Acadia/Hecla deal signed

An agreement between Toronto- listed Acadia Mineral Ventures and the Canadian subsidiary of Idaho- based Hecla Mining was signed this week.

Over the next three years, the agreement could give Acadia a cash infusion of $5.34 million. Hecla, on the other hand, can pick up 600,000 shares in the Nova Scotia gold explorer and a 60% interest in the Mooseland gold property in Halifax Cty., N.S.

In order to earn that 60% interest in the property (where drill-inferred reserves total two million tons grading 0.39 oz gold per ton) Hecla Mining Co. of Canada must bring the property into production and make the $2-million cash payment to Acadia.

To pay back the capital cost of bringing the property into production, should the pending feasibility study prove positive, Hecla will receive 90% of production earnings in the early years of mine production. Once those capital costs are paid back, earnings will be split 60/40, Hecla/Acadia.

Hecla has already paid Acadia $200,000 as the first instalment and has also purchased 200,000 shares of Acadia at $3.20 per share for a total of $840,000.

Hecla also has a 2-year option for 200,000 more Acadia shares at $6.00 and a 3-year option for 200,000 shares at $7.50. Should those options be exercised, Acadia would receive an additional $2.7 million.

Hecla plans to begin an underground exploration program at the Mooseland property as soon a government permits allow.

Acadia, meanwhile, has six drill rigs operating on a number of other properties in the Maritimes. The company has 12 prime properties other than the Mooseland property. The company’s shares traded this week in Toronto at about $2.15.

The company has about 6.5 million shares outstanding.