The Prospector News


You have opened a direct link to the current edition PDF

Open PDF Close

Share this news article







America’s largest and highest-grade silver producer adding
Canada’s largest and highest-grade silver reserve


Hecla Mining Company (NYSE: HL) and Alexco Resource Corp. (NYSE American: AXU) (TSX: AXU) are pleased to announce a definitive agreement for Hecla to acquire 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 US$0.47 per Alexco common share and a premium of 23% based on the companies’ 5-day volume weighted average price on the NYSE and NYSE American on July 1, 2022. 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%.


Hecla has also entered into an agreement with Wheaton Precious Metals Corporation to terminate its silver streaming interest at Alexco’s Keno Hill property in exchange for US$135 million of Hecla common stock conditional upon the completion of Hecla’s acquisition of Alexco.


Benefits to Hecla Shareholders

  • A large, high-grade silver property in the Yukon, a top 10 rated jurisdiction by the 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
  • 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
  • Potential to be Canada’s largest silver producer


Benefits to Alexco Shareholders

  • Delivers an immediate up-front premium to Alexco shareholders
  • Allows advancement of Keno Hill’s development with an immediate and non-dilutive interim financing
  • Partners with the United States’ largest silver producer
  • Transitions from a single asset and its development risk to a diversified production base of long-lived mines and a portfolio of high-quality exploration projects
  • A strong balance sheet to invest in Keno Hill and continue its history of resource expansion
  • Enhanced capital markets profile with increased analyst coverage and trading liquidity


“At Hecla, we have followed the Keno Hill project closely for a number of years, as it is one of the very few deposits that fit seamlessly into Hecla’s strategy of owning and operating high-grade properties in tier one jurisdictions,” said Phillips S. Baker Jr., President and CEO. “As the United States’ largest silver producer, producing over 40% of silver mined in the U.S., it is natural that Hecla acquires Keno Hill which could also make Hecla Canada’s largest silver producer. Silver is a critical element to decarbonize the economy and the need for domestic supply is growing. Acquiring Keno Hill allows Hecla to further meet this need with a secure high-grade silver development and exploration project that has a small environmental footprint.”


“This transaction delivers significant benefits to our stakeholders,” said Clynton Nauman, Chairman and CEO of Alexco. “By partnering with Hecla, an industry leader in high-grade narrow vein silver mining, we further position Keno Hill to achieve its full potential.  There is no doubt that we have fallen well behind the development and production plan at Keno Hill – and our original estimate of achieving commercial production in early 2022.  There are myriad reasons for those challenges, but fundamentally, they all led to an increasing level of stress across our business, which was having a negative impact on the share price, our finances, our employees, and other stakeholders. As a much larger business, Hecla has the organizational expertise and financial strength to build Keno Hill to the level and capacity required, while being able to continue to invest in exploration across the district, something that we, as Alexco, independently would likely struggle to achieve.  Frankly, the opportunity now afforded to our employees, to the First Nation of Na-Cho Nyäk Dun and the wider Yukon community as a whole is superior to anything Alexco could offer in the short term.  I look forward to working with Phil and his team at Hecla to close this transaction in September 2022.”


Terms of the Transaction


The agreement provides Alexco shareholders with 0.116 of a Hecla share for each Alexco common share they hold as of the effective date of the agreement. Hecla will issue approximately 18 million common shares to Alexco shareholders. Upon completion of the transactions with both WPM and Alexco, and assuming the July 1, 2022 5-day volume weighted average price of Hecla’s shares of US$4.13, WPM and Alexco shareholders will own approximately 5.6% and 3.0%, respectively, of the outstanding common shares of Hecla. The exact number of Hecla common shares to be issued to WPM will be calculated immediately before the closing date.


