Hecla Mining eyes deal for ATAC Resources and creates new exploration company
Just one day after Yukon's Victoria Gold said they were “moving on” after their offer to acquire the mining properties of nearby ATAC Resources expired, American giant Hecla Mining stepped in and announced its own offer to do the same thing on Feb. 21.
Hecla’s offer is a little sweeter than Victoria Gold’s, since it upped the price another two cents per share, offering 14 cents. Two more cents on a penny stock that usually hovers between seven or eight cents a share is a big difference. The announcement came through two news releases ATAC and Hecla issued Feb. 21; ATAC Resources’ share price predictably jumped to 14 cents the following day.
The offer, in a non-binding letter of intent, outlines a deal where the share offering is payable in Hecla shares to a considered value of $31 million. ATAC’s properties will be divided between Hecla Mining and a new exploration company, which is to be spun off during the acquisition process, temporarily named Spinco.
The letter says two properties would be acquired by Hecla Mining, and the others would become part of the new company. Andrew Carne, ATAC’s Vice President of Corporate and Project Development, explained that Rackla Gold’s property northeast of Mayo in the Beaver River area and the Connaught property west of Dawson City would stay with Hecla. He went on to say the Catch project southeast of Carmacks, the Rosie project east of Whitehorse, the Idaho Creek project next to Casino as well as ATAC’s projects in British Columbia would become part of the new spun off company.
Spinco would see a $2 million strategic investment by Hecla. The proposal suggests that Hecla would then maintain a 20 per cent interest in the new entity and enjoy the first rights of refusal to acquire any or all of the Spinco assets in the future.
Carne stressed in his Feb. 21 interview the companies are engaged in a non-binding letter of intent. The parties have until March 15 to come to an agreement, before the offer expires.
ATAC’s news release states that the “Board and management are of the opinion that the proposed transaction is in ATAC’s best interests.”
They note that the proposed transaction represents $31 million in Hecla shares and a value of approximately $8 million in Spinco shares. The increase in the average share price they say, represent a 109 per cent premium including the value of Spinco from ATAC.
ATAC had rebuffed Victoria Gold’s unsolicited offer in January and February, saying they believed the value of the mineral resources in the Rackla property alone was not reflected in Victoria Gold’s offer.
Victoria Gold’s release Feb. 20 stated: “Victoria wishes ATAC’s management and Board of Directors success as they work to achieve their future exploration, permitting, and capital allocation objectives.”
Lawrie Crawford, Local Journalism Initiative Reporter, Yukon News