Hecla Mining Company (NYSE:HL) (Hecla) (Company) is pleased to
announce that it has entered into a definitive arrangement
agreement (Arrangement Agreement) with Aurizon Mines Ltd. (TSX:ARZ)
(NYSE:AZK) (Aurizon) pursuant to which Hecla will acquire all of
the issued and outstanding common shares of Aurizon in a
transaction with a total value of approximately CAD$796 million
(the Transaction).
Under the terms of the Transaction, which is similar to a merger
with a Hecla subsidiary under U.S. Law, Hecla will acquire all of
the outstanding common shares of Aurizon for consideration valued
at CAD$4.75 per share. Each holder of Aurizon common shares
(Shareholder) may elect to receive either CAD$4.75 in cash (Cash
Alternative) or 0.9953 of a Hecla share (Share Alternative),
subject in each case to pro-ration based on a maximum cash
consideration of CAD$513,631,193 and a maximum number of Hecla
shares issued of 57,000,000. Assuming that all Shareholders elected
either the Cash Alternative or the Share Alternative, each
Shareholder would be entitled to receive CAD$3.11 in cash and
0.34462 of a Hecla share for each Aurizon common share.
Aurizon announced today that its Board of Directors, upon the
recommendation of a Special Committee of the Board and after
receipt of advice from its financial and legal advisors, has
unanimously determined that the Transaction is in the best
interests of Aurizon, is fair to shareholders and recommends that
shareholders of Aurizon vote in favor of approving the Transaction.
In addition, all the directors and senior officers of Aurizon have
agreed to vote their shares in favor of the deal.
“We are pleased Aurizon’s Board recommends support of Hecla’s
transaction,” said Hecla’s President and Chief Executive Officer,
Phillips S. Baker, Jr. “Hecla and Aurizon together create a unique
precious metals company with three long-life, high-grade, low-cost
mines in some of the best mining jurisdictions in the world. These
three properties have in common strong exploration potential on
very large and contiguous land positions as well as locations near
communities that are supportive to mining. In addition, all three
utilize similar mining methods enabling Hecla to leverage the
knowledge and experience from each mine across the organization.
Hecla’s expertise in operating low-volume, high-value mines
complements these assets, resulting in a value-added proposition
for Hecla and Aurizon shareholders.”
Based on the closing price of the shares of Aurizon and Hecla on
March 1, 2013, the Transaction implies a value per Aurizon share of
CAD$4.75, which represents a premium of approximately 39% to the
unaffected Aurizon share price on January 11, 2013, the last
trading day prior to the announcement of the unsolicited bid for
Aurizon by Alamos Gold Inc. (Alamos).
Transaction Highlights
Hecla believes that the Transaction is attractive to Aurizon’s
shareholders for the following reasons:
- Higher
PremiumHecla’s offer implies a value per Aurizon share of
CAD$4.75, which represents a 39% premium to the Aurizon share price
on January 11, 2013, the last trading day before Alamos made its
bid, and a premium of 12% over the implied current value of the
Alamos offer, based on the closing share prices of both Alamos and
Aurizon on March 1, 2013.
- Increased Value
CertaintyThe substantial cash component of Hecla’s offer
provides Aurizon’s shareholders increased certainty in the value of
the transaction.
- Creation of a
Leading Diversified Precious Metals CompanyShareholders who
elect to receive Hecla shares or receive Hecla shares due to
pro-ration, may continue to participate in silver and gold
production growth of Hecla Mining Company with enhanced operating
and commodity diversification, size and liquidity. The combined
company is anticipated to have a market capitalization of
approximately US$1.64 billion, based on current share prices.
- Focused in Mining
Friendly Jurisdictions in North AmericaPro-forma for the
transaction, 100% of the combined company’s operating assets will
be in politically stable mining jurisdictions. The combined
portfolio of mining assets has significant reserves and resources,
lower cost structures, and positive and growing production
profiles. Hecla anticipates production of approximately 8 to 9
million ounces of silver in 2013 from its primary silver mines,
while Aurizon expects the Casa Berardi mine in Quebec to produce
125,000 to 130,000 ounces of gold in 2013.
- Access to Hecla’s
Underground Mining ExpertiseHecla has been mining precious
metals for over 120 years, mainly from high-grade underground
mines. Hecla’s experience in rock mechanics, shaft-sinking, paste
backfill and ventilation, for example, is expected to benefit the
continued development of the Casa Berardi mine.
- Enhanced Exposure
to Exploration and Pre-Development ProjectsIn addition to
continued exposure to Aurizon’s prospective development and
exploration portfolio, Hecla controls district-sized land packages
with attractive exploration potential in the U.S. and Mexico.
Aurizon’s shareholders who elect to receive Hecla shares or receive
shares due to pro-ration, can participate in the growth and
development of the portfolio over time.
Financing the Transaction
The Transaction will be fully financed and will not require the
approval of Hecla shareholders.
Section 3(a)(10) of the Securities Act of 1933, as amended (the
"Securities Act"), exempts from the registration requirements under
the Securities Act the issuance and exchange of securities which
have been approved, after a hearing upon the fairness of the terms
and conditions on which all persons to whom it is proposed the
securities will be issued shall have the right to appear, by any
court expressly authorized by law to grant such approval.
