Canadian Mining Journal

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TAKEOVER: Hecla attempts to derail U.S. Silver, RX Gold merger

COEUR D’ALENE, Idaho, and TORONTO – In early June 2012, U.S. Silver Corp. and RX Gold & Silver (both of Toronto) announced they had worked out a plan of arrangement for the two companies. Uniting under the U.S. Silver & Gold...


COEUR D’ALENE, Idaho, and TORONTO – In early June 2012, U.S. Silver Corp. and RX Gold & Silver (both of Toronto) announced they had worked out a plan of arrangement for the two companies. Uniting under the U.S. Silver & Gold banner, the new company would combine RX Gold’s producing Drumlummon gold-silver project in Montana, U.S. Silver’s Galena silver-copper mine and Coeur redevelopment projects in Idaho.

The combined company would be owned 70% by U.S. Silver shareholders and 30% by RS Gold investors. It would have an annual output of 2.7 million oz of silver and 25,500 oz of gold. It would be positioned to grow resources and foster head office synergies. Moreover, the geographic concentration of assets would allow the implementation of better mine planning and reduced production costs.

Then, on July 26, Hecla Mining Co. tossed its all-cash offer into the ring. The Idaho-based company is offering C$1.80 for each U.S. Silver share, a 23% premium over the recent closing price of U.S. Silver. Hecla further tried to sway U.S. Silver shareholders by pointing out that its bid represents a 28% premium over the RX Gold-U.S. Silver share deal. The offer is not contingent on financing, since Hecla has sufficient cash in it treasury to complete the purchase.

Hecla, of course, hedged its bet by making the offer contingent upon the RX Gold-U.S. Silver deal not proceeding. Hecla urged U.S. Silver shareholders to revoke their proxies voted for the proposal and vote against the deal before Aug. 2, 2012.

Hecla is the operator of the Greens Creek silver-zinc-gold-lead mine in Alaska, and owner of the suspended Lucky Friday silver-lead-zinc mine in northern Idaho. Adding the assets of U.S. Silver would boost Hecla’s output and growth potential.

Details of both proposed arrangements are available at RXGold.com, US-Silver.com and Hecla-Mining.com.


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