Hecla Mining acquires Klondex Mines for $462 million
A leading low-cost U.S silver producer, with a significant portfolio in silver and an emerging force in the gold industry, has entered into an agreement to acquire a junior-mid tier silver and gold producer as it continues to expand its footprint.
Hecla Mining Company announced this week that it will acquire three high-grade Nevada gold mines with the acquisition of Klondex Mines ltd, in a deal worth $462 million.
Through the acquisition, Hecla will add the Fire Creek, Midas and Hollister mines to its already expansive gold and silver portfolio.
Hecla will also acquire seven large land positions in some of the safest and most prolific mining jurisdictions in the world.
The company will also generate a significant production base with highly prospective growth opportunities and cost reductions. The acquisition adds about 162,000 oz of annual gold equivalent production.
Upon completion of the transaction, Hecla will launch a significant exploration program at Fire Creek and at the prospective Hatter Graben discovery at Hollister.
Under the transaction, a wholly new company will be formed (Klondex Canada) which will look to list on the TSX-V.
“One of our core strengths is operating high-grade, narrow-vein underground mines, and Klondex’s three operating mines – Fire Creek, Midas and Hollister – are some of the highest-grade gold mines in the world,” said Phillips S. Baker, Jr., Hecla’s President and CEO.
“We expect this transaction to be accretive on many important financial and credit metrics, with potentially significant synergies.”
“This transaction is an excellent outcome for Klondex and our shareholders, delivering premium value and a clear pathway to develop and optimize the Nevada mining assets and create further value in the future,” said Paul Huet, Klondex’s President and CEO.
“Hecla has a proven track record of developing and optimizing mining assets such as ours and has a strong balance sheet that should help Fire Creek and our other properties reach their full potential. Hecla operates a diverse portfolio of some of the highest-grade mines in the world, and the addition of our assets strengthens the portfolio further. We are delighted to enter into this agreement and the Klondex board unanimously recommends that Klondex shareholders vote in favour of this transaction.”