U.S. Silver board urges rejection of Hecla bid
RX Gold merger offer favored
U.S. Silver Corp.’s board of directors is urging the company’s shareholders to reject an unsolicited buyout offer from Hecla Mining Co., saying the $110 million bid is “opportunistically timed” to take advantage of record-low stock values in the silver industry.
“The Hecla offer is simply not compelling enough for us to abandon our strategic plan going forward,” Gordon Pridham, U.S. Silver’s chairman and interim CEO, said in a statement.
Instead, U.S. Silver’s board wants shareholders to back a previously announced merger with a Canadian company, RX Gold & Silver.
The jockeying for control of assets comes amid renewed interest in Idaho’s Silver Valley, where both Hecla and U.S. Silver have operating silver mines and extensive land holdings.
Pridham said Hecla’s cash offer of $1.80 per share Canadian doesn’t reflect the value of U.S. Silver’s holdings, which include the Galena Mine in Silverton, Idaho, and several historic silver producers, including the Coeur and Calladay properties.
U.S. Silver’s shareholders are scheduled to vote Aug. 7 on the merger with RX Gold & Silver, which owns a Montana gold mine. If that merger goes through, U.S. Silver’s shareholders would get 70 percent ownership in a new company, U.S. Silver & Gold.
Hecla officials, meanwhile, said they think their cash offer represents a better deal for shareholders, saying it offers a premium over the stock’s recent trading price.
Hecla approached U.S. Silver’s management team with a “friendly” merger offer on July 23, according to a company press release. When the parties failed to reach an agreement, Hecla took its offer directly to U.S. Silver’s shareholders, offering cash for their shares.
Hecla’s offer will be withdrawn if the merger with RX Gold & Silver goes through.