Hecla to buy Aurizon Mines for $774 million
Hecla Mining Co. announced that it will buy Aurizon Mines for about US$774 million.
The offer from Hecla tops an unsuccessful bid by the Aurizon’s largest shareholder to gain control of a gold mine in Quebec.
Hecla, the second-largest U.S. silver miner by output, offered C$4.75 per share to acquire Vancouver, British Columbia-based Aurizon, the companies said.
In January, Aurizon rejected an unsolicited takeover offer of C$4.65 per share from Alamos Gold Inc., which already owns more than 16 percent of the company, Reuters reported.
Aurizon operates the Casa Berardi Mine in Quebec, from which it expects production of 3.8 to 4 t (125,000 to 130,000 oz) of gold in 2013.
"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," Hecla chief executive Phillips Baker said in a statement.
The combined company is expected to have a market capitalization of about $1.64 billion, Hecla said.
Hecla, which has been mining precious metals for more than 120 years, expects to produce about 248 t to 279 t (8 million to 9 million oz) of silver this year from its primary silver mines.
It operates the Greens Creek Mine in Alaska and Lucky Friday Mine in Idaho and has exploration and pre-development properties in four silver mining districts in the U.S. and Mexico.
Under the deal terms, each holder of Aurizon may elect to receive either $4.75 in cash or 0.9953 of a Hecla share.
"It is a white knight offer. The advantage for Hecla is that it is a friendly offer. It is a superior offer on a cash basis, $514 million versus Alamos's $305 million maximum cash component in this market I suppose, the more the cash the more certainty of the offer, the better," analyst Steven Butler of Canaccord Genuity said.
The transaction, expected to close in the second quarter of 2013, will be fully financed and will not require the approval of Hecla shareholders.