EX-1.0 2 ex1-0.htm NOTICE OF SPECIAL MEETING OF SHAREHOLDERS AND OPTIONHOLDERS AND MANAGEMENT INFORMATION PROXY CIRCULAR FOR MEETING TO BE HELD ON MAY 9, 2013 CA Filed by Filing Services Canada Inc. 403-717-3898

 

NOTICE OF

Special Meeting of Shareholders AND OPTIONHOLDERS

and

Management Information Proxy Circular

OF

AURIZON MINES LTD.

 

 

April 10, 2013

   
   

 

 

April 10, 2013

Dear Aurizon Securityholder,

It is my pleasure to extend to you, on behalf of the board of directors of Aurizon Mines Ltd. ("Aurizon"), an invitation to attend a special meeting (the "Meeting") of the shareholders ("Aurizon Shareholders") and optionholders of Aurizon (together with Aurizon Shareholders, "Aurizon Securityholders") to be held at The Vancouver Club, in the University Room, 3rd Floor, 915 West Hastings Street, Vancouver, BC, V6C 1C6 at 1:00 p.m. (Vancouver time) on May 9, 2013.

At the Meeting, you will be asked to consider and, if thought advisable, approve a special resolution (the "Arrangement Resolution") with respect to the arrangement (the "Arrangement") involving the acquisition by 0963708 B.C. Ltd. ("Acquireco"), a wholly-owned subsidiary of Hecla Mining Company ("Hecla"), of all of the outstanding common shares of Aurizon (the "Aurizon Shares"), pursuant to an arrangement agreement effective as of March 3, 2013 among Aurizon, Hecla and Acquireco.

Under the terms of the Arrangement, Aurizon Shareholders may elect to receive, in exchange for each Aurizon Share, $4.75 or 0.9953 of a share of Hecla common stock (a "Hecla Share") or a combination of both, subject in each case to pro-ration based on a maximum cash consideration of approximately $513.6 million and a maximum share consideration of 57 million Hecla Shares. Assuming that all shareholders elect to receive either cash or Hecla Shares, the consideration will be fully pro-rated with each shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share. This description of the pro-ration provisions of the Arrangement is subject to the detailed provisions of the Arrangement itself. See "The Arrangement - Election Procedure and Pro-ration" in the accompanying management proxy circular (the "Circular"). The actual consideration received by an Aurizon Shareholder will depend upon such Aurizon Shareholder’s consideration election and the effect of pro-ration.

Under the terms of the Arrangement, each Aurizon stock option that has an exercise price of less than $4.75 per share will, without any further action by or on behalf of any Aurizon optionholder, be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon (free and clear of all liens, claims and encumbrances) and cancelled in exchange for the number of Aurizon Shares (the "Option Consideration") obtained by dividing: (i) the amount, if any, by which: (A) the product obtained by multiplying the number of Aurizon Shares underlying such Aurizon stock option by $4.75; exceeds: (B) the aggregate exercise price payable under such Aurizon stock options; by (ii) $4.75. Aurizon Shares received as Option Consideration will be subject to the election and pro-ration provisions of the Arrangement. Aurizon stock options that have an exercise price greater than $4.75 per share will be cancelled, and no consideration will be paid in respect of these options.

To become effective, the Arrangement Resolution must be approved by at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) Aurizon Shareholders voting as a single class, and (ii) Aurizon Securityholders voting together as a single class. The Arrangement also requires the approval of the Supreme Court of British Columbia.

Hecla has entered into voting agreements with each of the directors and senior officers of Aurizon (collectively, the "Locked-up Shareholders"), pursuant to which the Locked-up Shareholders have agreed, subject to the terms and conditions thereof, to vote their Aurizon Shares and options to purchase common shares of Aurizon ("Aurizon Options") in favour of the Arrangement Resolution. The Locked-up Shareholders collectively beneficially own or exercise control or direction over an aggregate of 1,768,102 Aurizon Shares and 6,254,000 Aurizon Options, representing approximately 1.07% of the outstanding Aurizon Shares and 60.4% of the outstanding Aurizon Options.

   
   

The board of directors of Aurizon (the "Aurizon Board") has unanimously determined that the consideration to be received by Aurizon Securityholders under the Arrangement is fair to Aurizon Securityholders and in the best interests of Aurizon. Accordingly, the Aurizon Board unanimously approved the Arrangement and unanimously recommends that Aurizon Securityholders vote their Aurizon Shares and Aurizon Options in favour of the Arrangement Resolution. In making its recommendation, the Aurizon Board considered a number of factors as described in this Circular, including those set out under the heading "The Arrangement — Recommendation of the Aurizon Board".

The accompanying Circular contains a detailed description of the Arrangement and other information relating to Aurizon, Hecla and Acquireco, including the Hecla Shares. We urge you to carefully consider all of the information in the Circular. If you require assistance, please consult your financial, legal or other professional advisor. If you have any questions or require more information with regard to the procedures for voting or completing your transmitted documentation, please contact Georgeson Shareholder Communications Canada Inc. by calling toll free in North America at 1-888-605-7616, calling collect from outside North America at 1-781-575-2422, or by email at askus@georgeson.com.

This is an important matter affecting the future of Aurizon and your vote is important regardless of the number of Aurizon Shares or Aurizon Options you own.

If you are a registered holder of common shares but are unable to be present at the Meeting in person, we encourage you to vote by completing the enclosed form of proxy. Voting by proxy will not prevent you from voting in person if you attend the Meeting but will ensure that your vote will be counted if you are unable to attend.

If you are a non-registered holder of Aurizon Shares and have received these materials through your broker or through another intermediary, please complete and return the proxy or other authorization provided to you by your broker or by such other intermediary in accordance with the instructions provided with the proxy. Failure to do so may result in your Aurizon Shares and Aurizon Options not being eligible to be voted at the Meeting.

Registered Aurizon Securityholders electing to submit a proxy may do so by choosing one of the following methods:

(a)complete, date and sign the proxy and return it to Aurizon's transfer agent, Computershare Trust Company of Canada ("Computershare"), by fax within North America at 1-866-249-7775, outside North America at 1-416-263-9524, or by mail to Computershare Trust Company of Canada, Proxy Dept., 9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; or
(b)use a touch-tone phone to transmit voting choices to the toll free number given in the proxy. Registered Aurizon Securityholders who choose this option must follow the instructions of the voice response system and refer to the proxy for the toll free number and control number; or
(c)log on to the internet at Computershare’s website, www.investorvote.com. Registered Aurizon Securityholders must follow the instructions given on the website and must refer to the proxy for the control number.

A registered Aurizon Securityholder must ensure that the proxy is received not less than 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting, which for greater certainty means no later than 4:00 p.m. (Toronto time) on May 7, 2013 or not less than 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment or postponement thereof.

   
   

We also encourage Aurizon Shareholders to complete and return the enclosed Letter of Transmittal and Election Form (printed on blue paper) ("Letter of Transmittal and Election Form"), together with the certificate(s) representing your Aurizon Shares, to the Depositary at the address specified in the Letter of Transmittal and Election Form. The Letter of Transmittal and Election Form contains other procedural information relating to the Arrangement and should be reviewed carefully. It is recommended that you complete, sign and return the Letter of Transmittal and Election Form with accompanying Aurizon Share certificate(s) to the Depositary as soon as possible. To make a valid election as to the consideration that you wish to receive under the Arrangement (subject to pro-ration), you must sign and return the Letter of Transmittal and Election Form and make a proper election thereunder and return it with accompanying Aurizon Share certificate(s) to the Depositary prior to 4:00 p.m. (Toronto time) on May 7, 2013 or such later date as may be determined and published in accordance with the Arrangement (the "Election Deadline"). IF YOU FAIL TO MAKE A PROPER ELECTION PRIOR TO THE ELECTION DEADLINE, YOU WILL BE DEEMED TO HAVE ELECTED TO RECEIVE THE SHARE CONSIDERATION IN RESPECT OF EACH AURIZON SHARE, SUBJECT TO PRO-RATION.

Subject to obtaining court and other regulatory approvals and satisfaction or waiver of all other conditions precedent, if Aurizon Securityholders approve the Arrangement Resolution, it is anticipated that the Arrangement will be completed in the second quarter of 2013.

On behalf of Aurizon, we would like to thank all Aurizon Securityholders for their ongoing support as we prepare to take part in this important event in the history of Aurizon.

Yours truly,

"David P. Hall"

David P. Hall

Chairman

   
   

 

 

    Suite 1120, Cathedral Place,
925 West Georgia Street,
Vancouver, British Columbia
Canada V6C 3L2
Tel: (604) 687-6600
Toll Free: 1-888-411-GOLD
Fax: (604) 687-3932
Email: info@aurizon.com
Web Site: www.aurizon.com
     

 

 

 

 

NOTICE OF special MEETING

NOTICE IS HEREBY GIVEN that pursuant to an order of the Supreme Court of British Columbia dated April 10, 2013 (the "Interim Order"), a special meeting (the "Meeting") of shareholders ("Aurizon Shareholders") and optionholders ("Aurizon Optionholders") of Aurizon Mines Ltd. ("Aurizon") will be held at The Vancouver Club, in the University Room, 3rd Floor, 915 West Hastings Street, Vancouver, BC, V6C 1C6 at 1:00 p.m. (Vancouver time) on May 9, 2013, for the following purposes:

1.to consider and, if thought advisable, to pass, with or without variation, a special resolution (the "Arrangement Resolution") to approve a plan of arrangement pursuant to Section 288 of the Business Corporations Act (British Columbia) (the "BCBCA"). The full text of the Arrangement Resolution is set forth in Appendix A to the accompanying management information circular dated April 10, 2013 (the "Circular"); and
2.to transact such other business as may properly be brought before the Meeting or any adjournment thereof.

Specific details of the matters proposed to be put before the Meeting are set forth in the Circular which accompanies this Notice of Special Meeting.

The record date for determining the Aurizon Shareholders and Aurizon Optionholders entitled to receive notice of and vote at the Meeting is the close of business on April 1, 2013 (the "Record Date"). An Aurizon Shareholder or Aurizon Optionholder may attend the Meeting in person or may be represented by proxy. Aurizon Shareholders and Aurizon Optionholders who are unable to attend the Meeting or any adjournment thereof in person are requested to complete, date, and sign the accompanying form of proxy and deliver it in accordance with the instructions set out in the form of proxy and in this Circular.

Aurizon Shareholders and Aurizon Optionholders who are planning to return the form of proxy are encouraged to review this Circular carefully before submitting the form of proxy.

If you are an unregistered holder of Aurizon Shares and have received these materials through your broker or through another intermediary, please complete and return the form of proxy or voting instruction form provided to you by your broker or other intermediary in accordance with the instructions provided therein.

Pursuant to the Interim Order, each registered Aurizon Shareholder has been granted the right to dissent in respect of the Arrangement Resolution and the dissent rights are described in the accompanying Circular. To exercise such right, (a) a written notice of dissent to the Arrangement Resolution must be received by Aurizon, c/o Blake, Cassels & Graydon LLP, 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, B.C. V7X 1L3 Attention: Sean Boyle by 1:00 p.m. (Vancouver time) on May 7, 2013, or two days prior to any adjournment of the Meeting, (b) the Aurizon Shareholder must not have voted in favour of the Arrangement Resolution, and (c) the Aurizon Shareholder must have otherwise complied with the provisions of sections 237 to 247 of the BCBCA, as modified and supplemented by the Interim Order. The right to dissent is described in the Circular and the texts of the Interim Order and sections 237 to 247 of the BCBCA are set forth in Appendices D and F, respectively, to this Circular.

   
   

Persons who are beneficial owners of Aurizon Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that only registered holders of Aurizon Shares are entitled to dissent. Accordingly, a beneficial owner of Aurizon Shares desiring to exercise this right must make arrangements for the Aurizon Shares beneficially owned by such person to be registered in his, her or its name prior to the time the written notice of dissent to the Arrangement Resolution is required to be received by Aurizon or, alternatively, make arrangements for the registered holder of Aurizon Shares to dissent on his, her or its behalf.

Failure to strictly comply with the requirements set forth in sections 237 to 247 of the BCBCA, as modified and supplemented by the Interim Order, may result in the loss of any right of dissent.

Georgeson Shareholder Communications Canada Inc. ("Georgeson") is acting as Aurizon’s proxy solicitation agent. If you have any questions or require any assistance in completing your proxy or voting instruction form, please contact Georgeson by calling toll free in North America at 1-888-605-7616, calling collect from outside North America at 1-781-575-2422, or by email at askus@georgeson.com.

 

DATED at Vancouver, British Columbia this 10th day of April, 2013.
BY ORDER OF THE BOARD OF DIRECTORS

David P. Hall, Chairman

   
   

TABLE OF CONTENTS

 
 
 
GLOSSARY OF TERMS 1
MANAGEMENT PROXY CIRCULAR 1
REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES 1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 1
EXCHANGE RATE DATA 3
NOTICE REGARDING INFORMATION 3
NOTE TO UNITED STATES SHAREHOLDERS 4
NOTICE TO ALL AURIZON SHAREHOLDERS 5
QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT 6
SUMMARY OF CIRCULAR 11
The Meeting 11
Purpose of the Meeting 11
Effects of the Arrangement 11
Aurizon Securityholder Approval 11
The Arrangement 11
Opinions of Financial Advisors 16
Parties to the Arrangement 16
Letter of Transmittal and Election Form 16
Election Procedure and Pro-ration 17
Court Approval of the Arrangement 18
Cancellation of Rights after Six Years 18
Interests of Certain Persons in the Arrangement 19
The Arrangement Agreement 19
Fractional Interest 19
Rights of Dissent 19
Income Tax Considerations 20
Canadian Securities Laws 20
U.S. Securities Laws 20
Selected Unaudited Pro Forma Financial Information 21
GENERAL PROXY INFORMATION 22
Date, Time and Place of Meeting 22
Solicitation of Proxies 22
Appointment and Revocation of Proxies 22
Proxy Voting 23
Advice to Beneficial Holders of Aurizon Shares 23
Quorum 24
Principal Holders of Aurizon Shares 24
THE ARRANGEMENT 24
Background to the Arrangement 24
Special Committee 27
Recommendation of the Aurizon Board 27
Reasons for the Recommendation 27
Opinions of Financial Advisors 29
Voting Agreements 30
Description of the Arrangement 30
Securityholder and Court Approvals 32
Letter of Transmittal and Election Form 33
Election Procedure and Pro-ration 33
Exchange Procedure 34
Lost Certificates 35
Cancellation of Rights after Six Years 36
Fractional Interest 36
Withholding Rights 36
Interests of Directors and Executive Officers of Aurizon in the Arrangement 36
THE ARRANGEMENT AGREEMENT 38
   
   

TABLE OF CONTENTS

 
 
 
 
Representations and Warranties 39
Covenants 40
Conditions Precedent to the Arrangement 44
Notice and Cure Provisions 46
Non-Solicitation 47
Right to Match 48
Expenses Reimbursement and Termination Fees 49
Insurance and Indemnification 51
Termination 51
Amendment 53
RISK FACTORS RELATING TO THE ARRANGEMENT 53
RIGHTS OF DISSENTING SHAREHOLDERS 56
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 58
Canadian Federal Income Tax Considerations for Aurizon Shareholders 58
Canadian Federal Income Tax Considerations for Aurizon Optionholders 64
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS 64
U.S. Federal Income Tax Consequences Related to the Exchange 66
U.S. Federal Income Tax Consequences Related to the Ownership and Disposition of Hecla Shares Received
in the Exchange 69
Additional Considerations for U.S. Holders, Applicable to Both the Exchange and the Ownership and
Disposition of Hecla Shares 72
NOTICE TO NON-CANADIAN AURIZON SHAREHOLDERS 73
SECURITIES LAW MATTERS 73
Canadian Securities Laws 73
U.S. Securities Laws 74
REGULATORY MATTERS 75
Investment Canada Act 75
Competition Act (Canada) 76
Hart–Scott–Rodino Antitrust Improvements Act 77
INFORMATION CONCERNING AURIZON 77
Summary 77
Prior Sales 78
Price Range and Trading Volumes of the Aurizon Shares 78
Available Information 79
Risk Factors 79
INFORMATION CONCERNING HECLA 79
INFORMATION CONCERNING THE COMBINED COMPANY 79
General 79
Description of Mineral Properties 79
Directors and Executive Officers of the Combined Company 80
Capital Structure 80
Unaudited Pro forma Condensed Combined Financial Information 80
Auditors, Transfer Agent and Registrar 80
INDEBTEDNESS OF OFFICERS AND DIRECTORS OF AURIZON 80
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS 81
MANAGEMENT CONTRACTS 81
INTERESTS OF EXPERTS 81
Names of Experts 81
Interests of Experts 81
ADDITIONAL INFORMATION 81
OTHER MATTERS 81
DIRECTORS’ APPROVAL 82
CONSENT OF SCOTIA CAPITAL INC 83
CONSENT OF CIBC WORLD MARKETS INC 84
   
   

 

APPENDIX A – ARRANGEMENT RESOLUTION

APPENDIX B – PLAN OF ARRANGEMENT

APPENDIX C – FAIRNESS OPINION OF SCOTIA CAPITAL INC.

APPENDIX D – FAIRNESS OPINION OF CIBC WORLD MARKETS INC.

APPENDIX E – INTERIM ORDER

APPENDIX F – NOTICE OF HEARING OF PETITION

APPENDIX G – DISSENT PROVISIONS

APPENDIX H – INFORMATION CONCERNING HECLA

APPENDIX I – UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF HECLA

APPENDIX J – COMPARISON OF RIGHTS OF AURIZON SHAREHOLDERS AND HECLA SHAREHOLDERS

   
   

GLOSSARY OF TERMS

In this Circular and the Summary, the following capitalized words and terms shall have the following meanings:

"Acquireco" means 0963708 B.C. Ltd., a wholly-owned subsidiary of Hecla;

"Acquisition Proposal" means, other than the transactions contemplated by the Arrangement Agreement, any offer, proposal or inquiry (written or oral) from any person or group of persons other than Hecla (or any affiliate of Hecla) and whether made to Aurizon or to the Aurizon Shareholders relating to: (i) any direct or indirect sale, disposition or joint venture (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), in a single transaction or a series of related transactions, of assets representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of Aurizon and its subsidiaries or of 20% or more of the voting, equity or other securities of Aurizon or any of its subsidiaries (or rights or interests therein or thereto) representing 20% or more of the consolidated assets of Aurizon and its subsidiaries, taken as a whole; (ii) any direct or indirect take-over bid, tender offer, exchange offer, treasury issuance or other transaction that, if consummated, would result in a person or group of persons beneficially owning 20% or more of any class of voting, equity or other securities or any other equity interests (including securities convertible into or exercisable or exchangeable for voting or equity securities) of Aurizon or any of its subsidiaries representing 20% or more of the consolidated assets of Aurizon and its subsidiaries, taken as a whole; (iii) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution, winding up or exclusive license involving Aurizon or any of its subsidiaries representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of Aurizon and its subsidiaries taken as a whole; (iv) any other similar transaction or series of transactions involving Aurizon or any of its subsidiaries; or (v) any other transaction, the consummation of which could reasonably be expected to impede, prevent or delay the transactions contemplated by the Arrangement Agreement or the Arrangement;

"Advance Ruling Certificate" means an advance ruling certificate issued by the Commissioner pursuant to section 102 of the Competition Act with respect to the transactions contemplated by the Arrangement Agreement;

"affiliate" has the meaning ascribed to such term in the Securities Act;

"Alamos" means Alamos Gold Inc.;

"Alamos Circular" means the take-over bid circular of Alamos relating to the Alamos Offer dated January 14, 2013, as amended from time to time;

"Alamos Offer" means the offer by Alamos to acquire all of the outstanding Aurizon Shares, other than those held by Alamos and its affiliates, announced by Alamos on January 14, 2013 and made pursuant to the Alamos circular as extended or changed or varied from time to time;

"Amalco" has the meaning ascribed to such term under in this Circular under the heading "Summary of Circular – Effects of the Arrangement";

"Arrangement" means the proposed arrangement under the provisions of Section 288 under the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with the terms of the Arrangement Agreement, or made at the direction of the Court in the Final Order with the prior written consent of Aurizon and Hecla, each acting reasonably;

"Arrangement Agreement" means the arrangement agreement dated as of March 3, 2013 among Hecla, Acquireco and Aurizon, as amended pursuant to an amendment to arrangement agreement among Hecla,

 i 
   

Acquireco and Aurizon dated April 9, 2013, and as the same may be further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof;

"Arrangement Resolution" means the special resolution of the Aurizon Shareholders and the special resolution of the Aurizon Shareholders and Aurizon Optionholders, voting as a single class, approving the Arrangement to be considered at the Meeting, substantially in the form attached as Appendix A to this Circular;

"associate" has the meaning ascribed to such term in the Securities Act;

"Aurizon" or the "Company" means Aurizon Mines Ltd., a company existing under the BCBCA;

"Aurizon AIF" means the annual information form of Aurizon dated April 1, 2013 for the fiscal year ended December 31, 2012, which is available on SEDAR at www.sedar.com under Aurizon’s profile;

"Aurizon Benefit Plan" has the meaning ascribed thereto in the Arrangement Agreement;

"Aurizon Board" means the board of directors of Aurizon, as the same is constituted from time to time;

"Aurizon Directors' Circular" means the directors' circular of Aurizon recommending rejection of the Alamos Offer dated January 22, 2013;

"Aurizon DSU Holder" means a holder of DSUs;

"Aurizon Optionholders" means the holders of Aurizon Options;

"Aurizon Options" means the outstanding options to purchase common shares of Aurizon granted under the Aurizon Stock Option Plans;

"Aurizon RSU Holder" means a holder of RSUs;

"Aurizon Securityholders" means, collectively, the Aurizon Shareholders and the Aurizon Optionholders;

"Aurizon Securities" means, collectively, the Aurizon Shares and Aurizon Options;

"Aurizon Securityholder Approval" means the approval of (i) 66 2/3% of the votes cast on the Arrangement Resolution by the Aurizon Shareholders and the Aurizon Optionholders, voting as a single class, present in person or by proxy at Meeting; and (ii) 66 2/3% of the votes cast on the Arrangement Resolution by the Aurizon Shareholders present in person or by proxy at the Meeting;

"Aurizon Securityholders" means, collectively, the holders of Aurizon Shares and Aurizon Options;

"Aurizon Shareholder Rights Plan" means the shareholder rights plan agreement dated January 22, 2013 between Aurizon and Computershare Trust Company of Canada, as rights agent, as amended from time to time;

"Aurizon Shareholders" means the holders of Aurizon Shares;

"Aurizon Shares" means the issued and outstanding common shares of Aurizon;

"Aurizon Stock Option Plans" means the Stock Option Plans of Aurizon, as amended;

"BCBCA" means the Business Corporations Act (British Columbia) and the regulations made thereunder, as promulgated or amended from time to time;

 ii 
   

"Beneficial Shareholder" means an Aurizon Shareholder who is not a Registered Shareholder;

"Business Day" means any day other than a Saturday, a Sunday or a statutory or civic holiday in Vancouver, British Columbia or New York, New York;

"Canadian Securities Authorities" means the British Columbia Securities Commission and the other securities regulatory authorities of the provinces and territories of Canada as applicable;

"Canadian Securities Laws" means the Securities Act (British Columbia) and the equivalent legislation in the other provinces and in the territories of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commissions and similar regulatory authorities of each of the provinces and territories of Canada and the published rules and policies of the TSX;

"Casa Berardi Gold Mine" means the Casa Berardi gold mine located 95 kilometres north of the town of La Sarre, Quebec;

"Cash Consideration" means $4.75 per Aurizon Share, DSU or RSU, as applicable, provided that the aggregate maximum amount payable to the Aurizon Shareholders shall be $513,631,193;

"Change in Recommendation" has the meaning ascribed to such term in this Circular under the heading "Arrangement Agreement – Termination";

"CIBC" means CIBC World Markets Inc., the financial advisor to the Special Committee;

"CIBC Fairness Opinion" means the fairness opinion of CIBC dated March 3, 2013 with respect to the Arrangement, a copy of which is attached as Appendix D to this Circular;

"Circular" means this information circular for the Meeting, including all appendices hereto, and all amendments and supplements hereto;

"Combined Company" means Hecla following completion of the Arrangement;

"Commissioner" means the Commissioner of Competition appointed under subsection 7(1) of the Competition Act, or his or her designee;

"Competition Act" means the Competition Act (Canada);

"Competition Act Approval" means:

(i) the issuance of an Advance Ruling Certificate where such Advance Ruling Certificate has not been rescinded prior to the Effective Date; or

(ii) Hecla and Aurizon have given the notice required under section 114 of the Competition Act with respect to the transactions contemplated by the Arrangement Agreement and the applicable waiting periods under section 123 of the Competition Act have expired or have been terminated or waived in accordance with the Competition Act; or

(iii) the obligation to give the requisite notice has been waived pursuant to paragraph 113(c) of the Competition Act;

 iii 
   

and, in the case of (ii) or (iii), a No-Action Letter, in a form acceptable to Hecla, acting reasonably, has been issued and has not been rescinded prior to the Effective Date (except where such rescission is owing to any conduct by Hecla);

"Competition Tribunal" means the Competition Tribunal as established by subsection 3(1) of the Competition Tribunal Act (Canada);

"Confidentiality Agreement" means the agreement between Hecla and Aurizon dated January 24, 2013 pursuant to which Hecla has been provided with access to confidential information of Aurizon;

"Contract" means any written or oral contract, agreement, license, franchise, lease, arrangement or other right or obligation to which Aurizon is a party or by which Aurizon is bound or affected or to which any of its properties or assets is subject;

"Consideration" means the consideration to be received by Aurizon Shareholders pursuant to the Plan of Arrangement in consideration for their Aurizon Shares, being the Share Consideration and/or the Cash Consideration, at the election or deemed election of an Aurizon Shareholder and subject to proration in accordance with the Plan of Arrangement;

"Court" means the Supreme Court of British Columbia;

"CRA" means the Canada Revenue Agency;

"Depositary" means Computershare Investor Services Inc.;

"Disclosure Letter" means the disclosure letter executed by Aurizon and delivered to Hecla in connection with the execution of the Arrangement Agreement;

"Dissent Procedures" means the procedures to be taken by an Aurizon Shareholder in exercising Dissent Rights;

"Dissent Rights" means the right to dissent to the Arrangement as set out in sections 237 to 247 of the BCBCA, and attached as Appendix G to this Circular as modified by the Plan of Arrangement, the Interim Order and the Final Order;

"Dissenting Shareholders" means Registered Shareholders who have duly and validly exercised their Dissent Rights in strict compliance with the Dissent Rights and whose Dissent Rights have not terminated;

"Dissenting Shares" means the Aurizon Shares held by Dissenting Shareholders;

"DSU Plan" means the Aurizon’s deferred share unit plan effective as of March 14, 2012;

"DSUs" means the deferred share units granted under the DSU Plan;

"EDGAR" means the system for Electronic Data Gathering, Analysis and Retrieval maintained by the SEC;

"Effective Date" means the date upon which all of the conditions to completion of the Arrangement as set forth in the Arrangement Agreement have been satisfied or waived and all documents agreed to be delivered thereunder have been delivered to the satisfaction of the Parties thereto, acting reasonably;

"Effective Time" means 12:01 a.m. (Vancouver time) on the Effective Date;

 iv 
   

"Election Deadline" means 4:00 pm (Toronto time) on the Initial Election Date or the New Election Date, as applicable;

"Encumbrances" means any pledge, claim, lien, charge, option, hypothec, action, mortgage, security interest, restriction, adverse right, prior assignment, lease, sublease, superficies, servitude, royalty, levy, right to possession or any other encumbrance, collateral securing the payment obligations of any person, easement, license, right of first refusal, covenant, voting trust or agreement, transfer restriction under any shareholder or similar agreement, right or restriction of any kind or nature whatsoever, whether contingent or absolute, direct or indirect, or any agreement, option, right or privilege (whether by Law, Contract or otherwise) capable of becoming any of the foregoing or with any similar effect whatsoever;

"Exchange" means the exchange of Aurizon Shares for the Share Consideration and the Cash Consideration pursuant to the Arrangement;

"Existing Credit Facilities" means the US$50 million revolving credit facility of Aurizon provided by Canadian Imperial Bank of Commerce and The Bank of Nova Scotia dated as of January 31, 2011, as amended;

"Fairness Opinions" means the CIBC Fairness Opinion and the Scotia Capital Fairness Opinion, each to the effect that as of the date of such opinions, and subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be received by the Aurizon Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view to the Aurizon Shareholders other than Hecla and its affiliates;

"Final Order" means the final order of the Court in a form acceptable to Aurizon, Hecla and Acquireco, each acting reasonably, approving the Arrangement as such order may be amended by the Court with the consent of Aurizon, Hecla and Acquireco at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

"Financial Advisors" means CIBC and Scotia Capital;

"GAAP" means generally accepted accounting principles as set out in the Canadian Institute of Chartered Accountants Handbook – Accounting, at the relevant time, applied on a consistent basis;

"Governmental Entity" has the meaning ascribed thereto in the Arrangement Agreement;

"Hecla" means Hecla Mining Company, a company existing under the Delaware General Corporation Law;

"Hecla Note Issue" means the issue by Hecla of US$500,000,000 principal amount 6.875% senior notes due 2021, which is expected to close on or about April 12, 2013;

"Hecla Shareholders" means the holders of Hecla Shares;

"Hecla Shares" means the common stock in the authorized share capital of Hecla, US$0.25 par value per share;

"Heva-Hosco (Joanna) Properties" means the Heva-Hosco (Joanna) Properties, a gold development project located in the Joannes township, Quebec;

"HSR Act" means the HartScottRodino Antitrust Improvements Act;

"HSR Act Approval" means the approval of the Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade Commission under the HSR Act, as described in more detail under the heading "Regulatory Matters – HartScottRodino Antitrust Improvements Act";

 v 
   

"Initial Election Date" has the meaning ascribed to such term in this Circular under the heading "Summary of Circular – Election Procedure and Pro-ration";

"Interim Order" means the interim order of the Court dated April 10, 2013, providing for, among other things, the calling and holding of the Meeting, attached as Appendix E hereto;

"Investment Canada Act" means the Investment Canada Act (Canada);

"Investment Canada Act Approval" means the approval of the Minister responsible for the Investment Canada Act, as described in more detail under the heading "Regulatory Matters – Investment Canada Act";

"IRS" means the United States Internal Revenue Service;

"Key Regulatory Approvals" means the Competition Act Approval, Investment Canada Act Approval, and HSR Act Approval;

"Key Third Party Consents" means those consents, approvals and notices required from any third party to proceed with the transactions contemplated by the Arrangement Agreement and the Plan of Arrangement, as set out in Schedule D of the Arrangement Agreement;

"Law" or "Laws" means any and all applicable laws, including without limitation, all supranational, national, provincial, state, municipal and local civil, commercial, banking, securities, Tax, personal and real property, security, mining, environmental, water, energy, investment, property ownership, land use and zoning, sanitary or occupational health and safety laws, treaties, statutes, instruments, decrees, injunctions, determinations, writs or certificates and orders, by-laws, rules, regulations, principles of law, ordinances, protocols, guidelines, codes, constitutions, policies, notices, directions, judicial or administrative or arbitral or ministerial judgments, decisions, rulings or awards or the grant of any approval, license, permission, authority or license of any Governmental Entity and general principles of common law and equity, binding on or affecting the person referred to in the context in which the word is used;

"Letter of Transmittal and Election Form" means, in the case of Aurizon Shareholders, a letter of transmittal and election form, a form of which accompanies this Circular, to be completed by Aurizon Shareholders in connection with the Arrangement, and in the case of Aurizon Optionholders, a notice of election, a form of which accompanies this Circular, to be completed by Aurizon Optionholders in connection with the Arrangement;

"Locked-up Shareholders" means each of the senior officers and directors of Aurizon;

"Material Adverse Effect" means in respect of any person, any change, effect, event or occurrence that either individually or in the aggregate with other such changes, effects, events or occurrences, is or could reasonably be expected to be, material and adverse to the business, results of operations or assets, properties, capitalization, condition (financial or otherwise), liabilities or prospects of that person and its subsidiaries, on a consolidated basis, except any change, effect, event or occurrence resulting from or relating to: (i) the announcement of the execution of the Arrangement Agreement or the transactions contemplated thereby; (ii) changes in general economic, securities, financial, banking or currency exchange markets; (iii) any change in GAAP or US GAAP; (iv) any natural disaster provided that it does not have a materially disproportionate effect on that person relative to comparable exploration and/or mining companies; (v) changes affecting the global gold or silver mining industries generally, provided that such changes do not have a materially disproportionate effect on that person relative to comparable exploration and/or mining companies; (vi) generally applicable changes in applicable Law; or (vii) the commencement or continuation of any war, armed hostilities or acts of terrorism;

"Material Contracts" means any Contract: (i) that, if terminated or modified or if it ceased to be in effect, would reasonably be expected to have a Material Adverse Effect on Aurizon; (ii) under which Aurizon has directly or

 vi 
   

indirectly guaranteed any liabilities or obligations of a third party (other than ordinary course endorsements for collection); (iii) relating to indebtedness for borrowed money, whether incurred, assumed, guaranteed or secured by any asset; (iv) providing for the establishment, organization or formation of any joint ventures; (v) under which Aurizon is obligated to make or expects to receive payments in excess of $500,000 over the remaining term of the Contract; (vi) that limits or restricts Aurizon from engaging in any line of business or any geographic area in any material respect; (vii) which provides for change of control, severance, retention or related payments or benefits to directors, officers or employees of Aurizon; (viii) that is or relates to an Aurizon Benefit Plan; or (ix) that is otherwise material to Aurizon; and, for greater certainty, includes the Material Contracts listed in the Disclosure Letter;

"Maximum Cash" means $513,631,193;

"Maximum Shares" means 57,000,000 Hecla Shares;

"Meeting" means the special meeting of the Aurizon Securityholders, including any adjournment or postponement thereof, to be held in accordance with the Interim Order to consider the Arrangement Resolution;

"MI 61-101" means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions;

"Misrepresentation" has the meaning ascribed thereto under applicable Securities Laws;

"New Election Date" has the meaning ascribed to such term in this Circular under the heading "Summary of Circular – Election Procedure and Pro-ration";

"NI 43-101" means National Instrument 43-101 – Standards of Disclosure for Mineral Projects or Regulation 43-101 respecting Standards of Disclosure for Mineral Projects in the Province of Quebec;

"No-Action Letter" means a written letter from the Commissioner to Hecla confirming that the Commissioner does not, at that time, intend to make an application for an order under section 92 of the Competition Act;

"Notification" means a notification under Part IX of the Competition Act;

"NYSE" means the New York Stock Exchange;

"NYSE MKT" means the NYSE MKT LLC;

"Non-Resident Shareholder" has the meaning ascribed to such term in this Circular under the heading "Canadian Federal Income Tax Considerations";

"Option Consideration" means, in respect of an Aurizon Option, the number of Aurizon Shares obtained by dividing: (i) the amount, if any, by which: (A) the product obtained by multiplying the number of Aurizon Shares underlying such Aurizon Option by the Cash Consideration; exceeds: (B) the exercise price payable under such Aurizon Option to acquire Aurizon Shares; by (ii) the Cash Consideration;

"Outside Date" means June 30, 2013, or such later date as may be agreed to in writing by the Parties;

"Parties" means Aurizon, Hecla and Acquireco, and "Party" means any of them;

"Person" includes an individual, association, trustee, executor, administrator, legal representative, government (including any Governmental Entity) or any Entity, whether or not having legal status;

 vii 
   

"Pre-Acquisition Reorganization" has the meaning ascribed thereto in the Arrangement Agreement;

"Plan of Arrangement" means the plan of arrangement in respect of the Arrangement attached as Appendix B hereto, and any amendments or variations thereto made in accordance with the Arrangement Agreement or the Plan of Arrangement or at the direction of the Court;

"Record Date" means April 1, 2013;

"Registered Shareholder" means a registered holder of Aurizon Shares as recorded in the shareholder register of Aurizon maintained by Computershare Investor Services Inc.;

"Representatives" means any officer, director, employee, representative (including any financial or other advisor) or agent of Aurizon;

"Response" has the meaning ascribed to such term under the heading "Summary of Circular - Court Approval of the Arrangement";

"Response Period" has the meaning ascribed to such term in this Circular under the heading "Arrangement Agreement – Right to Match";

"RSU Plan" means Aurizon’s restricted share unit plan effective as of August 8, 2012, as amended;

"RSUs" means the restricted share units granted under the RSU Plan;

"Scotia Capital" means Scotia Capital Inc., the financial advisor to Aurizon;

"Scotia Capital Fairness Opinion" means the fairness opinion of Scotia Capital dated March 3, 2013 with respect to the Arrangement, a copy of which is attached as Appendix C to this Circular;

"SEC" means the U.S. Securities and Exchange Commission;

"Second Aurizon Shareholder Rights Plan" means the shareholder rights plan agreement dated March 10, 2013 between Aurizon and Computershare Trust Company of Canada, as rights agent, as amended from time to time;

"Section 3(a)(10) Exemption" means the exemption from the registration requirements of the U.S. Securities Act provided under Section 3(a)(10) thereof;

"Securities Act" means the Securities Act (British Columbia) and the rules, regulations and published policies made thereunder, as now in effect and as they may be promulgated or amended from time to time;

"Securities Authorities" means all applicable securities regulatory authorities, including the applicable securities commission or similar regulatory authorities in each of the provinces and territories of Canada and the SEC;

"Securities Laws" means the Securities Act, the U.S. Exchange Act, the U.S. Securities Act and all other applicable securities Laws and applicable stock exchange rules and listing standards of the Stock Exchanges;

"Share Consideration" means 0.9953 of a Hecla Share for each Aurizon Share to an aggregate maximum of 57,000,000 Hecla Shares;

"Special Committee" means the special committee of the Aurizon Board;

"Stock Exchanges" means, collectively, the TSX, NYSE and NYSE MKT;

 viii 
   

"Subject Options" means all of the Aurizon Options owned legally or beneficially by the Locked-up Shareholders or over which the Locked-up Shareholders exercise control or direction;

"Subject Shares" means all of the Aurizon Shares owned legally or beneficially, either directly or indirectly, by the Locked-up Shareholders or over which the Locked-up Shareholders exercise control or direction, either directly or indirectly, and shall further include any Aurizon Shares issued upon the exercise by the Locked-up Shareholders of Aurizon Options or otherwise acquired by the Locked-up Shareholders after March 3, 2013;

"subsidiary" means, with respect to a specified person, any entity of which more than 50% of the outstanding equity interests ordinarily entitled to elect a majority of the board of directors or governing body thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified person and shall include any Entity over which such specified person exercises direction or control or which is in a like relation to a subsidiary;

"Superior Proposal" means any bona fide, unsolicited, written Acquisition Proposal made by a third party after the date of the Arrangement Agreement (and not obtained in violation of the non-solicitation provisions in the Arrangement Agreement) that relates to the acquisition of 100% of the outstanding Aurizon Shares (other than Aurizon Shares owned by the person making the Superior Proposal) or all or substantially all of the consolidated assets of Aurizon and its subsidiaries, which did not result from a violation of the Arrangement Agreement; and (i) that is reasonably capable of being completed without undue delay relative to the completion of the Arrangement, taking into account all financial, legal, regulatory and other aspects of such proposal and the person making such proposal; (ii) that is not subject, either by the terms of the proposal or by virtue of any applicable Law or rule or regulation of any Stock Exchange, to any requirement that the approval of the shareholders of the party making the Acquisition Proposal be obtained; (iii) that is made available to all Aurizon Shareholders on the same terms and conditions; (iv) that is not subject to a due diligence condition; (v) that is not subject to a financing condition; (vi) the terms of which do not provide for the payment of any fees, no matter how characterized or confer any rights or options to acquire securities or assets of Aurizon in the event Hecla exercises its right to match such Superior Proposal pursuant to the provisions of the Arrangement Agreement described in this Circular under the heading "The Arrangement Agreement – Right to Match"; and (vii) in respect of which the Aurizon Board determines, in its good faith judgment, after receiving the written advice of its outside legal and financial advisors, that: (a) failure to recommend such Acquisition Proposal to the Aurizon Shareholders would be inconsistent with its fiduciary duties under applicable Law; and (b) having regard for all of its terms and conditions, such Acquisition Proposal, would, if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favourable to Aurizon Shareholders from a financial point of view than the Arrangement, after taking into account any changes to the Arrangement proposed by Hecla pursuant to the provisions of the Arrangement Agreement described in this Circular under the heading "The Arrangement Agreement – Right to Match";

"Tax Act" means the Income Tax Act (Canada) and the regulations thereunder, as amended from time to time;

"Taxes" means: any and all taxes, imposts, levies, withholdings, duties, fees, premiums, assessments and other charges of any kind, however denominated and instalments in respect thereof, other additions that have been, are or will become payable in respect thereof, imposed by any Governmental Entity, including for greater certainty all income or profits taxes (including Canadian federal, provincial and territorial income taxes), payroll and employee withholding taxes, employment taxes, unemployment insurance, disability taxes, social insurance taxes, sales and use taxes, ad valorem taxes, excise taxes, goods and services taxes, harmonized sales taxes, franchise taxes, gross receipts taxes, capital taxes, business license taxes, mining royalties, alternative minimum taxes, estimated taxes, abandoned or unclaimed (escheat) taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, severance taxes, workers’ compensation, Canada, Quebec and other government pension plan premiums or contributions and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which a Party or any of its subsidiaries is required to pay, withhold or collect, together with any interest, fines, penalties or other additions to the foregoing that may become payable in respect of such taxes, and any interest in respect of such interest, penalties and additions whether disputed or not or as a result of being liable to another person’s Taxes as a transferee or successor, by contract or otherwise;

 ix 
   

"Termination Fee" means $27,200,000;

"Termination Fee Event" has the meaning ascribed to such term in this Circular under the heading "Arrangement Agreement – Expenses Reimbursement and Termination Fees";

"TSX" means the Toronto Stock Exchange;

"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as the same has been, and hereafter from time to time, may be amended;

"U.S. GAAP" means U.S. generally accepted accounting principles, applied on a consistent basis, except as required or permitted and disclosed;

"U.S. Holder" has the meaning ascribed to such term under the heading "Certain United States Federal Income Tax Considerations - U.S. Federal Income Tax Consequences Related to the Exchange";

"U.S. Securities Act" means the United States Securities Act of 1933 as the same has been, and hereinafter from time to time may be, amended;

"U.S. Shareholders" means those Aurizon Shareholders that are in the United States;

"U.S. Securityholders" means those Aurizon Securityholders that are in the United States; and

"Voting Agreements" means the voting agreements (including all amendments thereto) between Hecla and the Locked-up Shareholders setting forth the terms and conditions upon which they have agreed to vote their Aurizon Securities in favour of the Arrangement Resolution.

