COEUR d'ALENE - Hecla Mining Co. announced Tuesday it agreed to acquire 20 percent ownership interest of British Columbia-based Dolly Varden Silver Corp.
Hecla, of Coeur d'Alene, will pay 16 cents per share, on 20 million common shares, and Dolly Varden will receive total gross proceeds of $3.2 million.
Dolly Varden is engaged in exploration and development of silver projects in northwestern British Columbia, including the past-producing Dolly Varden and Torbit mines that combined have produced more than 20 million ounces of silver.
Dolly Varden's land package is in a geologic setting with world-class projects such as the past-producing Eskay Creek Mine, which is a similar deposit type to Hecla's Greens Creek Mine, located in Alaska.
Hecla now will be able to nominate a person to Dolly Varden's board of directors, and will be able to nominate someone to a technical committee, which will be established to design and execute Dolly Varden's exploration programs.
Hecla gained the right of first refusal in any proposed transfer or sale by Dolly Varden of its interest in its mining properties.
Hecla president and CEO Phillips S. Baker Jr. said in a statement, "Hecla is pleased to be able to make a strategic investment in Dolly Varden to participate in the re-emergence of a historic silver district with outstanding exploration and development potential."
Hecla will be acquiring the common shares for investment purposes, and the company said it had no "present intention" to acquire ownership of, or control over, additional securities of Dolly Varden.
Baker said, "It's one of many strategic investments in junior mining companies with strong management and outstanding exploration land packages that Hecla is contemplating as we seek to expand our exposure to under-explored silver-gold mining districts in the Americas."
Ron Nichols, CEO and president of Dolly Varden, said the company is pleased "to forge such a strong strategic partnership with Hecla."
The agreement brings together two technical teams that have experience operating and restarting mines in historical silver mining camps, Nichols said.
Hecla's experience at Greens Creek will be particularly valuable to the Dolly Varden silver project because of the similar geological settings, he said.
Two weeks ago, Hecla tried to acquire all common shares of U.S. Silver Corp., which would have given Hecla control of U.S. Silver's Silver Valley properties. The Galena, Coeur and Caladay mines in the Valley are either owned or operated or both by U.S. Silver, which has corporate offices in Toronto.
Hecla said the $100 million offer for U.S. Silver represented a good strategic fit for Hecla.
U.S. Silver shareholders voted, instead, to approve a combination transaction with RX Gold and Silver.