Hecla has received a commitment for a US$500 million financing
from The Bank of Nova Scotia and there is no financing condition in
the Arrangement Agreement. The financing includes a US$200 million
amortizing term loan facility with a three-year maturity and a
US$200 million three-year revolving credit facility. An additional
US$100 million loan will mature shortly after the close of the
transaction. The commitment for the financing is subject to
satisfaction of certain customary conditions precedent for an
acquisition financing.
Terms
The Transaction will be implemented by way of a court-approved
plan of arrangement under the Business Corporations Act (British
Columbia) and will require the approval of 66 2/3% of the votes
cast by the affected security holders of Aurizon at a special
meeting which is expected to take place in May 2013. The terms and
conditions of the Transaction will be disclosed in a Management
Information Circular of Aurizon which will be mailed to
Shareholders and other affected security holders of Aurizon.
The Arrangement Agreement provides for, among other things, a
non-solicitation covenant on the part of Aurizon (subject to
customary fiduciary out provisions). The Arrangement Agreement also
provides Hecla with a “right to match” any competing offer which
constitutes a superior proposal and the Arrangement Agreement
requires Aurizon to pay a termination fee of CAD$27.2 million in
certain circumstances. The completion of the Transaction will also
be subject to applicable regulatory approvals and closing
conditions customary in transactions of this nature.
Assuming Aurizon shareholders approve the transaction at the
special meeting and all court and regulatory approvals are
obtained, the transaction is expected to close in the second
quarter of 2013.
How to Withdraw Aurizon Shares from the Alamos Offer
Shareholders who have questions or who may have already tendered
their shares to the unsolicited Offer by Alamos and wish to
withdraw them, may do so by contacting Aurizon’s Information Agent,
Georgeson, Toll Free (North America): 1-888-605-7616, Outside North
America Call Collect: 1-781-575-2422 or Email:
askus@georgeson.com.
Hecla Advisors and Counsel
BofA Merrill Lynch is acting as financial advisor to Hecla on
this transaction and rendered a fairness opinion to Hecla’s Board
of Directors in connection with the transaction. Cassels Brock
& Blackwell LLP is serving as Canadian counsel to Hecla.
Conference Call Details
Hecla will host a conference call today, March 4, at 9 am
Eastern Time to discuss the acquisition. You may join the
conference call by dialing toll-free 1-866-730-5771 or
1-857-350-1595 internationally. The participant passcode is
42071935. Hecla's live and archived webcast can be accessed at
www.hecla-mining.com under Investors
or via Thomson StreetEvents Network.
About Hecla Mining Company
Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver
producer with operating mines in Alaska and Idaho, exploration and
pre-development properties in four world-class silver mining
districts in the U.S. and Mexico, and an exploration office and
investments in early-stage silver exploration projects in
Canada.
Additional Information and Where to Find It
This material relates to Hecla’s proposed
acquisition (the “Transaction”) of Aurizon. Shares of Hecla’s
common stock (the “Hecla Shares”) issued in connection with the
proposed Transaction may be registered pursuant to a registration
statement to be filed with the SEC or issued pursuant to an
available exemption. This information is not a substitute for any
registration statement or any other document that Hecla may file
with the SEC or that it or Aurizon may send to their
respective shareholders in connection with the offer and/or
issuance of Hecla Shares. Investors are urged to
read any registration statement, if and when filed, and
all other relevant documents that may be filed with the SEC or
with Canadian regulatory authorities as and if they become
available because they will contain important information about the
issuance of Hecla Shares. Documents, if and when
filed with the SEC, will be available free of charge at the
SEC’s website (www.sec.gov). You may also obtain these
documents by contacting Hecla’s Investor Relations department at
Hecla Mining Company; Investor Relations; 1-800-HECLA91
(1-800-432-5291); hmc-info@hecla-mining.com. This
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities.
In connection with the proposed
transaction, Aurizon will file proxy
soliciting materials with the SEC and/or Canadian
regulatory authorities. The information contained in any such
filing may not be complete and may be updated, amended
or changed. SHAREHOLDERS ARE URGED TO READ SUCH
MATERIALS WHEN AVAILABLE AND ANY OTHER RELEVANT
MATERIALS FILED WITH THE SEC AND/OR CANADIAN REGULATORY
AUTHORITIES CAREFULLY IN THEIR ENTIRETY BEFORE MAKING
ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED
TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND THE PARTIES
THERETO.
Proxy solicitation materials will be mailed
to Aurizon’s shareholders seeking their approval of the
proposed transaction. Anyone may also obtain a copy
of such materials free of charge once available by directing a
request to: Hecla Mining Company, 6500 N Mineral Drive, Suite 200,
Coeur d’Alene, ID 83815-9408. 1-800-HECLA91 (1-800-432-5291)
Attention: Investor Relations. In addition, any relevant
materials filed with the SEC will be available free of charge at
the SEC’s website at www.sec.gov or interested
persons may access copies of such documentation filed with the
SEC by the Company by visiting the Investors section of the
Company’s website at www.hecla-mining.com.
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,
risks associated with the completion of Transaction, the risk that
expected synergies or cost savings resulting from the Transaction
may not be achieved, 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.
Similarly, please refer to the securities filings of Aurizon for
further information concerning risks applicable to it and its
forward-looking information.
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