VANCOUVER – Atac Resources Ltd. [ATC-TSXV; ATADF-OTCQB] said Tuesday it has signed a non-binding letter of intent (LOI) with Hecla Mining [HL-NYSE] in connection with a proposed transaction that will see Hecla acquiring all the issued and outstanding shares of Atac for 14 cents per share, payable in common shares of Hecla.
Under the proposal, Atac shareholders will also receive shares in a new exploration company, which will hold all of Atac’s rights and interests with respect to the Idaho Creek, Catch, Rosy and PIL projects as well as Atac’s cash balance following completion of the transaction.
Hecla Mining, the largest silver producer in the U.S., recently agreed to acquire all the shares of Alexco Resources it didn’t already own in an all-stock deal worth 47 cents a share.
Pursuant to the LOI, Hecla intends to make a $2.0 million strategic investment into the spin out company (SpinCo) in which Hecla will acquire a right of first refusal to acquire any or all of the SpinCo assets, as well as units equivalent to a 19.9% interest in the shares of SpinCo.
Each unit will contain one common share of the spin out company and one warrant. Each warrant will entitle Hecla to purchase one additional SpinCo share for five years at the same price as the spin out company unit.
Atac said the proposed transaction represents a consideration of $31 million in Hecla shares and a value of approximately $8 million in SpinCo shares based on Hecla’s proposed $2 million placement. Atac’s board and management are of the opinion that the proposed transaction is in Atac’s best interests, the company said in a press release.
It said the Hecla shares received would provide Atac shareholders with a premium of 66% based on Atac’s 20-day volume-weighted average price of $0.0845 as of February 17, 2023, or a 109% premium when including the value of Spinco.
The shares are currently trading in a 52-week range of 16 cents and $0.065.
News of the Hecla proposal comes after Atac rejected an unsolicited non-binding proposal from Victoria Gold Corp. [VIT-TSXV] to acquire 100% of the share capital of Atac for 12 cents per share, payable in Victoria shares.
Victoria Gold said its takeover proposal expired at 5:00 pm (Vancouver time) on February 17, 2023.
Atac said the offer represented a 36.4% premium to Atac’s closing price at the time of the offer. It was non-binding and contained numerous deal conditions.
Atac has recently been focused on developing Canada’s only Carlin-style gold district and intrusion-related polymetallic targets at the 1,700 square kilometre Rackla property in the Canadian Yukon.
The company also has an option on the 151.5-square kilometre PIL property, which is located in the prolific Toodogone porphyry and epithermal district of northern British Columbia. Once the option is exercised, Atac and Finlay Minerals Ltd. [FYL-TSXV] will each own 70% and 30% of the project respectively.