Shares in Nevada-focused precious metals miner Klondex Mines (TSE:KDX,NYSE:KLDX) shot up in pre-market deals in New York after it revealed it would be bought by Hecla Mining Company in a premium transaction.
Under the scheme, Hecla will acquire Klondex for US$462mln. The latter's Canadian assets (in Manitoba) will be spun out to existing shareholders.
Klondex shares surged 60% to C$2.88 in Monday trade in Toronto.
READ - Klondex Mines confident on operating and cash flow aims for 2018 after challenges of last year
Klondex's shareholders will receive US$2.47 per share in cash or shares of Hecla, representing a big 59%premium to Klondex's 30-day volume-weighted average price, as of Friday (March 16), on the NYSE American.
"This transaction is an excellent outcome for Klondex and our shareholders, delivering premium value and a clear pathway to develop and optimise the Nevada mining assets and create further value in the future," said Paul Huet, Klondex chief executive.
"Hecla has a proven track record of developing and optimising mining assets such as ours and has a strong balance sheet that should help Fire Creek and our other properties reach their full potential.
"Hecla operates a diverse portfolio of some of the highest-grade mines in the world, and the addition of our assets strengthens the portfolio further."
He added Klondex board was unanimously recommending that shareholders vote in favour.
Klondex owns the Fire Creek mine, the Midas mine and milling facility, and the Hollister mine, all in Nevada - a mining sweetspot.
"Opportunities to acquire significant land packages along Nevada's prolific gold trends are very rare," said Phillips S. Baker Jr., Hecla's president and chief executive.
"Rarer still are for these land packages to have the highest grade mines in the U.S...," he added
"We structured the deal to use our excess cash balance so our shareholders can benefit from the approximately 162,000 gold equivalent ounces a year of production while minimising dilution."
Klondex shareholders will continue to own new firm Klondex Canada, in which certain members of Klondex's board and management team will continue.
Hecla will subscribe for US$7mln shares, in exchange for a 13.46% equity interest, based on a pre-investment Klondex Canada valuation of US$45mln.
Klondex Canada plans to apply to list its shares on the TSX Venture Exchange.
In New York, Klondex shares added over 56% in pre-market at US$2.25.
In the regular session, they shot up over 60% to C$2.88.