OTTAWA (dpa-AFX) - U.S.-based silver producer Hecla Mining Co. (HL) said Monday that it has agreed to buy Canada-based gold miner Aurizon Mines Ltd. (AZK, ARZ.TO) for about C$796 million, or $774.13 million. Following the announcement, shares of Aurizon are up more than 7 percent in pre-market trades.
Under the terms of the deal, Coeur d'Alene, Idaho-based Hecla will acquire all of the outstanding common shares of Canada-based Aurizon for C$4.75 per share.
The offer price represents a 39 percent premium to Aurizon's unaffected share price on January 11, 2013, the last trading day prior to the announcement of the hostile takeover bid for the company by Alamos Gold Inc. (AGI.TO). It also represents a 9 percent premium to Aurizon's closing stock price of C$4.35 on Friday, March 1.
Alamos said in mid-January that it commenced an offer to acquire Aurizon Mines for C$4.65 per share, in a deal valued at about C$780 million. However, Aurizon later urged its shareholders to reject that offer.
Hecla is a low-cost U.S. silver producer with operating mines in Alaska and Idaho, and exploration as well as pre-development properties in four silver mining districts in the U.S. and Mexico. Aurizon is a gold producer focused on developing its existing projects in the Abitibi region of north-western Quebec.
Under the proposed deal with Hecla, Aurizon shareholders may opt to receive either C$4.75 in cash or 0.9953 of a Hecla share or a combination of both. This is subject in each case to pro-ration based on a maximum cash consideration of C$513.63 million and a maximum of about 57 million Hecla shares.
Assuming that all Aurizon shareholders elect to receive either cash or Hecla shares, each shareholder would be entitled to receive C$3.11 in cash and 0.34462 of a Hecla share for each Aurizon share.
Aurizon said its board of directors has recommended that its shareholders vote in favor of approving the transaction. In addition, all the directors and senior officers of Aurizon have agreed to vote their shares in favor of the deal.
Phillips Baker, Hecla's President and Chief Executive Officer said, 'Hecla and Aurizon together create a unique precious metals company with three long-life, high-grade, low-cost mines in some of the best mining jurisdictions in the world.'
George Brack, Chair of the Special Committee of the Aurizon Board of Directors said, 'The agreement with Hecla provides Aurizon shareholders with an attractive premium, value certainty through a substantial cash consideration component and an opportunity to participate in the upside potential of a combined C$1.6 billion company with a world class asset portfolio located in politically stable and proven mining jurisdictions.'
Hecla said the transaction will be fully financed and does not require the approval of its shareholders. The transaction will be implemented by way of a court-approved plan of arrangement and requires the approval of 66 2/3 percent of the votes cast by Aurizon shareholders at a special meeting expected to take place in May 2013. The deal is anticipated to close in the second quarter of 2013.
The agreement also provides Hecla with a 'right to match' any competing offer that constitutes a superior proposal and requires Aurizon to pay a termination fee of C$27.2 million in certain circumstances.
Aurizon's board also announced the cancellation of the March 7, 2013 special meeting of shareholders, the purpose of which was to ratify the company's shareholder rights plan.
HL closed Friday's trading at $4.64 on a volume of 2.98 million shares.
AZK closed Friday's trading at $4.22. In Monday's pre-market, the stock is trading at $4.55, up $0.31 or 7.31 percent.
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