Hecla Mining Co 8-K, filed Jul 20, 2022
Hecla Mining Co (HL)
About this 8-K
Hecla Mining Co filed this 8-K on July 20, 2022.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Item 7.01 Regulation FD Disclosure
On July 20, 2022, representatives of Hecla Mining Company (“Hecla”) are scheduled to make a presentation (the “Presentation”) in Coeur d’Alene, Idaho to certain analysts. As part of the Presentation, Phillips S. Baker, Jr., President and Chief Executive Officer of Hecla, will discuss Hecla’s pending acquisition of Alexco Resource Corp. (“Alexco”). The Presentation will include the slides attached as Exhibit 99.1 (the “Acquisition Slides”).
As previously announced, on July 4, 2022, Hecla entered into an Arrangement Agreement (the “Alexco Agreement”) with Alexco. Under the terms of the Alexco Agreement, Hecla will acquire all of the outstanding shares of Alexco, and Alexco’s shareholders will receive 0.116 of a share of Hecla common stock per Alexco share, representing total consideration with a value of US$0.47 per Alexco share (based on the companies’ 5-day volume weighted average price on the New York Stock Exchange (“NYSE”) and NYSE American on July 1, 2022). As part of the Alexco Agreement, Hecla has agreed to:
| • | provide a loan to Alexco in the amount of up to $30 million to bridge Alexco’s operations from signing to closing; and |
| • | subscribe for and purchase 8,984,100 Alexco common shares at CDN$0.50 per share, having an aggregate value of US$3,593,640. Following such purchase, Hecla and its affiliates will own 9.9% of the outstanding Alexco shares. |
Concurrently with entering into the Alexco Agreement, Hecla entered into a Stream Termination Agreement (the “WPM Agreement” and together with the Alexco Agreement, the “Agreements”) with Wheaton Precious Metals Corp. (“WPM”). Under the WPM Agreement, after the closing of the Alexco acquisition, Hecla will issue shares of its common stock valued at US$135 million based on Hecla’s 5-day volume-weighted average price immediately prior to the closing in exchange for the termination of WPM’s silver streaming interest in Alexco’s Keno Hill silver mine located in the Yukon Territory, Canada.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 and Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any of the Company’s filings or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 - Financial Statements and Exhibits
| (c) | Exhibits |
| 99.1 | Acquisition slides.* | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL). | |
| * | Filed herewith. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HECLA MINING COMPANY | ||||||
| By: | /s/ David C. Sienko | |||||
| David C. Sienko | ||||||
| Vice President and General Counsel | ||||||
| Dated: July 20, 2022 | ||||||
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Exhibit 99.1
WORKING TO DAYLIGHT SIGNIFICANT VALUE RESPONSIBLE. SAFE. INNOVATIVE. l * Source – Fraser Institute Annual Survey of Mining Companies 2021 Short-term goals are small steps towards the long-term objective of S&P 500 inclusion Operational Improvements Advancing Exploration & Development Casa Berardi: attempting to overcome inflation pressures particularly diesel Greens Creek: increasing throughput, production improves the technical report Balance Sheet Strength Improved debt rating, yield lower than peers If Alexco & Wheaton transactions close, Keno Hill anticipated to begin producing in 2024 Lucky Friday: implementing the UCB method & mining the intermediate veins improves the technical report Hollister permitting changes to discharge more water Midas continued drilling East Graben San Sebastian drilling mine area and La Roca Republic drilling the Blacktail and Tom Thumb targets in historic district with 3m oz production San Juan Silver rehabbing the access and drilling to the north Continued enhancing dividend New permitting strategy for Montana assets
