Wheels in motion for merger between Hecla Mining and Equinox

The wheels are in motion for a merger between Hecla Mining (NYSE) and Equinox Resources (TSE).

The agreement-in-principle, initiated by Hecla, calls for Equinox shareholders to receive 0.3 Hecla common shares for each outstanding Equinox share. By pooling the interests of the two companies, Hecla hopes the transaction will qualify for special accounting treatment.

The merger is subject to a definitive agreement by mid-December and a due diligence review, as well as approval by Equinox shareholders. Equinox President Ross Beaty was out of the country at presstime and unable to comment on his future within the merged entity. Jenna Hardy, Equinox’s technical manager, said it is too early to discuss the structure of the merged entity or Beaty’s role within it.

Hecla, now in its 102nd year and based in Coeur d’Alene, Idaho, produces silver, lead, gold and industrial minerals. Two of its advanced gold projects — La Choya in northern Mexico and Grouse Creek in central Idaho — are expected to enter production in late 1993 and late 1994, respectively. Equinox, a Vancouver, B.C.-based company, has exploration and mining operations in western North America and Bolivia. It produces gold at its 50%-owned American Girl mine in California.

In the third quarter, the company produced 8,000 oz. gold (net), at a cash cost of US$272 per oz. Net income for the quarter was $205,000, compared with a net loss of $6.1 million in the same period last year.

Equinox is spending $5 million to advance its Rosebud gold project in Nevada, for which a feasibility study is expected next year. Work is also continuing on joint-ventured exploration projects elsewhere in the U.S. Meanwhile, in Bolivia, the company has six geologists exploring and evaluating new projects. The work is being funded by Teck (TSE), in return for the right to a 51% interest in the projects.