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Management ProXy Circular

This Circular is furnished in connection with the solicitation of proxies by or on behalf of the management of Aurizon for use at the special meeting of Aurizon Securityholders to be held at The Vancouver Club, in the University Room, 3rd Floor, 915 West Hastings Street, Vancouver, BC, V6C 1C6 at 1:00 p.m. (Vancouver time) on May 9, 2013 and at any adjournment(s) or postponement(s) thereof for the purposes set forth in the Notice of Meeting.

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

Unless otherwise indicated, all references to "$" or "Cdn$" in this Circular refer to Canadian dollars and all reference herein to "US$" in this Circular refer to U.S. dollars. Hecla’s financial statements that are included or incorporated by reference herein are reported in U.S. dollars and are prepared in accordance with U.S. GAAP.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for the statements of historical fact contained herein, the information presented in this Circular and the information incorporated by reference herein, constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian Securities Laws (together, "forward-looking statements") concerning the business, operations and financial performance and condition of each of Aurizon, Hecla and the Combined Company. Often, but not always, forward-looking statements can be identified by words such as "pro forma", "plans", "expects", "may", "should", "could", "will", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", or variations including negative variations thereof of such words and phrases that refer to certain actions, events or results that may, could, would, might or will occur or be taken or achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Aurizon, Hecla or the Combined Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the heading "Risk Factors Relating to the Arrangement" and in the unaudited pro forma condensed combined financial statements of Hecla included in Appendix I of this Circular. Although Aurizon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

In addition, forward-looking and pro forma information herein is based on certain assumptions and involves risks related to the consummation or non-consummation of the Arrangement and the business and operations of the Combined Company. Pro forma information contained herein is based on certain assumptions including that Aurizon Securityholders will vote in favour of the Arrangement, that the Court will approve the Arrangement and that all other conditions to the Arrangement are satisfied or waived and that the Arrangement is completed. Other assumptions include, but are not limited to, the ability of the Combined Company to realize the enhanced growth opportunities currently anticipated for the Combined Company; realize the benefits of the Combined Company’s growth projects; the value of Aurizon's assets, in particular the Casa Berardi Gold Mine; the value of Hecla’s assets; the successful completion of new development projects, planned expansions or other projects within the timelines anticipated and at anticipated production levels; the accuracy of reserve and resource estimates, grades, mine life and cash cost estimates; whether mineral resources can be developed; interest and exchange rates; the price of gold, silver, zinc, lead and other metals; competitive conditions in the mining industry; title to mineral properties; financing requirements; general economic conditions; and changes in laws, rules and regulations applicable to Aurizon and Hecla. Factors which could cause actual results to differ materially from current expectations include non-completion of the Arrangement, including due to the parties failing to receive, in a timely manner and on satisfactory terms, the necessary court, shareholder, stock exchange and regulatory approvals or the inability of the parties to satisfy in a timely manner the other conditions to the closing of the Arrangement; changes in market conditions; the risk that upon completion of the Arrangement the market value of the Hecla Shares will be materially lower from the value at the time the exchange ratio was agreed; the information available to Aurizon in respect of Hecla may not be accurate or complete; there may be unforeseen or unexpected tax and other consequences to the transactions which would have a material adverse effect on the Combined Company; production, construction and technological risks related to the Combined Company; capital requirements and operating risks associated with the expanded operations of the Combined Company; actual results being materially different than reserve and resource estimates, grades, mine life and cash cost estimates; variations in ore grade or recovery rates; risks relating to international operations; fluctuations in gold, silver and other metal prices and currency exchange rates; failure to obtain any required financing; inability to successfully complete new development projects, planned expansions or other projects within the timelines anticipated; adverse changes to general economic conditions or laws, rules and regulations applicable to Aurizon or Hecla; changes in project parameters; the possibility of project cost overruns or unanticipated costs and expenses; labour disputes and other risks of the mining industry; failure of plant, equipment or processes to operate as anticipated; risk that estimated costs, including costs of labor, equipment and materials, including power, are not as anticipated; the risk of an undiscovered defect in title or other adverse claim; that results of exploration activities will be different than anticipated; and those risks set forth in the Aurizon AIF and in Hecla’s filings with the U.S. Securities and Exchange Commission, which are available respectively on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Although Aurizon has attempted to identify important factors that could cause actions, events or results to differ materially from those described in forward-looking statements and forward-looking information in this Circular, and the documents incorporated by reference herein, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There is no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information in this Circular, nor in the documents incorporated by reference herein. All of the forward-looking statements made in this Circular, including all documents incorporated by reference herein, are qualified by these cautionary statements.

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Certain of the forward-looking statements and forward-looking information and other information contained herein concerning the mining industry and Aurizon’s general expectations concerning the mining industry, Aurizon, Hecla and the Combined Company are based on estimates prepared by Aurizon or Hecla using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which Aurizon believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, this data is inherently imprecise. While Aurizon is not aware of any misstatement regarding any industry data presented herein, the mining industry involves risks and uncertainties that are subject to change based on various factors.

Aurizon Shareholders are cautioned not to place undue reliance on forward-looking statements and forward-looking information. Aurizon undertakes no obligation to update any of the forward-looking statements or forward-looking information in this Circular or incorporated by reference herein, except as required by law.

 2 
   

Exchange Rate Data

The following table sets forth the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of the exchange rates for each period indicated and the exchange rate at the end of each such period, based upon the noon buying rates provided by the Bank of Canada:

    Year End December 31
2012   2011   2010
High. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1.0418   1.0604   1.0778
Low. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   0.9710   0.9449   0.9946
Rate at end of period. . . . . . . . . . . . . . . . . .   0.9949   1.0170   0.9946
Average rate for period. . . . . . . . . . . . . . . .   0.9996   0.9891   1.0299

On April 9, 2013, the noon exchange rate for one U.S. dollar expressed in Canadian dollars as reported by the Bank of Canada, was $1.0162.

NOTICE REGARDING INFORMATION

Certain information in this Circular pertaining to Hecla, including, but not limited to, information pertaining to Hecla in Appendix H hereto and under the heading "Information Concerning the Combined Company" and the historical management discussion and analysis and the historical financial statements of Hecla incorporated by reference in this Circular and information relating to Hecla in the unaudited pro forma condensed combined financial statements attached as Appendix I to this Circular, has been furnished by Hecla. With respect to this information, the Aurizon Board has relied exclusively upon Hecla, without independent verification by Aurizon. Although Aurizon does not have any knowledge that would indicate that such information is untrue or incomplete, neither Aurizon nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information including any of Hecla’s financial statements, or for the failure by Hecla to disclose events or information that may affect the completeness or accuracy of such information.

The information contained in this Circular is given as at April 10, 2013, except where otherwise noted and except that information in documents incorporated by reference is given as of the dates noted therein. No person has been authorized to give any information or to make any representation in connection with the Arrangement and other matters described herein other than those contained in this Circular and, if given or made, any such information or representation should be considered not to have been authorized by Aurizon or Hecla.

This Circular does not constitute the solicitation of an offer to purchase, or the making of an offer to sell, any securities or the solicitation of a proxy by any person in any jurisdiction in which such solicitation or offer is not authorized or in which the person making such solicitation or offer is not qualified to do so or to any person to whom it is unlawful to make such solicitation or offer.

Information contained in this Circular should not be construed as legal, tax or financial advice and Aurizon Securityholders are urged to consult their own professional advisors in connection therewith.

Descriptions in this Circular of the terms of the Arrangement Agreement and the Plan of Arrangement are summaries of the terms of those documents and are qualified in their entirety by such terms. Aurizon Securityholders should refer to the full text of each of the Arrangement Agreement and the Plan of Arrangement for complete details of those documents. The full text of the Arrangement Agreement may be viewed on SEDAR at www.sedar.com. The Plan of Arrangement is appended hereto as Appendix B.

 3 
   

NOTE TO UNITED STATES SHAREHOLDERS

THE SECURITIES ISSUABLE IN CONNECTION WITH THE ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES IN ANY STATE, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITIES OF ANY STATE PASSED UPON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The securities to be issued or distributed under the Arrangement have not been registered under the U.S. Securities Act, and are being issued in reliance on the Section 3(a)(10) Exemption on the basis of the approval of the Court, which will consider, among other things, the fairness of the terms and condition of the Arrangement to Aurizon Shareholders. See "Securities Law Matters — U.S. Securities Laws."

Aurizon Securityholders should be aware that the acquisition of the securities described herein may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein. See "Certain United States Federal Income Tax Considerations". U.S. Shareholders should consult their own tax advisors with respect to their own particular circumstances.

The solicitation of proxies hereby is not subject to the proxy requirements of Section 14(a) of the U.S. Exchange Act and the SEC rules promulgated thereunder. Accordingly, this Circular has been prepared in accordance with applicable disclosure requirements in Canada. Aurizon Securityholders in the United States should be aware that such requirements are different than those of the United States.

Information in this Circular or in the documents incorporated by reference herein concerning the properties and operations of Aurizon and Hecla has been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. Aurizon and, for the purpose of this Circular, Hecla are required to describe mineral reserves associated with their respective properties utilizing Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") definitions of "proven" or "probable", which categories of reserves are recognized by NI 43-101, but which differ from those definitions in the disclosure requirements promulgated by the SEC and contained in Industry Guide 7. In addition, under NI 43-101 the Company and Hecla are required to describe mineral resources associated with its properties utilizing CIM definitions of "measured", "indicated" or "inferred", which categories of resources are recognized by Canadian regulations but are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the SEC. Accordingly, information contained in this Circular regarding Aurizon and Hecla’s mineral deposits may not be comparable to similar information disclosed by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the SEC thereunder. In particular, this Circular uses the terms "measured" and "indicated" resources. U.S. readers are cautioned that while these terms are recognized and required by Canadian regulations, the SEC does not recognize them. U.S. investors are cautioned not to assume that all or any part of measured mineral resources or indicated mineral resources will ever be converted into mineral reserves. This Circular also uses the term "inferred" resources. U.S readers are cautioned that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. readers are cautioned not to assume that all or any part of an inferred resource exists, or is economically or legally mineable.

The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that Aurizon and Acquireco are incorporated or organized outside the United States, that some or all of their respective officers and directors and the experts named herein are residents of a country other than the United States, and that all or a substantial portion of the assets of Aurizon and said persons are located outside the United States. As a result, it may not be possible for U.S. Shareholders to effect service of process within the United States upon Aurizon or Acquireco, their respective officers or directors or the experts named herein, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States. In addition, U.S. Shareholders should not assume that the courts of Canada: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States.

 4 
   

NOTICE TO ALL AURIZON SHAREHOLDERS

Hecla is incorporated under the laws of the State of Delaware, and a majority of the directors and officers of Hecla and its experts named in this Circular reside outside of Canada. All of the assets of these persons and Hecla may be located outside Canada. Accordingly, it may not be possible for investors in the Combined Company to effect service of process within Canada upon all of the directors, officers and experts referred to above. It may also not be possible to enforce against Hecla, its directors and officers and such experts judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable Canadian Securities Laws. In addition, the rights of a stockholder of a Delaware corporation differ from the rights of a shareholder of a BCBCA corporation. See Appendix J to this Circular for a summary comparison of the rights of Aurizon Shareholders and Hecla Shareholders.

 5 
   

QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE ARRANGEMENT

The following is a summary of certain information contained in or incorporated by reference into this Circular, together with some of the questions that you, as an Aurizon Securityholder, may have and answers to those questions. You are urged to read the remainder of this Circular, the form of proxy and the Letter of Transmittal and Election Form carefully, because the information contained below is of a summary nature, and is qualified in its entirety by the more detailed information contained elsewhere in or incorporated by reference into this Circular, the form of proxy and the Letter of Transmittal and Election Form and the attached Appendices, all of which are important and should be reviewed carefully.

Q: Does the Aurizon Board support the Arrangement?

A: Yes. The Aurizon Board has unanimously determined (i) that the consideration to be received by Aurizon Securityholders is fair to Aurizon Securityholders and in the best interests of Aurizon, (ii) that Aurizon should enter the Arrangement Agreement, and (iii) to recommend that Aurizon Securityholders vote FOR the Arrangement Resolution.

Prior to entering into the Arrangement Agreement, the Aurizon Board established the Special Committee, comprised of four independent directors (Mr. George Brack, Mr. Louis Dionne, Mr. Andre Falzon and Mr. Sargent Berner), to review and evaluate the Alamos Offer, pursue strategic alternatives to the Alamos Offer, to oversee and supervise the process carried out by Aurizon in negotiating and entering into the Arrangement Agreement and to advise the Aurizon Board with respect to any recommendation that the Aurizon Board should make to Aurizon Securityholders. The Special Committee retained CIBC as its financial advisor and Blake, Cassels and Graydon LLP as legal counsel.

The Special Committee determined that the proposed Arrangement with Hecla was fair to Aurizon Securityholders and in the best interests of Aurizon. The Special Committee then recommended that the Aurizon Board approve the proposed Arrangement Agreement.

In making its recommendation, the Aurizon Board considered a number of factors as described in this Circular under the heading "The Arrangement — Recommendation of the Aurizon Board", including the opinions of CIBC and Scotia Capital, which determined that the Consideration offered to Aurizon Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to Aurizon Shareholders other than Hecla and its affiliates.

See "The Arrangement — Background to the Arrangement".

Q: When will the Arrangement become effective?

A: Subject to obtaining Court and other regulatory approvals as well as the satisfaction or waiver of all other conditions precedent, if Aurizon Securityholders approve the Arrangement Resolution, it is anticipated that the Arrangement will be completed in the second quarter of 2013.

Q: What will I receive for my Aurizon Shares under the Arrangement?

A: If the Arrangement is completed, each Aurizon Shareholder at the Effective Time, which will include Aurizon Optionholders that receive Aurizon Shares as satisfaction of the Option Consideration, may elect to receive, for each Aurizon Share, either $4.75 in cash or 0.9953 of a Hecla Share, or a combination of both, subject in each case to pro-ration based on a maximum of approximately $513.6 million in cash and a maximum of 57 million Hecla Shares. Assuming that all Aurizon Shareholders elect to receive either cash or Hecla Shares, the Consideration will be fully pro-rated with each Aurizon Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share. This description of the pro-ration provisions of the Arrangement is subject to the detailed provisions of the Arrangement itself.

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See "The Arrangement – Election Procedure and Pro-ration".

The actual consideration received by an Aurizon Shareholder will depend upon such Aurizon Shareholder's consideration election and the effect of pro-ration. See "The Arrangement — Description of the Arrangement".

Q: How do I elect to receive my Consideration under the Arrangement?

A: Each Registered Shareholder will have the right to elect in the Letter of Transmittal and Election Form delivered to the Depositary to receive the Cash Consideration or Share Consideration, or a combination of both, subject to pro-ration.

Aurizon Shareholders whose Aurizon Shares are registered in the name of a broker, investment dealer or other intermediary should contact that broker, investment dealer or other intermediary for instructions and assistance in delivery of the share certificate(s) representing those shares and, making an election with respect to the form of Consideration they wish to receive.

If you fail to make a specific election by the Election Deadline, or the Depositary determines that your election was not properly made with respect to any Aurizon Shares, you will be deemed to have elected to receive the Share Consideration in respect of any such Aurizon Shares, including Aurizon Shares issued in satisfaction of the Option Consideration, subject to pro-ration.

See "The Arrangement - Election Procedure and Pro-ration".

Q: What will happen to my Aurizon Options under the Arrangement?

A: Each Aurizon Option issued and outstanding at the Effective Time that has an exercise price of less than $4.75 per share will, without any further action by or on behalf of any Aurizon Optionholder, be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon (free and clear of all liens, claims and encumbrances) and cancelled in exchange for the Option Consideration. Aurizon Shares received as Option Consideration will be subject to the election and pro-ration provisions of the Arrangement. Aurizon Options that do not have an exercise price that is less than $4.75 per share will be cancelled, and no consideration will be paid in respect of these options.

See "The Arrangement – Election Procedure and Pro-ration".

Q: What are the Canadian federal income tax consequences of the Arrangement to Aurizon Shareholders?

A: For a summary of certain material Canadian income tax consequences of the Arrangement, see "Canadian Federal Income Tax Considerations". Such summary is not intended to be legal or tax advice to any particular Aurizon Shareholder. Aurizon Shareholders should consult their own tax and investment advisors with respect to their particular circumstances.

Q: What are the United States federal income tax consequences of the Arrangement to Aurizon Shareholders?

A: For Aurizon Shareholders that are U.S. Holders (as defined below under “Certain United States Federal Income Considerations”), the Exchange will be treated either as a fully taxable transaction or as a partially tax-deferred reorganization. Whether the transaction is fully taxable or partially tax-deferred for U.S. federal income tax purposes depends on whether the Share Consideration constitutes a sufficient portion, by value, of the total Consideration. There is no authority directly on point holding that Share Consideration constituting 35% of the total Consideration is sufficient for a partially tax-deferred reorganization, although there is authority providing that Share Consideration constituting 40% of the total Consideration would be sufficient for a partially tax-deferred reorganization. If the Exchange is treated as a fully taxable transaction, a U.S. Holder of Aurizon Shares will recognize gain or loss equal to the difference between (i) the fair market value of the Consideration received by such U.S. Holder in the Exchange and (ii) the adjusted tax basis of such U.S. Holder in the Aurizon Shares exchanged for the Consideration. If the Exchange is treated as a tax-deferred reorganization, a U.S Holder will not recognize gain, except to the extent that such U.S. Holder receives Cash Consideration. If the Exchange is treated as a tax-deferred reorganization, a U.S. Holder will not be permitted to recognize any loss realized, except if such U.S. Holder receives only Cash Consideration.

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Aurizon Shareholders that are non-U.S. Holders (as defined below under “Certain United States Federal Income Considerations”) generally will not be subject to U.S. federal income tax or withholding tax on any gain recognized on the disposition of their Aurizon Shares under the Arrangement unless (i) a non-U.S. Holder is an individual present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, or (ii) such gain is effectively connected with a non-U.S. Holder’s conduct of a trade or business in the United States.

For a summary of certain U.S. federal income tax considerations arising from the Arrangement, see "Certain United States Federal Income Tax Considerations", which qualifies the information set forth above.

Q: What will happen to Aurizon if the Arrangement is completed?

A: If the Arrangement is completed, Acquireco will acquire all of the Aurizon Shares and Aurizon will become a direct, wholly-owned subsidiary of Hecla. Acquireco and Hecla intend to have the Aurizon Shares de-listed from the TSX and the NYSE MKT, and Aurizon will apply to cease to be a reporting issuer in all jurisdictions in which it is a reporting issuer in Canada and cease to be subject to the reporting requirements of the U.S. Exchange Act.

Q: Are the Hecla Shares listed on a stock exchange?

A: Yes. Hecla Shares are listed for trading on the NYSE.

Q: What approvals are required to be given by Aurizon Securityholders at the Meeting?

A: To become effective, the Arrangement Resolution must be approved, with or without variation, by the affirmative vote of at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) the Aurizon Securityholders voting together as a single class; and (ii) the Aurizon Shareholders voting as a single class.

All directors and senior officers of Aurizon, holding in aggregate approximately 1.07% of the Aurizon Shares and approximately 60.4% of the Aurizon Options, have entered into the Voting Agreements with Hecla, pursuant to which they have agreed, subject to certain exceptions, to vote their Aurizon Shares and Aurizon Options in favour of the Arrangement Resolution.

Q: Are Aurizon Shareholders entitled to dissent rights?

A: Under the Interim Order, Registered Shareholders are entitled to dissent rights only if they follow the procedures specified in the BCBCA, as modified by the Interim Order. If you wish to exercise dissent rights, you should review the requirements summarized in this Circular carefully and consult with legal counsel.

See "Rights of Dissenting Shareholders".

Q: What other conditions must be satisfied to complete the Arrangement?

A: In addition to the applicable approvals by Aurizon Securityholders at the Meeting, the Arrangement is conditional upon, among other things, the performance, by each of Aurizon and Hecla, of all obligations under the Arrangement Agreement and the receipt of, among other things, approval for the listing of the Hecla Shares issuable to the Aurizon Securityholders pursuant to the Arrangement on the NYSE, obtaining the Final Order from the Court and all other applicable waivers and consents required, including the Investment Canada Act Approval, all in accordance with the terms of the Arrangement Agreement.

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See "The Arrangement Agreement – Conditions Precedent to the Arrangement".

Q: What will happen if the Arrangement Resolution is not approved or the Arrangement is not completed for any reason?

A: If the Arrangement Resolution is not approved or the Arrangement is not completed for any reason, the Arrangement Agreement may be terminated. If this occurs, Aurizon will continue to carry on its business operations in the normal and usual course. See "Risk Factors Related to the Arrangement". In certain termination circumstances, Aurizon will be required to pay to Hecla the Termination Fee in the amount of $27.2 million or reimburse Hecla for all fees, costs and expenses incurred in connection with the Arrangement up to a maximum of $8 million.

See "The Arrangement Agreement — Expenses Reimbursement and Termination Fees".

Q: What do I need to do now in order to vote at the Meeting?

A: You should carefully read and consider the information contained in this Circular. Registered Aurizon Securityholders should then complete, sign and date the enclosed form of proxy and return the applicable form in the enclosed return envelope or by facsimile as indicated in the Notice of Meeting as soon as possible so that your Aurizon Shares and Aurizon Options may be represented at the Meeting. To be eligible for voting at the Meeting, the form of proxy must be returned by mail or by facsimile to the Depositary not later than 4:00 p.m. (Toronto time) on May 7, 2013, or if the Meeting is adjourned or postponed, prior to 4:00 p.m. (Toronto time) on the day (other than a Saturday, Sunday or any other holiday in Toronto, Ontario) preceding the date to which the Meeting is adjourned or postponed.

See "General Proxy Information – Proxy Voting" and "General Proxy Information – Appointment and Revocation of Proxies".

Q: If my Aurizon Shares are held in street name by my broker, will my broker vote my Aurizon Shares for me?

A: A broker will vote the Aurizon Shares held by you only if you provide instructions to your broker on how to vote. Without instructions, those Aurizon Shares will not be voted. Beneficial Shareholders should instruct their brokers to vote their Aurizon Shares by following the directions provided to them by their brokers. Unless your broker gives you its proxy to vote the Aurizon Shares at the Meeting, you cannot vote your Aurizon Shares at the Meeting.

See "General Proxy Information — Advice to Beneficial Holders of Aurizon Shares".

Q: Should I send in my Letter of Transmittal and Election Form and Aurizon Share certificates?

A: Yes. It is recommended that all Registered Shareholders complete, sign and return the Letter of Transmittal and Election Form with accompanying Aurizon Share certificate(s) to the Depositary as soon as possible. To make a valid election as to the Consideration that you wish to receive under the Arrangement (subject to pro-ration), you must sign and return the Letter of Transmittal and Election Form and return it with accompanying Aurizon Share certificate(s) to the Depositary prior to the Election Deadline. If you fail to make a specific election by the Election Deadline, or the Depositary determines that your election was not properly made with respect to any Aurizon Shares, you will be deemed to have elected to receive the Share Consideration in respect of each Aurizon Share, including the Aurizon Shares issued in satisfaction of the Option Consideration, subject to pro-ration.

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Aurizon Shareholders whose Aurizon Shares are registered in the name of a broker, investment dealer, bank, trust company, trustee or other nominee should contact that nominee for assistance in depositing their Aurizon Shares and should follow the instructions of such nominee in order to make their election and deposit their Aurizon Shares.

See "The Arrangement — Election Procedure and Pro-ration".

Q: Should I send in my proxy now?

A: Yes. To ensure the Arrangement Resolution is passed, you should complete and submit the applicable enclosed form of proxy or, if applicable, provide your broker with voting instructions.

See "General Proxy Information — Proxy Voting".

Q. When will I receive the Consideration payable to me under the Arrangement for my Aurizon Shares?

A. You will receive the Consideration due to you under the Arrangement promptly after the Arrangement Resolution is approved, Court and other approvals have been obtained, the Arrangement becomes effective and your Letter of Transmittal and Election Form and Aurizon Share certificate(s) and all other required documents are properly completed and received by the Depositary.

See "The Arrangement — Exchange Procedure".

Q. What happens if I send in my Aurizon Share certificates and the Arrangement Resolution is not approved or the Arrangement is not completed?

A. If the Arrangement Resolution is not approved or if the Arrangement is not otherwise completed, your Aurizon Share certificates will be returned promptly to you by the Depositary.

Q: Can I revoke my proxy after I have voted by proxy?

A: Yes. An Aurizon Securityholder executing the enclosed form of proxy has the right to revoke it under the BCBCA. An Aurizon Securityholder may revoke a proxy by depositing an instrument in writing executed by him or her, or by his or her attorney authorized in writing, at the registered office of Aurizon at any time up to and including the last day (other than a Saturday, Sunday or other holiday in Vancouver, British Columbia) preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting prior to the Meeting, or any adjournment thereof, or in any other manner permitted by law.

Q: Who can help answer my questions?

A: Aurizon Securityholders who would like additional copies, without charge, of this Circular or have additional questions about the Arrangement, including the procedures for voting Aurizon Shares and Aurizon Options, should contact their broker or Georgeson Shareholder Communications Canada Inc. ("Georgeson") toll free at one of the numbers below. In addition, Georgeson is available to answer any questions you might have in respect of the information contained in this Circular.

Interested Aurizon Securityholders may contact Georgeson by calling toll free in North America at 1-888-605-7616, calling collect from outside North America at 1-781-575-2422, or by email at askus@georgeson.com.

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SUMMARY OF CIRCULAR

This Summary should be read together with and is qualified in its entirety by the more detailed information and financial data and statements contained elsewhere in this Circular, including the appendices hereto and documents incorporated into this Circular by reference. Capitalized terms in this Summary have the meanings set out in the Glossary of Terms or as set out in this Summary. The full text of the Arrangement Agreement may be viewed on SEDAR at www.sedar.com or on EDGAR at www.sec.gov under filings made by Aurizon.

The Meeting

Date, Time and Place of Meeting

The Meeting will be held on May 9, 2013 at 1:00 p.m. (Vancouver time) at The Vancouver Club, in the University Room, 3rd Floor, 915 West Hastings Street, Vancouver, BC, V6C 1C6.

The Record Date

The record date for determining the Aurizon Securityholders entitled to receive notice of and to vote at the Meeting is April 1, 2013. Only Aurizon Securityholders of record as of the close of business (Vancouver time) on the Record Date are entitled to receive notice of and to vote at the Meeting.

Purpose of the Meeting

At the Meeting, Aurizon will ask the Aurizon Securityholders to consider and, if deemed advisable, pass, with or without variation, the Arrangement Resolution to approve the Arrangement.

Effects of the Arrangement

If the Arrangement is completed, (i) Acquireco will acquire all of the Aurizon Shares in exchange for a combination of cash and Hecla Shares to be issued to the Aurizon Securityholders, and (ii) Aurizon will amalgamate with Acquireco to form one corporate entity ("Amalco") under Section 288 of the BCBCA. Upon completion of the Arrangement, Amalco will be a wholly-owned subsidiary of Hecla.

Aurizon Securityholder Approval

To be effective, the Arrangement Resolution must be approved, with or without variation, by the affirmative vote of at least two-thirds of the votes cast on the Arrangement Resolution by (i) Aurizon Shareholders voting as a single class, and (ii) Aurizon Securityholders voting together as a single class, in each case present in person or represented by proxy at the Meeting. In the case of the approval described in (i), this will be determined by a separate tabulation of the votes cast by all Aurizon Securityholders that cast votes, including the votes cast by Aurizon Optionholders.

The Arrangement Resolution must be passed in order for Aurizon to seek the Final Order and implement the Arrangement on the Effective Date.

See "The Arrangement – Securityholder and Court Approvals".

The Arrangement

If approved, the Arrangement will become effective at the Effective Time (which is expected to be at 12:01 a.m. (Vancouver time) on the Effective Date, which is expected to be in the second quarter of 2013. At the Effective Time, the following shall be deemed to occur sequentially in the following order:

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  1. each outstanding Aurizon Option will be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon and cancelled in exchange for the Option Consideration and the Aurizon Stock Option Plans will be terminated;
  2. each outstanding RSU will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per RSU, less any amounts withheld for tax purposes, and the RSU Plan will be cancelled;
  3. following the resignation by, or removal of, an Aurizon DSU Holder as a director of Aurizon, all of the outstanding DSUs will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per DSU, less any amounts withheld for tax purposes;
  4. each Aurizon Share held by a Dissenting Shareholder shall be deemed to be transferred by the holder thereof to Acquireco and Acquireco shall thereupon be obliged to pay the amount therefor determined and payable in accordance with the Plan of Arrangement. See "Rights of Dissenting Shareholders";
  5. Hecla will subscribe for common shares of Acquireco at a price of $1.00 per share that results in an aggregate subscription price equal to the fair market value of the Share Consideration to be delivered to the former Aurizon Securityholders pursuant to the Plan of Arrangement, with such subscription price being satisfied by Hecla as described in the Plan of Arrangement;
  6. any former Aurizon Securityholder who has not duly and validly completed a Letter of Transmittal and Election Form by the Election Deadline will be deemed to have elected to receive Share Consideration for his or her Aurizon Shares, including, without limitation, the Aurizon Shares issued in satisfaction of the Option Consideration;
  7. each issued Aurizon Share held by a former Aurizon Shareholder (other than Hecla, any subsidiary of Hecla or a Dissenting Shareholder) including, without limitation, the Aurizon Shares issued in satisfaction of the Option Consideration shall be transferred to Acquireco and each such former Aurizon Securityholder shall be entitled to receive, in exchange therefor and subject to withholding rights and pro-ration as described below under the heading "Summary of Circular - Pro-ration", consideration comprised of, in accordance with the election or deemed election of such former Aurizon Securityholder:
a.Cash Consideration - $4.75 for each Aurizon Share held; or
b.Share Consideration - 0.9953 of a Hecla Share for each Aurizon Share held; or
c.a combination of the foregoing (assuming that all Aurizon Shareholders at the Effective Time, elect (or are deemed to have elected) to receive either cash or Hecla Shares, the Consideration will be fully pro-rated with each Aurizon Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share);

See "Summary of Circular – Election Procedure and Pro-ration"

  1. Acquireco will be deemed to have directed Hecla to deliver the Share Consideration to each former Aurizon Securityholder on behalf of Acquireco in full satisfaction of Acquireco’s obligation to deliver the Share Consideration to such former Aurizon Securityholders;
  2. each Aurizon Share held by Hecla will be transferred to Acquireco in consideration of the issue by Acquireco to Hecla of one common share of Acquireco for each Aurizon Common Share so transferred; and
  3. Aurizon and Acquireco will amalgamate to form Amalco.
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See "The Arrangement – Description of the Arrangement".

Special Committee

The Special Committee of directors appointed by the Aurizon Board was formed to, among other things, consider any unsolicited take-over bid or other offer to acquire the Company, including the Arrangement and to make recommendations to the Aurizon Board with respect to any such proposed transaction. After careful consideration, including a thorough review of the Arrangement Agreement and the CIBC Fairness Opinion, as well as a thorough review of other matters, and consultation with its financial and legal advisors, the Special Committee unanimously concluded that the Arrangement is fair to the Aurizon Securityholders, in the best interests of Aurizon and the Aurizon Board should approve the Arrangement Agreement.

See "The Arrangement – Special Committee" and "The Arrangement – Opinions of Financial Advisors".

Recommendation of the Aurizon Board

After careful consideration, including a thorough review of the Arrangement Agreement and the Scotia Capital Fairness Opinion, as well as a thorough review of other matters, including those discussed below, and on the unanimous recommendation of the Special Committee, the Aurizon Board unanimously determined that the Consideration under the Arrangement is fair to Aurizon Securityholders (other than Hecla and affiliates), and that the Arrangement is in the best interests of Aurizon. Accordingly, the Aurizon Board unanimously approved the Arrangement and unanimously recommends that Aurizon Securityholders vote FOR the Arrangement Resolution.

See "The Arrangement – Recommendation of the Aurizon Board".

Reasons for the Recommendation

The Aurizon Board believes that the Arrangement is fair to Aurizon Securityholders and in the best interests of Aurizon. Accordingly, the Aurizon Board unanimously approved the Arrangement and recommends that Aurizon Securityholders vote their Aurizon Shares and Aurizon Options in favour of the Arrangement Resolution.

In reaching its conclusion that the Arrangement is fair to Aurizon Securityholders, is in the best interest of Aurizon and in making its recommendation, the Aurizon Board considered and relied upon a number of factors, including:

  1. The Arrangement arose out of a rigorous process conducted by Aurizon to seek value-maximizing alternatives to the Alamos Offer.
  2. The consideration of $4.75 or 0.9953 of a Hecla Share or a combination of both to be received by Shareholders pursuant to the Arrangement Agreement represents a 40% premium to the closing price of the Aurizon Shares on the TSX on the last trading day prior to the announcement of the Alamos Offer, assuming full pro-ration.
  3. The Arrangement provides a maximum Cash Consideration of approximately $513.6 million, 68% higher than the maximum $305 million cash that was available under the Alamos Offer.
  4. The Scotia Capital Fairness Opinion, which concluded that the consideration offered to Aurizon Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to Aurizon Shareholders other than Hecla and affiliates. See "The Arrangement – Opinions of Financial Advisors" and Appendix C - "Scotia Capital Fairness Opinion".
  5.  13 
       
  6. Each director and senior officer of Aurizon has entered into a Voting Agreement with Hecla pursuant to which, and subject to the terms thereof, they have agreed to vote their Aurizon Securities in favour of the Arrangement Resolution. See "The Arrangement - Voting Agreements".
  7. Aurizon Shareholders who receive Hecla Shares under the Arrangement will be provided with an opportunity to participate in a North American precious metals producer with operating mines in Alaska and Idaho and exploration and pre-development properties in four silver mining districts in the U.S. and Mexico.
  8. Historical market prices and trading information with respect to the Aurizon Shares and the Hecla Shares.
  9. Information regarding the business, operations, property, assets, financial performance and condition, operating results and prospects of Aurizon, Hecla and the Combined Company.
  10. The terms of the Arrangement Agreement, which permit the Aurizon Board to consider and respond to a Superior Proposal subject to the payment of the Termination Fee to Hecla in certain circumstances.
  11. The requirement that the Arrangement Resolution be passed by at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) Aurizon Shareholders voting as a single class, and (ii) Aurizon Shareholders and Aurizon Optionholders voting together as a single class.
  12. The procedures by which the Arrangement is to be approved, including the requirement for approval by the Court after a hearing at which the fairness of the Arrangement to Aurizon Securityholders will be considered.
  13. The availability of rights of dissent to the Registered Shareholders with respect to the Arrangement.
  14. The Board and the Special Committee, with the assistance of their respective legal advisors and the Financial Advisors, examined a variety of strategic alternatives with a view to the best interests of Aurizon. The Arrangement represents the best alternative available to Aurizon and the Aurizon Securityholders.
  15. The Arrangement is not subject to any financing condition.
  16. The terms of the Arrangement are the result of a comprehensive negotiation process, undertaken with the oversight and participation of the Special Committee and its legal counsel and financial advisor, and are reasonable in the judgment of the Special Committee.
  17. The Arrangement is for 100% of the Aurizon Shares and, under the Plan of Arrangement, all Aurizon Shareholders are treated identically and no Aurizon Shareholder receives any "collateral benefit" as defined in MI 61-101.

The Aurizon Board also considered a number of potential issues regarding and risks resulting from the Arrangement, including:

  1. The risks to Aurizon if the Arrangement is not completed, including the costs to Aurizon in pursuing the Arrangement and the further diversion of the Company’s management from the conduct of Aurizon’s business in the ordinary course.
  2. The terms of the Arrangement Agreement in respect of restricting Aurizon from soliciting third parties to make an Acquisition Proposal and the specific requirements regarding what constitutes a Superior Proposal.
  3.  14 
       
  4. The Termination Fee payable to Hecla in certain circumstances, including if Aurizon enters into an agreement in respect of a Superior Proposal to acquire Aurizon.
  5. The conditions to Hecla’s obligations to complete the Arrangement, including (a) that no person or group of persons acting jointly and in concert shall have acquired ownership of, or control or direction over Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares, and (b) holders of no more than 21% of the issued and outstanding Aurizon Shares shall have exercised dissent rights.
  6. The right of Hecla to terminate the Arrangement Agreement under certain limited circumstances.
  7. The likelihood that the Arrangement will be completed, given the conditions and Investment Canada Act Approval necessary to complete the Arrangement.
  8. The business, operations, assets, financial performance and condition, operating results and prospects of Hecla, including the long-term expectations regarding Hecla’s operating performance.

See "The Arrangement – Reasons for the Recommendation". See also "The Arrangement – Special Committee", "The Arrangement – Opinions of Financial Advisors" and the financial statements of Hecla incorporated by reference into this Circular.

Voting Agreements

All of the directors and the senior officers of Aurizon (the "Locked-up Shareholders"), in aggregate holding approximately 1.07% of the Aurizon Shares and approximately 60.4% of the Aurizon Options (as of April 1, 2013), have entered into Voting Agreements with Hecla pursuant to which they have agreed, subject to the terms and conditions of the Voting Agreements, among other things:

(a)to vote any Subject Shares or Subject Options held by them, or over which they have control or direction, as at the date of the Meeting, in favour of the Arrangement Resolution;
(b)to vote at any meeting of Aurizon Shareholders or Aurizon Optionholders, any Subject Shares or Subject Options held by them, or over which they have control or direction, as at the date of such meeting, against any Acquisition Proposal and/or any matter that could reasonably be expected to delay, prevent or frustrate the successful completion of the Arrangement and each of the transactions contemplated by the Arrangement Agreement; and
(c)not to directly or indirectly (i) sell, transfer, assign, grant a participation interest in, option, pledge, hypothecate, grant any security interest in or otherwise convey or encumber (each, a "Transfer"), or enter into any agreement, option or other arrangement with respect to the Transfer of, any of its Subject Shares or Subject Options to any person, other than pursuant to the Arrangement Agreement, or (ii) grant any proxies or power of attorney, deposit any of its Subject Shares or Subject Options into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to its Subject Shares or Subject Options, other than pursuant to its Voting Agreement.

