US-based precious metals mining company Hecla Mining signed an agreement to acquire Canadian gold miner Aurizon Mines for CAD$796m ($775m).
As per the agreed terms, Hecla will acquire all issued and outstanding common shares of Aurizon for a consideration of CAD$4.75 ($4.63) a share.
The offer price represents a 9% premium over the Canadian miner’s closing share price of CAD$4.35 ($4.24) on 1 March 2013.
Hecla president and CEO Phillips Baker, Jr. said that the acquisition will create a significant precious metals company with three long-life, high-grade, low-cost mines.
"These three properties have in common strong exploration potential on very large and contiguous land positions as well as locations near communities that are supportive to mining," Baker said.
Aurizon shareholders may elect to receive cash or 0.9953 of a Hecla share for each Aurizon Share, or a combination of both.
The offer price is higher than an earlier bid made by Alamos Gold to purchase Aurizon for a price of CAD$4.26 ($4.15) a share.
Alamos Gold is the largest shareholder in Aurizon with a 16% stake in the company.
The company’s board of directors has determined that the transaction is in the best interests of Aurizon, following consultation with its financial and legal advisors and the recommendation of its special committee of independent directors.
Aurizon board of directors special committee chair George Brack noted that the company’s "rigorous value-maximising process" resulted in a higher value agreement with Hecla.
"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 CAD$1.6bn company with a world class asset portfolio located in politically stable and proven mining jurisdictions," Brack stated.
Hecla has secured $500m from The Bank of Nova Scotia to help fund the transaction.
Image: Hecla will acquire all issued and outstanding common shares of gold miner Aurizon for a consideration of CAD$4.75 ($4.63) a share. Credit: Bertrand Rieger / Corbis.