Hecla Mining Co. announced it will acquire all the outstanding shares of Klondex Mines, a high-grade Nevada underground gold producer with three mines, Fire Creek, Midas and Hollister, for $462 million. Klondex’s Canadian assets will be spun out to its existing shareholders.

“Opportunities to acquire significant land packages along Nevada’s prolific gold trends are very rare,” said Phillips S. Baker Jr., Hecla president and CEO. “Rarer still are for these land packages to have the highest-grade mines in the U.S. and this transaction is consistent with Hecla’s strategy of owning large prospective land packages with mines where we can improve costs, grow reserves and expand production. 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 minimizing dilution.”

Baker said the 110-square-mile land position offers the company an opportunity to make discoveries and grow the reserve base.

Paul Huet, Klondex president and CEO, said, “Hecla has a proven track record of developing and optimizing 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.

Klondex is forming Klondex Canada. Certain members of Klondex’s board and management team will continue on at Klondex Canada. Hecla will subscribe for US$7 million of common shares of New Klondex in exchange for a 13.46% equity interest, based on a pre-investment Klondex Canada valuation of US$45 million.