Hecla Mining has entered into a non-binding letter of intent (LoI) to acquire all of the issued and outstanding shares of Canada-based exploration company ATAC Resources for a consideration of C$31m ($22.9m).
Under the terms proposed in the LoI, the US-based mining company will offer C$0.14 ($0.1) per ATAC Resources share, which will be payable in Hecla Mining’s common stock shares. The latter is listed on the Toronto Stock Exchange (TSX) in Canada.
The deal includes ATAC Resources’ Rackla and Connaught projects in Yukon, Canada.
Hecla Mining also intends to make a C$2m ($1.48m) investment into Spinco, a new exploration company that would hold the remaining assets of ATAC Resources, which include the Idaho Creek, Catch, Rosy, and PIL projects.
Furthermore, Hecla Mining will have the right of first refusal to acquire all of Spinco’s assets as well as a number of units equivalent to 19.9% of the new company.
The Hecla Mining shares to be offered will provide ATAC Resources’ shareholders with a premium of 66% based on the latter’s 20-day volume-weighted average price as of 17 February 2023.
ATAC Resources fully owns the Rackla gold property, which spans across an area of 1,700km2. Rackla is comprised of two separate projects, namely Rau and Nadaleen.
ATAC Resources president and CEO Graham Downs said: “We believe the Potential Transaction will provide significant value to ATAC shareholders. Hecla is an ideal acquirer for the Rackla Gold Property, given its adjacent Keno Hill mining project and demonstrated commitment to the Yukon and its communities.
“As an established and successful multi-asset producer, Hecla has the resources, strengths and experience to meaningfully advance the known targets at Rackla and Connaught.”
The proposed transaction is subject to the signing of a definitive and binding agreement and other things.
Last week, ATAC Resources said that it received an unsolicited non-binding takeover proposal from Victoria Gold, valuing the company at C$0.12 ($0.09) per share.