Their respective obligations under the Voting Agreements may be terminated at any time upon the written agreement of Hecla and the Locked-up Shareholder, and will be terminated if the Arrangement Agreement is terminated in accordance with its terms.

See "The Arrangement – Voting Agreements".

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Opinions of Financial Advisors

Scotia Capital and CIBC were retained to render financial advisory services to the Aurizon Board and the Aurizon Special Committee, respectively, and provide opinions as to the fairness, from a financial point of view, of the Consideration to be received by Aurizon Shareholders pursuant to the Arrangement Agreement. The Financial Advisors have delivered the Fairness Opinions concluding that, as at the date thereof and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be received by the Aurizon Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Aurizon Shareholders (other than Hecla and its affiliates). The full text of the Fairness Opinions, setting out the assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Fairness Opinions, are attached as Appendices C (Scotia Capital Fairness Opinion) and D (CIBC Fairness Opinion) to this Circular. The summaries of the Fairness Opinions described in this Circular are qualified in their entirety by reference to the full text of the Fairness Opinions.

The Fairness Opinions are not a recommendation to any Aurizon Securityholder as to how to vote or act on any matter relating to the Arrangement. The Fairness Opinions were one of a number of factors taken into consideration by the Aurizon Board in making its unanimous determination to recommend that the Aurizon Securityholders vote in favour of the Arrangement Resolution. The Aurizon Board urges Aurizon Securityholders to read each of the Fairness Opinions carefully and in their entirety.

See "The Arrangement – Opinions of Financial Advisors" in this Circular and Appendices C and D.

Parties to the Arrangement

Aurizon is a company governed by the laws of the Province of British Columbia. The head office and registered and records office address of Aurizon is located at Suite 1120, Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada. The Aurizon Shares are listed for trading on the TSX under the symbol "ARZ", and on the NYSE MKT under the symbol "AZK".

Hecla is a company governed by the laws of Delaware. The registered and records office and the head office of Hecla is located at 6500 North Mineral Drive, Suite 200, Coeur d'Alene, Idaho, 83815-9408, United States. The Hecla Shares are listed for trading on the NYSE under the symbol "HL".

Acquireco is a corporation incorporated under the BCBCA and a wholly-owned subsidiary of Hecla. Acquireco was formed for the purpose of completing the Arrangement and has not carried on any business.

See "Information Concerning Hecla" and "Information Concerning the Combined Company" in this Circular for a description of Hecla and the Combined Company after giving effect to the Arrangement.

Letter of Transmittal and Election Form

A Letter of Transmittal and Election Form is being mailed, together with this Circular, to each person who was a Registered Shareholder or a registered Aurizon Optionholder on the Record Date. Each such Registered Shareholder or registered Aurizon Optionholder must forward a properly completed and signed Letter of Transmittal and Election Form, with accompanying Aurizon Share certificate(s), if applicable, in order to receive the Consideration to which such Aurizon Securityholder is entitled under the Arrangement. It is recommended that Registered Shareholders and registered Aurizon Optionholders complete, sign and return the Letter of Transmittal and Election Form, with accompanying Aurizon Share certificate(s), if applicable, to the Depositary as soon as possible.

Aurizon Shareholders whose Aurizon Shares are registered in the name of a broker, investment dealer, bank, trust company, trustee or other nominee should contact that nominee for assistance in depositing their Aurizon Shares and should follow the instructions of such nominee in order to make their election and deposit their Aurizon Shares.

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See "The Arrangement — Letter of Transmittal and Election Form" and "The Arrangement — Election Procedure and Pro-ration".

Election Procedure and Pro-ration

Elections and Procedure

Each registered Aurizon Securityholder will have the right, prior to 4:00 p.m. (Toronto time) on May 7, 2013 (the "Initial Election Date"), or, if Aurizon and Hecla determine that the Effective Date is not reasonably likely to occur by the tenth Business Day after the Initial Election Date, a date (the "New Election Date") which Aurizon and Hecla expect to be not more than ten Business Days before the Effective Date, to elect in the Letter of Transmittal and Election Form delivered to the Depositary to receive the Consideration set out below, including the Consideration payable to Aurizon Shareholders for the Aurizon Shares they may receive as Option Consideration. If a New Election Date is determined, notice of the New Election Date will be published. To make a valid election as to the Consideration that you wish to receive under the Arrangement (subject to pro-ration), you must sign and return the Letter of Transmittal and Election Form and return it with accompanying Aurizon Share certificate(s), if applicable, to the Depositary prior to the Election Deadline.

The determination of the Depositary as to whether elections have been properly made or revoked and when elections and revocations were received by it will be binding. AURIZON SECURITYHOLDERS WHO DO NOT MAKE A SPECIFIC ELECTION PRIOR TO THE ELECTION DEADLINE, OR FOR WHOM THE DEPOSITARY DETERMINES THAT THEIR ELECTION WAS NOT PROPERLY MADE WITH RESPECT TO ANY AURIZON SHARES, WILL BE DEEMED TO HAVE ELECTED TO RECEIVE THE SHARE CONSIDERATION IN RESPECT OF EACH AURIZON SHARE, INCLUDING THE AURIZON SHARES ISSUED IN SATISFACTION OF THE OPTION CONSIDERATION, SUBJECT TO PRO-RATION AS DESCRIBED BELOW. The Depositary may, with the mutual agreement of Aurizon and Hecla, make such rules as are consistent with the Arrangement for the implementation of the elections contemplated by the Arrangement and as are necessary or desirable to fully effect such elections.

Pro-ration

Each Aurizon Shareholder at the Effective Time, which will include Aurizon Optionholders that receive Aurizon Shares as satisfaction of the Option Consideration, may elect in accordance with the holder's Letter of Transmittal and Election Form, or be deemed to have elected to receive: (i) Cash Consideration; or (ii) Share Consideration; or (iii) a combination of Cash Consideration and Share Consideration, provided that: (a) the maximum aggregate amount of Cash Consideration to be paid to Aurizon Shareholders is approximately $513.6 million (the "Maximum Cash") and the maximum aggregate number of Hecla Shares that may be received by Aurizon Shareholders is 57 million (the "Maximum Shares"). Assuming that all Aurizon Shareholders elect to receive either cash or Hecla Shares, the Consideration will be fully pro-rated with each Aurizon Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share.

In the event that, based on the elections of Aurizon Securityholders, the aggregate amount of the Cash Consideration that would be paid to Aurizon Securityholders exceeds the Maximum Cash, then the Cash Consideration to be paid to any Aurizon Securityholder who has elected or is deemed to have elected to receive Cash Consideration shall be determined by multiplying the total amount of Cash Consideration otherwise payable to such holder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Cash and the denominator of which is the aggregate amount of Cash Consideration otherwise payable to all Aurizon Securityholders who have so elected (or are deemed to have elected), and such Aurizon Securityholder will be deemed to have elected to receive Share Consideration for the remainder of their Aurizon Shares, for which they would otherwise have received Cash Consideration.

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In the event that, based on the elections of Aurizon Securityholders, the aggregate number of Hecla Shares that would be issuable to Aurizon Securityholders exceeds the Maximum Shares, then the number of Hecla Shares issuable to any Aurizon Securityholder shall, subject to rounding in accordance with the Plan of Arrangement, be determined by multiplying the total number of Hecla Shares otherwise issuable to such Aurizon Securityholder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Shares and the denominator of which is the aggregate number of Hecla Shares otherwise issuable to all Aurizon Securityholders who have so elected (or are deemed to have so elected), and such Aurizon Securityholder shall be deemed to have elected to receive Cash Consideration for the remainder of their Aurizon Shares for which such Aurizon Securityholder would, but for this clause, have received Hecla Shares.

Court Approval of the Arrangement

The Arrangement requires approval by the Court under section 288 of the BCBCA. On April 10, 2013, Aurizon obtained the Interim Order providing for the calling and holding of the Meeting and other procedural matters and filed a Notice of Hearing of Petition for the Final Order to approve the Arrangement. Copies of the Interim Order and the Notice of Hearing of Petition are attached as Appendices E and F, respectively, to this Circular.

The Court hearing in respect of the Final Order is expected to take place at 9:45 a.m. (Vancouver time), on May 10, 2013, or as soon thereafter as counsel for Aurizon may be heard, at the Courthouse, 800 Smithe Street, Vancouver, British Columbia, subject to the approval of the Arrangement Resolution at the Meeting. At the hearing, the Court will consider, among other things, the fairness of the terms and conditions of the Arrangement and the rights and interests of every person affected. The Court may approve the Arrangement in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit. The Court will be advised prior to the hearing of the application for the Final Order that if the terms and conditions of the Arrangement are approved by the Court, the Hecla Shares issued pursuant to the Arrangement will not be registered under the U.S. Securities Act pursuant to the Section 3(a)(10) Exemption and that the Final Order will constitute the basis for such exemption.

Under the terms of the Interim Order, each Aurizon Securityholder, as well as creditors of Aurizon, will have the right to appear and make submissions at the application for the Final Order. Any person desiring to appear at the hearing of the application for the Final Order is required to indicate his, her or its intention to appear by filing with the Court and serving Aurizon at the address set out below, on or before 4:00 p.m. (Vancouver time) on May 8, 2013, a Response to Petition ("Response"), including his, her or its address for service, together with all materials on which he, she or it intends to rely at the application. The Response and supporting materials must be delivered, within the time specified, to Aurizon at the following address:

Blake, Cassels & Graydon LLP
595 Burrard Street
P.O. Box 49314
Suite 2600, Three Bentall Centre
Vancouver, B.C. V7X 1L3
Attention: Sean Boyle

Aurizon Securityholders who wish to participate in or be represented at the Court hearing for the Final Order should consult their legal advisors as to the necessary requirements.

See "The Arrangement – Securityholder and Court Approvals".

Cancellation of Rights after Six Years

To the extent that a former Aurizon Securityholder has not complied with the provisions of the Arrangement described above under the heading "Election Procedure and Pro-ration", on or before the date that is six years after the Effective Date, then the Cash Consideration which such former Aurizon Securityholder was entitled to receive will be returned to Hecla and the Share Consideration that such former Aurizon Securityholder was entitled to receive will be automatically cancelled without any repayment of capital in respect thereof and the certificates representing such Share Consideration will be delivered to Hecla by the Depositary and the interest of the former Aurizon Securityholder in such Cash Consideration and/or Share Consideration to which it was entitled will be terminated on the date that is six years after the Effective Date.

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Interests of Certain Persons in the Arrangement

In considering the recommendation of the Aurizon Board, Aurizon Securityholders should be aware that members of the Aurizon Board and the executive officers of Aurizon have interests in the Arrangement or may receive benefits that may differ from, or be in addition to, the interests of Aurizon Shareholders generally.

All benefits received, or to be received, by directors or executive officers of Aurizon as a result of the Arrangement are, and will be, solely in connection with their services as directors or employees of Aurizon or the Combined Company. No benefit has been, or will be, conferred for the purpose of increasing the value of consideration payable to any such person for Aurizon Shares, nor is it, or will it be, conditional on the person supporting the Arrangement.

See "The Arrangement – Interests of Directors and Executive Officers of Aurizon in the Arrangement".

The Arrangement Agreement

The Arrangement Agreement provides for the Arrangement and matters related thereto. Under the Arrangement Agreement, Aurizon has agreed to, among other things, call the Meeting to seek approval of the Arrangement Resolution by the Aurizon Securityholders and, if approved, apply to the Court for the Final Order.

See "The Arrangement Agreement."

Fractional Interest

No fractional Hecla Shares shall be issued to former Aurizon Securityholders. The number of Hecla Shares to be issued to former Aurizon Securityholders will be rounded up to the nearest whole Hecla Share in the event that a former Aurizon Securityholder is entitled to a fractional share representing 0.5 or more of a Hecla Share and shall be rounded down to the nearest whole Hecla Share in the event that a former Aurizon Securityholder is entitled to a fractional share representing less than 0.5 of a Hecla Share.

The aggregate Cash Consideration payable to a former Aurizon Securityholder, Aurizon DSU Holder or Aurizon RSU Holder will be rounded up to the next whole five cent increment.

See "The Arrangement – Fractional Interest".

Rights of Dissent

Registered Shareholders have Dissent Rights with respect to the Arrangement. Any Registered Shareholder who dissents from the Arrangement Resolution in accordance with Sections 237 to 247 of the BCBCA, as amended by the Plan of Arrangement, the Interim Order and the Final Order, will be entitled to be paid by Aurizon the fair value of the Aurizon Shares held by the Aurizon Shareholder, determined as at the point in time immediately before the Arrangement Resolution is approved by the Aurizon Securityholders. The Dissent Rights must be strictly complied with in order for a Registered Shareholder to receive cash representing the fair value of Aurizon Shares held.

To exercise the Dissent Rights a written notice of objection to the Arrangement Resolution must be received by Aurizon, c/o Blake, Cassels & Graydon LLP, 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, B.C. V7X 1L3 Attention: Sean Boyle by 1:00 p.m. (Vancouver time) on May 7, 2013, or two days prior to any adjournment of the Meeting.

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See "Rights of Dissenting Shareholders" in this Circular.

Income Tax Considerations

Aurizon Securityholders should consult their own tax advisors about the applicable Canadian or United States federal, provincial, state and local tax consequences of the Arrangement.

See "Canadian Federal Income Tax Considerations" and "United States Federal Income Tax Considerations".

Canadian Securities Laws

Qualification and Resale of Hecla Shares

The Hecla Shares to be issued in exchange for Aurizon Shares pursuant to the Arrangement will be issued in reliance upon exemptions from the prospectus and registration requirements of securities legislation in each province and territory of Canada. Subject to certain disclosure and regulatory requirements and to customary restrictions applicable to distributions of shares that constitute "control distributions", Hecla Shares issued pursuant to the Arrangement may be resold in each province and territory in Canada, subject in certain circumstances to the usual conditions that no unusual effort has been made to prepare the market or create demand for such Hecla Shares.

Ongoing Canadian Reporting Obligations

Aurizon is a reporting issuer (or the equivalent) in all of the provinces of Canada. The Aurizon Shares currently trade on the TSX. After the Arrangement, Hecla intends to delist the Aurizon Shares from the TSX, and Hecla will apply to the applicable Canadian securities regulators to have Aurizon cease to be a reporting issuer.

See "Securities Law Matters – Canadian Securities Laws".

U.S. Securities Laws

Issuance and Resale of Hecla Shares

The securities to be issued and distributed in connection with the Arrangement to Aurizon Securityholders are not required to be, and will not be, registered under the U.S. Securities Act. Such securities will be issued and distributed in reliance upon the Section 3(a)(10) Exemption. Except with respect to holders of Hecla Shares who were affiliates of Hecla within 90 days prior to the Effective Date of the Arrangement or are affiliates of Hecla after the Effective Date of the Arrangement, the Hecla Shares to be issued pursuant to the Arrangement will not be subject to resale restrictions under the U.S. Securities Act.

Ongoing United States Reporting Obligations

Aurizon is subject to the periodic reporting requirements of the U.S. Exchange Act, and Aurizon Shares currently trade on the NYSE MKT. After the Arrangement, Hecla intends to delist the Aurizon Shares from the NYSE MKT, and Aurizon will cease to be subject to the reporting requirements of the U.S. Exchange Act.

See "Securities Law Matters – U.S. Securities Laws".

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Selected Unaudited Pro Forma Financial Information

The following selected unaudited pro forma condensed combined financial information is based on the assumptions described in the notes to the unaudited pro forma condensed combined financial statements of Hecla, attached as Appendix I to this Circular. The pro forma condensed combined balance sheet as at December 31, 2012 and the pro forma condensed combined statement of operations for the year ended December 31, 2012 gives effect to the Hecla Note Issue and the Arrangement as if the Arrangement had been completed on December 31, 2012. The pro forma condensed combined statement of operations for the year ended December 31, 2012 give effect to the Hecla Note Issue and the Arrangement as if the Arrangement had been completed on January 1, 2012. The unaudited pro forma condensed combined financial statements do not purport to project Hecla’s consolidated financial position or results of operations for any future period.

The unaudited pro forma condensed combined financial statements are based on certain assumptions and adjustments. The selected unaudited pro forma condensed combined financial information set out below should be read in conjunction with the description of the Arrangement contained in this Circular, Hecla and Aurizon's historical consolidated financial statements and the unaudited pro forma condensed combined financial statements attached to this Circular as Appendix I.

The unaudited pro forma condensed combined financial statements have been prepared using Hecla’s accounting policies in accordance with U.S. Generally Accepted Accounting Principles, which differ in certain material respects from Aurizon’s accounting policies which are in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

(Figures expressed in thousands of (except per share data) U.S. dollars)  
   
Pro Forma Statement of Operations Data (Unaudited) for the Year Ended December 31, 2012  
Sales of products……………………………………………………………………….………………..……………………………… 544,746
Income from operations……………………………………………………………………….……………………….…………… 80,714
Net income…………………………………………………………………………………………………………………….…………… 21,265
   
Basic and diluted income per common share after preferred stock dividends………………..…………… 0.06
   
Pro Forma Balance Sheet Data (Unaudited) as of December 31, 2012  
Cash and cash equivalents…………………………………………………………………………………..…………….………… 331,712
Total current assets…………………………………………………………………………………………………………….………… 469,011
Total assets…………………………………………………………………………………………………………………………………… 2,457,773
   
Total current liabilities…………………………………………………………………………………………………………………… 126,765
Long-term debt and capital leases………………………………………………………………...………….…………………… 511,935
Total liabilities…………………………………………………………………………………………………………………..…………… 1,084,955
Total shareholders' equity………………………………………………………………………………………………..…………… 1,372,818
   

 

 

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general proxy information

Date, Time and Place of Meeting

The Meeting will be held on May 9, 2013 at 1:00 p.m. (Vancouver time) at The Vancouver Club, in the University Room, 3rd Floor, 915 West Hastings Street, Vancouver, BC, V6C 1C6.

Solicitation of Proxies

Aurizon will conduct its solicitation by mail and officers and employees of Aurizon may, without receiving special compensation, also telephone or make other personal contact. Pursuant to the terms of the Arrangement Agreement, Aurizon has agreed to permit Hecla to, on behalf of management of Aurizon, directly or through a soliciting dealer, actively solicit proxies in favour of the Arrangement Resolution in compliance with applicable laws. In addition, Aurizon has retained the services of Georgeson to assist with Aurizon's shareholder communication and solicitation of proxies. In connection with these services, Georgeson will receive a fee of $20,000 plus a per call fee for retail shareholder calls and will be reimbursed for its reasonable out-of-pocket expenses. Interested shareholders of Aurizon may contact Georgeson at Toll Free (North America): 1-888-605-7616 or Outside North America Call Collect: 1-781-575-2422 or Email: askus@georgeson.com. Aurizon will pay the cost of solicitation.

Appointment and Revocation of Proxies

The persons named in the enclosed form of proxy are directors or officers of Aurizon. An Aurizon Securityholder has the right to appoint a person (who need not be an Aurizon Securityholder) to represent them at the Meeting as an alternative to the the persons designated in the form of proxy provided by Aurizon. To exercise this right, the Aurizon Securityholder should strike out the name of the management designees in the enclosed form of proxy and insert the name of the desired representative in the blank space provided in the form of proxy or submit another appropriate form of proxy.

In order to be effective, a proxy must be deposited at the office of Aurizon's registrar and transfer agent, Computershare Trust Company of Canada ("Computershare"), no later than 4:00 p.m. (Toronto time) on May 7, 2013 or not less than 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment or postponement of the Meeting.

Registered Aurizon Securityholders electing to submit a proxy may do so by choosing one of the following methods:

(a)complete, date and sign the proxy and return it to Computershare, by fax within North America at 1-866-249-7775, outside North America at 1-416-263-9524, or by mail to Computershare Trust Company of Canada, Proxy Dept., 9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; or
(b)use a touch-tone phone to transmit voting choices to the toll free number given in the proxy. Registered Aurizon Securityholders who choose this option must follow the instructions of the voice response system and refer to the proxy for the toll free number and control number; or
(c)log on to the internet at Computershare’s website, www.investorvote.com. Registered Aurizon Securityholders must follow the instructions given on the website and must refer to the proxy for the control number.

 

Any Aurizon Securityholder who has returned a proxy may revoke it at any time before it has been exercised. In addition to revocation in any other manner permitted by law, a registered Aurizon Securityholder, his attorney authorized in writing or, if the registered Aurizon Securityholder is a corporation, a corporation under its corporate seal or by an officer or attorney thereof duly authorized, may revoke a proxy by instrument in writing, including a proxy bearing a later date. The instrument revoking the proxy must be deposited at the registered office of Aurizon, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, or with the chairman of the Meeting on the day of the Meeting. Only registered Aurizon Securityholders have the right to revoke a proxy. Non-registered holders who wish to revoke their proxy must arrange for their respective intermediaries to revoke the proxy on their behalf in accordance with any requirements of the intermediaries.

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Proxy Voting

All Aurizon Shares and Aurizon Options represented at the Meeting by properly completed and executed proxies will be voted on any ballot that may be called for and, where a choice with respect to any matter to be acted upon has been specified in the proxy, Aurizon Shares and Aurizon Options represented by the proxy will be voted in accordance with such instructions. In the absence of any such instruction, the persons whose names appear on the applicable printed forms of proxy will vote FOR all of the matters set out thereon. If any other business or amendments or variations to matters identified in the Notice of Meeting properly come before the Meeting, then discretionary authority is conferred upon the persons appointed in the proxy to vote in the manner they see fit.

Advice to Beneficial Holders of Aurizon Shares

The information set forth in this section is of significant importance to many Aurizon Shareholders, as a substantial number of Aurizon Shareholders do not hold Aurizon Shares in their own names. Beneficial Shareholders should note that only proxies deposited by Aurizon Shareholders whose names appear on the records of Aurizon as the registered holders of Aurizon Shares can be recognized and acted upon at the Meeting. If Aurizon Shares are listed in an account statement provided to an Aurizon Shareholder by a broker, then in almost all cases those Aurizon Shares will not be registered in the Aurizon Shareholder’s name on the records of Aurizon. Such Aurizon Shares will more likely be registered under the name of the Aurizon Shareholder’s broker or an agent of that broker. In Canada, the majority of such Aurizon Shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depositary Services Inc., which acts as nominee for many Canadian brokerage firms). Aurizon Shares held by brokers or their agents or nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting Aurizon Shares for the broker’s clients. The directors and officers of Aurizon do not know for whose benefit the Aurizon Shares registered in the name of CDS & Co. or of other brokers/agents are held. Therefore, Beneficial Shareholders should ensure that instructions respecting the voting of their Aurizon Shares are communicated to the appropriate person.

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of Aurizon Shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their Aurizon Shares are voted at the Meeting. The form of proxy supplied to a Beneficial Shareholder by its broker (or the agent of the broker) is similar to the form of proxy provided to Registered Shareholders. However, its purpose is limited to instructing the Registered Shareholder (the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communications Corporation ("Broadridge"). Broadridge typically mails a scannable voting instruction form instead of the form of proxy. The Beneficial Shareholder is asked to complete the voting instruction form and return it to Broadridge by mail or facsimile. Alternatively, the Beneficial Shareholder may call a toll-free number or complete a voting instruction form online to vote the Aurizon Shares held by the Beneficial Shareholder. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Aurizon Shares to be represented at the applicable meeting. A Beneficial Shareholder receiving a voting instruction form cannot use that voting instruction form to vote Aurizon Shares directly at the Meeting as the voting instruction form must be returned as directed by Broadridge well in advance of the Meeting in order to have the Aurizon Shares voted.

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Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting Aurizon Shares registered in the name of his broker (or agent of the broker), a Beneficial Shareholder may attend the Meeting as proxyholder for the Registered Shareholder and vote the Aurizon Shares in that capacity. Beneficial Shareholders who wish to attend at the Meeting and indirectly vote their Aurizon Shares as proxyholders for Registered Shareholders should enter their own names in the blank spaces on the instruments of proxy or voting instruction form provided to them and return the same to their brokers (or the brokers’ agents) in accordance with the instructions provided by such brokers (or agents), well in advance of the Meeting.

Quorum

A quorum for the Meeting is two Aurizon Shareholders present or represented by proxy at the Meeting.

Principal Holders of Aurizon Shares

As at April 1, 2013, Aurizon had 164,665,627 Aurizon Shares issued and outstanding. Each Aurizon Share outstanding on the Record Date carries the right to one vote.

To the knowledge of the directors and executive officers of Aurizon, except as set forth below, no person, as of the date of this Circular, beneficially owned, directly or indirectly, or exercised control or direction over, Aurizon Shares carrying more than 10% of the voting rights attached to all issued Aurizon Shares (based on information available to Aurizon at the date of this Circular).

 

 

 

Name

Number of Common Shares Beneficially Owned Controlled or Directed (Directly or Indirectly) Percentage of Issued and Outstanding Common Shares as of April 10, 2013

 

Alamos Gold Inc.

 

26,507,283

 

16.1%

THE ARRANGEMENT

Background to the Arrangement

On the evening of Sunday, January 13, 2013, Alamos delivered to Aurizon a letter stating that Alamos would be making the Alamos Offer at 6:00 a.m. Eastern Time the following morning.

The intention to make the Alamos Offer was announced by Alamos by way of press release prior to the opening of the TSX on January 14, 2013.

On January 14, 2013, Aurizon issued a press release noting Alamos’ announcement and that Aurizon was in the process of reviewing and evaluating the Alamos Offer and expected that a special committee of the Aurizon Board would be appointed.

On January 15, 2013, the Aurizon Board appointed the Special Committee with a mandate that included the review and evaluation of the Alamos Offer. The Special Committee is comprised of George Brack (Chairman), Sargent Berner, Louis Dionne and Andre Falzon. The Special Committee met on January 15, 2013 to review the Alamos Offer and to discuss procedural matters. On January 18, 2013, the Company issued a news release announcing that it had appointed Scotia Capital as financial advisor and DuMoulin Black LLP and Blake, Cassels & Graydon LLP as legal counsel to assist in responding to the Alamos Offer. The Company also announced that it had appointed the Special Committee, the Special Committee had appointed CIBC as its financial advisor and Blake, Cassels & Graydon LLP was also providing advice to the Special Committee.

On January 20, 2013, the Special Committee met to receive presentations from its legal and financial advisors regarding the discharge by the Special Committee of its duties in respect of the Alamos Offer.

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On January 22, 2013, the Special Committee met and after careful consideration, including a thorough review of the Alamos Offer, the Alamos Circular, and after receiving the verbal opinion of CIBC as to the inadequacy of the Alamos Offer, as well as a thorough review of other matters, including matters discussed elsewhere in the Aurizon Directors’ Circular, and taking into account the best interests of Aurizon and the impact on Aurizon’s stakeholders, and consultation with its financial and legal advisors, the Special Committee unanimously concluded that the Alamos Offer is financially inadequate and not in the best interests of Aurizon and that the Aurizon Board should recommend that Aurizon Shareholders reject the Alamos Offer and not tender their Aurizon Shares to the Alamos Offer.

On January 22, 2013, the Aurizon Board met and after careful consideration, including a thorough review of the Alamos Offer and the Alamos Circular, and after receiving the recommendation of the Special Committee and the verbal opinion of Scotia Capital as to the financial inadequacy of the Alamos Offer, as well as a thorough review of other matters, including Aurizon’s continuing pursuit of strategic alternatives and other matters discussed in the Aurizon Directors’ Circular, and taking into account the best interests of Aurizon and the impact on Aurizon’s stakeholders, and consultation with its financial and legal advisors, the Aurizon Board unanimously determined that the Alamos Offer is financially inadequate and not in the best interests of Aurizon and to recommend that Aurizon Shareholders reject the Alamos Offer and not tender their Aurizon Shares to the Alamos Offer. At the same Aurizon Board meeting, the Aurizon Board adopted the Aurizon Shareholder Rights Plan.

On January 23, 2013, Aurizon announced the Aurizon Board's recommendation that Aurizon Shareholders reject the Alamos Offer, the filing of the Aurizon Directors' Circular, the adoption of the Aurizon Shareholder Rights Plan and that Aurizon would hold a shareholders' meeting on March 7, 2013 to ratify the Aurizon Shareholder Rights Plan.

Following the commencement of the Alamos Offer, the Company established a data room to enable potential acquirors of the Company to access information regarding the Company and its business. Scotia Capital and CIBC commenced a sale process and contacted potential acquirors around the world to determine their interest in pursuing a transaction with Aurizon. Discussions ensued over the next several weeks with a number of third parties, including Hecla, who showed initial interest. During this time, eight confidentiality agreements, were entered into by the Company, including an agreement with Hecla effective as of January 24, 2013.

On January 24, 2013, Alamos announced that it would be applying to the British Columbia Securities Commission to have the Aurizon Shareholder Rights Plan cease-traded before the expiration of the Alamos Offer.

During the period from February 5, 2013 to February 27, 2013 site visits at one or more of the Company's projects were conducted with three interested parties. Also during that time, the Special Committee met formally on four occasions and members of the Special Committee met informally with management on an as-needed basis.

On February 12, 2013, Aurizon announced that a hearing before the British Columbia Securities Commission would be held on February 18, 2013 to consider the application filed by Alamos to cease trade the Aurizon Shareholder Rights Plan.

On February 18, 2013, Aurizon announced that the British Columbia Securities Commission had granted an order that was consented to by both Aurizon and Alamos that would allow the Aurizon Shareholder Rights Plan to continue to March 4, 2013, after which time it would be waived by Aurizon or cease traded.

On February 18, 2013, Alamos announced an extension of the expiry time of the Alamos Offer to March 5, 2013, unless further extended or withdrawn.

During the period from February 20, 2013 to March 3, 2013, Aurizon and Hecla exchanged drafts of, and negotiated the terms of, the Arrangement Agreement and the other related agreements, under which Hecla would acquire all of the issued and outstanding Aurizon Shares and Aurizon Shareholders would be entitled to elect to receive, in exchange for each Aurizon Share, CAD$4.75 per share or 0.9953 of a Hecla Share or a combination of both, subject in each case to pro-ration based on a maximum cash consideration of approximately $513.6 million and a maximum of 57 million Hecla Shares, the whole subject to a number of conditions, including Aurizon Securityholder Approval.

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On Sunday, March 3, 2013, the Special Committee met with CIBC and Blake, Cassels & Graydon LLP. The Special Committee was advised of the status of the Arrangement Agreement and related agreements. CIBC then gave its presentation on the process leading up to the Arrangement and the work undertaken, and methodology used, by CIBC for the purpose of the CIBC Fairness Opinion. Throughout the presentation, members of the Special Committee asked various questions to CIBC's representatives. At the end of the presentation, CIBC provided a verbal fairness opinion and confirmed that it would be able to deliver a written fairness opinion soon after the Arrangement Agreement was executed. After a detailed discussion relating to the risks and opportunities with respect to the Arrangement, the Special Committee unanimously determined:

·         that the Arrangement is in the best interests of Aurizon;

·         that the Arrangement is fair to the Aurizon Securityholders; and

·         to recommend to the Aurizon Board that it approve the Arrangement Agreement.

Immediately after the Special Committee meeting, the Aurizon Board met to consider the Arrangement Agreement and the Arrangement and Scotia Capital delivered their verbal opinion to the Aurizon Board that, subject to and based on the considerations, assumptions and limitations described, the consideration under the Hecla Arrangement was fair, from a financial point of view, to the Aurizon Shareholders other than Hecla (and its affiliates). Based upon the recommendation of the Special Committee and after consultation with its financial and legal advisors, the Aurizon Board:

·         unanimously determined that the Consideration to be received by the Aurizon Shareholders is fair for the Aurizon Shareholders;

·         unanimously determined that the Arrangement is in the best interests of Aurizon;

·         unanimously determined that the Arrangement is fair to the Aurizon Securityholders; and

·         approved the Arrangement Agreement and the Arrangement and determined that it would recommend that Aurizon Securityholders vote in favour of the Arrangement Resolution.

Later on March 3, 2013, the Arrangement Agreement and Voting Agreements were concluded and the parties exchanged signature pages. A press release announcing the transaction was issued on Monday, March 4, 2013 by each of Hecla and Aurizon prior to the opening of trading on the TSX, NYSE and NYSE MKT.

Aurizon also announced that, in accordance with the order of the British Columbia Securities Commission referenced above, the Aurizon Board had waived the application of the Aurizon Shareholder Rights Plan and cancelled the March 7, 2013 special meeting of Aurizon Shareholders, the purpose of which was to ratify the Aurizon Shareholder Rights Plan.

On March 5, 2013, Alamos issued a press release announcing that it had amended the Alamos Offer to, among other things, waive the minimum tender condition in the Alamos Offer and extend the expiry date of the Alamos Offer to 5:00 p.m. (Toronto time) on March 19, 2013. Alamos filed a notice of variation and extension pursuant thereto on March 6, 2013.

On March 11, 2013, Aurizon announced that it had adopted the Second Aurizon Shareholder Rights Plan. Alamos announced that it had applied to the British Columbia Securities Commission for an order to cease-trade the Second Aurizon Shareholder Rights Plan and to cease-trade the Arrangement pending removal of a provision of the Arrangement Agreement that provides for the payment of the Termination Fee in the event that any person acquires ownership of, or control or direction over 33 1/3% or more of the outstanding Aurizon Shares.

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On March 12, 2013, Aurizon announced that the British Columbia Securities Commission would hold a hearing on March 15, 2013 in response to Alamos’ application.

On March 15, 2013, the British Columbia Securities Commission hearing was held. On March 18, 2013, the British Columbia Securities Commission granted an order cease trading the Second Aurizon Shareholder Rights Plan. The British Columbia Securities Commission refused to grant an order cease trading the Arrangement pending removal of the provisions of the Arrangement Agreement relating to the payment of the Termination Fee in certain circumstances.

On March 19, 2013, Alamos issued a press release announcing that the Alamos Offer will expire on March 19, 2013 and that it would not take up any Aurizon Shares tendered to the Alamos Offer.

Special Committee

The Special Committee of directors appointed by the Aurizon Board was formed to, among other things, consider the Alamos Offer, any other offer to acquire the Company and the Arrangement and make recommendations to the Aurizon Board with respect to any such proposed transaction. The Special Committee retained CIBC to act as financial advisor to the Special Committee and to provide the CIBC Fairness Opinion.

After careful consideration, including a thorough review of the Arrangement Agreement and the CIBC Fairness Opinion, as well as a thorough review of other matters, including matters discussed below, and taking into account the best interests of Aurizon and the impact on Aurizon stakeholders and consultation with its financial and legal advisors, the Special Committee unanimously determined that the Arrangement is fair to Aurizon Securityholders and in the best interests of Aurizon. Accordingly, the Special Committee unanimously recommended that the Aurizon Board approve the Arrangement and enter into the Arrangement Agreement.

Recommendation of the Aurizon Board

After careful consideration, including a thorough review of the Arrangement Agreement and the Scotia Capital Fairness Opinion, as well as a thorough review of other matters, including those discussed below, and on the unanimous recommendation of the Special Committee, the Aurizon Board unanimously determined that the Consideration under the Arrangement is fair to Aurizon Securityholders (other than Hecla and its affiliates), and that the Arrangement is in the best interests of Aurizon. Accordingly, the Aurizon Board unanimously approved the Arrangement and unanimously recommends that Aurizon Securityholders vote FOR the Arrangement Resolution.

Reasons for the Recommendation

The Aurizon Board believes that the Arrangement is fair to Aurizon Securityholders and in the best interests of Aurizon. Accordingly, the Aurizon Board unanimously approved the Arrangement and recommends that Aurizon Securityholders vote their Aurizon Shares and Aurizon Options in favour of the Arrangement Resolution.

In making its recommendation, the Aurizon Board considered a number of factors, including:

  1. The Arrangement arose out of a rigorous process conducted by Aurizon to seek value-maximizing alternatives to the Alamos Offer.
  2. The consideration of $4.75 or 0.9953 of a Hecla Share or a combination of both to be received by Shareholders pursuant to the Arrangement Agreement represents a 40% premium to the closing price of the Aurizon Shares on the TSX on the last trading day prior to the announcement of the Alamos Offer, assuming full pro-ration.
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  1. The Arrangement provides a maximum Cash Consideration of approximately $513.6 million, 68% higher than the maximum $305 million cash that was available under the Alamos Offer.
  2. The Scotia Capital Fairness Opinion, which concluded that the consideration offered to Aurizon Shareholders pursuant to the Arrangement is fair, from a financial point of view, to Aurizon Shareholders other than Hecla and affiliates. See "The Arrangement – Opinions of Financial Advisors" and Appendix C - "Scotia Capital Fairness Opinion".
  3. Each director and senior officer of Aurizon has entered into a Voting Agreement with Hecla pursuant to which, and subject to the terms thereof, they have agreed to vote their Aurizon Securities in favour of the Arrangement Resolution. See "The Arrangement - Voting Agreements".
  4. Aurizon Shareholders who receive Hecla Shares under the Arrangement will be provided with an opportunity to participate in a North American precious metals producer with operating mines in Alaska and Idaho and exploration and pre-development properties in four silver mining districts in the U.S. and Mexico.
  5. Historical market prices and trading information with respect to the Aurizon Shares and the Hecla Shares.
  6. Information regarding the business, operations, property, assets, financial performance and condition, operating results and prospects of Aurizon, Hecla and the Combined Company.
  7. The terms of the Arrangement Agreement, which permit the Aurizon Board to consider and respond to a Superior Proposal subject to the payment of the Termination Fee to Hecla in certain circumstances.
  8. The requirement that the Arrangement Resolution be passed by at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) Aurizon Shareholders voting as a single class, and (ii) Aurizon Shareholders and Aurizon Optionholders voting together as a single class.
  9. The procedures by which the Arrangement is to be approved, including the requirement for approval by the Court after a hearing at which the fairness of the Arrangement to Aurizon Securityholders will be considered.
  10. The availability of rights of dissent to the Registered Shareholders with respect to the Arrangement.
  11. The Board and the Special Committee, with the assistance of their respective legal advisors and the Financial Advisors, examined a variety of strategic alternatives with a view to the best interests of Aurizon. The Arrangement represents the best alternative available to Aurizon and the Aurizon Securityholders.
  12. The Arrangement is not subject to any financing condition.
  13. The terms of the Arrangement are the result of a comprehensive negotiation process, undertaken with the oversight and participation of the Special Committee and its legal counsel and financial advisor, and are reasonable in the judgment of the Special Committee.
  14. The Arrangement is for 100% of the Aurizon Shares and, under the Plan of Arrangement, all Aurizon Shareholders are treated identically and no Aurizon Shareholder receives any "collateral benefit" as defined in MI 61-101.
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The Aurizon Board also considered a number of potential issues regarding and risks resulting from the Arrangement, including:

  1. The risks to Aurizon if the Arrangement is not completed, including the costs to Aurizon in pursuing the Arrangement and the further diversion of the Company’s management from the conduct of Aurizon’s business in the ordinary course.
  2. The terms of the Arrangement Agreement in respect of restricting Aurizon from soliciting third parties to make an Acquisition Proposal and the specific requirements regarding what constitutes a Superior Proposal.
  3. The Termination Fee payable to Hecla in certain circumstances, including if Aurizon enters into an agreement in respect of a Superior Proposal to acquire Aurizon.
  4. The conditions to Hecla’s obligations to complete the Arrangement, including (a) that no person or group of persons acting jointly and in concert shall have acquired ownership of, or control or direction over Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares, and (b) holders of no more than 21% of the issued and outstanding Aurizon Shares shall have exercised dissent rights.
  5. The right of Hecla to terminate the Arrangement Agreement under certain limited circumstances.
  6. The likelihood that the Arrangement will be completed, given the conditions and Investment Canada Act Approval necessary to complete the Arrangement.
  7. The business, operations, assets, financial performance and condition, operating results and prospects of Hecla, including the long-term expectations regarding Hecla’s operating performance.

See "The Arrangement – Opinions of Financial Advisors" and the financial statements of Hecla incorporated by reference into this Circular.

The Aurizon Board’s reasons for recommending the Arrangement include certain assumptions relating to forward-looking information, and such information and assumptions are subject to various risks. See "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors Relating to the Arrangement" in this Circular.

