Note 13 - Acquisition of Klondex Mines Ltd.

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note

13.

Acquisition of Klondex Mines Ltd.

On

March 16, 2018,

we and Klondex Mines Ltd. ("Klondex") entered into an agreement pursuant to which we would acquire all of the issued and outstanding common shares of Klondex for consideration valued at

$2.47

per Klondex share (the "Arrangement"). Under the terms of the Arrangement, each holder of Klondex common shares

may

elect to receive either (i)

$2.47

in cash (the “Cash Alternative”), (ii)

0.6272

of a Hecla share per Klondex share (the “Share Alternative”), or (iii) US

$0.8411

in cash and

0.4136

of a Hecla share per Klondex share (the “Combined Alternative”), subject in the case of the Cash Alternative and the Share Alternative to pro-ration based on a maximum cash consideration of

$157.4

million and a maximum number of Hecla shares issued of

77,411,859.

If all Klondex shareholders elect either the Cash Alternative or the Share Alternative, each Klondex shareholder would be entitled to receive

US$0.8411

in cash and

0.4136

Hecla shares. Klondex shareholders would also receive shares of a newly formed company which would hold the Canadian assets of Klondex. Klondex had

179,668,072

issued and outstanding common shares as of

May 7, 2018.

An additional

7,476,924

Klondex common shares would be issued immediately prior to consummation of the proposed Arrangement related to conversion of in-the-money Klondex share options and warrants and certain outstanding restricted share units, resulting in a total of

187,144,996

issued and outstanding Klondex common shares at the time of consummation of the Arrangement. The actual value of consideration transferred will be based in part on the market price of Hecla's common stock on the date the Arrangement is consummated. Based on the

60

-day volume-weighted average price at the time of announcement on

March 19, 2018

of

$3.94

per share, total consideration would be

$462.3

million. A

10%

change in the price per share of Hecla stock would result in a

$30.5

million change in the amount of total consideration transferred in the Arrangement. The closing price of Hecla’s common stock was

$3.97

at

May 

8,

2018.

The Arrangement is subject to approval of at least

66

2/3%

of the votes to be cast by Klondex shareholders.

Under the proposed Arrangement, we would also subscribe for

US$7.0

million of common shares of the new company which would hold the Canadian assets of Klondex.