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(Kitco News) - Hecla Mining (NYSE: HL) announced on Thursday that the company has entered into a definitive agreement with ATAC Resources to acquire ATAC and its Rackla and Connaught projects in Yukon, Canada.
According to a company statement, Hecla's subsidiary would acquire all of the issued and outstanding shares of ATAC for a consideration of C$31 million, or 0.0166 Hecla share per share of ATAC (consisting of 3,693,516 common shares of the company in aggregate).
Hecla would also invest C$2 million in seed capital, equal to a 19.9% interest, for a new exploration company Cascadia Minerals, which would be spun-out with certain properties to ATAC's shareholders as part of the transaction.
The company said that the total consideration to the ATAC shareholders, including the implied value for the shares in Cascadia (C$0.036/share), is C$39 million.
"The Hecla shares provide ATAC shareholders with a premium of 66% based on ATAC's 20-day volume-weighted average price of C$0.0845 as of February 17, 2023, the last trading day preceding announcement of the letter of intent, or a 109% premium when including the value of Cascadia shares received," it added.
"The acquisition of ATAC reflects the continued execution of our strategy of acquiring significant land packages in highly prospective and tier one mining jurisdictions," stated President and CEO Phillips S. Baker Jr. "The Rackla and Connaught projects would further consolidate our position in Yukon after our strategic acquisition of Keno Hill, which we are developing, and is expected to be the largest and the highest grade primary silver mine in Canada. We look forward to continuing our work with the First Nation of Na-Cho Nyäk Dun and the wider Yukon community."
Founded in 1891, Hecla Mining is the largest silver producer in the United States. In addition to operating mines in Alaska, Idaho, and Quebec, Canada, the company is developing a mine in the Yukon, Canada, and owns a number of exploration and pre-development projects throughout North America.
Known for its discovery of Canada's first Carlin-type gold at its Rackla Gold Property in Yukon (Osiris Deposit, 0.73 Moz Indicated at 4.12 g/t Au, 1.04 Moz Inferred at 3.47 g/t Au), ATAC recently diversified its property portfolio with additional copper assets and a project in British Columbia.
In addition to these projects, ATAC also holds the oxide gold Tiger Deposit, with PEA-level economics yielding a pre-tax NPV(5%) of $118.2 M and an IRR of 54.5% at a US$1,400/oz gold price.
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