The foregoing summary of the information and factors considered by the Aurizon Board is not intended to be exhaustive. In view of the variety of factors and the amount of information considered in connection with its evaluation of the Arrangement, the Aurizon Board did not find it practical to, and did not, quantify or otherwise attempt to assign any relative weight to each specific factor considered in reaching its conclusion and recommendation. The Aurizon Board’s recommendation was made after considering all of the above-noted factors and in light of the Aurizon Board’s knowledge of the business, financial condition and prospects of Aurizon, and was also based on the advice of financial advisors and legal advisors to the Aurizon Board. In addition, individual members of the Aurizon Board may have assigned different weights to different factors.

Opinions of Financial Advisors

The Financial Advisors were retained to render financial advisory services to the Aurizon Board and the Aurizon Special Committee, respectively, and provide opinions as to the fairness, from a financial point of view, of the Consideration to be received by Aurizon Shareholders pursuant to the Arrangement Agreement. The Financial Advisors have delivered the Fairness Opinions concluding that, as at the date thereof and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be received by the Aurizon Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Aurizon Shareholders (other than Hecla and its affiliates). The full text of the Fairness Opinions, setting out the assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Fairness Opinions, are attached as Appendices C and D to this Circular. The summaries of the Fairness Opinions described in this Circular are qualified in their entirety by reference to the full text of the Fairness Opinions.

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Under the engagement letters with the Financial Advisors, Aurizon has agreed to pay a fee to each of the Financial Advisors for their services, including an advisory fee payable to CIBC, and a fee payable to Scotia Capital for the delivery of the Scotia Capital Fairness Opinion, no portion of which are contingent on the substance of the Fairness Opinions. Aurizon has also agreed to indemnify the Financial Advisors against certain liabilities in connection with their engagements.

The Fairness Opinions are not a recommendation to any Aurizon Securityholder as to how to vote or act on any matter relating to the Arrangement. The Fairness Opinions were one of a number of factors taken into consideration by the Aurizon Board in making its unanimous determination to recommend that the Aurizon Securityholders vote in favour of the Arrangement Resolution.

 

The Aurizon Board urges Aurizon Securityholders to read each of the Fairness Opinions carefully and in their entirety. See Appendices C and D of this Circular.

Voting Agreements

All of the Locked-up Shareholders, who in aggregate hold approximately 1.07% of the Aurizon Shares and approximately 60.4% of Aurizon Options (as of April 1, 2013), have entered into Voting Agreements with Hecla pursuant to which they have agreed, subject to the terms and conditions of the Voting Agreements, among other things:

(a)to vote any Subject Shares or Subject Options held by them, or over which they have control or direction, as at the date of the Meeting, in favour of the Arrangement Resolution;
(b)to vote at any meeting of Aurizon Shareholders or Aurizon Optionholders, any Subject Shares or Subject Options held by them, or over which they have control or direction, as at the date of such meeting, against any Acquisition Proposal and/or any matter that could reasonably be expected to delay, prevent or frustrate the successful completion of the Arrangement and each of the transactions contemplated by the Arrangement Agreement; and
(c)not to directly or indirectly (i) sell, transfer, assign, grant a participation interest in, option, pledge, hypothecate, grant any security interest in or otherwise convey or encumber (each, a "Transfer"), or enter into any agreement, option or other arrangement with respect to the Transfer of, any of their Subject Shares or Subject Options to any person, other than pursuant to the Arrangement Agreement, or (ii) grant any proxies or power of attorney, deposit any of their Subject Shares or Subject Options into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to their Subject Shares or Subject Options, other than pursuant to their Voting Agreements.

Their obligations under the Voting Agreements may be terminated at any time upon the written agreement of Hecla and the Locked-up Shareholder, or if the Arrangement Agreement is terminated in accordance with its terms.

Description of the Arrangement

The following description of the Arrangement is qualified in its entirety by reference to the full text of the Plan of Arrangement, a copy of the form of which is attached as Appendix B of this Circular.

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The purpose of the Arrangement is to effect the acquisition of all of the issued and outstanding Aurizon Shares by Hecla. Pursuant to the Arrangement Agreement, Aurizon and Hecla have agreed to complete the Arrangement pursuant to which, among other things, (i) Acquireco will acquire all of the issued and outstanding Aurizon Shares in exchange for a combination of cash and Hecla Shares to be issued to the Aurizon Shareholders, and (ii) Aurizon will amalgamate with Acquireco to form Amalco. Upon completion of the Arrangement, Amalco will be a wholly-owned subsidiary of Hecla.

If approved, the Arrangement will become effective at the Effective Time (which is expected to be at 12:01 a.m. (Vancouver time) on a date to be determined which is expected to be in the second quarter of 2013. At the Effective Time, the following shall be deemed to occur sequentially in the following order:

  1. each outstanding Aurizon Option will be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon and cancelled in exchange for the Option Consideration and the Aurizon Stock Option Plans will be terminated;
  2. each outstanding RSU will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per RSU, less any amounts withheld for tax purposes, and the RSU Plan will be cancelled;
  3. following the resignation by, or removal of, an Aurizon DSU Holder as a director of Aurizon, all of the outstanding DSUs will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per DSU, less any amounts withheld for tax purposes;
  4. each Aurizon Share held by a Dissenting Shareholder shall be deemed to be transferred by the holder thereof to Acquireco and Acquireco shall thereupon be obliged to pay the amount therefor determined and payable in accordance with the Plan of Arrangement. See "Rights of Dissenting Shareholders";
  5. Hecla will subscribe for common shares of Acquireco at a price of $1.00 per share that results in an aggregate subscription price equal to the fair market value of the Share Consideration to be delivered to the former Aurizon Securityholders pursuant to the Plan of Arrangement, with such subscription price being satisfied by Hecla as described in the Plan of Arrangement;
  6. any former Aurizon Securityholder who has not duly and validly completed a Letter of Transmittal and Election Form by the Election Deadline will be deemed to have elected to receive Share Consideration for his or her Aurizon Shares, including, without limitation, the Aurizon Shares issued in satisfaction of the Option Consideration;
  7. each issued Aurizon Share held by a former Aurizon Shareholder (other than Hecla, any subsidiary of Hecla or a Dissenting Shareholder) including, without limitation, the Aurizon Shares issued in satisfaction of the Option Consideration shall be transferred to Acquireco and each such former Aurizon Securityholder shall be entitled to receive, in exchange therefor and subject to withholding rights and pro-ration as described below under the heading "Election Procedure and Pro-ration - Pro-ration", consideration comprised of, in accordance with the election or deemed election of such former Aurizon Securityholder:
    1. Cash Consideration - $4.75 for each Aurizon Share held; or
    2. Share Consideration - 0.9953 of a Hecla Share for each Aurizon Share held; or
    3. a combination of the foregoing (assuming that all Aurizon Shareholders at the Effective Time, elect (or are deemed to have elected) to receive either cash or Hecla Shares, the Consideration will be fully pro-rated with each Aurizon Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share);
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See "The Arrangement - Election Procedure and Pro-ration"

  1. Acquireco will be deemed to have directed Hecla to deliver the Share Consideration to each former Aurizon Securityholder on behalf of Acquireco in full satisfaction of Acquireco’s obligation to deliver the Share Consideration to such former Aurizon Securityholders;
  2. each Aurizon Share held by Hecla will be transferred to Acquireco in consideration of the issue by Acquireco to Hecla of one common share of Acquireco for each Aurizon Common Share so transferred; and
  3. Aurizon and Acquireco will amalgamate to form Amalco.

See the Plan of Arrangement attached as Appendix B for additional information.

Securityholder and Court Approvals

Aurizon Securityholder Approval

To be effective, the Arrangement Resolution must be approved, with or without variation, by the affirmative vote of at least two-thirds of the votes cast on the Arrangement Resolution by (i) Aurizon Shareholders voting as a single class, and (ii) Aurizon Securityholders voting together as a single class, in each case present in person or represented by proxy at the Meeting. In the case of the approval described in (i), this will be determined by a separate tabulation of the votes cast by all Aurizon Securityholders that cast votes, including the votes cast by Aurizon Optionholders. The complete text of the Arrangement Resolution to be presented to the Meeting is set forth in Appendix A to this Circular.

Court Approval of the Arrangement

The BCBCA requires that the Court approve the Arrangement.

On April 10, 2013, Aurizon obtained the Interim Order providing for the calling and holding of the Meeting and other procedural matters and filed a Notice of Hearing of Petition for the Final Order to approve the Arrangement. Copies of the Interim Order and the Notice of Hearing of Petition are attached as Appendices E and F, respectively, to this Circular.

The Court hearing in respect of the Final Order is expected to take place at 9:45 a.m. (Vancouver time), on May 10, 2013, or as soon thereafter as counsel for Aurizon may be heard, at the Courthouse, 800 Smithe Street, Vancouver, British Columbia, subject to the approval of the Arrangement Resolution at the Meeting. At the hearing, the Court will consider, among other things, the fairness of the terms and conditions of the Arrangement and the rights and interests of every person affected. The Court may approve the Arrangement in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit. The Court will be advised at or prior to the hearing of the application for the Final Order that if the terms and conditions of the Arrangement are approved by the Court, the Hecla Shares issued pursuant to the Arrangement will not be registered under the U.S. Securities Act pursuant to the Section 3(a)(10) Exemption and that the Final Order will constitute the basis for such exemption.

Under the terms of the Interim Order, each Aurizon Securityholder, as well as creditors of Aurizon, will have the right to appear and make submissions at the application for the Final Order. Any person desiring to appear at the hearing of the application for the Final Order is required to indicate his, her or its intention to appear by filing with the Court and serving Aurizon at the address set out below, on or before 4:00 p.m. (Vancouver time) on May 8, 2013, a Response, including his, her or its address for service, together with all materials on which he, she or it intends to rely at the application. The Response and supporting materials must be delivered, within the time specified, to Aurizon at the following address:

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Blake, Cassels & Graydon LLP
595 Burrard Street
P.O. Box 49314
Suite 2600, Three Bentall Centre
Vancouver, B.C. V7X 1L3
Attention: Sean Boyle

Aurizon Securityholders who wish to participate in or be represented at the Court hearing for the Final Order should consult their legal advisors as to the necessary requirements.

Letter of Transmittal and Election Form

A Letter of Transmittal and Election Form is being mailed, together with this Circular, to each person who was a Registered Shareholder or a registered Aurizon Optionholder on the Record Date. Each such Registered Shareholder or registered Aurizon Optionholder must forward a properly completed and signed Letter of Transmittal and Election Form, with accompanying Aurizon Share certificate(s), if applicable, in order to receive the Consideration to which such Aurizon Securityholder is entitled under the Arrangement. It is recommended that Registered Shareholders and registered Aurizon Optionholders complete, sign and return the Letter of Transmittal and Election Form with accompanying Aurizon Share certificate(s), if applicable, to the Depositary as soon as possible.

Copies of the Letter of Transmittal and Election Forms may be obtained by contacting the Depositary. The Letter of Transmittal and Election Forms will also be available on SEDAR at www.sedar.com under Aurizon’s profile.

Aurizon and Hecla reserve the right to waive or not to waive any and all errors or other deficiencies in any Letter of Transmittal and Election Form or other document and any such waiver or non-waiver will be binding upon the affected Aurizon Securityholder. The granting of a waiver to one or more Aurizon Securityholders does not constitute a waiver for any other Aurizon Securityholder. Aurizon and Hecla reserve the right to demand strict compliance with the terms of the Letter of Transmittal and Election Forms and the Arrangement. The method used to deliver the Letter of Transmittal and Election Forms and any accompanying certificates representing Aurizon Shares or Aurizon Options is at the option and risk of the holder surrendering them, and delivery will be deemed effective only when such documents are actually received by the Depositary. Aurizon recommends that the necessary documentation be hand delivered to the Depositary, and a receipt obtained therefor; otherwise the use of registered mail with return receipt requested, and with proper insurance obtained, is recommended.

Aurizon Shareholders whose Aurizon Shares are registered in the name of a broker, investment dealer, bank, trust company, trustee or other nominee should contact that nominee for assistance in depositing their Aurizon Shares and should follow the instructions of such nominee in order to make their election and deposit their Aurizon Shares.

Election Procedure and Pro-ration

Elections and Procedure

Each registered Aurizon Securityholder will have the right, prior to the Initial Election Date, or, if after the Letter of Transmittal and Election Form has been mailed, Aurizon and Hecla determine that the Effective Date is not reasonably likely to occur by the tenth Business Day after the Initial Election Date, a New Election Date which Aurizon and Hecla expect to be not more than ten Business Days before the Effective Date, to elect in the Letter of Transmittal and Election Form delivered to the Depositary to receive the Consideration set out below, including the Consideration payable to Aurizon Optionholders for the Aurizon Shares they may receive as Option Consideration. If a New Election Date is determined, notice of the New Election Date will be published. To make a valid election as to the Consideration that you wish to receive under the Arrangement (subject to pro-ration),  you must sign and return a Letter of Transmittal and Election Form and return it with accompanying Aurizon Share certificate(s), if applicable, to the Depositary prior to the Election Deadline.

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The determination of the Depositary as to whether elections have been properly made or revoked and when elections and revocations were received by it will be binding. AURIZON SECURITYHOLDERS WHO DO NOT MAKE A SPECIFIC ELECTION PRIOR TO THE ELECTION DEADLINE, OR FOR WHOM THE DEPOSITARY DETERMINES THAT THEIR ELECTION WAS NOT PROPERLY MADE WITH RESPECT TO ANY AURIZON SHARES OR AURIZON OPTIONS, WILL BE DEEMED TO HAVE ELECTED TO RECEIVE THE SHARE CONSIDERATION IN RESPECT OF EACH AURIZON SHARE, INCLUDING THE AURIZON SHARES ISSUED IN SATISFACTION OF THE OPTION CONSIDERATION, SUBJECT TO PRO-RATION AS DESCRIBED BELOW. The Depositary may, with the mutual agreement of Aurizon and Hecla, make such rules as are consistent with the Arrangement for the implementation of the elections contemplated by the Arrangement and as are necessary or desirable to fully effect such elections.

Pro-ration

Each Aurizon Shareholder at the Effective Time, which will include Aurizon Optionholders that receive Aurizon Shares as satisfaction of the Option Consideration, may elect in accordance with the holder's Letter of Transmittal and Election Form, or be deemed to have elected to receive: (i) Cash Consideration; or (ii) Share Consideration; or (iii) a combination of Cash Consideration and Share Consideration, up to the aggregate Maximum Cash and/or Maximum Share amounts. Assuming that all Aurizon Shareholders elect to receive either cash or Hecla Shares, the Consideration will be fully pro-rated with each Aurizon Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Aurizon Share.

In the event that, based on the elections of Aurizon Securityholders, the aggregate amount of the Cash Consideration that would be paid to former Aurizon Securityholders exceeds the Maximum Cash, then the Cash Consideration to be paid to any former Aurizon Securityholder who has elected or is deemed to have elected to receive Cash Consideration shall be determined by multiplying the total amount of Cash Consideration otherwise payable to such holder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Cash and the denominator of which is the aggregate amount of Cash Consideration otherwise payable to all former Aurizon Securityholders who have so elected (or are deemed to have elected), and such former Aurizon Securityholder will be deemed to have elected to receive Share Consideration for the remainder of their Aurizon Shares, for which they would otherwise have received Cash Consideration.

In the event that, based on the elections of Aurizon Securityholders, the aggregate number of Hecla Shares that would be issuable to former Aurizon Securityholders exceeds the Maximum Shares, then the number of Hecla Shares issuable to any former Aurizon Securityholder shall, subject to rounding in accordance with the Plan of Arrangement, be determined by multiplying the total number of Hecla Shares otherwise issuable to such former Aurizon Securityholder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Shares and the denominator of which is the aggregate number of Hecla Shares otherwise issuable to all former Aurizon Securityholders who have so elected (or are deemed to have so elected), and such former Aurizon Securityholder shall be deemed to have elected to receive Cash Consideration for the remainder of their Aurizon Shares for which such former Aurizon Securityholder would, but for this clause, have received Hecla Shares.

Exchange Procedure

On the Effective Date: (i) each former Aurizon Securityholder (other than a Dissenting Shareholder) who has surrendered to the Depositary for cancellation, certificates representing one or more outstanding Aurizon Shares and validly elected in accordance with the provisions of the Plan of Arrangement shall, following completion of the transactions described above under the heading "Description of the Arrangement", be entitled to receive, and the Depositary shall deliver to such former Aurizon Securityholder following the Effective Time, cash representing the Cash Consideration and certificates representing the Share Consideration that such former Aurizon Securityholder is entitled to receive in accordance with the terms of the Arrangement; and (ii) each Aurizon DSU Holder or Aurizon RSU Holder will, following completion of the transactions described above under the heading "Description of the Arrangement", be entitled to receive, and the Depositary will deliver to such holders following the Effective Time, cash representing the Cash Consideration that such Aurizon DSU Holder or Aurizon RSU Holder is entitled to receive in accordance with the terms of the Arrangement.

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Upon surrender to the Depositary for cancellation of a certificate that immediately before the Effective Time represented one or more outstanding Aurizon Shares that were exchanged for Cash Consideration and/or Share Consideration in accordance with the terms of the Arrangement, together with such other documents and instruments as would have been required to effect the transfer of the Aurizon Shares formerly represented by such certificate under the terms of such certificate, the BCBCA or the articles of Aurizon and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate will be entitled to receive in exchange therefor, and the Depositary will deliver to such holder following the Effective Time, cash representing the Cash Consideration and certificates representing the Share Consideration that such holder is entitled to receive in accordance with the terms of the Arrangement.

After the Effective Time and until surrendered for cancellation, each certificate that immediately prior to the Effective Time represented one or more Aurizon Shares following completion of the transactions described above under the heading "Description of the Arrangement", shall be deemed at all times to represent only the right to receive in exchange therefor Cash Consideration and/or certificates representing the Share Consideration that the holder of such certificate is entitled to receive in accordance with their election (or deemed election) and the terms of the Arrangement.

Aurizon Shareholders who hold Aurizon Shares registered in the name of a broker, investment dealer, bank, trust company or other intermediary should contact the intermediary for instructions and assistance in providing details for registration and delivery of the Cash Consideration and/or Share Consideration to which the Registered Shareholder is entitled to receive on the Beneficial Shareholders’ behalf.

No dividend or other distribution declared or made after the Effective Time with respect to Hecla Shares with a record date after the Effective Time will be delivered to the holder of any unsurrendered certificate that, immediately prior to the Effective Time, represented outstanding Aurizon Shares unless and until the holder of such certificate has complied with the provisions of the Arrangement as described in the foregoing paragraphs under the heading "Exchange Procedure" or under the heading "Lost Certificates". Subject to applicable law and to applicable withholding rights, at the time of such compliance, there will, in addition to the delivery of a certificate representing Hecla Shares to which such holder is entitled, be delivered to such holder, without interest, the amount of the dividend or other distribution with a record date after the Effective Time that such holder is entitled with respect to such Hecla Shares.

Lost Certificates

In the event any certificate, that immediately prior to the Effective Time represented one or more outstanding Aurizon Shares exchanged for Cash Consideration and/or Share Consideration in accordance with the terms of the Arrangement, has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming such certificate to be lost, stolen or destroyed, the Depositary will deliver in exchange for such lost, stolen or destroyed certificate, cash and/or, if so elected (or deemed elected), certificates representing Hecla Shares that such holder is entitled to receive in accordance with the terms of the Arrangement. When authorizing such delivery of a certificate representing Hecla Shares that such holder is entitled to receive in exchange for such lost, stolen or destroyed certificate, the holder to whom certificates representing such Hecla Shares is to be delivered shall, as a condition precedent to the delivery of cash and certificates representing such Hecla Shares, give a bond satisfactory to Hecla and the Depositary in such amount as Hecla and the Depositary may direct, or otherwise indemnify Hecla and the Depositary in a manner satisfactory to Hecla and the Depositary, against any claim that may be made against Hecla or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed and will otherwise take such actions as may be required by the articles of Aurizon.

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Cancellation of Rights after Six Years

To the extent that a former Aurizon Securityholder has not complied with the provisions of the Arrangement described above under the headings "Exchange Procedure" and "Lost Certificates", as applicable, on or before the date that is six years after the Effective Date, then the Cash Consideration which such former Aurizon Securityholder was entitled to receive will be returned to Hecla and the Share Consideration that such former Aurizon Securityholder was entitled to receive will be automatically cancelled without any repayment of capital in respect thereof and the certificates representing such Share Consideration will be delivered to Hecla by the Depositary and the interest of the former Aurizon Securityholder in such Cash Consideration and/or Share Consideration to which it was entitled will be terminated on the date that is six years after the Effective Date.

Fractional Interest

No fractional Hecla Shares shall be issued to former Aurizon Securityholders. The number of Hecla Shares to be issued to former Aurizon Securityholders will be rounded up to the nearest whole Hecla Share in the event that a former Aurizon Securityholder is entitled to a fractional share representing 0.5 or more of a Hecla Share and will be rounded down to the nearest whole Hecla Share in the event that a former Aurizon Securityholder is entitled to a fractional share representing less than 0.5 of a Hecla Share.

The aggregate Cash Consideration payable to a former Aurizon Securityholder, Aurizon DSU Holder or Aurizon RSU Holder will be rounded up to the next whole five cent increment.

The foregoing information is a summary only. For further details of procedures, see the Plan of Arrangement attached as Appendix B to this Circular.

Withholding Rights

Pursuant to the terms of the Plan of Arrangement, Hecla, Acquireco, Aurizon and the Depositary will be entitled to deduct and withhold from any consideration payable or otherwise deliverable to an Aurizon Securityholder pursuant to the Arrangement and from any all dividends or other distributions otherwise payable to any Aurizon Securityholder such amounts as Hecla or the Depositary is required or permitted to deduct and withhold with respect to such payment under the Tax Act, the United States Internal Revenue Code of 1986, as amended or any provision of any applicable federal, provincial, state, local or foreign tax law or treaty, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of the Arrangement as having been paid to the particular person in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. Hecla, Acquireco or the Depositary will withhold from any Cash Consideration payable to an Aurizon Optionholder and/or sell on behalf of an Aurizon Optionholder any Share Consideration deliverable to the Aurizon Optionholder in order to remit to Aurizon for remittance to a taxing authority a sufficient amount to comply with tax laws in respect of the cancellation of the Aurizon Options pursuant to the Plan of Arrangement.

Interests of Directors and Executive Officers of Aurizon in the Arrangement

In considering the recommendation of the Aurizon Board, Aurizon Securityholders should be aware that members of the Aurizon Board and the executive officers of Aurizon have interests in the Arrangement or may receive benefits that may differ from, or be in addition to, the interests of Aurizon Securityholders generally.

All benefits received, or to be received, by directors or executive officers of Aurizon as a result of the Arrangement are, and will be, solely in connection with their services as directors or employees of Aurizon or the Combined Company. No benefit has been, or will be, conferred for the purpose of increasing the value of consideration payable to any such person for Aurizon Shares, nor is it, or will it be, conditional on the person supporting the Arrangement.

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Aurizon has employment agreements (the "Employment Agreements") with certain of its executive officers. The Employment Agreements provide for payments upon termination of the employment of such officers, including following a "change of control" of Aurizon. Completion of the Arrangement will constitute a change of control of Aurizon. Pursuant to the terms of the Employment Agreements, assuming the Arrangement is completed and the employment of such officers is terminated on May 31, 2013, the estimated payments would be as follows:

 

 

Entitlement (1)  

(before statutory withholding taxes)

Officer Position Total Termination of Employment (2) Stock Options (3) RSUs (4)
George Paspalas President, Chief Executive Officer $ 2,723,227 $ 2,252,341 $ 291,920 $ 178,966
Ian S. Walton Executive Vice President, Chief Financial Officer 2,285,227 1,819,577 347,460 118,190
Martin Bergeron Vice President, Operations 1,232,226 968,076 145,960 118,190

 

 

$ 6,240,680 $ 5,039,994 $ 785,340 $ 415,346

Notes:

(1)The actual amounts of these entitlements will depend on the date of closing of the Arrangement and the date the employment of such executive officers is terminated.
(2)Pursuant to the terms of the Employment Agreements and assuming the Arrangement is completed and the employment of such executive officers is terminated on May 31, 2013.
(3)As described elsewhere in this Circular, at the Effective Time, each outstanding Aurizon Option will be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon and cancelled in exchange for the Option Consideration. The estimated amount of entitlement in respect of Aurizon Options is based, in part, on the closing price per Hecla Share of US$3.97 on April 9, 2013.
(4)As described elsewhere in this Circular, each outstanding RSU will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per RSU, less any amounts withheld for tax purposes.

Aurizon Options held by non-executive directors of Aurizon will, at the Effective Time, be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon and cancelled in exchange for the Option Consideration, as described elsewhere in this Circular. Also, as described elsewhere in this Circular, pursuant to the Arrangement, following the resignation by, or removal of, an Aurizon DSU Holder as a director of Aurizon, all of the outstanding DSU's held by the director will be cancelled in exchange for a cash payment equal to the amount of the Cash Consideration per DSU, less any amounts withheld for tax purposes. Assuming the non-executive directors of Aurizon cease to be directors following completion of the Arrangement, the estimated payments would be as follows:

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Entitlement (1)

 (before statutory withholding taxes)

Director Total Stock Options (2) DSUs (3)
Sargent H. Berner $349,038 $198,610 $150,428
George Brack $194,038 $43,610 $150,428
Louis Dionne $194,038 $43,610 $150,428
Andre Falzon $349,038 $198,610 $150,428
Richard Faucher $271,538 $121,110 $150,428
Diane Francis $194,038 $43,610 $150,428
David Hall, Chairman $606,126 $421,840 $184,286
Brian Moorhouse $349,038 $198,610 $150,428

Notes:

(1)The actual amounts of these entitlements will depend on the date of closing of the Arrangement and the date the directorship of such director is terminated.
(2)As described elsewhere in this Circular, at the Effective Time, each outstanding Aurizon Option will be deemed to be fully vested and transferred and disposed of by the holder thereof to Aurizon and cancelled in exchange for the Option Consideration. The estimated amount of entitlement in respect of Aurizon Options is based, in part, on the closing price per Hecla Share of US$3.97 on April 9, 2013.
(3)As described elsewhere in this Circular, each outstanding DSU will be cancelled in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per DSU, less any amounts withheld for tax purposes.

 

Aurizon Shareholdings

As of April 1, 2013, the directors and executive officers of Aurizon beneficially owned, directly or indirectly, or exercised control or direction over, in the aggregate 1,768,102 Aurizon Shares, which represented approximately 1.07% of the total number of outstanding Aurizon Shares on a fully diluted basis. All Aurizon Shares held by the directors and executive officers of Aurizon will be treated identically and in the same manner under the Arrangement as Aurizon Shares held by any other Aurizon Shareholders.

Aurizon Options

The directors and executive officers of Aurizon beneficially owned, directly or indirectly, or exercised control or direction over, in the aggregate 6,254,000 Aurizon Options as of the close of business on April 1, 2013, which represented approximately 60.4% of the outstanding Aurizon Options. All Aurizon Options held by the directors and executive officers of Aurizon will be treated identically and in the same manner under the Arrangement as Aurizon Options held by any other Aurizon Optionholders.

THE ARRANGEMENT AGREEMENT

The Arrangement will be carried out pursuant to the Arrangement Agreement and the Plan of Arrangement. The following is a summary of the principal terms of the Arrangement Agreement and Plan of Arrangement. This summary does not purport to be complete and is qualified in its entirety by reference to the Arrangement Agreement, which has been filed by Aurizon on SEDAR at www.sedar.com and on EDGAR at www.sec.gov, and to the Plan of Arrangement, which is attached as Schedule A to the Arrangement Agreement and appended hereto as Appendix B. Copies of the Arrangement Agreement and the Plan of Arrangement are also available for inspection by Aurizon Shareholders at Aurizon's records office at Suite 1120, Cathedral Place, 925 West Georgia Street, Vancouver, B.C., V6C 3L2. Aurizon Shareholders are encouraged to read the Arrangement Agreement, including the Plan of Arrangement, in its entirety.

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On March 3, 2013, Aurizon and Hecla entered into the Arrangement Agreement, pursuant to which Aurizon and Hecla agreed that, subject to the terms and conditions set forth in the Arrangement Agreement, Hecla will acquire all of the issued and outstanding shares of Aurizon. The terms of the Arrangement Agreement are the result of arm’s length negotiation between Aurizon and Hecla and their respective advisors.

The Arrangement Agreement and the summary of its material terms and conditions in this Circular have been included to provide information about the terms and conditions of the Arrangement Agreement. They are not intended to provide any other public disclosure of factual information about Aurizon, Hecla or any of their respective subsidiaries or affiliates. The representations, warranties, covenants and conditions precedent contained in the Arrangement Agreement are made by Aurizon or Hecla, as applicable, only for the purposes of the Arrangement Agreement and were qualified and subject to certain limitations and exceptions agreed to by the parties in connection with negotiating its terms, including as provided in the Disclosure Letter. In particular, in your review of the representations and warranties contained in the Arrangement Agreement and described in this summary, it is important to bear in mind that the representations and warranties were made solely for the benefit of the parties to the Arrangement Agreement and were negotiated for the purpose of allocating contractual risk between the parties to the Arrangement Agreement rather than to establish matters as facts. The representations and warranties may also be subject to a contractual standard of materiality (including a Material Adverse Effect) different from those generally applicable to securityholders and to the public disclosure to Aurizon Shareholders and in some cases may be qualified by disclosures made by one party to the other, which are not necessarily reflected in the Arrangement Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this Circular, may have changed since the date of the Arrangement Agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in this Circular.

For the foregoing reasons, the representations, warranties, covenants and conditions precedent or any descriptions of them should not be read alone or relied upon as characterizations of factual information. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this Circular or incorporated by reference herein.

Representations and Warranties

The Arrangement Agreement contains a number of representations and warranties of Hecla and Aurizon relating to, among other things: their corporate formation; corporate power; compliance with laws, permits, licences and constating documents; execution, delivery, authorization and enforceability of the Arrangement Agreement; financial statements; liabilities; taxes; material changes; interests in and title to property and assets; good standing of mining concessions; litigation; environmental matters; employment and employee benefits; authorized and issued capital; subsidiaries; and reporting issuer status, stock exchange listing, the due filing of required documents with securities authorities and the absence of misrepresentation in the public record.

The representations and warranties in the Arrangement Agreement expire on the earlier of the Effective Time and the date on which the Arrangement Agreement is terminated in accordance with its terms.

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Covenants

Covenants of Aurizon Regarding the Conduct of Business

Aurizon has covenanted in favour of Hecla that, during the period from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms, except as required or permitted by the Arrangement Agreement, applicable Laws or any Governmental Entities or consented to by Hecla in writing, Aurizon will conduct its business in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms, except as required or permitted by the Arrangement Agreement, Aurizon will not directly or indirectly, without the prior written consent of Hecla:

(a)(i) amend its articles, charter or by-laws or other comparable organizational documents; (ii) split, combine or reclassify any shares in its capital; (iii) issue, grant, deliver, sell or pledge, or agree to issue, grant, deliver, sell or pledge, any Aurizon Shares, or any rights convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Aurizon Shares or other securities of Aurizon, other than: (A) the issuance of Aurizon Shares pursuant to the terms of the outstanding Aurizon Options; and (B) as required under applicable Law or existing Material Contracts set forth in the Disclosure Letter; (iv) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any outstanding securities of Aurizon; (v) amend the terms of any of its securities; (vi) adopt a plan of liquidation or resolution providing for the liquidation or dissolution of Aurizon; (vii) amend its accounting policies or adopt new accounting policies, in each case except as required and disclosed in accordance with GAAP; or (viii) enter into any agreement with respect to any of the foregoing;
(b)except for the sale of inventory or immaterial equipment in the ordinary course of business consistent with past practice, (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer, any assets, securities, properties, interests or businesses; (ii) acquire (by merger, arrangement, amalgamation, consolidation or acquisition of shares or assets or otherwise), directly or indirectly, any assets, securities, properties, interests, businesses, corporation, partnership or other business organization or division thereof, or make any investment either by the purchase of securities, contribution of capital, property transfer, or, except as disclosed in its 2013 budget report, purchase of any other property or assets of any other person, for an amount greater than $250,000; (iii) draw down on the Existing Credit Facilities in any amount whatsoever; (iv) incur, create, assume or otherwise become liable for, any indebtedness for borrowed money or, except as disclosed in its 2013 budget report, any other liability or obligation, or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person, or make any loans, capital contributions, investments or advances; (v) except as disclosed in its 2013 budget report, pay, discharge or satisfy any material liabilities or obligations; (vi) waive, release, grant or transfer any rights of material value; or (vii) authorize or propose any of the foregoing, or enter into any agreement to do any of the foregoing;
(c)other than as disclosed in the Disclosure Letter or as is necessary to comply with applicable Laws or the current terms of any Contracts by which it is bound or in accordance with Aurizon Benefit Plans: (i) grant to any officer, employee or director an increase in compensation in any form, or grant any general salary increase; (ii) make any loan to any officer, employee, or director; (iii) take any action with respect to the grant of any severance, retention, change of control, bonus or termination pay to, or enter into any employment agreement, deferred compensation or other similar agreement (or amend any such existing agreement) with, or hire or terminate the employment (except for just cause) of, any officer, employee or director provided that Aurizon will not be restricted from taking any action in respect of hiring or terminating the employment of employees having a position below that of mine manager or superintendent if such action is taken in the ordinary course consistent with past practice so long as Aurizon provides Hecla with prompt written notice when the total number of such persons hired or terminated exceeds five from, in the first instance, the date of the Arrangement Agreement and following such first notice, from the date of the last notice provided to Hecla by Aurizon pursuant to this provision; (iv) increase any benefits payable under any existing severance or termination pay policies or employment agreements, or adopt or materially amend or make any contribution to any Aurizon Benefit Plan or other bonus, profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, compensation or other similar plan, agreement, trust, fund or arrangement for the benefit of directors, officers or employees or former directors, officers, employees; (v) increase bonus levels or other benefits payable to any director, executive officer or employee; (vi) provide for accelerated vesting, removal of restrictions or an exercise of any stock-based or stock-related awards (including stock options, stock appreciation rights, deferred share units, performance units and restricted share awards) upon a change of control occurring on or prior to the Effective Time; or (vii) establish, adopt or amend (except as required by applicable Law) any collective bargaining agreement or similar agreement;
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(d)settle, pay, discharge, satisfy, compromise, waive, assign or release (i) any material action, claim or proceeding brought against it; or (ii) any action, claim or proceeding brought by any present, former or purported holder of its securities in connection with the transactions contemplated by the Arrangement Agreement or the Plan of Arrangement;
(e)enter into any agreement or arrangement that limits or otherwise restricts it from competing in any manner;
(f)waive, release or assign any material rights, claims or benefits;
(g)other than in the ordinary course of business consistent with past practice: (i) enter into any agreement that if entered into prior to the date hereof would be a Material Contract; (ii) modify, amend in any material respect, transfer or terminate any Material Contract, or waive, release or assign any material rights or claims thereto or thereunder;
(h)change any method of tax accounting, make or change any tax election, file any materially amended Return, settle or compromise any tax liability, agree to an extension or waiver of the limitation period with respect to the assessment, reassessment or determination of taxes, enter into any closing agreement with respect to any tax or surrender any right to claim a material tax refund;
(i)take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entity to institute proceedings for the suspension, revocation or limitation of rights under, any material Permits necessary to conduct its businesses as now conducted or as proposed to be conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities for permits;
(j)take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede its ability to consummate the Arrangement or the other transactions contemplated by the Arrangement Agreement other than in connection with a Pre-Acquisition Reorganization;
(k)except for any Pre-Acquisition Reorganization, take any action or enter into any transaction that would preclude the Canadian tax "bump" rules from applying upon an amalgamation or winding-up of Aurizon (or its successor by amalgamation) including pursuant to paragraph 88(1)(c) of the Tax Act, in calculating the tax cost of capital property distributed to Acquireco for purposes of paragraph 88(1)(d) of the Tax Act, the amount determined under paragraph 88(1)(d); or
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(l)agree, resolve or commit to do any of the foregoing.

 

Aurizon has also covenanted in favour of Hecla that it will:

(a)use its commercially reasonable efforts to cause the current insurance (or re-insurance) policies maintained by Aurizon, including directors’ and officers’ insurance, not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing having comparable deductions and providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; provided that, subject to the provisions provided below under the heading "Arrangement Agreement - Insurance and Indemnification", Aurizon will not obtain or renew any insurance (or re-insurance) policy for a term exceeding 12 months; and
(b)subject to compliance with applicable competition or anti-trust laws, promptly notify Hecla in writing of any circumstance or development that, to the knowledge of Aurizon, is or could reasonably be expected to constitute a Material Adverse Effect.

Covenants of Aurizon Relating to the Arrangement

Aurizon has covenanted in favour of Hecla that it will perform all obligations required or desirable to be performed by Aurizon under the Arrangement Agreement, co-operate with Hecla in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective the transactions contemplated in the Arrangement Agreement, without limiting the generality of the foregoing, Aurizon will (some of which have already been satisfied):

(a)promptly, and in any event within five business days following the date of the Arrangement Agreement, provide to Hecla (if such agreement remains in effect and if providing a copy of such agreement is not prohibited by the terms of such agreement) a copy of each confidentiality and/or standstill agreement which has been entered into by Aurizon and any third party pursuant to which confidential information of Aurizon has been provided;
(b)subject to obtaining confirmation that insurance coverage is maintained as contemplated in the Arrangement Agreement, and provided that the Effective Date has occurred, it will use its reasonable commercial efforts to cause such members of the Aurizon Board to resign as Hecla may require, at the time and in the manner requested by Hecla, as of the Effective Date, with a nominee of Hecla to be appointed to the Aurizon Board immediately after each such resignation;
(c)use its best efforts to obtain as soon as practicable following execution of the Arrangement Agreement all third party consents, approvals and notices required under any of the Material Contracts, and all Key Third Party Consents;
(d)defend all lawsuits or other legal, regulatory or other proceedings against Aurizon challenging or affecting the Arrangement Agreement or the consummation of the transactions contemplated hereby; and
(e)allow representatives of Hecla (including legal and financial advisors) to attend the Meeting and allow officers of Hecla to speak to any motion relating to the Arrangement Resolution.
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Covenants of Hecla Regarding the Performance of Obligations

Hecla has covenanted in favour of Aurizon that it will, and will cause its subsidiaries to, perform all obligations required to be performed by Hecla or any of Hecla’s subsidiaries under the Arrangement Agreement, co-operate with Aurizon in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in the Arrangement Agreement and, without limiting the generality of the foregoing, Hecla will and where appropriate will cause its subsidiaries to:

(a)use all commercially reasonable efforts to assist Aurizon in obtaining the Key Third Party Consents;
(b)apply for and use commercially reasonable efforts to obtain conditional approval of the listing and posting for trading on the NYSE of Hecla Shares included in the Consideration; and
(c)subject to the terms and conditions of the Arrangement Agreement and of the Plan of Arrangement and applicable Laws, pay the aggregate Consideration to be paid pursuant to the Arrangement at the time provided in the Arrangement Agreement.

Covenants of Hecla Regarding Conduct of Business

Hecla has covenanted in favour of Aurizon that, during the period from the date of the Arrangement Agreement until the earlier of the Effective Date and the time that the Arrangement Agreement is terminated in accordance with its terms, unless Aurizon will otherwise agree in writing, such agreement not to be unreasonably withheld or delayed, or as is otherwise expressly permitted or contemplated by the Arrangement Agreement, it will not directly or indirectly:

(a)make any amendment to its constating documents that would have a Material Adverse Effect on its ability to consummate the transactions contemplated in the Arrangement Agreement or change its authorized share capital; and
(b)split, combine, subdivide or reclassify its capital stock.

