Mergers & Acquisitions Report
Hecla Mining Company Acquires Alexco Resource Corp.
July 5th, 2022
This report provides a summary of Gold and Precious Metal Funds that hold:
1) The acquirer only: Hecla Mining Company (NYSE: HL)
2) The acquired company only: Alexco Resource Corp. (NYSE: AXU; TSX: AXU)
3) Both the acquirer and acquired company.
On Tuesday 5th July 2022, Hecla Mining Company (NYSE: HL) (Hecla) and Alexco Resource Corp. (NYSE: AXU; TSX: AXU) (Alexco) announced a definitive agreement wherein Hecla is to acquire all of the outstanding common shares of Alexco not already owned by Hecla. Each outstanding common share of Alexco is to be exchanged for 0.116 of a share of Hecla common stock. This implies a consideration of US$0.47 per Alexco common share, which is a premium of 23% based on the companies’ NYSE traded 5-day volume weighted average price calculated on 1st July 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 (WPM) 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.
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.
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
6 Funds show as holding Alexco Resource Corp. (NYSE: AXU; TSX: AXU) exclusively, and will be the biggest performance beneficiaries from this transaction:
Funds Holding:
Source: https://mineralfunds.com/gold-funds/
MineralFunds.com provides prices, performance and trade information for all the world’s metal ETFs including: Precious Metals, Battery Metals, Platinum Group Metals and Base Metals and comprehensive fund information, including asset allocations, for Gold & Precious Metals Managed Funds from all investment jurisdictions.
Report prepared by: Kay Samnani, Analyst and Christopher J. Berlet BSc, CFA
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