to purchase all of the issued and outstanding common shares of U.S. Silver for CDN$1.80 per share in cash will represent a premium of over 23% to the CDN$1.46 closing price of U.S. Silver common shares on the TSX on July 24, 2012 and a premium of 28% to the imputed offer price of CDN$1.41 under the RX Proposal, as at the same date;
- Once successful, the Hecla Offer will eliminate integration and dilution risk to U.S. Silver shareholders associated with the proposed merger with RX Gold & Silver and any subsequent capital needs;
- Hecla intends to offer to acquire each outstanding common share purchase warrant for CDN$0.205 (its “in the money” amount); and
- After successful completion of the Hecla Offer, Hecla will offer to pay holders of U.S. Silver options (vested or not) for the cancellation of their options the greater of: (a) their “in the money amount” or (b) CDN$0.01 per option in cash.
Background to the Hecla Offer
In June, the U.S. Silver Board of Directors approved a proposed business combination between U.S. Silver and RX Gold & Silver. Shareholders of U.S. Silver are scheduled to vote on the proposed transaction at a special meeting of U.S. Silver shareholders, currently scheduled for August 7, 2012.
Early on Monday, July 23, 2012, Hecla approached the Board of Directors of U.S. Silver to discuss the Hecla Offer and, at that time, expressed a strong desire to enter into a friendly transaction supported by the Board of Directors of U.S. Silver at CND$1.80 per common share. Hecla and U.S. Silver engaged in discussions; however, the two companies were unable to reach an agreement on how best to proceed on a timely basis. Given this impasse and the rapidly approaching meetings on the proposed RX Gold & Silver transaction, Hecla believes it is compelled to make its offer directly to holders of U.S. Silver common shares and warrants and provide them with the opportunity to receive what it believes is superior consideration for their shares.
Further Details of the Hecla Offer
Once launched, the Hecla Offer will constitute two offers: 1) an offer to purchase all of the outstanding common shares of U.S. Silver for CDN$1.80 in cash, and 2) an offer to purchase each outstanding common share purchase warrant for CDN$0.205 (its “in the money” amount). The two offers will be inter-conditional and will be made simultaneously. The offers will not be subject to any financing conditions. Hecla has sufficient cash to pay for the consideration payable under the offers and associated expenses. At March 31, 2012, Hecla had US$279 million in cash and equivalents and no bank debt.
The Hecla Offer will commence by way of a newspaper advertisement. A formal offer and take-over bid circular will then be mailed to holders of U.S. Silver common shares and warrants as soon as possible, once U.S. Silver makes a list of holders of shares and a list of holders of warrants available. Hecla requested such lists on July 25, 2012. The Hecla Offer will be subject to usual and customary conditions, including receipt of all required regulatory approvals, not less than 66 2/3% of the U.S. Silver common shares being deposited under the Hecla Offer and not withdrawn, and Hecla and U.S. Silver not agreeing to proceeding with the acquisition of U.S. Silver by Hecla by way of a negotiated plan of arrangement. The Hecla Offer will also be conditional on the RX Gold & Silver proposal not being approved by the shareholders of U.S. Silver or such transaction otherwise being terminated and there having been deposited under the Hecla Offer a sufficient number of common share purchase warrants such that Hecla may amend the appropriate warrant indenture to permit a cashless exercise or to cancel the remaining warrants for their “in the money” amount.
Although not part of the Hecla Offer, after the successful completion of the Hecla Offer, Hecla intends to offer the holders of outstanding options to acquire U.S. Silver common shares the opportunity to cancel their options in consideration of the greater of the “in the money amount” of such option and CDN$0.01.
Further details concerning the Hecla Offer will be included in the advertisement, formal offer and take-over bid circular. The Hecla Offer will be open for acceptance for at least 35 days following its commencement. Hecla expects to mail the bid circular and related documents related to the Hecla Offer to the holders of U.S. Silver common shares and warrants in the coming days.
Advisors
Scotiabank is acting as financial advisor to Hecla in connection with the proposed takeover offer and Aird & Berlis LLP as Hecla’s Canadian legal counsel.
About Hecla Mining Company
Established in 1891, Hecla Mining Company is a leading low cash cost silver producer in the U.S. The company has two operating mines and exploration properties in four world-class silver mining districts in the U.S. and Mexico.
Cautionary Statements
Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, prospects and opportunities including reserves, resources, and mineralization, costs, and prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may”, “will”, “should”, “expects”, “intends”, “projects”, “believes”, “estimates”, “targets”, “anticipates” and similar expressions are used to identify these forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, environmental and litigation risks, operating risks, project development risks, political and regulatory risks, labor issues, ability to raise financing and exploration risks and results. Refer to the company's Form 10-K and 10-Q reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.
Cautionary Statements to Investors on Reserves and Resources
The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this release, such as “resource,” “other resources,” and “mineralized materials” that the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form 10-Q. You can review and obtain copies of these filings from the SEC's website at www.sec.gov.
U.S. Silver shareholders with questions about the Hecla Offer can also contact Hecla’s information agent, MacKenzie Partners Inc., at 1-800-322-2885.