Mutual Covenants

Each of the Parties to the Arrangement Agreement has covenanted and agreed that, except as contemplated in the Arrangement Agreement, during the period from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms:

(a)it will, and will cause its subsidiaries to, use commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to its obligations in the Arrangement Agreement, as described under the heading "Arrangement Agreement – Conditions", to the extent the same is within its control and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under all applicable Laws to complete the Plan of Arrangement, including using its commercially reasonable efforts to: (i) obtain all Key Regulatory Approvals required to be obtained by it; (ii) effect all necessary registrations, filings and submissions of information requested by Governmental Entities required to be effected by it in connection with the Plan of Arrangement; (iii) oppose, lift or rescind any injunction or restraining order against it or other order or action against it seeking to stop, or otherwise adversely affecting its ability to make and complete, the Plan of Arrangement; and (iv) co-operate with the other Party in connection with the performance by it and its subsidiaries of their obligations in the Arrangement Agreement; in addition, subject to the terms and conditions of the Arrangement Agreement, none of the Parties will knowingly take or cause to be taken any action which would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated in the Arrangement Agreement; and
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(b)it will not take any action, refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with the Arrangement Agreement or which would reasonably be expected to significantly impede the making or completion of the Plan of Arrangement except as permitted by the Arrangement Agreement.

 

Conditions Precedent to the Arrangement

Mutual Conditions Precedent

The Arrangement Agreement provides that the respective obligations of the Parties to complete the transactions contemplated in the Arrangement Agreement are subject to the fulfillment, on or before the Effective Time, of each of the following conditions, each of which may only be waived with the mutual consent of the Parties:

(a)the Arrangement Resolution will have been approved and adopted by the Aurizon Securityholders at the Meeting in accordance with the Interim Order;
(b)the Interim Order and the Final Order will each have been obtained on terms consistent with the Arrangement Agreement, and will not have been set aside or modified in a manner unacceptable to Aurizon and Hecla, acting reasonably, on appeal or otherwise;
(c)there will not exist any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation, against Hecla or Aurizon which will prevent the consummation of the Arrangement;
(d)the Hecla Shares to be issued in the United States pursuant to the Arrangement will be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) of the U.S. Securities Act; provided, however, that Aurizon will not be entitled to rely on the provisions of this paragraph in failing to complete the transactions contemplated by the Arrangement Agreement in the event that Aurizon fails to advise the Court prior to the hearing in respect of the Final Order, as required by the terms of the foregoing exemptions, that Hecla will rely on the foregoing exemptions based on the Court’s approval of the transaction;
(e)the distribution of the Hecla Shares pursuant to the Arrangement will be exempt from the prospectus and registration requirements of applicable Canadian securities laws either by virtue of exemptive relief from the securities regulatory authorities of each of the provinces and territories of Canada or by virtue of applicable exemptions under Canadian Securities Laws and will not be subject to resale restrictions under applicable Canadian Securities Laws; and
(f)the Arrangement Agreement will not have been terminated in accordance with its terms.

Additional Conditions Precedent to the Obligations of Hecla

The Arrangement Agreement provides that the obligation of Hecla to complete the transactions contemplated in the Arrangement Agreement is subject to the fulfillment of the following additional conditions (each of which is for the exclusive benefit of Hecla and may be waived by Hecla):

(a)no person or group of persons acting jointly and in concert will have acquired ownership of, or control or direction over Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares;
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(b)Hecla will have received from Aurizon’s Quebec legal counsel opinions on customary terms as to Aurizon’s title to the Casa Berardi Gold Mine satisfactory to Hecla, acting reasonably;
(c)all covenants of Aurizon under the Arrangement Agreement to be performed on or before the Effective Time which have not been waived by Hecla will have been duly performed by Aurizon in all material respects, and Hecla will have received a certificate of Aurizon addressed to Hecla and dated the Effective Time, signed on behalf of Aurizon by two senior executive officers of Aurizon (on Aurizon’s behalf and without personal liability), confirming the same as at the Effective Date;
(d)all representations and warranties of Aurizon set forth in the Arrangement Agreement will be true and correct in all material respects, without regard to any materiality or Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which will be determined as of that specified date), except where any failure or failures of all such representations and warranties (other than certain representations and warranties relating to Aurizon's corporate organization, requisite corporate power and capacity, capitalization, property, environmental matters, mine safety and mineral reserves and resources (collectively, the "Select Aurizon Representations and Warranties")) to be so true and correct in all respects would not reasonably be expected to have a Material Adverse Effect on Aurizon (it being a separate condition that the representations and warranties of Aurizon made in the Select Aurizon Representations and Warranties must be accurate in all respects when made and, except as contemplated by the Arrangement Agreement, on and as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which will be determined as of that specified date)); and Hecla will have received a certificate of Aurizon addressed to Hecla and dated the Effective Time, signed on behalf of Aurizon by two senior executive officers of Aurizon (on Aurizon’s behalf and without personal liability), confirming the same as at the Effective Date;
(e)no Governmental Entity will have taken any action that could impose or could lead to the imposition of any restriction on the ability of Hecla to derive the full value and benefit of the indirect ownership of Aurizon’s assets;
(f)the Key Third Party Consents will have been obtained;
(g)the Key Regulatory Approvals will have been obtained;
(h)the Aurizon Board will not have made a Change in Recommendation;
(i)there will not have occurred a Material Adverse Effect with respect to Aurizon;
(j)holders of no more than 21% of the Aurizon Shares will have exercised Dissent Rights; and
(k)the Pre-Acquisition Reorganization, if any, will have been completed in a manner satisfactory to Hecla.

Additional Conditions Precedent to the Obligations of Aurizon

The Arrangement Agreement provides that the obligation of Aurizon to complete the transactions contemplated in the Arrangement Agreement is subject to the fulfillment of the following additional conditions (each of which is for the exclusive benefit of Aurizon and may be waived by Aurizon):

(a)all covenants of Hecla under the Arrangement Agreement to be performed on or before the Effective Time will have been duly performed by Hecla in all material respects, and Aurizon will have received a certificate of Hecla, addressed to Aurizon and dated the Effective Time, signed on behalf of Hecla by two of its senior executive officers (on Hecla’s behalf and without personal liability), confirming the same as of the Effective Date;
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(b)all representations and warranties of Hecla set forth in the Arrangement Agreement will be true and correct in all respects, without regard to any materiality or Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which will be determined as of that specified date), except where the failure or failures of all such representations and warranties (other than certain representations and warranties relating to Hecla's requisite corporate power and capacity, the corporate organization of Hecla and its material subsidiaries and Hecla's capitalization (the "Select Hecla Representations and Warranties")) to be so true and correct in all respects would not reasonably be expected to have a Material Adverse Effect on Aurizon or Hecla (it being a separate condition that the representations and warranties of Hecla made in the Select Hecla Representations and Warranties must be accurate in all respects when made and, except as contemplated by the Arrangement Agreement, on and as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which will be determined as of that specified date)); and Aurizon will have received a certificate of Hecla, addressed to Aurizon and dated the Effective Time, signed on behalf of each of Hecla by two senior executive officers of each of Hecla (on Hecla’s behalf and without personal liability), confirming the same as at the Effective Date;
(c)Hecla will have delivered evidence satisfactory to Aurizon of the approval of the listing and posting for trading on the NYSE of Hecla Shares comprising the Share Consideration, subject only to satisfaction of the standard listing conditions, including notice of issuance.

Notice and Cure Provisions

Each Party will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the earlier to occur of the termination of the Arrangement Agreement and the Effective Time of any event or state of facts which occurrence or failure would, or would be likely to:

(a)cause any of the representations or warranties of any Party contained herein to be untrue or inaccurate in any material respect on the date hereof or at the Effective Time; or
(b)result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any Party hereunder prior to the Effective Time.

Hecla may not exercise its rights to terminate the Arrangement Agreement pursuant to breaches of certain covenants, representations and warranties by Aurizon and Aurizon may not exercise its right to terminate the Arrangement Agreement pursuant to breaches of certain covenants, representations and warranties by Hecla unless the Party intending to rely thereon has delivered a written notice to the other Party specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Party delivering such notice is asserting as the basis for the non-fulfilment or the applicable condition or termination right, as the case may be. If any such notice is delivered, provided that a Party is proceeding diligently to cure such matter and such matter is capable of being cured, no Party may terminate the Arrangement Agreement until the expiration of a period of ten business days from such notice, and then only if such matter has not been cured by such date. If such notice has been delivered prior to the making of the application for the Final Order, such application and such filing will be postponed until the expiry of such period, provided that such period does not extend beyond the Outside Date. For greater certainty, in the event that such matter is cured within the time period referred to herein without a Material Adverse Effect, the Arrangement Agreement may not be terminated as a result of the cured breach.

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Non-Solicitation

The Arrangement Agreements provides that Aurizon will not, directly or indirectly, through any Representative: (i) solicit, assist, initiate, facilitate, encourage and otherwise facilitate (including by way of furnishing or providing access to any non-public information or entering into any form of agreement, arrangement or understanding) the initiation of any inquiries, proposals or offers that constitutes or could reasonably be expected to constitute or lead to an Acquisition Proposal; (ii) participate in any discussions or negotiations with any person (other than Hecla or any of its affiliates) that constitutes or could reasonably be expected to constitute or lead to an Acquisition Proposal, provided, however, that Aurizon may respond to a bona fide request for information that did not result from a breach of the non-solicitation provisions of the Arrangement Agreement that would reasonably be expected to lead to an Acquisition Proposal by advising that no information can be provided unless a bona fide Acquisition Proposal is made and then only in compliance with Arrangement Agreement; (iii) approve, accept, endorse or recommend, remain neutral with respect to or propose publicly to accept, approve, endorse or recommend, or remain neutral with respect to, any Acquisition Proposal; (iv) accept or enter into or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, understanding, undertaking or arrangement or other contract in respect of an Acquisition Proposal; or (v) make a Change in Recommendation.

The Arrangement Agreement further provides that except as otherwise provided in non-solicitation provisions of the Arrangement Agreement, Aurizon will, and will cause its Representatives to immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any persons conducted heretofore by Aurizon, or any Representatives with respect to any Acquisition Proposal, and, in connection therewith, Aurizon will discontinue access to any of its confidential information and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise and will as soon as possible request, to the extent that it is entitled to do so (and exercise all rights it has to require) the return or destruction of all confidential information previously provided to any such person or any other person and will request (and exercise all rights it has to require) the destruction of all material including or incorporating or otherwise reflecting any material confidential information. Aurizon has agreed that, except as permitted by non-solicitation provisions of the Arrangement Agreement described in the paragraph below, it will not terminate, waive, amend or modify any provision of any existing confidentiality agreement relating to an Acquisition Proposal or any standstill agreement to which it is a party (it being acknowledged and agreed that: (i) the automatic termination of the standstill provisions of any such agreement as the result of the entering into the Arrangement Agreement by Aurizon, pursuant to the express terms of any such agreement, will not be a violation of non-solicitation provisions of the Arrangement Agreement, (ii) Hecla is released and discharged from its obligations under certain standstill provisions of the Confidentiality Agreement in respect of the Arrangement Agreement; and (iii) Aurizon undertakes to enforce all standstill, use, non-disclosure, non-disturbance, non-solicitation and similar covenants that it has entered into prior to the date hereof with any person other than Hecla).

Notwithstanding the sections of the Arrangement Agreement described in the two paragraphs above, if at any time following the date of the Arrangement Agreement and prior to obtaining the Aurizon Securityholder Approval of the Arrangement Resolution at the Meeting, Aurizon receives a bona fide written Acquisition Proposal that: (a) did not result from a breach of the Arrangement Agreement; and (b) the Aurizon Board determines in good faith after consultation with its outside legal counsel and financial advisors is, or is likely to lead to a Superior Proposal, then Aurizon may, in response to a request made by the party making such Acquisition Proposal and provided Aurizon is in compliance with the Arrangement Agreement:

(a)furnish information with respect to Aurizon to the person making such Acquisition Proposal; and/or
(b)enter into, participate, facilitate and maintain discussions or negotiations with, and otherwise cooperate with or assist, the person making such Acquisition Proposal,
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provided that Aurizon will not, and will not allow its Representatives to, disclose any non-public information with respect to Aurizon to such person (i) if such non-public information has not been previously provided to, or is not concurrently provided to, Hecla; and (ii) without entering into a confidentiality and standstill agreement with such person containing terms that are no less favourable, in the aggregate, to Aurizon and are no more favourable to such person than those found in the Confidentiality Agreement including a "standstill" provision which restricts such person from making or announcing its intention to make an Acquisition Proposal to Aurizon or the Aurizon Shareholders without the consent of the Aurizon Board, provided, however, that such confidentiality agreement will not restrict or prohibit Aurizon from disclosing to Hecla any details concerning such Acquisition Proposal or any Superior Proposal made by such person.

Aurizon will promptly notify Hecla (the "Notice of Acquisition Proposal"), at first orally and then in writing within 24 hours of receipt of an Acquisition Proposal by it or the Aurizon Shareholders, of the material terms and conditions thereof, and the identity of the person or persons making the Acquisition Proposal, and will include copies of any such proposal, inquiry, offer or request, a copy of any agreement entered into in accordance with the Arrangement Agreement and a copy of any other agreements which relate to the Acquisition Proposal to which Aurizon has access (for example, voting agreements with shareholders of Aurizon or agreements to provide financing, financial support or other assistance to the person making such Acquisition Proposal), and any amendments to any of the foregoing. Aurizon will thereafter also provide such other details of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, as Hecla may reasonably request. Aurizon will keep Hecla fully informed as to the status, including any changes to the material terms, of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, and will respond promptly to all inquiries from Hecla with respect thereto.

The Aurizon Board will promptly review and assess each Acquisition Proposal following receipt or announcement thereof (whether such Acquisition Proposal is received by Aurizon or is made to the Aurizon Shareholders directly) to determine whether such Acquisition Proposal is or is likely to lead to a Superior Proposal and will advise Hecla in writing and issue a press release relating thereto within three business days of receiving such Acquisition Proposal.

Right to Match

Aurizon covenants that it will not accept, approve, endorse, recommend or enter into any agreement, understanding or arrangement in respect of a Superior Proposal (other than a confidentiality and standstill agreement permitted by the Arrangement Agreement) unless:

(a)Aurizon has complied with its obligations under the Section of the Arrangement Agreement described above under the heading "Non-Solicitation" including providing to Hecla a copy of any agreement to implement the Superior Proposal and any supporting documents, including the terms of any proposal to provide financing for such Superior Proposal;
(b)the person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction in favour of Aurizon;
(c)Aurizon has delivered a written notice to Hecla of its determination that such Acquisition Proposal is a Superior Proposal and that it intends to accept, endorse, approve, recommend or enter into an agreement with respect to such Superior Proposal together with a written notice from the Aurizon Board setting out the value and financial terms that the Aurizon Board has determined should be ascribed to any non-cash consideration offered under such Superior Proposal and the basis for such determination in reasonable detail;
(d)a period (the "Response Period") of five business days has elapsed from the date that is the later of (i) the date on which Hecla receives written notice from the Aurizon Board that the Aurizon Board has determined, subject only to compliance with the Arrangement Agreement relating to Hecla's right to match, to accept, approve, endorse, recommend or enter into a binding agreement to proceed with such Superior Proposal; and (ii) the date Hecla receives a copy of the Superior Proposal and all related documentation;
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(e)during any Response Period, Hecla has had the opportunity (but not the obligation) to offer to amend the Arrangement Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;

 

(f)if Hecla has offered to amend the Arrangement Agreement and the Arrangement under subsection (e) above, the Aurizon Board (i) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (compared to the terms of the Arrangement as proposed to be amended by Hecla under subsection (e) above; and (ii) has determined in good faith, after consultation with its outside legal counsel, that it is necessary for the Aurizon Board to enter into a definitive agreement with respect to such Superior Proposal in order to properly discharge its fiduciary duties; and

 

(g)prior to entering into any definitive agreement with respect to a Superior Proposal, Aurizon terminates the Arrangement Agreement and pays the Termination Fee pursuant to the section of the Arrangement Agreement described below under the heading "Expenses Reimbursement and Termination Fees".

 

During the Response Period, or such longer period as Aurizon may approve in writing for such purpose: (a) the Aurizon Board will review any offer made by Hecla to amend the terms of the Arrangement Agreement and the Arrangement in good faith after consultation with outside legal and financial advisors, in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) Aurizon will negotiate in good faith with Hecla to make such amendments to the terms of the Arrangement Agreement and the Arrangement as would enable Hecla to proceed with the transactions contemplated by the Arrangement Agreement on such amended terms. If the Aurizon Board determines that such Acquisition Proposal would cease to be a Superior Proposal, Aurizon will promptly so advise Hecla and the Parties will amend the Arrangement Agreement to reflect such offer made by Hecla, and will take and cause to be taken all such actions as are necessary to give effect to the foregoing.

Where at any time before the Aurizon Meeting, Aurizon has provided Hecla with a Notice of Acquisition Proposal, or an Acquisition Proposal has been publicly disclosed or announced and in either case the Response Period has not elapsed, then, subject to applicable Laws, at Hecla’s request, Aurizon will postpone or adjourn the Aurizon Meeting to a date acceptable to Hecla, acting reasonably.

Each successive amendment to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by the Aurizon Securityholders will constitute a new Acquisition Proposal for the purposes of the Arrangement Agreement and Hecla will be afforded a new Response Period and the rights afforded in the Arrangement Agreement in respect of each such Acquisition Proposal.

Expenses Reimbursement and Termination Fees

In the event that the Arrangement Agreement is terminated by Hecla pursuant to the section of the Arrangement Agreement described below under the heading "Termination" in circumstances which do not give rise to an obligation of Aurizon to pay a Termination Fee, then Aurizon will reimburse Hecla for all fees, costs and expenses incurred by Hecla in connection with the Arrangement Agreement and the Plan of Arrangement up to a maximum of $8,000,000.

If a Termination Fee Event occurs, Aurizon will pay Hecla (by wire transfer of immediately available funds) the Termination Fee in accordance with the terms of the Arrangement Agreement.

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For the purposes of the Arrangement Agreement, "Termination Fee" means $27,200,000.

For the purposes of the Arrangement Agreement, "Termination Fee Event" means the termination of the Arrangement Agreement:

(a)by Hecla pursuant to Subsections (c)(i), (c)(iii), (c)(iv) or (c)(v) under the heading "Termination";
(b)by Aurizon pursuant to subsection (d)(i) under the heading "Termination";
(c)by either Party pursuant to subsection (b)(i) or (b)(ii) under the heading "Termination" or by Hecla pursuant to subsection (c)(ii) under the heading "Termination", but only if an Acquisition Proposal is publicly announced prior to the termination of the Arrangement Agreement and within twelve months following the date of such termination:
(i)an Acquisition Proposal is consummated by Aurizon; or
(ii)Aurizon and/or one or more of its subsidiaries enters into a definitive agreement in respect of, or the Aurizon Board approves or recommends, an Acquisition Proposal which is subsequently consummated at any time thereafter;

provided that, for the purposes of the Arrangement Agreement, (A) all references to "20%" in the definition of "Acquisition Proposal" will be deemed to be references to "50%"; and (B) the Alamos Offer will not constitute an "Acquisition Proposal" unless the terms of such take-over bid are amended to increase the consideration payable to Aurizon Shareholders thereunder; or

(d)by either Party pursuant to subsection (b)(i) or (b)(ii) under the heading "Termination" or by Hecla pursuant to subsection (c)(ii) under the heading "Termination", but only if within twelve months following the date of such termination:
(i)an Acquisition Proposal is consummated by Alamos or any person acting jointly or in concert with Alamos; or
(ii)Aurizon and/or one or more of its subsidiaries enters into a definitive agreement in respect of, or the Aurizon Board approves or recommends, an Acquisition Proposal with Alamos or any person acting jointly or in concert with Alamos which is subsequently consummated at any time thereafter.

If a Termination Fee Event occurs due to a termination of the Arrangement Agreement by Aurizon pursuant to subsection (d)(i) under the heading "Termination", or by Hecla pursuant to Subsections (c)(i), (c)(iv) or (c)(v) under the heading "Termination", the Termination Fee will be payable simultaneously with the occurrence of such Termination Fee Event. If a Termination Fee Event occurs due to a termination of the Arrangement Agreement by Hecla pursuant to subsection (c)(iii) under the heading "Termination", the Termination Fee will be payable within two business days following such Termination Fee Event. If a Termination Fee Event occurs in the circumstances set out above in subsection (c), the Termination Fee will be payable within two business days following the closing of the applicable transaction referred to therein. If a Termination Fee becomes payable pursuant to subsection (c) above and Aurizon has previously reimbursed Hecla in respect of its expenses pursuant to the Arrangement Agreement, the amount of the Termination Fee will be reduced by the amount actually paid by Aurizon to Hecla pursuant to the Arrangement Agreement.

Each of the Parties has acknowledged that the agreements contained in the Arrangement Agreement are an integral part of the transactions contemplated in the Arrangement Agreement and that, without those agreements, the Parties would not enter into the Arrangement Agreement. Each Party has acknowledged that all of the payment amounts set out in the Arrangement Agreement are payments of liquidated damages which are a genuine pre-estimate of the damages which the Party entitled to such damages will suffer or incur as a result of the event giving rise to such payment and the resultant termination of the Arrangement Agreement and are not penalties. Aurizon irrevocably waives any right it may have to raise as a defense that any such liquidated damages are excessive or punitive. For greater certainty, each Party has agreed that, upon any termination of the Arrangement Agreement under circumstances where Hecla is entitled to the Termination Fee and such Termination Fee is paid in full, Hecla will be precluded from any other remedy against Aurizon at law or in equity or otherwise (including, without limitation, an order for specific performance), and will not seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against Aurizon in connection with the Arrangement Agreement or the transactions contemplated therein. In no event will Aurizon be required to pay Hecla's expenses described above, on the one hand, and the Termination Fee, on the other hand, in the aggregate, an amount in excess of the Termination Fee.

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Nothing in the Arrangement Agreement will relieve or have the effect of relieving any Party in any way from liability for damages incurred or suffered by a Party as a result of an intentional or wilful breach of the Arrangement Agreement, provided that no party will seek or obtain, or be obligated to pay, punitive or exemplary damages relating to the Arrangement Agreement or the transactions contemplated hereby, whether arising in tort or at law or equity.

Nothing in the Arrangement Agreement will preclude a Party from seeking injunctive relief to restrain any breach or threatened breach of the covenants or agreements set forth in the Arrangement Agreement or the Confidentiality Agreement or otherwise to obtain specific performance of any such covenants or agreements, without the necessity of posting bond or security in connection therewith.

Insurance and Indemnification

Hecla will, or will cause Aurizon to, maintain in effect without any reduction in scope or coverage for six years from the Effective Date customary policies of directors’ and officers’ liability insurance providing protection no less favourable to the protection provided by the policies maintained by Aurizon which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date, provided, however, that prior to the Effective Date, Aurizon may, in the alternative, purchase customary run off directors’ and officers’ liability insurance for a period of up to six years from the Effective Date with the prior written consent of Hecla, such consent not to be unreasonably withheld, conditioned or delayed.

Hecla has agreed that following the Effective Date it will cause Aurizon to honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of Aurizon to the extent that such rights are fully disclosed in the Disclosure Letter and has acknowledged that such rights, to the extent that they are disclosed in the Disclosure Letter, will survive the completion of the Plan of Arrangement and will continue in full force and effect.

The provisions of the Arrangement Agreement are intended for the benefit of, and will be enforceable by, each insured or indemnified person, his or her heirs and his or her legal representatives and, for such purpose, Aurizon has confirmed that it is acting as agent and trustee on their behalf.

Termination

The Arrangement Agreement, other than the provisions relating to expense reimbursement and the Termination Fee, may be terminated and the Arrangement may be abandoned at any time prior to the Effective Time:

(a)by mutual written agreement of Aurizon and Hecla ; or
(b)by either Aurizon or Hecla, if:
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(i)the Effective Time will not have occurred on or before the Outside Date, except that the right to terminate the Arrangement Agreement under this subsection (b)(i) will not be available to any Party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under the Arrangement Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date;
(ii)the Aurizon Securityholder Approval is not obtained at the Aurizon Meeting in accordance with the Interim Order provided that a Party may not terminate the Arrangement Agreement pursuant to this subsection (b)(ii) if the failure to obtain the Aurizon Securityholder Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under the Arrangement Agreement; or
(iii)after the date of the Arrangement Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins Aurizon or Hecla from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable;
(c)by Hecla, if:
(i)the Aurizon Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to Hecla, or fails to reaffirm its recommendation of the Arrangement within three business days (and in any case prior to the Aurizon Meeting) after having been requested in writing by Hecla to do so (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of three business days or beyond the date which is the day prior to the date proxies in respect of the Aurizon Meeting must be deposited will be considered an adverse modification) (a "Change in Recommendation");
(ii)subject to the notice and cure provisions described above under the heading "Notice and Cure Provisions", a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Aurizon set forth in the Arrangement Agreement (other than as set forth under the heading "Non-Solicitation") will have occurred that would cause the conditions precedent to the obligations of Hecla (including the mutual conditions), not to be satisfied, and such conditions are incapable of being satisfied by the earlier of the expiry of any applicable cure period or Outside Date; provided that Hecla is not then in breach of the Arrangement Agreement so as to cause any of the conditions precedent to the obligations of Aurizon (including the mutual conditions), not to be satisfied;
(iii)Aurizon is in breach or in default of any of its obligations or covenants set forth under the heading "Non-Solicitation";
(iv)the Aurizon Board authorizes Aurizon to enter into a binding written agreement relating to a Superior Proposal; or
(v)any person or group of persons acting jointly and in concert acquires ownership of, or control or direction over, Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares; or
(d)by Aurizon, if:
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(i)the Aurizon Board authorizes Aurizon, subject to complying with the terms of the Arrangement Agreement, to enter into a legally binding agreement with respect to a Superior Proposal; provided that concurrently with such termination, Aurizon pays the Termination Fee payable pursuant to the Section of the Arrangement Agreement described above under the heading "Expenses Reimbursement and Termination Fees"; or
(ii)subject to the notice and cure provisions described above under the heading "Notice and Cure Provisions", a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Hecla set forth in the Arrangement Agreement will have occurred that would cause the conditions precedent to the obligations of Aurizon (including the mutual conditions), not to be satisfied, and such conditions are incapable of being satisfied by the earlier of the expiry of any applicable cure period or the Outside Date; provided that Aurizon is not then in breach of the Arrangement Agreement so as to cause any of the conditions precedent to the obligations of Hecla (including the mutual conditions), not to be satisfied.

The Party desiring to terminate the Arrangement Agreement (other than pursuant to subsection (a) above) will give notice of such termination to the other Parties.

If the Arrangement Agreement is terminated pursuant to the Arrangement Agreement, the Arrangement Agreement will become void and of no effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party hereto, except as otherwise expressly contemplated hereby, and provided that the provisions of this paragraph and the Sections of the Arrangement Agreement described above under the heading "Expenses Reimbursement and Termination Fees", and governing law and the provisions of the Confidentiality Agreement (including any standstill provisions contained therein) will survive any termination of the Arrangement Agreement pursuant to the Arrangement Agreement, provided further that neither the termination of the Arrangement Agreement nor anything contained in the Arrangement Agreement will relieve a Party from any liability arising prior to such termination.

Amendment

The Arrangement Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Meeting but not later than the Effective Time, be amended by mutual written agreement of the Parties, and any such amendment may, subject to the Interim Order and the Final Order and applicable Law, without limitation:

(a)change the time for performance of any of the obligations or acts of the Parties;
(b)waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;
(c)waive compliance with or modify any of the covenants contained in the Arrangement Agreement and waive or modify performance of any of the obligations of the Parties; and/or
(d)waive compliance with or modify any mutual conditions precedent contained in the Arrangement Agreement.

RISK FACTORS Relating to the Arrangement

The following risk factors relating to the Arrangement should be considered by Aurizon Securityholders in evaluating whether to vote to approve the Arrangement Resolution. These risk factors should be considered in conjunction with the other information contained in or incorporated by reference into this Circular. See "Information Concerning Aurizon – Risk Factors" and "Information Concerning Hecla – Risk Factors".

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Because the market price of the Hecla Shares and the Aurizon Shares will fluctuate and the exchange ratio is fixed, Aurizon Securityholders cannot be certain of the market value of the Hecla Shares they may receive for their Aurizon Shares under the Arrangement.

The exchange ratio between Aurizon Shares and Hecla Shares comprising the Share Consideration, on a per-share basis, is fixed and will not increase or decrease due to fluctuations in the market price of Hecla Shares or Aurizon Shares. The market price of Hecla Shares or Aurizon Shares could each fluctuate significantly prior to the Effective Date in response to various factors and events, including, without limitation, the differences between Hecla’s and Aurizon’s actual financial or operating results and those expected by investors and analysts, changes in analysts’ projections or recommendations, fluctuations in the prices of silver and gold, changes in general economic or market conditions, and broad market fluctuations. As a result of such fluctuations, historical market prices are not indicative of future market prices or the market value of the Hecla Shares that holders of Aurizon Shares may receive on the Effective Date. There can be no assurance that the market value of the Hecla Shares that the holders of Aurizon Shares may receive on the Effective Date will equal or exceed the market value of the Aurizon Shares held by such Aurizon Shareholders prior to the Effective Date. In addition, the trading price of the Hecla Shares may decline following the completion of the Arrangement.

There can be no certainty that all conditions precedent to the Arrangement will be satisfied. Failure to complete the Arrangement could negatively impact the market price of the Aurizon Shares.

The Arrangement is subject to certain conditions that are outside the control of Aurizon and Hecla, including, without limitation, the receipt of the Final Order and the receipt of Investment Canada Act Approval. There can be no assurance that these conditions will be satisfied or, if satisfied, when they will be satisfied. If the Arrangement is not completed, the market price of the Aurizon Shares may decline. If the Arrangement is not completed and the Aurizon Board decides to seek another merger or business combination, there can be no assurance that it will be able to find a party willing to pay consideration for the Aurizon Shares that is equivalent to, or more attractive than, the Consideration payable pursuant to the Arrangement.

The Arrangement Agreement may be terminated by Hecla in certain circumstances, including in the event of the occurrence of an Aurizon Material Adverse Effect or if any person or group of persons acting jointly and in concert acquires Aurizon Shares which represent 33⅓% or more of the outstanding Aurizon Shares and may be terminated by Aurizon in certain circumstances.

Each of Hecla and Aurizon have the right to terminate the Arrangement Agreement and the Arrangement in certain circumstances. Accordingly, there can be no assurance that the Arrangement Agreement will not be terminated by either Hecla or Aurizon before the completion of the Arrangement. For example, Hecla has the right, in certain circumstances, to terminate the Arrangement Agreement if an Aurizon Material Adverse Effect occurs. In addition, Hecla has the right to terminate the Arrangement Agreement if any person or group of persons acting jointly and in concert, acquires ownership of, or control or direction over, Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares. See "The Arrangement Agreement — Termination".

Hecla and Aurizon may not integrate successfully.

If approved, the Arrangement will involve the integration of companies that previously operated independently. As a result, the Arrangement will present challenges to management, including the integration of the operations, systems and personnel of the two companies, and special risks, including possible unanticipated liabilities, unanticipated costs, diversion of management’s attention and the loss of key employees.

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The difficulties management encounters in the transition and integration process could have an adverse effect on the revenues, level of expenses and operating results of the Combined Company. As a result of these factors, it is possible that any benefits expected from the combination will not be realized.

Uncertainty surrounding the Arrangement could adversely affect Aurizon’s retention of customers, suppliers and personnel and could negatively impact Aurizon’s future business and operations.

Because the Arrangement is dependent upon satisfaction of certain conditions, its completion is subject to uncertainty. In response to this uncertainty, Aurizon’s customers and suppliers may delay or defer decisions concerning Aurizon. Any delay or deferral of those decisions by customers and suppliers could have an adverse effect on the business and operations of Aurizon, regardless of whether the Arrangement is ultimately completed.

United States federal income tax consequences of the Arrangement.

Aurizon will not seek an advance income tax ruling from the IRS with respect to the U.S. federal income tax consequences of the Arrangement. Whether the transaction is fully taxable or partially tax-deferred for U.S. federal income tax purposes depends on whether the Share Consideration constitutes a sufficient portion, by value, of the total Consideration. There is no authority directly on point holding that Share Consideration constituting 35% of the total Consideration is sufficient for a partially tax-deferred reorganization, although there is authority providing that Share Consideration constituting 40% of the total Consideration would be sufficient for a partially tax-deferred reorganization. The Exchange might result in a recognized capital gain for U.S. federal income tax purposes to an Aurizon Shareholder if the Exchange does not qualify as a reorganization for such purposes. If the Exchange qualifies as a reorganization, a U.S. Holder that realizes a loss for U.S. federal income tax purposes pursuant to the Arrangement would not be permitted to recognize such loss. For a summary of certain U.S. federal income tax considerations arising from the Arrangement, see "Certain United States Federal Income Tax Considerations", which qualifies the information set forth above. Such summary is not intended to be legal or tax advice to any particular Aurizon Shareholder. Aurizon Shareholders should consult their own tax and investment advisors with respect to their particular circumstances.

The pro forma condensed combined financial statements are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement.

The pro forma condensed combined financial statements contained in this Circular are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement for several reasons. For example, the pro forma condensed combined financial statements have been derived from the historical financial statements of Hecla and Aurizon and certain adjustments and assumptions have been made regarding the Combined Company after giving effect to the Arrangement. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. Moreover, the pro forma condensed combined financial statements do not reflect all costs that are expected to be incurred by the Combined Company in connection with the Arrangement. For example, the impact of any incremental costs incurred in integrating Hecla and Aurizon is not reflected in the pro forma condensed combined financial statements. In addition, the assumptions used in preparing the pro forma condensed combined financial information may not prove to be accurate, and other factors may affect the Combined Company’s financial condition or results of operations following the Arrangement. The Combined Company’s stock price may be adversely affected if the actual results of the Combined Company fall short of the pro forma condensed combined financial statements contained in this Circular. See "Information Concerning the Combined Company - Unaudited Pro forma condensed combined Financial Statements" and the Unaudited Pro forma condensed combined Financial Statements attached as Appendix I to this Circular.

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Directors and executive officers of Aurizon may have interests in the Arrangement that are different from those of Aurizon Securityholders generally.

Certain executive officers and directors of Aurizon may have interests in the Arrangement that may be different from, or in addition to, the interests of Aurizon Securityholders generally including, but not limited to, the receipt of certain change of control payments as discussed under the heading "Interests of Directors and Executive Officers of Aurizon in the Arrangement ". The Aurizon Board retained its own independent legal counsel and financial adviser in respect of the Arrangement. In addition, the Aurizon Board established a special committee comprised of independent directors to evaluate the Arrangement and advise the full Aurizon Board on whether the Arrangement is in the best interests of Aurizon and fair to the Aurizon Securityholders. The Special Committee also had its own independent financial advisor. The Special Committee and the Aurizon Board each recommended in favour of the Arrangement. Nevertheless, Aurizon Securityholders should consider these interests in connection with their vote on the Arrangement Resolution, including whether these interests may have influenced Aurizon’s executive officers and directors to recommend or support the Arrangement.

RIGHTS OF DISSENTING SHAREHOLDERS

Registered Shareholders who wish to dissent should take note that strict compliance with the Dissent Procedures is required.

The following description of the Dissent Procedures is not a comprehensive statement of the procedures to be followed by a Dissenting Shareholder who seeks payment of the fair value of its Aurizon Shares and is qualified in its entirety by the reference to the full text of the Interim Order and Part 8, Division 2 of the BCBCA which are attached to this Circular as Appendices E and G, respectively. A Dissenting Shareholder who intends to exercise the Dissent Rights should carefully consider and comply with the provisions of Sections 237 to 247 of the BCBCA, as modified by the Interim Order and consult with its own advisors. Failure to comply strictly with the provisions of the BCBCA, as modified by the Interim Order, and to adhere to the procedures established therein may result in the loss of all rights thereunder.

The Court hearing the application for the Final Order has the discretion to alter the Dissent Rights described herein based on the evidence presented at such hearing.

Pursuant to the Interim Order, each Registered Shareholder may exercise Dissent Rights under Sections 237 to 247 of the BCBCA as modified by the Interim Order or the Final Order in respect of the Arrangement. Aurizon Shareholders who duly exercise such Dissent Rights and who:

(a)are ultimately determined to be entitled to be paid fair value for the Aurizon Shares in respect of which they have exercised Dissent Rights will be deemed to have transferred such Aurizon Shares to Acquireco for cancellation immediately prior to the Effective Time, and Acquireco shall fund such payment using its own assets; or
(b)are ultimately not entitled, for any reason, to be paid fair value for the Aurizon Shares in respect of which they have exercised Dissent Rights will be deemed to have participated in the Arrangement on the same basis as an Aurizon Shareholder that has not exercised Dissent Rights, and shall only be entitled to receive the Consideration,

but in no case will Hecla, Aurizon or any other person be required to recognize such Dissenting Shareholders as Aurizon Shareholders after the cancellation of the Dissenting Shares, which cancellation is to occur at the Effective Time, and each Dissenting Shareholder will cease to be entitled to the rights of an Aurizon Shareholder in respect of the Dissenting Shares in relation to which such Dissenting Shareholder has exercised Dissent Rights and the central securities register will be amended to reflect that such former holder is no longer the holder of such Aurizon Shares as and from the Effective Time.

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Persons who are Beneficial Shareholders who wish to dissent with respect to their Aurizon Shares should be aware that only Registered Shareholders are entitled to dissent with respect to them. A Registered Shareholder such as an intermediary who holds Aurizon Shares as nominee for Beneficial Shareholders, some of whom wish to dissent, must exercise Dissent Rights on behalf of such Beneficial Shareholders with respect to the Aurizon Shares held for such Beneficial Shareholders. In such case, the Notice of Dissent (as defined below) should set forth the number of Aurizon Shares it covers.

Pursuant to Section 238 of the BCBCA, the Interim Order and the Plan of Arrangement, every Registered Shareholder who dissents from the Arrangement Resolution in compliance with Sections 237 to 247 of the BCBCA will be entitled to be paid by Acquireco the fair value of the Aurizon Shares held by such Dissenting Shareholder determined as at the point in time immediately before the passing of the Arrangement Resolution.

A Dissenting Shareholder must dissent with respect to all Aurizon Shares in which the holder owns a beneficial interest. A Registered Shareholder who wishes to dissent must deliver written notice of dissent (a "Notice of Dissent") to Aurizon, c/o Blake, Cassels & Graydon LLP, 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, B.C. V7X 1L3 Attention: Sean Boyle by 1:00 p.m. (Vancouver time) on May 7, 2013, and such Notice of Dissent must strictly comply with the requirements of Section 242 of the BCBCA. Any failure by an Aurizon Shareholder to fully comply may result in the loss of that holder’s Dissent Rights. Beneficial Shareholders who wish to exercise Dissent Rights must arrange for the Registered Shareholder holding their Aurizon Shares to deliver the Notice of Dissent.

The delivery of a Notice of Dissent does not deprive a Dissenting Shareholder of the right to vote at the Meeting on the Arrangement Resolution; however, a Dissenting Shareholder is not entitled to exercise the Dissent Rights with respect to any of his or her Aurizon Shares if the Dissenting Shareholder votes in favour of the Arrangement Resolution. A vote against the Arrangement Resolution, whether in person or by proxy, does not constitute a Notice of Dissent.

A Dissenting Shareholder must prepare a separate Notice of Dissent for him or herself, if dissenting on his or her own behalf, and for each other person who beneficially owns Aurizon Shares registered in the Dissenting Shareholder’s name and on whose behalf the Dissenting Shareholder is dissenting; and must dissent with respect to all of the Aurizon Shares registered in his or her name beneficially owned by the Beneficial Shareholder on whose behalf he or she is dissenting. The Notice of Dissent must set out the number of Aurizon Shares in respect of which the Notice of Dissent is to be sent (the "Notice Shares") and: (a) if such Aurizon Shares constitute all of the Aurizon Shares of which the Dissenting Shareholder is the registered and beneficial owner, a statement to that effect; (b) if such Aurizon Shares constitute all of the Aurizon Shares of which the Dissenting Shareholder is both the registered and beneficial owner but the Dissenting Shareholder owns additional Aurizon Shares beneficially, a statement to that effect and the names of the Registered Shareholders, the number of Aurizon Shares held by such registered owners and a statement that written Notices of Dissent has or will be sent with respect to such Aurizon Shares; or (c) if the Dissent Rights are being exercised by a registered owner who is not the beneficial owner of such Aurizon Shares, a statement to that effect and the name of the beneficial owner and a statement that the registered owner is dissenting with respect to all Aurizon Shares of the beneficial owner registered in such registered owner’s name.

