The boards of Hecla Mining (NYSE) and CoCa Mines (NASDAQ) unanimously approved a definitive merger agreement that will result in CoCa becoming a wholly owned subsidiary of Hecla. The companies hope to complete the merger in several months following the normal approval process and a final valuation of CoCa’s Grouse Creek gold project in Idaho.
Under the terms of the merger agreement, Hecla will issue 3.42 million of its common share (about 13% of Hecla’s capitalization) in exchange for all CoCa’s outstanding shares at the time of the merger. The number of Hecla shares may be adjusted up or down by 176,119 shares, based on a valuation of CoCa’s Grouse Creek project.
CoCa expects its shareholders will vote on the proposed merger at a special shareholders’ meeting, with a date to be announced shortly. The transaction is currently valued at about US$27 million, and is intended to be tax-free to CoCa shareholders.
Hecla President Arthur Brown said the CoCa acquisition would have a *DOpositive effect on Hecla’s asset base, doubling Hecla’s proven and probable gold reserves.” Hecla produced 151,231 oz. gold in 1990, which represents a hefty 83% increase over 1989’s gold production of 82,586 oz. The company attributed the increased production to a full season of operation at the Yellow Pine mine in Idaho, which turned out 58,000 oz. gold.
The Republic mine in Washington state produced more than 81,000 oz. gold. An accelerated development program is in progress at the Republic operation, which includes a new decline to provide a second access to the Golden Promise area of the mine and to prove up new gold reserves.
Hecla produced 5.6 million oz. silver in 1990, a slight decrease from 1989’s production of 5.8 million oz.
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