U.S. Silver shareholders prefer competing offer
Hecla Mining Co. won’t be acquiring a competing silver producer through a hostile takeover.
Company officials announced Tuesday morning that U.S. Silver Corp.’s shareholders had rejected their cash offer of about $109 million, and voted instead to merge with a Canadian firm, RX Gold & Silver.
The merger will create a new company – U.S. Silver & Gold, which includes the Galena Mine in Idaho’s Silver Valley and a gold mine in Montana.
U.S. Silver’s shareholders will own about 70 percent of the new company. Officials said they’ll be seeking final approval for the merger from Canadian authorities later this week, with the transaction expected to be finalized on Monday.
• In other news, Hecla officials said they’ve hired back an additional 20 miners at the Lucky Friday Mine this month and remain on track to reopen the underground silver mine early next year.
Employment at the Mullan, Idaho, mine is 95 people. Most of the workers were laid off in January, when federal inspectors closed the Lucky Friday’s main shaft amid safety concerns.
Work crews have finished required rehabilitation work on the shaft past the 4,900 level, which will allow development crews to start preparing the mine to resume operations, Hecla officials said.
• The Lucky Friday’s update was released with Hecla’s second-quarter earnings report.
The company’s net income was $2.4 million, or 1 cent per common share, during the quarter; compared to $33.2 million, or 12 cents per share, during the second quarter of 2011. Second quarter sales were $67 million.
Hecla’s second-quarter results were affected by $6.5 million in work suspension-related costs at the Lucky Friday Mine and lower-than-expected ore grades at the company’s Greens Creek Mine in Alaska.
Even with only the Greens Creek Mine operating, Hecla generated enough cash flow and had a strong enough balance sheet to spend record amounts in capital upgrades and exploration, said Phil Baker, Hecla’s president and CEO.
The company spent $10.6 million on exploration costs, predevelopment work and engineering studies during the second quarter at the Greens Creek Mine, silver properties in Mexico and Colorado, and the historic Star Mine complex in the Silver Valley.