If the Arrangement Resolution is approved by the Aurizon Securityholders by special resolution and if Aurizon notifies the Dissenting Shareholders of its intention to act upon the Arrangement Resolution, the Dissenting Shareholder is then required within one month after Aurizon gives such notice, to send to Aurizon, the certificates representing the Notice Shares and a written statement that requires Aurizon to purchase all of the Notice Shares. If the Dissent Right is being exercised by the Dissenting Shareholder on behalf of a Beneficial Shareholder who is not the Dissenting Shareholder, a statement signed by the beneficial owner is required which sets out whether the beneficial owner is the beneficial owner of other Aurizon Shares and if so, (i) the names of the registered owners of such Aurizon Shares; (ii) the number of such Aurizon Shares; and (iii) that dissent is being exercised in respect of all of such Aurizon Shares. Upon delivery of these documents, the Dissenting Shareholder is deemed to have sold the Aurizon Shares and Aurizon is deemed to have purchased them. Once the Dissenting Shareholder has done this, the Dissenting Shareholder may not vote or exercise any shareholder rights in respect of the Notice Shares.

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The Dissenting Shareholder and Aurizon may agree on the payout value of the Notice Shares; otherwise, either party may apply to the Court to determine the fair value of the Notice Shares or apply for an order that value be established by arbitration or by reference to the registrar or a referee of the Court. After a determination of the payout value of the Notice Shares, Aurizon must then promptly pay that amount to the Dissenting Shareholder.

A Dissenting Shareholder loses his or her Dissent Right if, before full payment is made for the Notice Shares, Aurizon abandons the corporate action that has given rise to the Dissent Right (namely, the Arrangement), a court permanently enjoins the action, or the Dissenting Shareholder withdraws the Notice of Dissent with Aurizon’s consent. When these events occur, Aurizon must return the share certificates to the Dissenting Shareholder and the Dissenting Shareholder regains the ability to vote and exercise shareholder rights.

The discussion above is only a summary of the Dissent Rights, which are technical and complex. An Aurizon Shareholder who intends to exercise Dissent Rights should carefully consider and comply with the provisions of Sections 237 to 247 of the BCBCA as modified by the Interim Order. Persons who are non-registered holders of Aurizon Shares registered in the name of an intermediary such as a broker, custodian, nominee, other intermediary, or in some other name, who wish to dissent should be aware that only the registered owner of such Aurizon Shares is entitled to dissent.

Aurizon suggests that any Aurizon Shareholder wishing to avail himself or herself of the Dissent Rights seek his or her own legal advice as failure to comply strictly with the applicable provisions of the BCBCA and the Interim Order may prejudice the availability of such Dissent Rights. Dissenting Shareholders should note that the exercise of Dissent Rights can be a complex, time-consuming and expensive process.

If a Dissenting Shareholder fails to strictly comply with the requirements of the Dissent Rights set out in the Interim Order, it will lose its Dissent Rights, Aurizon will return to the Dissenting Shareholder the certificates representing the Notice Shares that were delivered to Aurizon, if any, and if the Arrangement is completed, that Dissenting Shareholder will be deemed to have participated in the Arrangement on the same terms as an Aurizon Shareholder.

If a Dissenting Shareholder strictly complies with the foregoing requirements of the Dissent Rights, but the Arrangement is not completed, Aurizon will return to the Dissenting Shareholder the certificates delivered to Aurizon by the Dissenting Shareholder, if any.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

Canadian Federal Income Tax Considerations for Aurizon Shareholders

In the opinion of Blake, Cassels & Graydon LLP, counsel to Aurizon, the following is a summary of the principal Canadian federal income tax considerations generally applicable to Aurizon Shareholders who, for purposes of the Tax Act, and at all relevant times, hold their Aurizon Shares, and will hold their Hecla Shares acquired pursuant to the Arrangement, as capital property, deal at arm’s length with, and are not affiliated with, Aurizon, Hecla, or Acquirco, and who dispose of Aurizon Shares pursuant to the Arrangement.

Aurizon Shares and Hecla Shares will generally be considered to be capital property to a holder of such shares for purposes of the Tax Act unless such securities are held in the course of carrying on a business of trading or dealing in securities, or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade. Certain Aurizon Shareholders who are residents of Canada for purposes the Tax Act and whose Aurizon Shares might not otherwise qualify as capital property, may be entitled to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have their Aurizon Shares and every "Canadian security" (as defined in the Tax Act) owned by such Aurizon Shareholder in the taxation year of the election and in all subsequent taxation years deemed to be capital property. This election does not apply to Hecla Shares or Aurizon Options. Aurizon Shareholders who do not hold their Aurizon Shares as capital property or who will not hold their Hecla Shares as capital property should consult their own tax advisors regarding their particular circumstances.

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This summary is based on the facts set out in the Circular, the current provisions of the Tax Act and the regulations thereunder and counsel’s understanding of the current published administrative policies and assessing practices of the CRA publicly available prior to the date of this document. This summary takes into account all proposed amendments to the Tax Act and the regulations thereunder that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof ("Proposed Amendments") and assumes that such Proposed Amendments will be enacted substantially as proposed. However, no assurance can be given that such Proposed Amendments will be enacted in the form proposed, or at all.

This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to the Arrangement and/or the holding of Hecla Shares. Except for the Proposed Amendments, this summary does not take into account or anticipate any other changes in law or any changes in the CRA’s administrative policies and assessing practices, whether by judicial, governmental or legislative action or decision, nor does it take into account other federal or any provincial, territorial or foreign tax legislation or considerations, which may differ from the Canadian federal income tax considerations described herein.

This summary does not apply to: (i) an Aurizon Shareholder with respect to whom Hecla is or will be a "foreign affiliate" within the meaning of the Tax Act, (ii) an Aurizon Shareholder that is a "financial institution", for the purposes of the mark-to-market rules in the Tax Act, (iii) an Aurizon Shareholder an interest in which is a "tax shelter investment" as defined in the Tax Act, (iv) an Aurizon Shareholder that is a "specified financial institution" as defined in the Tax Act, (v) an Aurizon Shareholder who has made a "functional currency" election under section 261 of the Tax Act, (vi) an Aurizon Shareholder who received Aurizon Shares upon exercise of a stock option prior to the Effective Time or (v) an Aurizon Shareholder that has entered into, with respect to the Aurizon Shares, a "derivative forward agreement" as that term is defined in proposed amendments contained in a Notice of Ways and Means Motion that accompanied the federal budget tabled by the Minister of Finance (Canada) on March 21, 2013.

Further, this summary is not applicable to a person that (i) is a corporation resident in Canada and (ii) is, or becomes as part of a transaction or event or series of transactions or events that includes the acquisition of Hecla Shares, controlled by a non‑resident corporation for the purposes of the foreign affiliate dumping rules in section 212.3 of the Tax Act. Any such shareholder should consult its own tax advisor.

This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular Aurizon Shareholder. Aurizon Shareholders should consult their own tax advisors as to the tax consequences to them of the Arrangement and the holding of Hecla Shares.

For purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of securities (including dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in U.S. dollars must be converted into Canadian dollars generally based on the Bank of Canada noon spot exchange rate on the date such amounts arise.

Resident in Canada

The following section of the summary only applies to an Aurizon Shareholder who, for purposes of the Tax Act, is or is deemed to be a resident of Canada at all relevant times (a "Resident Shareholder").

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Exchange of Aurizon Shares for the Consideration

A Resident Shareholder who exchanges Aurizon Shares with Acquireco for the Consideration under the Arrangement will be considered to have disposed of such Aurizon Shares for proceeds of disposition equal to the fair market value at the Effective Time of the Consideration received (being the amount of cash received, the fair market value of Hecla Shares received or a combination of the amount of cash and fair market value of the Hecla Shares received) by such Resident Shareholder for their Aurizon Shares. As a result, the Resident Shareholder will generally realize a capital gain (or a capital loss) to the extent that such proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of such Aurizon Shares.

For a description of the tax treatment of capital gains and losses, see "Canadian Federal Income Tax Considerations for Aurizon Shareholders — Resident in Canada — Taxation of Capital Gains or Capital Losses" below.

Acquisition and Disposition of Hecla Shares

The cost of any Hecla Shares received in exchange for Aurizon Shares pursuant to the Arrangement will be equal to the fair market value of such Hecla Shares at the Effective Time and will generally be averaged with the adjusted cost base of any other Hecla Shares held at that time by the holder as capital property for the purpose of determining the holder’s adjusted cost base of such Hecla Shares.

A disposition or deemed disposition of Hecla Shares by a Resident Shareholder will generally result in a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the holder of the Hecla Shares immediately before the disposition. For a description of the tax treatment of capital gains and losses, see "Canadian Federal Income Tax Considerations for Aurizon Shareholders — Resident in Canada — Taxation of Capital Gains or Capital Losses" below.

Dividends on Hecla Shares

Dividends on Hecla Shares, before deduction of any withholding taxes as may be applicable, will be included in the Resident Shareholder’s income for the purposes of the Tax Act. Such dividends received by a Resident Shareholder who is an individual will not be subject to the gross-up and dividend tax credit rules in the Tax Act. A Resident Shareholder that is a corporation must include such dividends in computing its income and will not be entitled to deduct the amount of the dividends in computing its taxable income.

A Resident Shareholder that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay a refundable tax of 6 ⅔% on its "aggregate investment income" (as defined in the Tax Act), including dividends received on Hecla Shares that are not deductible in computing taxable income.

Any United States non-resident withholding tax on these dividends generally will be eligible for foreign tax credit or deduction treatment to the extent and under the circumstances provided in the Tax Act.

Taxation of Capital Gains or Capital Losses

Generally, one-half of any capital gain (a "taxable capital gain") realized by a Resident Shareholder in a taxation year must be included in the Resident Shareholder’s income for the year, and one-half of any capital loss (an "allowable capital loss") realized by a Resident Shareholder in a taxation year must be deducted from taxable capital gains realized by the Resident Shareholder in that year (subject to and in accordance with rules contained in the Tax Act). Allowable capital losses for a taxation year in excess of taxable capital gains for that year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.

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A Resident Shareholder that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay a refundable tax of 6⅔% on its "aggregate investment income" (as defined in the Tax Act), including any taxable capital gains.

If the Resident Shareholder is a corporation, the amount of any capital loss realized on a disposition or deemed disposition of an Aurizon Share may be reduced by the amount of dividends received or deemed to have been received by it on such share (and in certain circumstances a share exchanged for such share) to the extent and under circumstances described in the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns such shares or where a trust or partnership of which a corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such shares. Resident Shareholders to whom these rules may be relevant should consult their own tax advisors.

Minimum Tax

A Resident Shareholder who is an individual (including certain trusts) is subject to a minimum tax under the Tax Act. This tax is computed by reference to adjust taxable income. Eighty percent (80%) of capital gains (net of capital losses) and the actual amount of taxable dividends (not including any gross-up) are included in determining the adjusted taxable income of an individual. Any additional tax payable by an individual under the minimum tax provisions may be carried forward and applied against certain tax otherwise payable in any of the seven immediately following taxation years, to the extent specified by the Tax Act.

Foreign Property Information Reporting

In general, a "specified Canadian entity" for a taxation year or fiscal period whose total cost amount of "specified foreign property" (both as defined in the Tax Act) at any time in the year or fiscal period exceeds $100,000, is required to file an information return for the year or period disclosing prescribed information. With some exceptions, an Aurizon Shareholder resident in Canada in the year will be a specified Canadian entity. On March 4, 2010, the Minister of Finance (Canada) announced proposals to expand existing reporting requirements with respect to specified foreign property to require more detailed information. As of the date hereof, no detailed legislative proposals with respect to such amended reporting requirements have been made public.

Hecla Shares will constitute specified foreign property to a holder. Accordingly, holders of Hecla Shares should consult their own tax advisors regarding compliance with these rules.

Offshore Investment Fund Property

The Tax Act contains rules which may require a taxpayer to include in income in each taxation year an amount in respect of the holding of an "offshore investment fund property". These rules could apply to a holder of a Hecla Share if, but only if:

(1)the Hecla Share may reasonably be considered to derive its value, directly or indirectly, primarily from portfolio investments in: (i) shares of one or more corporations, (ii) indebtedness or annuities, (iii) interests in one or more corporations, trusts, partnerships, organizations, funds or entities, (iv) commodities, (v) real estate, (vi) Canadian or foreign resource properties, (vii) currency of a country other than Canada, (viii) rights or options to acquire or dispose of any of the foregoing, or (ix) any combination of the foregoing (collectively, "Investment Assets"); and
(2)it may reasonably be concluded, having regard to all the circumstances, that one of the main reasons for the holder acquiring, holding or having an interest in the Hecla Share was to derive a benefit from portfolio investments in Investment Assets in such a manner that the taxes, if any, on the income, profits and gains from such assets for any particular year are significantly less than the tax that would have been applicable under Part I of the Tax Act if the income, profits and gains been earned directly by such holder.
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If applicable, these rules would generally require a holder of a Hecla Share to include in income, for each taxation year in which such holder holds the Hecla Share, an imputed amount determined by applying a prescribed rate of interest to the "designated cost" to the holder of the Hecla Share, at the end of each month in the year, less the amount of certain income of the holder from the Hecla Share, in the year. Any amount required to be included in computing a holder’s income in respect of a Hecla Share under these rules would be added to the adjusted cost base to the holder of such share or note.

Holders of Hecla Shares are urged to consult their own tax advisors regarding the application and consequences of these rules.

Dissenting Aurizon Shareholders

A Resident Shareholder who is also a Dissenting Shareholder (a "Resident Dissenting Shareholder") will be deemed to have transferred his, her or its Aurizon Shares to Acquirco as of the Effective Time and will receive a cash payment from Acquirco in respect of the fair value of the Resident Dissenting Shareholder’s Aurizon Shares. Such a Resident Dissenting Shareholder will be considered to have disposed of the Aurizon Shares for proceeds of disposition equal to the amount received by the Resident Dissenting Shareholder (less any interest awarded by a court). As a result, such Resident Dissenting Shareholder will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition, net any reasonable cost of disposition, received exceed (or is less than) the adjusted cost base to the Resident Dissenting Shareholder of the Aurizon Shares.

Interest awarded to a Resident Dissenting Shareholder by a court will be included in the Resident Dissenting Shareholder’s income for the purposes of the Tax Act. In addition, a Resident Dissenting Shareholder that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay a refundable tax of 6⅔% on its "aggregate investment income" (as defined in the Tax Act), including taxable capital gains and interest income.

A Resident Shareholder who exercises his or her dissent rights but who is not ultimately determined to be entitled to be paid fair value for the Aurizon Shares held by such Resident Shareholder will be deemed to have participated in the Arrangement and will receive Cash Consideration. Such a Resident Shareholder will be considered to have disposed of the Aurizon Shares for proceeds of disposition equal to the cash received. As a result, such Resident Shareholder will realize a capital gain (or a capital loss) equal to the amount by which such proceeds of disposition, net of any reasonable costs of disposition, received exceed (or is less than) the adjusted cost base to the Resident Shareholder of the Aurizon Shares.

For a description of the tax treatment of capital gains and losses, see "Canadian Federal Income Tax Considerations for Aurizon Shareholders – Residents in Canada – Taxation of Capital Gains or Losses" above.

Eligibility for Investment

The Hecla Shares to be issued pursuant to the Arrangement would, if issued on the date of this Circular, be "qualified investments" under the Tax Act for a trust governed by a registered retirement savings plan ("RRSP"), a registered retirement income fund ("RRIF"), a deferred profit sharing plan, a registered education savings plan, a registered disability savings plan and a tax‑free savings account ("TFSA") (collectively, "Registered Plans") provided that the Hecla Shares are listed on a "designated stock exchange" as defined for purposes of the Tax Act (which includes the NYSE on the date of this Circular).

Notwithstanding the foregoing, a holder of Hecla Shares will be subject to a penalty tax if the Hecla Shares are held in a RRSP, RRIF, TFSA, as the case may be, and are a "prohibited investment" for such RRSP, RRIF, TFSA under the Tax Act. However, the Hecla Shares will not be a prohibited investment for a RRSP, RRIF or TFSA, as the case may be, held by a particular holder or annuitant provided the holder or annuitant deals at arm’s length with Hecla for the purposes of the Tax Act, and does not have a "significant interest" (as defined in the Tax Act) in Hecla. In addition, pursuant to Proposed Amendments, Hecla Shares will generally not be a prohibited investment if the Hecla Shares are "excluded property" as defined in the Proposed Amendments. Shareholders should consult their own tax advisors as to whether the Hecla Shares will be a prohibited investment in their particular circumstances, including the respect to whether the Hecla Shares would be "excluded property" as defined in the Proposed Amendments.

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Not Resident in Canada

The following section of the summary only applies to an Aurizon Shareholder who, (i) for the purposes of the Tax Act and at all relevant times, is not, and is not deemed to be, a resident of Canada (ii) does not, and is not deemed to, use or hold Aurizon Shares, or any Hecla Shares received pursuant to the Arrangement, in or in the course of, carrying on a business in Canada, and (iii) is not an insurer who carries on an insurance business or is deemed to carry on an insurance business in Canada and elsewhere (a "Non-Resident Shareholder").

Disposition of Aurizon Shares

A Non-Resident Shareholder will not be subject to tax under the Tax Act on the disposition of Aurizon Shares unless the Aurizon Shares constitute "taxable Canadian property" of the Non‑Resident Shareholder for purposes of the Tax Act and the Non‑Resident Shareholder is not entitled to relief under an applicable income tax treaty or convention.

Generally, Aurizon Shares will not be "taxable Canadian property" of a Non-Resident Shareholder at a particular time provided that the Aurizon Shares are listed on a designated stock exchange (which includes the TSX at that time, unless: (i) at any time during the sixty-month period immediately preceding the disposition of the Aurizon Shares by such Non-Resident Shareholder, (A) the Non-Resident Shareholder, persons not dealing at arm’s length with such Non-Resident Shareholder, or the Non-Resident Shareholder together with all such persons, owned 25% or more of the issued shares of any class or series of the capital stock of Aurizon and (B) more than 50% of the fair market value of the Aurizon Shares was delivered directly or indirectly from one or any combination of real or immovable property situated in Canada, "Canadian resource properties" as defined in the Tax Act, "timber resource properties" as defined in the Tax Act, and options in respect of, interests in, or civil law rights in, an such properties; or (ii) the Non-Resident Shareholder’s Aurizon Shares were acquired in certain types of tax-deferred exchanges in consideration for property that was itself taxable Canadian property.

Even if any of the Aurizon Shares are "taxable Canadian property" to a Non‑Resident Shareholder at a particular time such holder may be exempt from tax by virtue of an income tax treaty or convention to which Canada is a signatory.

In the event Aurizon Shares are taxable Canadian property to a Non-Resident Shareholder at the time of disposition and such Non‑Resident Shareholder is not exempt from tax by a tax treaty, the tax consequences described above under "Canadian Federal Income Tax Considerations for Aurizon Shareholders – Resident in Canada – Exchange of Aurizon Shares for the Consideration" will generally apply.

Dissenting Aurizon Shareholders

A Non‑Resident Shareholder who is a Dissenting Shareholder (a "Non‑Resident Dissenting Shareholder") will be deemed to have transferred his, her or its Aurizon Shares to Acquirco as of the Effective Time and will receive the cash payment from Acquirco in respect of the fair market value of the Non‑Resident Dissenting Shareholder’s of Aurizon Shares. A Non‑Resident Dissenting Shareholder will not be subject to tax under the Tax Act on such disposition of Aurizon Shares unless the Aurizon Shares constitute "taxable Canadian property" as discussed above under the heading "Canadian Federal Income Tax Considerations for Aurizon Shareholders – Not Resident in Canada – Disposition of Aurizon Shares".

Interest (if any) awarded by a court to a Dissenting Non‑Resident Shareholder generally should not be subject to withholding tax under the Tax Act.

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A Non‑Resident Shareholder who exercises his or her dissent rights but who is not ultimately determined to be entitled to be paid fair value for the Aurizon Shares held by such Resident Shareholder will be deemed to have participated in the Arrangement and will receive Cash Consideration. Such a Non‑Resident Shareholder will be considered to have disposed of the Aurizon Shares from proceeds of disposition equal to the cash so received and will not be subject to tax under the Tax Act on the disposition unless the Aurizon Shares constitute "taxable Canadian property" of the Non‑Resident Shareholder as discussed above under the heading "Canadian Federal Income Tax Considerations for Aurizon Shareholders – Not Resident in Canada – Disposition of Aurizon Shares".

Canadian Federal Income Tax Considerations for Aurizon Optionholders

The following is, as of the date hereof, a summary of certain Canadian federal income tax considerations generally applicable under the Tax Act in respect of the Arrangement that will generally apply to an Aurizon Optionholder who (i) at all relevant times, is, or is deemed to be, resident in Canada for the purposes of the Tax Act, (ii) disposes of his or her Aurizon Options pursuant to the Plan of Arrangement, (iii) is a current or former employee or director of Aurizon, (iv) received his Aurizon Options in respect of, in the course of, or by virtue of, such employment or in consideration for the services performed by him as a director of Aurizon, and (v) at the time the Aurizon Optionholder’s Aurizon Options were granted, dealt at arm’s length with Aurizon. This summary does not describe the tax consequences of an exercise or other disposition of Aurizon Options by Aurizon Optionholders, prior to the Effective Time, and holders who have, or wish to, exercise or dispose of their Aurizon Options prior to the Effective Time should consult their own tax advisors. Aurizon Optionholders to whom this summary does not apply should consult their own advisors with respect to the consequences of transactions contemplated herein.

Disposition of Aurizon Options for Aurizon Shares

The terms of the Arrangement provide that Aurizon Options that are not exercised prior to the Effective Time and are "in the money" will be transferred and diposed of to Aurizon for payment of the Option Consideration. An Aurizon Optionholder will be required to include in computing his or her income from employment for such year, the fair market value, at the Effective Time, of the Option Consideration (the "Benefit"). An Aurizon Optionholder may, in computing taxable income for the taxation year in which the Benefit is included in income, deduct one half of the amount of the Benefit, provided the Aurizon Optionholder deals at arm’s length with Aurizon and certain other conditions are met. Aurizon Optionholders should consult their own advisors in this regard.

The cost to an Aurizon Optionholder of Aurizon Shares acquired as the Option Consideration will be equal to the fair market value of the Aurizon Shares at the Effective Time and will generally be averaged with the adjusted cost base of any other Aurizon Shares held at that time by the Aurizon Optionholder as capital property for purposes of determining the Aurizon Optionholder’s adjusted cost base of such Aurizon Shares.

Disposition of Aurizon Shares pursuant to the Arrangement is discussed above under "Canadian Federal Income Tax Considerations for Aurizon Shareholders".

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER; (B) THIS DISCUSSION WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS DISCUSSED HEREIN; AND (C) EACH TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following discussion summarizes certain U.S. federal income tax considerations generally applicable to U.S. Holders and non-U.S. Holders (each as defined below and collectively referred to as “Holders”) of Aurizon Shares relating to the Exchange, and of the ownership and disposition of Hecla Shares received in the Arrangement. This summary is based upon the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder (“Treasury Regulations”), judicial authorities, published positions of the IRS, the Canada-United States Income Tax Convention (1980), as amended (the “Convention”) and other applicable authorities, all as in effect on the date hereof and all of which are subject to change, perhaps retroactively, and to differing interpretations, so as to result in U.S. federal income tax considerations different from those summarized below.

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There can be no assurance that the IRS will not challenge one or more of the tax considerations described in this summary, and Aurizon has not obtained, nor does it intend to obtain, a ruling from the IRS or an opinion from legal counsel with respect to the U.S. federal income tax considerations discussed herein. This summary addresses only certain considerations arising under U.S. federal income tax law, and does not address any other federal tax considerations or any tax considerations arising under the laws of any state, locality or non-U.S. taxing jurisdiction.

This summary does not address the U.S. federal income tax consequences of transactions effected prior or subsequent to, or concurrently with the Exchange (whether or not any such transactions are undertaken in connection with the Exchange), including, without limitation, the following:

  • any conversion into Aurizon Shares or Hecla Shares of any notes, debentures or other debt instruments;
  • any vesting, conversion, assumption, disposition, exercise, exchange, or other transaction involving RSUs, DSUs, or any rights to acquire Aurizon Shares or Hecla Shares, including the Aurizon Options; and
  • any transaction, other than the Exchange, in which Aurizon Shares or Hecla Shares are acquired.

This summary is of a general nature only and does not address all of the U.S. federal income tax considerations that may be relevant to a Holder in light of such Holder’s particular situation. In particular, this discussion only deals with Holders that hold Aurizon Shares and Hecla Shares, as applicable, as “capital assets” (generally, property held for investment purposes), and does not address the special tax rules that may apply to special classes of taxpayers, such as:

  • securities broker-dealers;
  • persons that hold Aurizon Shares or Hecla Shares, as applicable, as part of a hedging or integrated financial transaction or a straddle;
  • U.S. Holders whose functional currency is not the U.S. dollar;
  • U.S. expatriates;
  • persons that are owners of an interest in a partnership or other pass-through entity that is a holder of Aurizon Shares or Hecla Shares, as applicable;
  • partnerships or other pass-through entities;
  • regulated investment companies;
  • financial institutions;
  • insurance companies;
  • traders that have elected a mark-to-market method of accounting;
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  • tax-exempt organizations;
  • holders that own or have owned, directly, indirectly or by attribution, 5% or more of Aurizon’s or Hecla’s outstanding voting share capital, as applicable;
  • persons subject to the alternative minimum tax; and
  • persons who hold Aurizon Options or persons who received their Aurizon Shares upon the exercise of employee stock options or otherwise as compensation.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) holds Aurizon Shares or Hecla Shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. This summary does not discuss the tax consequences to such partners or partnerships. A partner of a partnership that owns or may acquire Aurizon Shares or Hecla Shares is urged to consult the partner’s tax advisor regarding the specific tax consequences of the Exchange and the ownership and disposition of Hecla Shares received in the Exchange.

This discussion is for general information only and is not intended to constitute a complete description of all tax consequences for Holders relating to the acquisition, ownership and disposition of the Aurizon Shares and Hecla Shares. Prospective investors are urged to consult their own tax advisors with regard to the application of the tax consequences discussed below to their particular situations as well as the application of any state, local, non-U.S. or other tax laws, including gift and estate tax laws.

U.S. Federal Income Tax Consequences Related to the Exchange

U.S. Holders

For purposes of this summary, a “U.S. Holder” is a beneficial owner of Aurizon Shares participating in the Arrangement (or exercising Dissent Rights pursuant to the Arrangement) that is:

  • an individual who is a citizen or resident alien of the United States as determined for U.S. federal income tax purposes;
  • a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
  • an estate, the income of which is subject to taxation in the United States regardless of its source; or
  • a trust (i) that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons or (ii) that has an election in effect under applicable U.S. Treasury Regulations to be treated as a United States person.

PFIC Status of Aurizon

The tax consequences of the Exchange to a particular U.S. Holder will depend on whether Aurizon was a passive foreign investment company (a “PFIC”) during any year in which a U.S. Holder owned Aurizon Shares. In general, a non-U.S. corporation is a PFIC for any taxable year in which either (i) 75% or more of the non-U.S. corporation’s gross income is passive income, or (ii) 50% or more of the average quarterly value of the non-U.S. corporation’s assets produce or are held for the production of passive income. Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions, but passive income does not include gains from the sale of commodities that arise in the active conduct of a commodities business by a non-U.S. corporation, provided that certain other requirements are satisfied. In determining whether or not it is classified as a PFIC, a non-U.S. corporation must take into account its pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest by value.

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Based on the composition of its income and assets, Aurizon does not believe that it was a PFIC for its taxable year ended December 31, 2012. Because the determination of a non-U.S. corporation’s PFIC status is a factual determination that is made at the close of a taxable year and is subject to change, there can be no assurance at this time that Aurizon was not, or will not be, a PFIC for any taxable year. The remainder of this summary assumes that Aurizon has never been, and will not be, a PFIC. U.S. Holders are urged to consult their own tax advisors about the U.S. federal income tax consequences that would apply to them if Aurizon were a PFIC.

Tax Considerations of the Exchange of Aurizon Shares for Hecla Consideration

As a result of the Exchange, a U.S. Holder will realize gain equal to the difference between (i) the fair market value of Hecla Shares and Canadian dollars received by such U.S. Holder in the Exchange and (ii) the adjusted tax basis of such U.S. Holder in its Aurizon Shares exchanged. However, whether U.S. Holders will recognize the full amount of this gain for U.S. federal income tax purposes depends on whether the Exchange qualifies as a reorganization under Section 368(a)(2)(D) of the Code (a “Forward Triangular Merger”). For the Exchange to qualify as a Forward Triangular Merger, in addition to a number of statutory and common law requirements, the transaction must preserve a substantial part of the value of target shareholders’ proprietary interests in the target (“Continuity of Interest”). Generally, Continuity of Interest is preserved if target shareholders exchange stock of the target for stock of the acquirer, rather than for cash or other property. Applicable Treasury Regulations provide that Continuity of Interest is preserved if 40% by value of the total consideration provided to all target shareholders in a transaction consists of stock consideration. The Regulations do not, however, provide a minimum percentage of stock consideration necessary to preserve Continuity of Interest. The U.S. Supreme Court has found that Continuity of Interest was preserved if approximately 38% of the total consideration consists of stock consideration. Other federal courts have found that Continuity of Interest was preserved at lower levels, although the facts of such cases likely are distinguishable from the Exchange.

The Consideration consists of Cash Consideration, Share Consideration, or a mixture of the two based on the election of Aurizon shareholders. Both forms of Consideration are subject to caps; accordingly, based on the value of Hecla shares on the last business day before the first date that there was a binding contract for the Arrangement, the Consideration will consist by value of approximately 35% Share Consideration and approximately 65% Cash Consideration. Such amount of Share Consideration is not sufficient to determine with certainty whether Continuity of Interest is preserved. Accordingly, there is a significant risk that the Exchange will not qualify as a Forward Triangular Merger, and that Holders that realize gain will recognize such gain in full. It is possible, however, that the Exchange will qualify as a Forward Triangular Merger, and that Holders that realize loss will not be permitted to recognize such loss.

Aurizon understands that Hecla intends to take the position that the Exchange is a taxable transaction for U.S. federal income tax purposes.

If the Exchange does not qualify as a Forward Triangular Merger, it will be a fully taxable transaction to a U.S. Holder. Accordingly,

  • a U.S. Holder of Aurizon Shares will recognize gain or loss equal to the difference between (i) the fair market value of Hecla Shares and Canadian dollars received by such U.S. Holder in the Exchange and (ii) the adjusted tax basis of such U.S. Holder in such Aurizon Shares exchanged for the Hecla Shares and Canadian dollars;
  • the aggregate tax basis of the Hecla Shares received by a U.S. Holder of Aurizon Shares in the Exchange will be equal to the aggregate fair market value of the Hecla Shares at the time of their receipt; and
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  • the holding period of Hecla Shares received by a U.S. Holder in the Exchange will begin on the day after their receipt.

If the Exchange qualifies as a Forward Triangular Merger, a U.S. Holder would not recognize any gain realized upon the Exchange, except with respect to cash that such U.S. Holder receives instead of fractional shares of Hecla Shares, and except to the extent that such U.S. Holder receives Cash Consideration; would not recognize any loss realized upon the Exchange, except where such U.S. Holder receives only Cash Consideration; the aggregate tax basis of the Hecla Shares that a U.S. Holder receives in exchange for its Aurizon Shares, including fractional shares for which cash is ultimately received, would be the same as the aggregate tax basis of its Aurizon Shares exchanged, decreased by the amount of cash received by such U.S. Holder and increased by the amount of gain (if any) recognized by such U.S. Holder in the merger; and the holding period for Hecla Shares that a U.S. Holder receives would include the holding period of the Aurizon Shares exchanged. If a U.S. Holder receives cash instead of a fractional Hecla Share, such U.S. Holder would recognize gain or loss equal to the difference, if any, between its tax basis in the fractional Hecla Share and the amount of cash received. Such gain or loss generally would constitute capital gain or loss.

U.S. Holders Exercising Dissent Rights

A U.S. Holder that exercises Dissent Rights in the Arrangement and is paid cash in exchange for all of its Aurizon Shares generally will recognize gain or loss in an amount equal to the difference, if any, between (a) the amount of cash received by such U.S. Holder in exchange for Aurizon Shares (other than amounts, if any, that are or are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income) and (b) the tax basis of such U.S. Holder in such Aurizon Shares surrendered. Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to complex limitations under the Code.

Non-U.S. Holders

For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of Aurizon Shares that is not a U.S. Holder and that is, for U.S. federal income tax purposes, an individual, corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), estate or trust.

Tax Considerations of the Exchange of Aurizon Shares for Hecla Consideration or Exercise of Dissent Rights

A non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on any gain recognized on the disposition of its Aurizon Shares under the Arrangement (including a disposition by a non-U.S. Holder that exercises Dissent Right) unless:

(a)such Holder is an individual present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case such Holder will be subject to a 30% tax (or a lower applicable treaty rate) with respect to such gain (offset by certain U.S. source capital losses), or
(b)such gain is effectively connected with such Holder’s conduct of a trade or business in the United States, in which case such Holder will be subject to tax as described below under “Effectively Connected Income.”
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Effectively Connected Income

For purposes of this discussion, gain on the sale, exchange or other taxable disposition of Aurizon Shares will be considered to be “U.S. trade or business income” if such income or gain is (a) effectively connected with a non-U.S. Holder’s conduct of a trade or business within the United States and (b) if such non-U.S. Holder is eligible for the benefits of an income tax treaty with the United States, attributable to a permanent establishment (or, if such non-U.S. Holder is an individual, a fixed base) that such U.S. Holder maintains in the United States. Generally, U.S. trade or business income of a non-U.S. Holder is subject to U.S. federal income tax on a net basis at regular U.S. federal income tax rates (in the same manner as a U.S. person) on its U.S. trade or business income. If a non-U.S. Holder is a corporation, any U.S. trade or business income that it receives may also be subject to a “branch profits tax” at a 30% rate, or at a lower rate prescribed by an applicable income tax treaty.

U.S. Federal Income Tax Consequences Related to the Ownership and Disposition of Hecla Shares Received in the Exchange

In the following discussion, the “Company” means Hecla and a “Share” means a Hecla Share, as applicable.

U.S. Holders

Taxation of Distributions

A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a Share will be required to include the amount of such distribution in its gross income as a dividend to the extent of the current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Shares and thereafter as gain from the sale or exchange of such Shares (see below under “Sale or Other Taxable Disposition of Shares”). Dividends received on Shares generally will constitute qualified dividend income eligible for the “dividends received deduction.”

A dividend paid by the Company to a U.S. Holder that is an individual, estate or trust generally will be taxed at the preferential tax rates applicable to long-term capital gains if certain holding period requirements for the Shares are met.

Sale or Other Taxable Disposition of Shares

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Shares in an amount equal to the difference, if any, between (a) the sum of the amount of cash and the fair market value of any property received and (b) such U.S. Holder’s tax basis in such Shares sold or otherwise disposed of. Any such gain or loss will be long-term capital gain or loss if, at the time of the sale or other disposition, such Shares have been held for more than one year.

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

Non-U.S. Holders

Taxation of Distributions

Distributions of cash or property paid in respect of Shares will constitute dividends for U.S. federal income tax purposes to the extent paid from the Company’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Except as described below under “—Non-U.S. Holders—Effectively Connected Income,” non-U.S. Holders generally will be subject to U.S. federal withholding tax at a 30% rate, or at a reduced rate prescribed by an applicable income tax treaty, on any dividends received in respect of Shares. If the amount of the distribution exceeds the Company’s current and accumulated earnings and profits, such excess first will be treated as a return of capital to the extent of a non-U.S. Holder’s tax basis in the Shares, and thereafter will be treated as capital gain.

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However, except to the extent that the Company elects otherwise (or the paying agent or other intermediary through which a non-U.S. Holder holds Shares elects otherwise), the Company (or the intermediary) must generally withhold on the entire distribution, in which case the non-U.S. Holder would be entitled to a refund from the IRS for the withholding tax on the portion of the distribution that exceeded the Company’s current and accumulated earnings and profits. In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, a non-U.S. Holder will be required to provide a properly executed IRS Form W-8BEN (or successor form) certifying its entitlement to benefits under the treaty. If a non-U.S. Holder is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, it may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS. Non-U.S. Holders are urged to consult their own tax advisors regarding their possible entitlement to benefits under an income tax treaty.

Sale or Other Taxable Disposition of Shares

Subject to the discussion below concerning backup withholding, a non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on any gain recognized on the sale, exchange, redemption, retirement or other disposition of a Share unless:

(a)such Holder is an individual present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case such Holder will be subject to a 30% tax (or a lower applicable treaty rate) with respect to such gain (offset by certain U.S. source capital losses),
(b)such gain is effectively connected with such Holder’s conduct of a trade or business in the United States, in which case such Holder will be subject to tax as described below under “Effectively Connected Income,” or
(c)the Company is or has been a “U.S. real property holding corporation” (a “USRPHC”) under section 897 of the Code at any time during the shorter of the five-year period ending on the date of the disposition and such Holder’s holding period for the Shares, in which case, subject to the exception set forth in the second sentence of the next paragraph, such gain would be subject to U.S. federal income tax in the same manner as U.S. trade or business income.

In general, a corporation is a USRPHC if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. In the event that the Company is determined to be a USRPHC, gain will not be subject to tax as U.S. trade or business income if a non-U.S. Holder’s direct and indirect holdings at all times during the applicable period constituted 5% or less of the Shares, provided that the Shares were regularly traded on an established securities market during such period. Based on its public statements, we believe that the Company is not currently a USRPHC, and we do not anticipate the Company becoming a USPRHC in the future. However, no assurance can be given that the Company will not become a USRPHC. Non-U.S. Holders are urged to consult their tax advisors to determine the application of these rules to their dispositions of Shares.

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Effectively Connected Income

For purposes of this discussion, dividend income or gain on the sale, exchange or other taxable disposition of Shares will be considered to be “U.S. trade or business income” if (A) such income or gain is (i) effectively connected with a non-U.S. Holder’s conduct of a trade or business within the United States and (ii) if such non-U.S. Holder is eligible for the benefits of an income tax treaty with the United States, attributable to a permanent establishment (or, if such non-U.S. Holder is an individual, a fixed base) that such U.S. Holder maintains in the United States or (B) the Company is or has been a USRPHC at any time during the shorter of the five-year period ending on the date of the disposition of such non-U.S. Holder’s interest and such non-U.S. Holder’s holding period for the Shares (subject to the exception set forth above in the second paragraph of “—Non-U.S. Holders—Sale, Exchange or Other Taxable Disposition of Shares)”. Generally, U.S. trade or business income is not subject to U.S. federal withholding tax (provided that a non-U.S. Holder complies with applicable certification and disclosure requirements, including providing a properly executed IRS Form W-8ECI (or successor form)); instead, a non-U.S. Holder is subject to U.S. federal income tax on a net basis at regular U.S. federal income tax rates (in the same manner as a U.S. person) on its U.S. trade or business income. If a non-U.S. Holder is a corporation, any U.S. trade or business income that it receives may also be subject to a “branch profits tax” at a 30% rate, or at a lower rate prescribed by an applicable income tax treaty.

Information Reporting and Backup Withholding

Unless certain exceptions apply, the Company must report annually to the IRS and to each non-U.S. Holder any dividends paid to such Holder. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which a non-U.S. Holder resides. Dividends paid to a non-U.S. Holder may also be subject to backup withholding. However, dividends paid to a non-U.S. Holder generally will be exempt from backup withholding, if such Holder provides the Company with a properly competed IRS Form W-8BEN or otherwise establishes an exemption.

Payments of proceeds from the disposition of Shares made to or through a non-U.S. office of a non-U.S. broker generally will not be subject to information reporting and backup withholding. Information reporting may apply, however, if the non-U.S. broker has certain connections to the United States, unless the beneficial owner of the Shares certifies, under penalties of perjury, that it is not a U.S. person, or otherwise establishes an exemption. Payments of proceeds from the disposition of Shares to or through a non-U.S. office of a U.S. broker will not be subject to backup withholding, but will be subject to information reporting unless the beneficial owner of the Shares certifies, under penalties of perjury, that it is not a U.S. person, or otherwise establishes an exemption. Payments of proceeds from the disposition of Shares to or through a U.S. office of any broker (U.S. or non-U.S.) will be subject to information reporting and backup withholding, unless the beneficial owner of the Shares certifies, under penalties of perjury, that it is not a U.S. person, or otherwise establishes an exemption.