KEY CHARACTERISTICS OF HECLA US Incorporated and primary US and Canadian operations Brand value 40% of all US silver mined Potential for 40% of all Canadian silver mined Unparalleled growth – on a path of 17-20 million silver ounces by 2025 Low-cost mines with lower inflation risk Long-lived mines Low capital mines/projects (except Montana assets) Strong cash position Access to long-term debt Silver linked dividend policy RESPONSIBLE. SAFE. INNOVATIVE. l No other primary silver miner provides investors with the same risk profile to silver
Highly Prospective and Top-Rated Mining Jurisdiction Alignment in Environmental and Community Stewardship Increase Throughput and/or Lower Costs Long Mine Life ALEXCO KENO HILL SILVER DISTRICT ALEXCO ACQUISITION CONSISTENT WITH STRATEGIC DRIVERS RESPONSIBLE. SAFE. INNOVATIVE. l Among the World’s Highest-Grade Silver Deposits Infrastructure, No Significant Capital Outlay 88 Square Mile Land Package Significant Exploration Potential Achieves the 8 key factors that Hecla considers for internal and external investments
KENO HILL SILVER DISTRICT OVERVIEW RESPONSIBLE. SAFE. INNOVATIVE. l Historical Production of over 200 million ounces of silver at 40 oz Ag per ton HECTOR-CALUMET Property contains excellent exploration potential to host deposits similar in size and grade to the Hector-Calumet, Bermingham, or Flame and Moth deposits Numerous untested or poorly tested exploration targets occur throughout district BERMINGHAM
Arctic Zone Bear Zone BERMINGHAM MID-RANGE WORK PLAN RESPONSIBLE. SAFE. INNOVATIVE. l Focus on development and drilling in the Bear zone to open working faces 12-18 Month Expected to Focus: 800m to 1,200m of development 3,000m to 4,000m of infill & definition drilling (~8M Ag oz) 2021 Reserves (18.2M Ag oz) Bermingham Deep NE Zone Infill & definition drilling location
Christal Zone FLAME & MOTH MID-RANGE WORK PLAN RESPONSIBLE. SAFE. INNOVATIVE. l Development and drilling will focus on upper lightning zone 2021 Reserves (15.6M Ag oz) Lightning Zone 12-18 Month Expected to Focus: 500m to 600m of development 600m to 700m of infill & definition drilling (~2M Ag oz) Infill & definition drilling location
TRANSACTION EXPECTED TO BE COMPLETED RESPONSIBLE. SAFE. INNOVATIVE. l Hecla natural operator, positive institutional investor feedback, working capital loan provided Hecla Natural Acquirer and Operator Transaction Support Lock up agreements with Wheaton, Management and Hecla stake, equates to ~ 15% voting support Long Mine Lives, 14+ years at all operating mines Largest Silver Producer in the US, Potential to be largest Silver Producer in Canada Best Jurisdictional Profile in Silver space, and Precious Metals Miners, enhanced if Alexco and Wheaton transactions close Positive feedback from institutional shareholders, supports trading activity of both Hecla and Alexco share performance since announcement Hecla provided working capital loan of up to $30 million to continue to advance development and drilling, a portion is convertible into ~10% of Alexco of current shares outstanding Currently 9.9% shareholder of Alexco Break fee of $10 million to Hecla if transaction isn’t consummated in certain circumstances due to an alternative proposal Right to match any alternative proposal
Nevada Drilling ongoing at Midas Development of Hatter Graben drift and exploration drilling suspended due to high water inflows Drilling at Aurora in progress Greens Creek Drilling to expand and upgrade multiple ore zones Surface drilling 4 target areas in progress Casa Berardi Drilling to expand resources in the West, Principal, and East Mines Regional exploration Sonic drilling completed; results pending San Sebastian Drill testing deeper levels of the La Roca district and multiple past producing veins Creede Drilling North Bulldog target is in progress Republic Drill testing the Blacktail target is in progress Keno Hill Surface exploration drilling to test several untested or poorly tested exploration targets HECLA’S 2022 EXPLORATION RESPONSIBLE. SAFE. INNOVATIVE. l 21 drill rigs company wide focused on expanding and discovery of resources