Hecla is providing Alexco with a US$30 million secured loan facility and is purchasing 8,984,100 Alexco Shares at C$0.50 per share, having an aggregate value of C$4,492,050, which will result in 9.9% of Alexco Shares being held by Hecla or its affiliates. A portion of the loan will be immediately drawn and the remainder available on a revolving basis, and the use of proceeds will be for agreed upon working capital and capital expenditures purposes according to a plan jointly approved by Alexco and Hecla. The loan and share purchase are intended to provide Alexco with immediate working capital to continue development work at Keno Hill and are not conditional upon the completion of the transaction.


Board of Directors’ Recommendations


The Board of Directors of Alexco and Hecla have both unanimously approved the transaction. The Board of Directors of Alexco unanimously recommends that Alexco shareholders vote in favor of the transaction. Alexco’s directors and officers support the transaction and have entered into customary voting support agreements with Hecla agreeing to vote their Alexco shares in favor of the transaction.  WPM has also entered into a voting support agreement with Hecla to vote its Alexco shares in favor of the transaction, resulting in approximately 4.9% of Alexco’s outstanding common shares being subject to voting support agreements to support the transaction.


Cormark Securities Inc. provided an opinion to the Alexco Board of Directors that the transaction is fair from a financial point of view to Alexco shareholders as of the date of the arrangement agreement, and subject to the assumptions, limitations and qualifications in the opinion.


Transaction Conditions and Timing


The transaction will be implemented by a Court-approved plan of arrangement under the Business Corporations Act (British Columbia) and requires the approval of: (i) 66 2/3% of the votes cast by the holders of Alexco’s common shares, (ii) 66 2/3% of the votes cast by the affected securityholders of Alexco voting as a single class, and (iii) if applicable, a majority of the votes cast by the holders of Alexco’s common shares after excluding any votes of Hecla and other persons required to be excluded under Canadian Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting.


The Alexco-Hecla and WPM-Hecla transactions are each subject to applicable regulatory approvals and customary closing conditions. The agreement provides for customary deal-protection provisions, including a non-solicitation covenant on the part of Alexco, a right for Hecla to match any superior proposal and a termination fee of US$10 million, payable by Alexco to Hecla, under certain circumstances.


It is anticipated that the special meeting will be held in September 2022 with the acquisition expected to close later that month.


Advisors and Counsel


BMO Capital Markets is acting as financial advisor to Hecla in connection with the Transaction. Osler, Hoskin & Harcourt LLP is serving as Canadian counsel to Hecla and K&L Gates is acting as U.S. counsel to Hecla.


Cormark Securities Inc. is acting as financial advisor to Alexco.  Blake, Cassels & Graydon LLP is serving as counsel to Alexco.


About Hecla


Founded in 1891, Hecla Mining Company is the largest silver producer in the United States. In addition to operating mines in Alaska, Idaho and Quebec, Canada, the Company owns a number of exploration properties and pre-development projects in world-class silver and gold mining districts throughout North America.


About Alexco


Alexco is the owner and operator of the historic Keno Hill Silver District in Canada’s Yukon Territory, one of the highest-grade silver deposits in the world.


Posted July 5, 2022

Share this news article


Rock Tech Lithium Announces Closing of Offering of Units

Rock Tech Lithium Inc. (TSX-V: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1X... READ MORE

August 19, 2022

Power Metals Intersects High-Grade Lithium, Cesium and Tantalum Mineralization at West Joe and Main Dykes, Case Lake


August 19, 2022


Vox Royalty Corp. (TSX-V: VOX) (OTCQX: VOXCF) a returns focused ... READ MORE

August 18, 2022

Aldebaran Reports 1,059.5 m of 0.4% CuEq in a Previously Untested Area at the Altar Copper Gold Project

Aldebaran Resources Inc. (TSX-V: ALDE) (OTCQX: ADBRF) is pleased ... READ MORE

August 18, 2022

Scorpio Gold – Closing of Convertible Loans in Principal Amount of up to US$2,450,000

Scorpio Gold Corporation (TSX-V: SGN) announces that further to i... READ MORE

August 18, 2022

We acknowledge the [financial] support of the Government of Canada.

Government of Canada Supported
Copyright 2022 The Prospector News