Backup withholding is not an additional tax; any amounts withheld from a payment to a non-U.S. Holder under the backup withholding rules will be allowed as a credit against such Holder’s U.S. federal income tax liability and may entitle such Holder to a refund, provided that the required information is timely furnished to the IRS. Non-U.S. Holders are urged to consult their own tax advisors regarding application of withholding and backup withholding in their particular circumstance and the availability of and procedure for obtaining an exemption from withholding and backup withholding under current Treasury Regulations.

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Additional Considerations for U.S. Holders, Applicable to Both the Exchange and the Ownership and Disposition of Hecla Shares

Foreign Tax Credit

A U.S. Holder that pays (whether directly or through withholding) Canadian income tax may elect to deduct or credit such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a tax year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. In addition, this limitation is calculated separately with respect to specific categories of income with the result that credits generated within a specific category of income may only offset income taxes with respect to foreign source income within that same category of income. U.S. Holders are urged to consult their own U.S. tax advisors regarding the foreign tax credit rules.

Receipt of Foreign Currency

The U.S. dollar value of any cash payment in Canadian dollars to a U.S. Holder will be translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the payment, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. A U.S. Holder will generally have a basis in the Canadian dollars equal to its U.S. dollar value on the date of receipt. Any U.S. Holder that receives payment in Canadian dollars and converts or disposes of the Canadian dollars after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. U.S. Holders are urged to consult their own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.

Additional Tax on Unearned Income

A non-corporate U.S. Holder whose income exceeds certain thresholds is subject to a 3.8% tax on the lesser of (A) the U.S. Holder’s “net investment income” for the relevant taxable year, and (B) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold. Net investment income includes, among other things, dividends and net gain from disposition of property (other than property held in a trade or business). Recognized gains from the exchange of Aurizon Shares for the Hecla Consideration (including gains recognized by a U.S. Holder exercising dissent rights under the Arrangement), payments of dividends on the Hecla Shares, and gains from the sale or other taxable disposition of the Hecla Shares are expected to constitute net investment income. U.S. Holders are urged to consult their own tax advisors regarding the Medicare contribution tax.

Information Reporting and Backup Withholding

Payments (a) of distributions on the Hecla Shares, (b) of proceeds arising from the sale or other taxable disposition of Hecla Shares, or (c) made within the U.S., by a U.S. payor, or by a U.S. middleman of any payments received in connection with the Arrangement (including payments to a U.S. Holder exercising dissent rights under the Arrangement) generally may be subject to information reporting and backup withholding if a U.S. Holder (i) fails to furnish its correct U.S. taxpayer identification number (generally on Form W-9), (ii) furnishes an incorrect U.S. taxpayer identification number, (iii) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding, or (iv) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. However, certain exempt persons generally are excluded from these information reporting and backup withholding rules. Any amounts withheld under the U.S. backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. U.S. Holders are urged to consult their own tax advisors regarding the information reporting and backup withholding rules.

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THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO HOLDERS OF AURIZON SHARES WITH RESPECT TO THE DISPOSITION OF THOSE SHARES PURSUANT TO THE ARRANGEMENT OR THE OWNERSHIP AND DISPOSITION OF HECLA SHARES RECEIVED PURSUANT TO THE ARRANGEMENT. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.

NOTICE TO NON-CANADIAN AURIZON SHAREHOLDERS

It is strongly recommended that all Non-Resident Shareholders consult their own legal and tax advisors with respect to the income tax consequences applicable in their place of residency of the disposition of their Aurizon Shares.

Securities Law Matters

The following is a brief summary of the securities law considerations applicable to the Arrangement and transactions contemplated thereby. This summary is of a general nature only and is not intended to be, and should not be construed to be, legal or business advice to any particular Aurizon Shareholder. This summary does not include any information regarding securities law considerations for jurisdictions other than Canada and the United States. Aurizon Shareholders are urged to obtain independent advice in respect of the consequences to them of the Arrangement having regard to their particular circumstances.

Canadian Securities Laws

Qualification and Resale of Hecla Shares

The Hecla Shares to be issued in exchange for Aurizon Shares pursuant to the Arrangement will be issued in reliance upon exemptions from the prospectus and registration requirements of securities legislation in each province and territory of Canada. Subject to certain disclosure and regulatory requirements and to customary restrictions applicable to distributions of shares that constitute "control distributions", Hecla Shares issued pursuant to the Arrangement may be resold in each province and territory in Canada, subject in certain circumstances to the usual conditions that no unusual effort, or no effort, has been made to prepare the market or create demand.

Ongoing Canadian Reporting Obligations

Aurizon is a reporting issuer (or the equivalent) in all of the provinces and territories of Canada. Aurizon Shares currently trade on the TSX. After the Arrangement, Hecla intends to delist the Aurizon Shares from the TSX, and Hecla will apply to the applicable Canadian securities regulators to have Aurizon cease to be a reporting issuer.

Hecla is not currently a reporting issuer in any jurisdiction in Canada. Upon completion of the Arrangement, Hecla will become a reporting issuer in certain of the provinces and territories of Canada by virtue of the completion of the Arrangement with Aurizon. Pursuant to National Instrument 71-102 - Continuous Disclosure and Other Exemptions Relating to Foreign Issuers, Hecla will be generally exempt from Canadian statutory financial and other continuous and timely reporting requirements, including the requirement for insiders of Hecla to file reports with respect to trades of Hecla securities, provided Hecla complies with the requirements of U.S. securities Laws and U.S. market requirements in respect of all financial and other continuous and timely reporting matters and Hecla files with the relevant provincial securities regulatory authorities copies of its documents filed with the SEC under the U.S. Exchange Act.

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U.S. Securities Laws

The following discussion is only a general overview of certain requirements of U.S. federal securities laws that may be applicable to the holders of Hecla Shares issuable in connection with the Arrangement. All holders of such securities are urged to obtain legal advice to ensure that their resale of such securities complies with applicable U.S. securities laws. Further information applicable to U.S. Securityholders is disclosed under "Notice to United States Shareholders".

Aurizon Securityholders who resell Hecla Shares must also comply with Canadian Securities Laws, as outlined above.

Issuance and Resale of Hecla Shares

The securities to be issued in connection with the Arrangement to Aurizon Securityholders are not required to be, and will not be, registered under the U.S. Securities Act. Such securities will be issued in reliance upon the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) Exemption. Section 3(a)(l0) of the U.S. Securities Act provides an exemption from registration for offers and sales of securities issued in exchange for one or more outstanding securities, or partly for such securities and partly for cash, where the terms and conditions of the issuance and exchange of such securities have been approved by a court authorized to grant such approval, after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all Persons to whom the securities will be issued have the right to appear (having received timely notice thereof). The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered.

The ability of an Aurizon Securityholder to resell the Hecla Shares issued to it on the Effective Date of the Arrangement will depend on whether it is an affiliate of Hecla after the Effective Date of the Arrangement or was an affiliate of Hecla within 90 days prior to the Effective Date of the Arrangement. As defined in Rule 144 under the U.S. Securities Act, an affiliate of an issuer is a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer. Typically, Persons who are executive officers, directors or major shareholders of an issuer are considered to be its affiliates. Persons that are not affiliates of Hecla after the Effective Date of the Arrangement and were not affiliates of Hecla within 90 days prior to the Effective Date of the Arrangement, may freely resell the Hecla Shares issued to them on the Effective Date of the Arrangement under the U.S. Securities Act. Persons that are affiliates of Hecla after the Effective Date of the Arrangement or were affiliates of Hecla within 90 days prior to the Effective Date of the Arrangement may resell such Hecla Shares only pursuant to registration or an exemption from registration under the U.S. Securities Act. Such Persons are urged to consult with their own legal counsel to determine the circumstances in which the resale of Hecla Shares issued to them pursuant to the Arrangement will comply with an exemption from such registration requirements.

The securities issuable in connection with the Arrangement have not been approved or disapproved by the SEC or the securities regulatory authorities in any state, nor has the SEC or the securities regulatory authorities in any state passed on the fairness or merits of the Arrangement or the adequacy or accuracy of this Circular. Any representation to the contrary is a criminal offence.

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Aurizon Securityholders are urged to consult with their own legal counsel to ensure that the resale of Hecla Shares issued to them pursuant to the Arrangement complies with applicable securities legislation.

Ongoing United States Reporting Obligations

Aurizon is subject to the periodic reporting requirements of the U.S. Exchange Act, and Aurizon Shares currently trade on the NYSE MKT. After the Arrangement, Hecla intends to delist the Aurizon Shares from the NYSE MKT, and Aurizon will cease to be subject to the reporting requirements of the U.S. Exchange Act.

New York Stock Exchange Approval

Hecla Shares currently trade on the NYSE. Hecla will apply to list the Hecla Shares issuable by Hecla under the Arrangement on the NYSE.

Regulatory Matters

Investment Canada Act

Subject to certain limited exceptions, the direct acquisition of control of a Canadian business by a non-Canadian that exceeds a financial threshold prescribed under Part IV of the Investment Canada Act (a "Reviewable Transaction") is subject to review and cannot be implemented until the non-Canadian has submitted an application (an "Application for Review") to the Minister responsible for the Investment Canada Act (the "Minister") and the Minister is satisfied, or is deemed under the Investment Canada Act to be satisfied, that the transaction is likely to be of net benefit to Canada (a "net benefit ruling"). In making his net benefit ruling, the Minister may take into account, among other things, the Application for Review and any undertakings provided to the Minister by the non-Canadian. The submission of the Application for Review triggers an initial review period of up to 45 days. If the Minister has not completed the review by that date, the Minister may unilaterally extend the review period for up to a further 30 days. The review may be extended for an additional period beyond 75 days, where agreed to by the Minister and the non-Canadian.

If, following his review, the Minister issues a positive net benefit ruling, the non-Canadian may proceed with the transaction. However, if the Minister is not satisfied (or is not deemed under the Investment Canada Act to be satisfied) that the Reviewable Transaction is likely to be of net benefit to Canada, the Minister is required to send a notice to that effect to the non-Canadian, advising the non-Canadian of its right to make further representations and submit (additional) undertakings within 30 days from the date of such notice or any further period that may be agreed to by the non-Canadian and the Minister. At any time, and in any event within a reasonable time after the expiry of the period for making representations and submitting undertakings described above, the Minister must send a notice to the non-Canadian that either the Minister is satisfied that the investment is likely to be of net benefit to Canada (i.e., a net benefit ruling), in which case the transaction may proceed, or confirmation that the Minister is not satisfied that the investment is likely to be of net benefit to Canada. In the latter case, the Reviewable Transaction may not be implemented.

In addition, under Part IV.I of the Investment Canada Act, investments by non-Canadians to establish a new Canadian business, acquire control of a Canadian business, or acquire, in whole or in part, or to establish an entity carrying on all or any part of its operations in Canada, whether or not the transaction is a Reviewable Transaction, can be made subject to review and approval on grounds that the investment could be injurious to national security. If the transaction is reviewed under Part IV.I of the Investment Canada Act, the Governor in Council (i.e., the Federal Cabinet) may, by order, take any measure in respect of the investment that the Governor in Council considers advisable to protect national security, including (a) directing the non-Canadian not to implement the investment; (b) authorizing the investment on condition that the non-Canadian (i) give any written undertakings to Her Majesty in right of Canada relating to the investment that the Governor in Council considers necessary in the circumstances, or (ii) implement the investment on the terms and conditions contained in the order, in which case the Minister will continue its review of the purchaser’s Application for Review and any proposed undertakings; or (c) requiring the non-Canadian to divest itself of control of the Canadian business or of its investment in the entity.

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The transactions contemplated by the Arrangement Agreement constitute a Reviewable Transaction. On March 22, 2013, Acquireco filed its Application for Review under the Investment Canada Act setting out the grounds upon which Acquireco (and its wholly-owning parent, Hecla) believes that the transactions contemplated by the Arrangement Agreement are likely to be of net benefit to Canada.

Competition Act (Canada)

Part IX of the Competition Act requires that parties to certain classes of transactions provide prescribed information to the Commissioner where the applicable thresholds set out in Sections 109 and 110 of the Competition Act are exceeded and no exemption applies ("Notifiable Transactions"). Subject to certain limited exceptions, a Notifiable Transaction cannot be completed until the parties to the transaction have each submitted the information prescribed pursuant to subsection 114(1) of the Competition Act (a "Notification") to the Commissioner and the applicable waiting period has expired or has been terminated early by the Commissioner. The Act prescribes an initial waiting period of 30 days from when the parties have both filed their respective Notification. At the end of that period, the parties are permitted to complete their Notifiable Transaction unless, prior to the expiration of the waiting period, the Commissioner issues a supplementary information request (a "SIR") to the parties, in which case the parties cannot complete their transaction until 30 days after the day in which the parties comply with the SIR, unless, before closing, the Competition Tribunal, upon the application of the Commissioner, issues a temporary order prohibiting closing in order to facilitate the Commissioner’s continued review of the transaction or litigation before the Competition Tribunal.

Alternatively to, or in addition to, filing a Notification, a party to a Notifiable Transaction may apply to the Commissioner for an advance ruling certificate (an "ARC") or, in the event that the Commissioner is not prepared to issue an ARC, a No-Action Letter. If the Commissioner issues an ARC, the parties are exempt from having to file a notification; if the Commissioner issues a No-Action Letter, upon the request of the parties, the Commissioner can waive the parties’ requirement to submit a notification where the parties have supplied substantially similar information as would have been supplied with their Notification (a "Waiver"). The filing of a request for an ARC or, in the alternative, a No-Action Letter and Waiver does not start a statutory waiting period and, unless the parties have also filed a Notification, the parties cannot complete their transaction until the Commissioner has completed his review and issued the requested clearance.

The Commissioner may challenge a merger before the Competition Tribunal at any time before, or within one year following, its completion where the merger prevents or lessens, or is likely to prevent or lessen, competition substantially (a "Competition Challenge"). If the Competition Tribunal agrees with the Commissioner, the Tribunal can issue an order prohibiting the transaction, provided that the transaction has not been completed by such time, or it can order the divestiture of shares or assets where the transaction already has been completed; the Competition Tribunal cannot issue an order, however, where the parties have been able to establish the elements of the statutory efficiencies defence. The Commissioner is precluded from bringing a Competition Challenge on substantially the same information that an ARC was issued, provided that the Notifiable Transaction was completed within one year after the ARC was issued. No such prohibition on bringing a Competition Challenge applies to the issuance of a No-Action Letter.

The transactions contemplated by the Arrangement Agreement constitute a Notifiable Transaction. On March 20, 2013, Acquireco filed with the Commissioner a submission in support of a request for an ARC. The ARC was issued on April 2, 2013.

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HartScottRodino Antitrust Improvements Act

Under the HSR Act, certain transactions may not be completed until each party has filed a Notification and Report Form with the Antitrust Division of the U.S. Department of Justice (the "DOJ") and with the U.S. Federal Trade Commission (the "FTC") and the HSR Act's 30 calendar-day waiting period has expired or been earlier terminated.

The transactions contemplated by the Arrangement are subject to the HSR Act. Accordingly, Aurizon and Hecla filed the requisite Notification and Report Forms on March 20, 2013, and the FTC granted early termination of the waiting period effective March 29, 2013. The termination of the waiting period does not bar the FTC or the DOJ from subsequently challenging the Arrangement.

In addition, prior to acquiring their Hecla Shares, Aurizon Securityholders who as a result of the Arrangement will hold Hecla Shares with a value in excess of US$70.9 million may, unless exempt, be subject to the filing and waiting period requirements of the HSR Act. This would require each such Aurizon Securityholder, as well as Hecla, to file a Notification and Report Form with the FTC and the DOJ and to observe an initial 30 calendar-day waiting period. The initial waiting period may be terminated before its expiration or extended by a request for additional information. Issuance of such a request requires the observation of an additional 30 calendar-day waiting period after the request is complied with (unless extended by court order for failing to provide an adequate response). Therefore, compliance with the HSR procedures could delay the acquisition of Hecla Shares by affected Aurizon Securityholders and/or the effective date of the Arrangement. These requirements will not apply to a particular Aurizon Secutiyholder if such shareholder will hold 10% or less of the voting securities of Hecla and is acquiring such voting securities solely for the purpose of investment within the meaning of the HSR Act. Any Aurizon Securityholder that believes that it may have a filing and waiting obligation under the HSR Act in connection with this transaction should contact Hecla at its head office at 6500 North Mineral Drive, Suite 200 Coeur d'Alene, Idaho 83815-9408 and consult its own legal counsel.

INFORMATION Concerning AURIZON

The following information reflects certain selected information of Aurizon. See "Information Concerning Hecla" and "Information Concerning the Combined Company" for business, financial and share capital information relating to Hecla and the Combined Company, respectively.

Summary

Aurizon was incorporated on April 8, 1988 under the former Company Act (British Columbia). The head office and registered and records office address of Aurizon is located at Suite 1120, Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada.

The transfer agent and registrar for the Aurizon Shares is Computershare Investor Services Inc., which is located at 100 University Avenue, 9th Floor, Toronto, Canada. PricewaterhouseCoopers LLP are the auditors of Aurizon. Aurizon is a reporting issuer or the equivalent in each of the provinces and territories of Canada.

Aurizon is a Canadian-based gold producer with operations and development activities in the Abitibi region of north-western Quebec. Since 1988 Aurizon has been involved in the acquisition, exploration, development and operation of a number of gold properties in North America.

Aurizon owns 100% of the producing Casa Berardi Gold Mine and also owns a 100% interest in the Heva-Hosco (Joanna) Properties, a development-stage gold property. In addition, the Company has staked mineral claims, and/or entered into agreements with junior exploration companies to acquire interests in several early stage exploration projects.

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Further information regarding the business of Aurizon, its corporate structure, operations and its mineral properties can be found in the Aurizon AIF.

Prior Sales

The following table summarizes the issuances of Aurizon Shares and Aurizon Options granted by Aurizon within the 12 months prior to the date of this Circular.

 

Date of Sale

Price per Aurizon Share or Exercise Price per Aurizon Option

 

Number of Securities

 

Reasons for issuance

August 13, 2012 $4.22 30,000 Grant of Options
December 18, 2012 $3.61 1,992,000 Grant of Options

Price Range and Trading Volumes of the Aurizon Shares

Aurizon Shares are listed on the TSX under the symbol "ARZ", and on the NYSE MKT under the symbol "AZK".

The following table sets forth the price range and trading volume for the Aurizon Shares on the TSX for the periods listed below:


Month

 

Volume

High
($)
Low
($)
       
April 1 – April 9, 2013 5,136,173 $4.48 $4.27
March 2013 72,797,772 $4.60 $4.26
February 2013 21,050,393 $4.69 $4.18
January 2013 36,674,040 $4.79 $3.24
December 2012 7,995,345 $3.81 $3.15
November 2012 11,088,286 $4.78 $3.60
October 2012 6,242,032 $5.18 $4.47
September 2012 8,722,876 $5.23 $4.03
August 2012 6,762,476 $4.54 $3.80
July 2012 4,008,380 $4.84 $4.25
June 2012 6,499,992 $5.51 $4.40
May 2012 8,073,148 $5.55 $3.88

The closing price of the Aurizon Shares on the TSX on April 9, 2013 was Cdn$4.47. The closing price of the Aurizon Shares on the TSX on March 1, 2013, the last trading day prior to the announcement of the Arrangement, was Cdn$4.35.

The following table sets forth the price range and trading volume for the Aurizon Shares on the NYSE MKT for the periods listed below:


Month

Volume
High
(US$)
Low
(US$)
       
April 1 – April 9, 2013 3,880,644 $4.42 $4.19
March 2013 19,435,557 $4.48 $4.14
February 2013 16,315,764 $4.70 $4.07
January 2013 23,449,374 $4.79 $3.28
December 2012 16,442,374 $3.87 $3.19
November 2012 8,769,783 $4.81 $3.61
October 2012 9,133,496 $5.30 $4.49
September 2012 15,703,833 $5.37 $4.28
August 2012 9,374,521 $4.59 $3.83
July 2012 7,614,924 $4.78 $4.13
June 2012 16,888,465 $5.31 $4.25
May 2012 14,487,280 $5.57 $3.82

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The closing price of the Aurizon Shares on the NYSE MKT on April 9, 2013 was US$4.35. The closing price of the Aurizon Shares on the NYSE MKT on March 1, 2013, the last trading day prior to the announcement of the Arrangement, was US$4.27.

Available Information

Aurizon files reports and other information with Canadian Securities Authorities and with the SEC. These reports and information are available to the public free of charge on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Risk Factors

The business and operations of Aurizon are subject to risks. In addition to considering the other information in this Circular, Aurizon Shareholders should consider carefully the factors set forth in the Aurizon AIF.

INFORMATION Concerning HECLA

Information concerning Hecla is set out in Appendix H – Information Concerning Hecla.

INFORMATION CONCERNING THE COMBINED COMPANY

General

On completion of the Arrangement, Hecla will directly or indirectly own all of the outstanding Aurizon Shares.

After completion of the Arrangement, the business and operations of Aurizon will be managed and operated as a subsidiary of Hecla. Hecla expects that the business and operations of Hecla and Aurizon will be consolidated and the principal executive office of the Combined Company will be located at Hecla’s current head office, being 6500 N Mineral Dr., Suite 200, Coeur d'Alene, Idaho 83815-9408.

The organizational chart of the Combined Company following the completion of the Arrangement is included in Appendix H – Information Concerning Hecla under the heading "Corporation Structure – Intercorporate Relationships".

Description of Mineral Properties

On completion of the Arrangement, the Combined Company will hold the following material properties currently owned by Aurizon and Hecla:

·Lucky Friday Mine, Shoshone County, Idaho, U.S.A.
·Greens Creek Mine, Juneau, Alaska, U.S.A.
·Casa Berardi Gold Mine, Quebec, Canada.

Further information regarding the Lucky Friday Mine and the Greens Creek Mine can be found in Schedules A and B to Appendix H hereto. Further information regarding the Casa Berardi Gold Mine can be found in the section of the Aurizon AIF entitled "Casa Berardi Gold Mine", which is incorporated by reference herein.

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Directors and Executive Officers of the Combined Company

See Appendix H – Information Concerning Hecla under the heading "Directors and Executive Officers" for information about the individuals who are the directors and executive officers of Hecla and will be the directors and executive officers of the Combined Company.

Capital Structure

The authorized capital of Hecla following the Arrangement will continue to be as described in Appendix H and the rights and restrictions of the Hecla Shares (as described in Appendix H) will remain unchanged. The issued share capital of Hecla will change as a result of the consummation of the Arrangement, to reflect the issuance of the Hecla Shares contemplated in the Arrangement. See Appendix J for a comparison of the rights of a Hecla Shareholder compared to the rights of an Aurizon Shareholder.

See Appendix H – Information Concerning Hecla under the heading "Consolidated Capitalization" for a table that sets forth the consolidated capitalization of Hecla as at December 31, 2012, both before and after giving effect to the Arrangement.

Unaudited Pro forma Condensed Combined Financial Information

Please see Appendix I for a copy of the unaudited pro forma combined financial statements for the Combined Company.

Auditors, Transfer Agent and Registrar

The auditors of Hecla following the Arrangement will continue to be BDO USA, LLP at its office at 601 W. Riverside Ave., Suite 900, Spokane, Washington, 99201.

The transfer agent and registrar for Hecla following the Arrangement will continue to be American Stock Transfer & Trust Company at its office at 59 Maiden Lane, New York, New York, 10038.

Any statement contained in this Circular or in any other document incorporated by reference in this Circular shall be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document which also is deemed to be incorporated by reference in this Circular modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this Circular except as so modified or superseded.

INDEBTEDNESS OF OFFICERS AND DIRECTORS OF AURIZON

No director, executive officer, or employee of Aurizon or any of its subsidiaries, former director, executive officer, or employee of Aurizon or any of its subsidiaries, proposed nominee for election as director of Aurizon, or any associate of any of the foregoing, (i) has been or is indebted to Aurizon or any of its subsidiaries, at any time during its last completed fiscal year, or (ii) has had any indebtedness to another entity at any time during its last completed fiscal year which has been the subject of a guarantee, support agreement, letter of credit, or other similar arrangement provided by Aurizon or any of its subsidiaries.

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INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of Aurizon, after reasonable enquiry, no informed person of Aurizon, or any associate or affiliate of any informed person, has or had any material interest, direct or indirect, in any transaction or any proposed transaction which has materially affected or would materially affect Aurizon since the commencement of Aurizon’s most recently completed fiscal year.

MANAGEMENT CONTRACTS

No management functions of the Company or any subsidiaries are performed to any substantial degree by a person other than the directors or executive officers of the Company.

INTERESTS OF EXPERTS

Names of Experts

The following persons have prepared or certified a report, statement or opinion that is either included in, referred to in or incorporated by reference in this Circular the information contained in the section of the Aurizon AIF entitled "Casa Berardi Gold Mine", which is incorporated by reference herein, is derived from a technical report dated March 28, 2013, prepared for Aurizon in accordance with NI 43-101 by Bernard Salmon, Eng., Dennis Bergen, P. Eng., Patrice Live, Eng., and Carl Pelletier, B.Sc., Geo.

The names of Hecla's experts are set out in Appendix H – Information Concerning Hecla under the heading "Experts".

Interests of Experts

To the knowledge of Aurizon, none of Bernard Salmon, Dennis Bergen, Patrice Live, or Carl Pelletier, at the time of preparing the applicable report, statement or opinion, held or has received or will receive any registered or beneficial interests, direct or indirect, in any securities or other property of Aurizon or Hecla or of one of Aurizon's or Hecla's associates or affiliates (other than through the ownership of less than 1% of the issued and outstanding Aurizon Shares or Hecla Shares).

ADDITIONAL INFORMATION

Additional information relating to Aurizon is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Aurizon Shareholders may contact Aurizon at Suite 1120, Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada to request copies of Aurizon’s financial statements and management’s discussion and analysis.

Financial information is provided in Aurizon’s financial statements and management’s discussion and analysis for its most recently completed financial year which are filed on SEDAR.

OTHER MATTERS

Management of Aurizon is not aware of any other matter to come before the Meeting other than as set forth in the notice of Meeting. If any other matter properly comes before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares represented thereby in accordance with their best judgment on such matter.

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DIRECTORS’ APPROVAL

The contents and the sending of the Notice of Meeting and this Circular have been approved by the Aurizon Board.

DATED: April 10, 2013

ON BEHALF OF THE BOARD OF DIRECTORS OF AURIZON MINES LTD.

"David P. Hall"

DAVID P. HALL
Chairman

 

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CONSENT OF SCOTIA CAPITAL inc.

DATED: April 10, 2013.

To the Board of Directors of Aurizon Mines Ltd.

We hereby consent to the references to our firm name and to the reference to our fairness opinion dated March 3, 2013 contained under the headings "Questions and Answers about the Meeting and the Arrangement", "Summary of Circular – The Arrangement – Recommendation of the Aurizon Board", "Summary of Circular – The Arrangement – Reasons for the Recommendation", "Summary of Circular – Opinions of Financial Advisors", "The Arrangement – Background to the Arrangement", "The Arrangement – Recommendation of the Aurizon Board", "The Arrangement – Reasons for the Recommendation" and "The Arrangement – Opinions of Financial Advisors" and the inclusion of the text of our opinion dated March 3, 2013 as Appendix C to this Circular dated April 10, 2013. Our fairness opinion was given as at March 3, 2013 and remains subject to the assumptions qualifications and limitations contained therein. In providing our consent, we do not intend that any person other than the Board of Directors of Aurizon Mines Ltd. shall be entitled to rely upon our opinion.

(Signed) Scotia Capital Inc.

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CONSENT OF CIBC WORLD MARKETS inc.

DATED: April 10, 2013.

To the Special Committee of the Board of Directors of Aurizon Mines Ltd.

We hereby consent to the references to our firm name and to the reference to our opinion dated March 3, 2013 contained under the headings "Questions and Answers about the Meeting and the Arrangement", "Summary of Circular – The Arrangement – Special Committee", "Summary of Circular – The Arrangement – Reasons for the Recommendation", "Summary of Circular – Opinions of Financial Advisors", "The Arrangement – Background to the Arrangement", "The Arrangement – Special Committee", "The Arrangement – Reasons for the Recommendation" and "The Arrangement – Opinions of Financial Advisors" and the inclusion of the text of our fairness opinion dated March 3, 2013 as Appendix D to this Circular dated April 10, 2013. Our opinion was given as at March 3, 2013 and remains subject to the assumptions qualifications and limitations contained therein. In providing our consent, we do not intend that any person other than the Board of Directors of Aurizon Mines Ltd. shall be entitled to rely upon our opinion.

(Signed) CIBC World Markets Inc.

 

 

 

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APPENDIX A
ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1.                   The arrangement (the "Arrangement") under Division 5 of Part 9 of the Business Corporations Act (British Columbia) (the "BCBCA") involving Aurizon Mines Ltd. ("Aurizon"), all as more particularly described and set forth in the Management Proxy Circular (the "Circular") of Aurizon dated April 10, 2013 accompanying the notice of this meeting (as the Arrangement may be modified or amended), is hereby authorized, approved and adopted;

2.                   The plan of arrangement, as it may be or has been amended (the "Plan of Arrangement"), involving Aurizon and implementing the Arrangement, the full text of which is set out in Appendix B to this Circular (as the Plan of Arrangement may be, or may have been, modified or amended), is hereby approved and adopted;

3.                   The arrangement agreement (the "Arrangement Agreement") between Aurizon, 0963708 B.C. Ltd. and Hecla Mining Company, dated as of March 3, 2013, as amended pursuant to an amendment to arrangement agreement among Hecla, Acquireco and Aurizon dated April 9, 2013, and all the transactions contemplated therein the actions of the directors of Aurizon in approving the Arrangement and the actions of the officers of Aurizon in executing and delivering the Arrangement Agreement and any amendments thereto are hereby ratified and approved;

4.                   Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the securityholders of Aurizon or that the Arrangement has been approved by the Supreme Court of British Columbia, the directors of Aurizon are hereby authorized and empowered, without further notice to, or approval of, the securityholders of Aurizon:

(a)to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement; or
(b)subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement;

5.                   Any one or more directors or officers of Aurizon is hereby authorized, for and on behalf and in the name of Aurizon, to execute and deliver, whether under corporate seal of Aurizon or not, all such agreements, forms waivers, notices, certificate, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Arrangement Agreement and the completion of the Plan of Arrangement in accordance with the terms of the Arrangement Agreement, including:

(a)all actions required to be taken by or on behalf of Aurizon, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and
(b)the signing of the certificates, consents and other documents or declarations required under the Arrangement Agreement or otherwise to be entered into by Aurizon;

such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

   
   

 

APPENDIX B

Plan of Arrangement

Under Section 288 of the
Business Corporations Act (British Columbia)

ARTICLE One
DEFINITIONS AND INTERPRETATION

Section1.01         Definitions

In this Plan of Arrangement, unless the context otherwise requires, the following words and terms with the initial letter or letters thereof capitalized shall have the meanings ascribed to them below:

(a)Acquireco” means 0963708 B.C. Ltd., a wholly-owned subsidiary of Hecla;
(b)“Amalco” shall have the meaning ascribed to such term in Section 3.01(m) hereof ;

 

(c)Arrangement” means the arrangement under section 288 of the BCBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.3 of the Arrangement Agreement, this Plan of Arrangement or at the direction of the Court;

 

(d)Arrangement Agreement” means the arrangement agreement dated as of March 3, 2013 among Hecla, Acquireco and Aurizon, together with the disclosure letter delivered by Aurizon in connection with the Arrangement Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof;

 

(e)“Arrangement Resolution” means the special resolution of the Aurizon Shareholders and the Aurizon Optionholders approving the Arrangement to be considered at the Aurizon Meeting;

 

(f)Aurizon” means Aurizon Mines Ltd., a company existing under the BCBCA;

 

(g)Aurizon Common Shares” means the issued and outstanding common shares of Aurizon;

 

(h)Aurizon Meeting” means the special meeting of the Aurizon Securityholders, including any adjournment or postponement thereof, to be held in accordance with the Interim Order to consider the Arrangement Resolution;

 

(i)Aurizon DSU Holder” means holders of DSUs;

 

(j)“Aurizon Optionholders” means holders of Aurizon Options;

 

(k)Aurizon Options” means options to purchase Aurizon Common Shares issued pursuant to the Aurizon Option Plans;

 

(l)“Aurizon Option Plans” means the stock option plans of Aurizon, as amended;

 

(m)Aurizon RSU Holder” means holders of RSUs;

 

(n)“Aurizon Securityholders” means, collectively, the Aurizon Shareholders and the Aurizon Optionholders;

 

(o)“Aurizon Shareholders” means the holders of Aurizon Common Shares;
   
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(p)BCBCA” means the Business Corporations Act (British Columbia) and the regulations made thereunder, as promulgated or amended from time to time;
(q)Business Day” means any day other than a Saturday, a Sunday or a statutory or civic holiday in Vancouver, British Columbia or New York, New York;
(r)Cash Consideration” means $4.75 per Aurizon Share, DSU or RSU, as applicable, provided that the aggregate maximum amount payable to the Aurizon Shareholders shall be $513,631,193;
(s)Court” means the Supreme Court of British Columbia;
(t)CRA” means the Canada Revenue Agency;
(u)Depositary” means any trust company, bank or financial institution agreed to in writing between Hecla and Aurizon for the purpose of, among other things, exchanging certificates representing Aurizon Common Shares for certificates representing the Share Consideration in connection with the Arrangement and paying the Cash Consideration to Aurizon Securityholders, Aurizon DSU Holders and Aurizon RSU Holders;
(v)Dissent Rights” shall have the meaning ascribed to such term in Section 4.01 hereof;

 

(w)Dissenting Shareholder” means a registered Aurizon Shareholder who dissents in respect of the Arrangement in strict compliance with the Dissent Rights and who is ultimately entitled to be paid fair value for their Aurizon Common Shares;

 

(x)DSU Plan” means the Aurizon’s deferred share unit plan effective as of March 14, 2012;

 

(y)DSUs” means the deferred share units granted under the DSU Plan;

 

(z)Effective Date” means the date upon which all of the conditions to completion of the Arrangement as set forth in the Arrangement Agreement have been satisfied or waived and all documents agreed to be delivered hereunder have been delivered to the satisfaction of the parties thereto, acting reasonably;

 

(aa)Effective Time” means 12:01 a.m. (Vancouver time) on the Effective Date;

 

(bb)“Election Deadline” means 4:30 pm (local time) at the place of deposit with the Depositary provided in the Letter of Transmittal on the Initial Election Date or the New Election Date, as applicable;

 

(cc)Final Order” means the final order of the Court in form acceptable to Aurizon, Hecla and Acquireco, each acting reasonably, approving the Arrangement as such order may be amended by the Court with the consent of the parties at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

 

(dd)Former Aurizon Securityholders” means the Aurizon Securityholders immediately prior to the Effective Time;

 

(ee)Hecla” means Hecla Mining Company, a corporation incorporated under the laws of Delaware;
   
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(ff)Hecla Shares” means the common stock in the authorized share capital of Hecla, U.S.$0.25 par value per share;
(gg)“Initial Election Date” shall have the meaning ascribed to such term in Section 3.02(a)

;

(hh)Interim Order” means the interim order of the Court, providing for, among other things, the calling and holding of the Aurizon Meeting, as the same may be amended by the Court;
(ii)“Letter of Transmittal” means the letter of transmittal and election form to be delivered by Aurizon to the Aurizon Securityholders, together with notice of the Election Deadline for purposes of making the election described in Section 3.01 hereof and providing for the delivery of Aurizon Common Shares to the Depositary;

 

(jj)“Maximum Cash” shall have the meaning ascribed to such term in subsection Section 3.01(h) hereof;

 

(kk)“Maximum Shares” shall have the meaning ascribed to such term in subsection Section 3.01(h) hereof;

 

(ll)New Election Date” shall have the meaning ascribed to such term in Section 3.02(a) hereof;

 

(mm)“Option Consideration” means, in respect of a Aurizon Option, the number of Aurizon Common Shares obtained by dividing: (i) the amount, if any, by which: (A) the product obtained by multiplying the number of Aurizon Common Shares underlying such Aurizon Option by the Cash Consideration; exceeds: (B) the exercise price payable under such Aurizon Option to acquire Aurizon Common Shares; by (ii) the Cash Consideration;

 

(nn)Plan of Arrangement” means this plan of arrangement and any amendments or variations hereto made in accordance with Section 8.3 of the Arrangement Agreement or this plan of arrangement or made at the direction of the Court;

 

(oo)RSU Plan” means Aurizon’s restricted share unit plan effective as of August 8, 2012, as amended;

 

(pp)RSUs” means the restricted share units granted under the RSU Plan;

 

(qq)“Share Consideration” means 0.9953 of a Hecla Share for each Aurizon Common Share to an aggregate maximum of 57,000,000 Hecla Shares;

 

(rr)Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as amended from time to time; and

 

(ss)U.S. Tax Code” means the United States Internal Revenue Code of 1986, as amended.

 

In addition, words and phrases used herein and defined in the BCBCA and not otherwise defined herein shall have the same meaning herein as in the BCBCA unless the context otherwise requires.

Section1.02         Interpretation Not Affected by Headings

The division of this Plan of Arrangement into articles, sections, paragraphs and subparagraphs and the insertion of headings herein are for convenience of reference only and shall not affect the construction or interpretation of this Plan of Arrangement. The terms “this Plan of Arrangement”, “hereof”, “herein”, “hereto”, “hereunder” and similar expressions refer to this Plan of

   
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Arrangement and not to any particular article, section or other portion hereof and include any instrument supplementary or ancillary hereto.

Section1.03         Number, Gender and Persons

In this Plan of Arrangement, unless the context otherwise requires, words importing the singular shall include the plural and vice versa, words importing the use of either gender shall include both genders and neuter and the word person and words importing persons shall include a natural person, firm, trust, partnership, association, corporation, joint venture or government (including any governmental agency, political subdivision or instrumentality thereof) and any other entity or group of persons of any kind or nature whatsoever.

Section1.04         Date for any Action

If the date on which any action is required to be taken hereunder is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day.

Section1.05         Statutory References

Any reference in this Plan of Arrangement to a statute includes all regulations made thereunder, all amendments to such statute or regulation in force from time to time and any statute or regulation that supplements or supersedes such statute or regulation.

Section1.06         Currency

Unless otherwise stated, all references herein to amounts of money are expressed in lawful money of Canada.

Section1.07         Governing Law

This Plan of Arrangement shall be governed, including as to validity, interpretation and effect, by the laws of the Province of British Columbia and the laws of Canada applicable therein.

ARTICLE Two
ARRANGEMENT AGREEMENT AND BINDING EFFECT

Section2.01         Arrangement Agreement

This Plan of Arrangement is made pursuant to, and subject to the provisions of, the Arrangement Agreement.

Section2.02         Binding Effect

As of and from the Effective Time, this Plan of Arrangement shall be binding upon:

(a)Hecla;
(b)Aurizon;
(c)Acquireco;
(d)the Dissenting Shareholders;
(e)the Aurizon Shareholders;
(f)the Aurizon Optionholders;
   
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(g)the Aurizon DSU Holders; and
(h)the Aurizon RSU Holders.

ARTICLE Three
ARRANGEMENT

Section3.01         Arrangement

At the Effective Time, the following shall occur and shall be deemed to occur sequentially in the following order without any further act or formality:

(a)notwithstanding any vesting or exercise provisions to which an Aurizon Option might otherwise be subject (whether by contract, the conditions of a grant, applicable law or the terms of the Aurizon Option Plans):
 (i)               each Aurizon Option issued and outstanding at the time referred to in this Section 3.01(a) will, without any further action by or on behalf of any holder of such Aurizon Option, be deemed to be fully vested and transferred and disposed by the holder thereof to Aurizon (free and clear of all liens, claims and encumbrances) and cancelled in exchange for the Option Consideration;

 

 (ii)               with respect to each Aurizon Option, the holder thereof will cease to be the holder of such Aurizon Option, will cease to have any rights as a holder in respect of such Aurizon Option or under the Aurizon Option Plans, such holder’s name will be removed from the register of Aurizon Options, and all option agreements, grants and similar instruments relating thereto will be cancelled; and

 

 (iii)               the Aurizon Option Plans will be terminated;

 

(b)All of the RSUs outstanding at the time referred to in this Section 3.01(b)

, and without any payment except as provided in this Plan of Arrangement and notwithstanding the terms of the RSU Plan, shall be cancelled without any act or formality by or on behalf of any Aurizon RSU Holder in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per RSU, less any amounts withheld pursuant to Section 5.04

and the RSU Plan shall be cancelled;

 

(c)following the resignation by, or removal of, an Aurizon DSU Holder as a director of Aurizon, all of the DSUs outstanding at the time referred to in this Section 3.01(c), and without any payment except as provided in this Plan of Arrangement and notwithstanding the terms of the DSU Plan, shall be cancelled without any act or formality by or on behalf of any Aurizon DSU Holder in exchange for a cash payment by Aurizon equal to the amount of the Cash Consideration per DSU, less any amounts withheld pursuant to Section 5.04;

 

(d)each Aurizon Common Share held by a Dissenting Shareholder shall be deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all liens, claims and encumbrances, to Acquireco and Acquireco shall thereupon be obliged to pay the amount therefor determined and payable in accordance with Article 4 hereof, and the name of such holder shall be removed from the central securities register of Aurizon as a Aurizon Shareholder and Acquireco shall be recorded as the registered holder of, and shall be deemed to be the legal owner of, such Aurizon Common Shares;
   
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(e)Hecla shall subscribe for that number of common shares of Acquireco at a price of $1.00 per share that results in an aggregate subscription price equal to the fair market value of the Share Consideration to be delivered to the Former Aurizon Securityholders pursuant to Section 3.01(g)

of this Plan of Arrangement, with such subscription price being satisfied by Hecla as described in Section 3.01(i) of this Plan of Arrangement;

 

(f)any Former Aurizon Securityholder who has not duly and validly completed a Letter of Transmittal by the Election Deadline shall be deemed to have elected to receive Share Consideration for his or her Aurizon Common Shares, including, without limitation, the Aurizon Common Shares issued in satisfaction of the Option Consideration;
(g)each issued Aurizon Common Share held by a Former Aurizon Securityholder (other than Hecla, any subsidiary of Hecla or a Dissenting Shareholder) including, without limitation, the Aurizon Common Shares issued in satisfaction of the Option Consideration shall be transferred to Acquireco (free and clear of any liens, charges and encumbrances of whatsoever nature) and each such Former Aurizon Securityholder shall be entitled to receive, in exchange therefor and subject to the following provisions of this Section 3.01 and Section 5.04 hereof consideration comprised of, in accordance with the election or deemed election as provided by Section Section 3.01(f) of such Former Aurizon Securityholder:

(i) Cash Consideration - $4.75 for each Aurizon Common Share held; or
(ii) Share Consideration - 0.9953 of a Hecla Share for each Aurizon Common Share held; or
(iii) any combination thereof;

 

(h)for greater certainty, with respect to any election pursuant to the foregoing, a Former Aurizon Securityholder may elect to receive a combination of the Cash Consideration and the Share Consideration in exchange for the aggregate number of Aurizon Common Shares in respect of which such election is made, provided however for calculation purposes only, each individual Aurizon Common Share may only be exchanged for either Cash Consideration or Share Consideration. The maximum aggregate amount of Cash Consideration to be paid to Former Aurizon Securityholders is $513,631,193 (the “Maximum Cash”). The maximum aggregate number of Hecla Shares that may be elected by Former Aurizon Securityholders is 57,000,000 (the “Maximum Shares”). In the event that: (x) the aggregate amount of the Cash Consideration that would, but for this clause, be paid to Former Aurizon Securityholders exceeds the Maximum Cash, then the Cash Consideration to be paid to any Former Aurizon Securityholder who has elected or is deemed to have elected to receive Cash Consideration shall be determined by multiplying the total amount of Cash Consideration otherwise payable to such holder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Cash and the denominator of which is the aggregate amount of Cash Consideration otherwise payable to all Former Aurizon Securityholders who have so elected (or are deemed to have elected), and such Former Aurizon Securityholder shall be deemed to have elected to receive Share Consideration for the remainder of their Aurizon Common Shares, for which they would otherwise have received Cash Consideration; or (y) the aggregate number of Hecla Shares that would, but for this clause, be issuable to Former Aurizon Securityholders exceeds the Maximum Shares then the number of Hecla Shares issuable to any Former Aurizon Securityholder shall, subject to rounding in accordance with Section 3.05, be determined by multiplying the total number of Hecla Shares otherwise issuable to such Former Aurizon Securityholder by a fraction, rounded to six decimal places, the numerator of which is the Maximum Shares and the denominator of which is the aggregate number of Hecla Shares otherwise issuable to all Former Aurizon Securityholders who have so elected (or are deemed to have so elected), and such Former Aurizon Securityholder shall be deemed to have elected to receive Cash Consideration for the remainder of their Aurizon Common Shares for which such Former Aurizon Securityholder would, but for this clause, have received Hecla Shares;

   
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(i)at the time of the step contemplated in Section 3.01(g) of this Plan of Arrangement, Acquireco shall be deemed to have directed Hecla to deliver the Share Consideration to each Former Aurizon Securityholder on behalf of Acquireco in full satisfaction of Acquireco’s obligation to deliver the Share Consideration to such Former Aurizon Securityholders pursuant to Section 3.01(g) of this Plan of Arrangement (which delivery by Hecla shall be in full satisfaction of the subscription price payable by Hecla for the common shares of Acquireco subscribed for by Hecla in Section 3.01(e) of this Plan of Arrangement), and Acquireco shall be deemed to have issued such fully paid and assessable common shares of its capital stock to Hecla, and the amount added to the stated capital of the Acquireco common shares will be equal to the fair market value of the Share Consideration delivered by Hecla on behalf of Acquireco to the Former Aurizon Securityholders pursuant to Section 3.01(g) of this Plan of Arrangement;

 

(j)each Aurizon Common Share held by Hecla shall be transferred to Acquireco in consideration of the issue by Acquireco to Hecla of one common share of Acquireco for each Aurizon Common Share so transferred, and the amount added to the stated capital of the Acquireco common shares will be equal to the fair market value of the Aurizon Common Shares so transferred;

 

(k)the stated capital in respect of the Aurizon Common Shares shall be reduced to $1.00 without any repayment of capital in respect thereof;

 

(l)Aurizon will file an election with the Canada Revenue Agency, to be effective prior to the amalgamation described in Section 3.01(m) of this Plan of Arrangement, to cease to be a public corporation for the purposes of the Tax Act;

 

(m)Aurizon and Acquireco shall amalgamate to form one corporate entity (“Amalco”) under Section 288 of the BCBCA;

 

(n)from and after the Effective Date, at the time of the step contemplated in Section 3.01(m) of this Plan of Arrangement:

 

 (i)               Amalco will own and hold all property of Aurizon and Acquireco and, without limiting the provisions hereof, all rights of creditors or others will be unimpaired by such amalgamation, and all liabilities and obligations of Aurizon and Acquireco, whether arising by contract or otherwise, may be enforced against Amalco to the same extent as if such obligations had been incurred or contracted by it;

 

 (ii)               Amalco will continue to be liable for all of the liabilities and obligations of Aurizon and Acquireco;

 

 (iii)               all rights, contracts, permits and interests of Aurizon and Acquireco will continue as rights, contracts, permits and interests of Amalco as if Aurizon and Acquireco continued and, for greater certainty, the amalgamation will not constitute a transfer or assignment of the rights or obligations of either of Aurizon or Acquireco under any such rights, contracts, permits and interests;
   
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 (iv)               any existing cause of action, claim or liability to prosecution will be unaffected;

 

 (v)               a civil, criminal or administrative action or proceeding pending by or against either Acquireco or Aurizon may be continued by or against Amalco;

 

 (vi)               a conviction against, or ruling, order or judgment in favour of or against either Aurizon or Acquireco may be enforced by or against Amalco;

 

 (vii)               Hecla shall receive on the amalgamation one Amalco common share in exchange for each Acquireco common share previously held and all of the issued and outstanding Aurizon Common Shares will be cancelled without any repayment of capital in respect thereof;

 

 (viii)               the name of Amalco shall be “Aurizon Mines Ltd. “;

 

 (ix)               Amalco shall be authorized to issue an unlimited number of common shares without par value;

 

 (x)               the articles and notice of articles of Amalco shall be substantially in the form of Aurizon’s articles and notice of articles;

 

 (xi)               the first annual general meeting of Amalco will be held within 18 months from the Effective Date;

 

 (xii)               the first directors of Amalco following the amalgamation shall be: Lawrence P. Radford, Phillips S. Baker, Jr., Dean W.A. McDonald, and James A. Sabala; and

 

 (xiii)               the stated capital of the common shares of Amalco will be an amount equal to the paid-up capital, as that term is defined in the Tax Act, attributable to the common shares of Acquireco immediately prior to the amalgamation; and

 

(o)the exchanges and cancellations provided for in this Section 3.01 will be deemed to occur on the Effective Date, notwithstanding that certain of the procedures related thereto are not completed until after the Effective Date.

   
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Section3.02         Election
(a)The initial election date (the “Initial Election Date”) shall be May 7, 2013, unless otherwise agreed in writing by Hecla and Aurizon. If, after the Letter of Transmittal has been mailed, Hecla and Aurizon determine that the Effective Date is not reasonably likely to occur by the tenth Business Day after the Initial Election Date, then the date by which Letters of Transmittal must be received shall be extended to a date (the “New Election Date”) which the parties expect to be not more than ten Business Days before the Effective Date. In the event that the date by which Letters of Transmittal must be received is extended, Aurizon shall provide at least five days notice of the New Election Date (and shall provide such notice prior to the Initial Election Date if practicable) to Aurizon Securityholders by means of publication, at least once, in The Globe and Mail, national edition, or any other English language daily newspaper of general circulation in Canada. Any duly completed Letter of Transmittal deposited by the Election Deadline on the Initial Election Date shall not be required to be re-deposited if the date by which Letters of Transmittal must be received is extended pursuant hereto. The Initial Election Date, as extended and published pursuant to the terms hereof, shall be the Election Date.
(b)The Letter of Transmittal shall be sent not less than 15 days prior to the Initial Election Date to each Aurizon Securityholder.
(c)Each person who, at or prior to the Election Deadline, is an Aurizon Securityholder will be entitled, with respect to all or a portion of their shares, to make an election at or prior to the Election Deadline to receive: (i) the Cash Consideration; (ii) the Share Consideration; or (iii) a combination thereof in each case in accordance with Section 3.01 hereof, including without limitation the prorationing provisions thereof.

 

Section3.03         Methods of Election

The election contemplated by Section 3.01 shall be made as follows:

(a)each Former Aurizon Securityholder shall make such election by depositing with the Depositary by the Election Deadline an irrevocable Letter of Transmittal duly signed and completed in accordance with the provisions thereof, indicating such Former Aurizon Securityholder’s election, together with the certificates representing such Former Aurizon Securityholder’s Aurizon Common Shares, if applicable;

 

(b)any Letter of Transmittal once so deposited with the Depositary shall be irrevocable and may not be withdrawn by the Former Aurizon Securityholder;

 

(c)any Former Aurizon Securityholder who does not deposit with the Depositary a duly completed Letter of Transmittal together with the certificates representing such Former Aurizon Securityholder’s Aurizon Common Shares, if applicable, prior to the Election Deadline or otherwise fails to fully comply with the requirements of Section 3.03(a) (including any Former Aurizon Securityholder who attempts to exercise but does not validly exercise Dissent Rights) shall be deemed to have elected to receive the Share Consideration for his or her Aurizon Common Shares, including, without limitation, the Aurizon Common Shares issued in satisfaction of the Option Consideration, in accordance with Section 3.01;

 

(d)any deposit of a Letter of Transmittal and accompanying certificates may be made at any of the addresses of the Depositary specified in the Letter of Transmittal; and
   
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(e)a Former Aurizon Securityholder who holds Aurizon Common Shares as a nominee, custodian, depositary, trustee or in any other representative capacity for beneficial owners of Aurizon Common Shares may submit multiple Letters of Transmittal.
Section3.04         Effective Time Procedures
(a)Following the receipt of the Final Order and prior to the Effective Date, Hecla shall deliver or arrange to be delivered to the Depositary cash in an aggregate amount sufficient to pay the aggregate Cash Consideration payable to the Former Aurizon Securityholders, and certificates representing the Hecla Shares required to be issued to Former Aurizon Securityholders in accordance with the provisions of Section 3.01 hereof, which cash and certificates shall be held by the Depositary as agent and nominee for such Former Aurizon Securityholders for distribution to such Former Aurizon Securityholders in accordance with the provisions of Article 5 hereof.

 

(b)Following receipt of the Final Order and prior to the Effective Date, Aurizon shall deliver or cause to be delivered cash in an aggregate amount sufficient to pay the aggregate cash consideration payable to the Aurizon DSU Holders and the Aurizon RSU Holders.

 

(c)Subject to the provisions of Article 5 hereof, and upon return of a properly completed Letter of Transmittal by a registered Former Aurizon Securityholder, together with certificates representing Aurizon Common Shares if applicable and such other documents as the Depositary may require, Former Aurizon Securityholders shall be entitled to receive delivery of the Cash Consideration and/or certificates representing the Hecla Shares to which they are entitled pursuant to Section 3.01 hereof and the Aurizon DSU Holders and the Aurizon RSU Holders shall be entitled to receive delivery of the Cash Consideration to which they are entitled pursuant to Section 3.01 hereof.

 

Section3.05         No Fractional Shares

 

(a)No fractional Hecla Shares shall be issued to Former Aurizon Securityholders. The number of Hecla Shares to be issued to Former Aurizon Securityholders shall be rounded up to the nearest whole Hecla Share in the event that a Former Aurizon Securityholder is entitled to a fractional share representing 0.5 or more of a Hecla Share and shall be rounded down to the nearest whole Hecla Share in the event that a Former Aurizon Securityholder is entitled to a fractional share representing less than 0.5 of a Hecla Share.

 

(b)The aggregate Cash Consideration payable to a Former Aurizon Securityholder, Aurizon DSU Holder or Aurizon RSU Holder shall be rounded up to the next whole five cent increment.
   
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ARTICLE Four
DISSENT RIGHTS

Section4.01         Dissent Rights

Pursuant to the Interim Order, registered Aurizon Shareholders may exercise rights of dissent (“Dissent Rights”) under Division 2 of Part 8 of the BCBCA, as modified by this Article 4, the Interim Order and the Final Order, with respect to Aurizon Common Shares in connection with the Arrangement, provided that the written notice of dissent to the Arrangement Resolution contemplated by Section 242 of the BCBCA must be sent to Aurizon by holders who wish to dissent at least two days before the Aurizon Meeting or any date to which the Aurizon Meeting may be postponed or adjourned and provided further that holders who exercise such rights of dissent and who:

(a)are ultimately entitled to be paid fair value for their Aurizon Common Shares which fair value shall be the fair value of such shares immediately before the passing by the Aurizon Securityholders of the Arrangement Resolution, shall be paid an amount in cash equal to such fair value by Acquireco; and
(b)are ultimately not entitled, for any reason, to be paid fair value for their Aurizon Common Shares shall be deemed to have participated in the Arrangement, as of the Effective Time, on the same basis as a non-dissenting Aurizon Shareholder and shall be entitled to receive only the Cash Consideration for such shares,

but in no case shall Hecla, Aurizon, Acquireco or any other person be required to recognize Aurizon Shareholders who exercise Dissent Rights as Aurizon Shareholders after the time that is immediately prior to the Effective Time, and the names of such registered Aurizon Shareholders who exercise Dissent Rights shall be deleted from the central securities register as Aurizon Shareholders at the Effective Time and Hecla shall be recorded as the registered Aurizon Shareholder so transferred and shall be deemed to be the legal owner of such Aurizon Common Shares.

 

ARTICLE Five
DELIVERY OF CASH CONSIDERATION AND SHARE CONSIDERATION

Section5.01         Delivery of Cash Consideration and Share Consideration
(a)On the Effective Date: (i) each Former Aurizon Securityholder (other than Dissenting Shareholders) who has validly elected in accordance with the provisions hereof shall, following completion of the transactions described in Section 3.01 , be entitled to receive, and the Depositary shall deliver to such Former Aurizon Securityholder following the Effective Time, cash representing the Cash Consideration and certificates representing the Share Consideration that such Former Aurizon Securityholder is entitled to receive in accordance with Section 3.01 hereof; and (ii) each Aurizon DSU Holder and Aurizon RSU Holder shall, following completion of the transactions described in Section 3.01 , be entitled to receive, and the Depositary shall deliver to such holder following the Effective Time, cash representing the Cash Consideration that such Aurizon DSU Holder or Aurizon RSU Holder is entitled to receive in accordance with Section 3.01 hereof.

 

(b)Upon surrender to the Depositary for cancellation of a certificate that immediately before the Effective Time represented one or more outstanding Aurizon Common Shares that were exchanged for Cash Consideration and/or Share Consideration in accordance with Section 3.01 hereof, together with such other documents and instruments as would have been required to effect the transfer of the Aurizon Common Shares formerly represented by such certificate under the terms of such certificate, the BCBCA or the articles of Aurizon and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder following the Effective Time, cash representing the Cash Consideration and certificates representing the Share Consideration that such holder is entitled to receive in accordance with Section 3.01 hereof.

   
 -12- 

(c)After the Effective Time and until surrendered for cancellation as contemplated by Section 5.01(b) hereof, each certificate that immediately prior to the Effective Time represented one or more Aurizon Common Shares following completion of the transactions described in Section 3.01 , shall be deemed at all times to represent only the right to receive in exchange therefor Cash Consideration and/or certificates representing the Share Consideration that the holder of such certificate is entitled to receive in accordance with their election (or deemed election) and Section 3.01 hereof.

 

Section5.02         Lost Certificates

In the event any certificate, that immediately prior to the Effective Time represented one or more outstanding Aurizon Common Shares that were exchanged for Cash Consideration and/or Share Consideration in accordance with Section 3.01 hereof, shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming such certificate to be lost, stolen or destroyed, the Depositary shall deliver in exchange for such lost, stolen or destroyed certificate, cash and/or, if so elected (or deemed elected), certificates representing Hecla Shares that such holder is entitled to receive in accordance with Section 3.01 hereof. When authorizing such delivery of a certificate representing Hecla Shares that such holder is entitled to receive in exchange for such lost, stolen or destroyed certificate, the holder to whom certificates representing such Hecla Shares is to be delivered shall, as a condition precedent to the delivery of cash and certificates representing such Hecla Shares, give a bond satisfactory to Hecla and the Depositary in such amount as Hecla and the Depositary may direct, or otherwise indemnify Hecla and the Depositary in a manner satisfactory to Hecla and the Depositary, against any claim that may be made against Hecla or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed and shall otherwise take such actions as may be required by the articles of Aurizon.

Section5.03         Distributions with Respect to Unsurrendered Certificates

No dividend or other distribution declared or made after the Effective Time with respect to Hecla Shares with a record date after the Effective Time shall be delivered to the holder of any unsurrendered certificate that, immediately prior to the Effective Time, represented outstanding Aurizon Common Shares unless and until the holder of such certificate shall have complied with the provisions of Section 5.01 or Section 5.02 hereof. Subject to applicable law and to Section 5.04 hereof, at the time of such compliance, there shall, in addition to the delivery of a certificate representing Hecla Shares to which such holder is thereby entitled, be delivered to such holder, without interest, the amount of the dividend or other distribution with a record date after the Effective Time theretofore paid with respect to such Hecla Shares.

Section5.04         Withholding Rights

Hecla, Acquireco, Aurizon and the Depositary shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to an Aurizon Securityholder, Aurizon DSU Holder or Aurizon RSU Holder pursuant to the Arrangement and from any all dividends or other distributions otherwise payable to any Former Aurizon Securityholder such amounts as Hecla or the Depositary is required or permitted to deduct and withhold with respect to such payment under the Tax Act, the U.S. Tax Code or any provision of any applicable federal, provincial, state, local or foreign tax law or treaty, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the particular person in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. Hecla, Acquireco or the Depositary shall withhold from any Cash Consideration payable to an Aurizon Optionholder and/or sell on behalf of an Aurizon Optionholder any Share Consideration deliverable to the Aurizon Optionholder in order to remit to Aurizon for remittance to a taxing authority a sufficient amount to comply with Tax laws in respect of the cancellation of the Aurizon Options pursuant to the Plan of Arrangement.

   
 -13- 

Section 5.05 Limitation and Proscription

To the extent that a Former Aurizon Securityholder shall not have complied with the provisions of Section 5.01 or Section 5.02 hereof on or before the date that is six years after the Effective Date (the “final proscription date”), then the Cash Consideration to which such Former Aurizon Securityholder was entitled shall be returned to Hecla and the Share Consideration that such Former Aurizon Securityholder was entitled to receive shall be automatically cancelled without any repayment of capital in respect thereof and the certificates representing such Share Consideration shall be delivered to Hecla by the Depositary and the interest of the Former Aurizon Securityholder in such Cash Consideration and/or Share Consideraion to which it was entitled shall be terminated as of such final proscription date.

 

 

Section 5.06 Election to Forgo Deduction Related to Options

Aurizon, Acquireco and Hecla each acknowledge and agree that Aurizon and any person not dealing at arm’s length with Aurizon, within the meaning of the Tax Act, will elect to forego any deduction under the Tax Act with respect to the payments to be made by Aurizon pursuant to the Plan of Arrangement to holders of Aurizon Options who are subject to tax under the Tax Act with respect to the disposition, transfer and cancellation of such holders’ Aurizon Options pursuant to this Plan of Arrangement and who are entitled to claim a deduction under subsection 110(1)(d) of the Tax Act in respect thereof and, to effect the foregoing, Aurizon will comply with the requirements described in subsection 110(1.1) of the Tax Act.

 

ARTICLE Six
AMENDMENTS

Section6.01         Amendments to Plan of Arrangement

 

(a)Hecla and Aurizon reserve the right to amend, modify or supplement this Plan of Arrangement at any time and from time to time, provided that each such amendment, modification or supplement must be (i) set out in writing, (ii) agreed to in writing by Hecla and Aurizon, (iii) filed with the Court and, if made following the Aurizon Meeting, approved by the Court, and (iv) communicated to Aurizon Securityholders, Aurizon DSU Holders and/or Aurizon RSU Holders if and as required by the Court.
(b)Any amendment, modification or supplement to this Plan of Arrangement may be proposed by Aurizon at any time prior to the Aurizon Meeting provided that Hecla shall have consented thereto in writing, with or without any other prior notice or communication, and, if so proposed and accepted by the persons voting at the Aurizon Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.
   
 -14- 
(c)Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Aurizon Meeting shall be effective only if: (i) it is consented to in writing by each of Hecla and Aurizon; and (ii) if required by the Court, it is consented to by the Aurizon Securityholders voting in the manner directed by the Court.

 

   
   

 

APPENDIX C
FAIRNESS OPINION OF SCOTIA CAPITAL INC.

 

Scotia Capital Inc.

Scotia Tower

18th Floor, 650 West Georgia Street

Box 11640

Vancouver, British Columbia

Canada V6B 4N9

Adobe
Systems

GLOBAL BANKING AND MARKETS

 

March 3, 2013

 

The Board of Directors
Aurizon Mines Ltd.
Suite 1120 Cathedral Place
925 West Georgia Street

Vancouver, British Columbia V6C3L2

 

To the Board of Directors:

Scotia Capital Inc. (“Scotia Capital”) understands that Aurizon Mines Ltd. (“Aurizon” or the “Company”) and Hecla Mining Company (“Hecla” or the “Acquirer”), have entered into an agreement dated March 3, 2013 (the “Arrangement Agreement”), whereby Hecla will indirectly acquire all of the outstanding common shares (the “Shares”) of the Company by way of a court-approved plan of arrangement (the “Plan of Arrangement”) (the “Transaction”). Pursuant to the terms of the Arrangement Agreement and related Plan of Arrangement, holders of the Shares will receive C$4.75 in cash per Share, or 0.9953 of a Hecla share, or a combination of both (the “Consideration”), subject in each case to pro-ration based on a maximum cash consideration of approximately C$513.6 million and a maximum number of Hecla shares issued of 57,000,000. The terms of the Arrangement Agreement relating to the proposed Transaction are to be more fully described in a disclosure document, which will be mailed to the shareholders and optionholders of the Company (the “Disclosure Document”).

Background and Engagement of Scotia Capital

Scotia Capital was engaged as financial advisor to the Company on September 13, 2012 pursuant to an engagement letter (the “Engagement Agreement”) to perform such financial advisory and investment banking services for the Company as are customary in transactions of this type including assisting the Company in analyzing strategic alternatives and, if requested, structuring, negotiating and effecting a Transaction (as defined in the Engagement Agreement). The board of directors of Aurizon (the “Board of Directors”) has requested that Scotia Capital provide its opinion (the “Opinion”) as to the fairness, from a financial point of view, of the Consideration to be received by the holders of the Shares (other than the Acquirer and its affiliates) (the “Shareholders”). The terms of the Engagement Agreement provide that Scotia Capital is to be paid a fee for its services as financial advisor, including fees that are contingent on the completion of such transaction(s) and fees payable upon delivery of an Opinion. In addition, Scotia Capital is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified in certain circumstances.

The Board of Directors has not instructed Scotia Capital to prepare, and Scotia Capital has not prepared, a formal valuation of the Company or any of its securities or assets, and the Opinion should not be construed as such. Scotia Capital has, however, conducted such analyses as it considered necessary in the circumstances to prepare and deliver the Opinion.

Subject to the terms of the Engagement Agreement, Scotia Capital consents to the inclusion of the Opinion in its entirety and a summary thereof in the Disclosure Document and to the filing of the Opinion, as necessary, with the securities commissions, stock exchanges and other similar regulatory authorities in Canada and in the United States.

   
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.

Overview of Aurizon Mines Ltd.

Aurizon is a Canadian-based gold producer with operations and development activities in the Abitibi region of northwestern Quebec. Since 1988 Aurizon has been involved in the acquisition, exploration, development and operation of a number of gold properties in North America.

Aurizon owns 100% of the producing Casa Berardi Gold Mine and also owns a 100% interest in the Joanna Gold Development Project, a development-stage gold property on which a feasibility study has been completed for the Hosco deposit. In addition, the Company has staked mineral claims, and/or entered into agreements with junior exploration companies to acquire interests in several early stage exploration projects. The Shares are listed on the Toronto Stock Exchange under the symbol “ARZ” and on the NYSE MKT under the symbol “AZK”.

Credentials of Scotia Capital

Scotia Capital represents the global corporate and investment banking and capital markets business of Scotiabank Group (“Scotiabank”), one of North America’s premier financial institutions. In Canada, Scotia Capital is one of the country’s largest investment banking firms with operations in all facets of corporate and government finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. Scotia Capital has participated in a significant number of transactions involving private and public companies and has extensive experience in preparing fairness opinions.

The Opinion expressed herein represents the opinion of Scotia Capital as a firm. The form and content of the Opinion have been approved for release by a committee of directors and other professionals of Scotia Capital, all of whom are experienced in merger, acquisition, divestiture, fairness opinion and valuation matters.

Relationships of Scotia Capital

Neither Scotia Capital nor any of its affiliates, is an insider, associate or affiliate (as those terms are defined in the Securities Act (Ontario)) of the Company, Acquirer or any of their respective associates or affiliates. Subject to the following, there are no understandings, agreements or commitments between Scotia Capital and the Company, Acquirer or any of their respective associates or affiliates with respect to any future business dealings. Scotia Capital has relationships with key personnel at both Aurizon and Hecla and has in the past provided, and may in the future provide, traditional banking, financial advisory or investment banking services to the Company or any of its affiliates and may in the future provide similar services to the Acquirer or its affiliates. Scotiabank is providing financing to Hecla with respect to the Transaction.

   
Page3  

Scotia Capital acts as a trader and dealer, both as principal and agent, in the financial markets in Canada, the United States and elsewhere and, as such, it and Scotiabank, may have had and may have positions in the securities of the Company, or its affiliates from time to time and may have executed or may execute transactions on behalf of such companies or clients for which it receives compensation. As an investment dealer, Scotia Capital conducts research on securities and may, in the ordinary course of business, provide research reports and investment advice to its clients on investment matters, including with respect to the Company or any of its affiliates, or with respect to the Transaction.

Scope of Review

In preparing the Opinion, Scotia Capital has reviewed, considered and relied upon, without attempting to verify independently the completeness or accuracy thereof, among other things:

(a)           a draft Arrangement Agreement dated March 3, 2013;

(b)           a draft voting support agreement (the “Support Agreement”) dated March 3, 2013 with the Acquirer;

(c)the debt financing commitment letter related to the Transaction;
(d)annual reports of the Company and the Acquirer for the fiscal years ended last 3 years (2009 – 11);
(e)the Notice of Annual Meeting of Shareholders and the Management Information Circular of the Company for the fiscal years ended last 3 years (2009 – 11);

(f)            audited financial statements of the Company and the Acquirer for the fiscal years ended last 3 years (2009 – 11);

(g)           annual information forms of the Company for the fiscal years ended last 3 years (2009 – 11);

(h)           unaudited quarterly reports of the Company and the Acquirer for each of the three-month periods ended in 2012;

(i)             the Company’s budget for the fiscal year ending 2013;

(j)the Company’s financial model and business plan;

(k)           various detailed internal Company management reports;

(l)             discussions with senior management of the Company and the Acquirer;

(m)discussions with senior management of the Company with respect to their site visit to Hecla’s Lucky Friday mine;

(n)           discussions with the Company’s legal counsel;

(o)discussions with other potential interested parties;

(p)           public information relating to the business, operations, financial performance and stock trading history of the Company, the Acquirer and other selected public companies considered by us to be relevant;

(q)           public information with respect to other transactions of a comparable nature considered by us to be relevant;

   
Page4  

(r)            representations contained in separate certificates addressed to Scotia Capital, as of the date hereof, from senior officers of the Company as to the completeness, accuracy and fair presentation of the information upon which the Opinion is based; and

(s)           such other corporate, industry and financial market information, investigations and analyses as Scotia Capital considered necessary or appropriate in the circumstances.

Scotia Capital has not, to the best of its knowledge, been denied access by the Company to any information requested by Scotia Capital.

Prior Valuations

The Company has represented to Scotia Capital that, to the best of its knowledge, there have been no valuations or appraisals of the Company or any material property of the Company or any of its subsidiaries or affiliates, made in the preceding twenty-four (24) months and in the possession or control or knowledge of the Company other than those provided to Scotia Capital or, in the case of valuations known to the Company which it does not have within its control, notice of which has been given to Scotia Capital.

Assumptions and Limitations

The Opinion is subject to the assumptions, explanations and limitations set forth below.

Scotia Capital has, subject to the exercise of its professional judgment, relied, without independent verification, upon the completeness, accuracy and fair presentation of all of the financial and other information, data, advice, opinions and representations obtained by it from public sources, or that was provided to us, by the Company, and its associates and affiliates and advisors (collectively, the “Information”), and we have assumed that this Information did not omit to state any material fact or any fact necessary to be stated to make that information not misleading. The Opinion is conditional upon the completeness, accuracy and fair presentation of such Information. With respect to the Company’s financial projections provided to Scotia Capital by management of the Company and used in the analysis supporting the Opinion, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management of the Company as to the matters covered thereby, and in rendering the Opinion we express no view as to the reasonableness of such forecasts or budgets or the assumptions on which they are based.

Senior management of the Company has represented to Scotia Capital in certificates delivered as at the date hereof, among other things, that to the best of their knowledge (a) the Company has no information or knowledge of any facts public or otherwise not specifically provided to Scotia Capital relating to the Company or any of its subsidiaries or affiliates which would reasonably be expected to affect materially the Opinion; (b) with the exception of forecasts, projections or estimates referred to in (d), below, the written Information provided to Scotia Capital by or on behalf of the Company in respect of the Company and its subsidiaries or affiliates, in connection with the Transaction is or, in the case of historical information or data, was, at the date of preparation, true and accurate in all material respects, and no additional material, data or information would be required to make the data provided to Scotia Capital by the Company not misleading in light of circumstances in which it was prepared; (c) to the extent that any of the Information identified in (b), above, is historical, there have been no changes in material facts or new material facts since the respective dates thereof which have not been disclosed to Scotia Capital or updated by more current Information that has been disclosed; and (d) any portions of the Information provided to Scotia Capital which constitute forecasts, projections or estimates were prepared using the assumptions identified therein, which, in the reasonable opinion of the Company, are (or were at the time of preparation) reasonable in the circumstances.

The Opinion is rendered on the basis of the securities markets, economic, financial and general business conditions prevailing as at the date hereof and the conditions and prospects, financial and otherwise, of the Company and its subsidiaries and affiliates, as they were reflected in the Information. In its analyses and in preparing the Opinion, Scotia Capital made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, which Scotia Capital believes to be reasonable and appropriate in the exercise of its professional judgment, many of which are beyond the control of Scotia Capital or any party involved in the Transaction.

   
Page5  

For the purposes of rendering the Opinion, Scotia Capital has also assumed that the representations and warranties of each party contained in the Arrangement Agreement are true and correct in all material respects and that each party will perform all of the covenants and agreements required to be performed by it under the Transaction and that the Company will be entitled to fully enforce its rights under the Arrangement Agreement and receive the benefits therefrom in accordance with the terms thereof.

The Opinion has been provided for the sole use and benefit of the Board of Directors of the Company in connection with, and for the purpose of, its consideration of the Transaction and may not be relied upon by any other person. Our opinion does not constitute a recommendation to any shareholder of the Company as to how such shareholder should vote or act with respect to the Transaction. The Opinion is given as of the date hereof, and Scotia Capital disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Scotia Capital after the date hereof. Without limiting the foregoing, in the event that there is any material change in any fact or matter affecting the Opinion after the date hereof, Scotia Capital reserves the right to change, modify or withdraw the Opinion.

Our opinion does not address the relative merits of the Transaction as compared to other business strategies or transactions that might be available with respect to the Company or the Company’s underlying business decision to effect the Transaction. At your direction, we have not been asked to, nor do we, offer any opinion as to the material terms (other than the Consideration) of the Arrangement Agreement, the Plan of Arrangement or the form of the Transaction.

Conclusion

Based upon and subject to the foregoing, Scotia Capital is of the opinion that, as of the date hereof, the Consideration to be received by the Shareholders pursuant to the Transaction is fair from a financial point of view to such Shareholders.

 

Yours very truly,

 

SCOTIA CAPITAL INC.

 

   
   

APPENDIX D
FAIRNESS OPINION OF CIBC WORLD MARKETS INC.

 

 

 

   

CIBC World Markets Inc.

400 Burrard Street

12th Floor, Commerce Place

Vancouver, BC V6C 3A6

 

Tel : 604-891-6300

     

March 3, 2013

 

The Special Committee of the Board of Directors

of Aurizon Mines Ltd.

Suite 1120, Cathedral Place

925 W. Georgia Street

Vancouver, B.C. V6C 3L2

 

To the Special Committee:

 

CIBC World Markets Inc. (“CIBC”, “we” or “us”) understands that Aurizon Mines Ltd. (“Aurizon” or the “Company”) is proposing to enter into an arrangement agreement (the “Arrangement Agreement”) with Hecla Mining Company (“Hecla” or the “Purchaser”) providing for, among other things, the acquisition (the “Proposed Transaction”) by the Purchaser of all of the issued and outstanding common shares (the “Shares”) of the Company not currently held by Hecla for consideration per Share, at the election of each of the shareholders of the Company (the "Shareholders") of:

 

a)$4.75 in cash (the “Cash Alternative”); or

 

b)0.9953 of a common share (the “Hecla Shares”) of Hecla (the “Share Alternative”); or

 

c)a combination of both, and each of (a), (b) and (c) being referred to herein as the “Consideration”),

 

subject, in each case, to pro-ration based on maximum cash consideration of approximately $513.6 million and a maximum of 57,000,000 Hecla Shares. Assuming that all Shareholders elect to receive either (i) the Cash Alternative or (ii) the Share Alternative, the Consideration will be fully pro-rated with each Shareholder being entitled to receive $3.11 in cash and 0.3446 of a Hecla Share for each Share held.

 

We further understand that pursuant to the Arrangement Agreement:

 

a)the Proposed Transaction will be effected by way of a plan of arrangement under Section 288 of the Business Corporations Act (British Columbia);

 

b)the completion of the Proposed Transaction will be conditional upon, among other things, approval by (i) at least 66 2/3% of the votes cast by the Shareholders and the optionholders of the Company, voting as a single class, who are present in person or represented by proxy at the special meeting of such security holders (the “Special Meeting”); (ii) 66 2/3% of the votes cast by Shareholders who are present in person or represented by proxy at the Special Meeting, and (iii) the approval of the Supreme Court of British Columbia; and

 

c)the terms and conditions of the Proposed Transaction will be described in a management information proxy circular of the Company and related documents (the “Circular”) that will be mailed to the Shareholders and optionholders in connection with the Special Meeting.
   
 -2- 

 

Engagement of CIBC

 

Following receipt of an unsolicited take-over bid from Alamos Gold Inc. on January 14, 2013 (the “Alamos Offer”), the board of directors (the “Board of Directors”) of the Company appointed a special committee (the “Special Committee”) to consider the implications of the Alamos Offer and to make recommendations to the Board of Directors concerning the Alamos Offer and responses thereto, including considering potential transactions that might be pursued by the Company as an alternative to the Alamos Offer.

 

By letter agreement dated January 17, 2013 (the “Engagement Agreement”), the Special Committee retained CIBC to act as its financial advisor in connection with the Alamos Offer and any alternative transaction. Pursuant to the Engagement Agreement, the Company has requested that we prepare and deliver to the Special Committee our written opinion (the “Opinion”) as to the fairness, from a financial point of view, of the Consideration to be received by Shareholders pursuant to the Arrangement Agreement.

 

CIBC has been paid an advisory fee, which fee was not contingent upon the outcome or completion of the Alamos Offer or the Proposed Transaction. The Company has also agreed to reimburse CIBC for its reasonable out-of-pocket expenses and to indemnify CIBC in respect of certain liabilities that might arise out of our engagement.

 

Credentials of CIBC

 

CIBC is one of Canada’s largest investment banking firms with operations in all facets of corporate and government finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. The Opinion expressed herein is the opinion of CIBC and the form and content herein have been approved for release by a committee of its managing directors and internal counsel, each of whom is experienced in merger, acquisition, divestiture and valuation matters.

 

Scope of Review

 

In connection with rendering our Opinion, we have reviewed and relied upon, among other things, the following:

 

 i)  a draft dated March 3, 2013 of the Arrangement Agreement;
 ii)  the annual reports, including the comparative audited financial statements and management’s discussion and analysis, of the Company for the fiscal years ended December 31, 2009, 2010 and 2011;
 iii)  the interim reports, including the comparative unaudited financial statements and management’s discussion and analysis, of the Company for the three months ended March 31, 2012, the six months ended June 30, 2012 and the nine months ended September 30, 2012;
 iv)  the annual information form of the Company for the fiscal year ended December 31, 2011 dated March 30, 2012;
 v)  the management information proxy circular of the Company dated April 5, 2012 relating to the annual meeting of shareholders held on May 10, 2012;
 vi)  the NI 43-101 Technical Report titled “Feasibility Study of the Hosco Deposit – Joanna Gold Project” dated June 5, 2012 and prepared for the Company by BBA Inc., Roche Ltd. and SGS Canada Inc.;
 vii)  the NI 43-101 Technical Report titled “Mineral Resource Estimation – Joanna Gold Project – Rouyn-Noranda, Quebec – Aurizon Mines Ltd. – September 2011 Update” dated December 31, 2011 and prepared for the Company by BBA Inc. and SGS Canada Inc.;
   
 -3- 
 viii)  the NI 43-101 Technical Report titled “Technical Report on the Casa Berardi Mine, Northwestern Quebec, Canada” dated March 28, 2011 and prepared for the Company by BBA Inc. and Roscoe Postle Associates Inc.;
 ix)  the annual reports, including the comparative audited financial statements and management’s discussion and analysis, of Hecla for the fiscal years ended December 31, 2009, 2010 and 2011;
 x)  the interim reports, including the comparative unaudited financial statements and management’s discussion and analysis, of Hecla for the three months ended March 31, 2012, the six months ended June 30, 2012 and the nine months ended September 30, 2012;
 xi)   the proxy statement of Hecla dated April 9, 2012 relating to the annual meeting of shareholders held on May 24, 2012;
 xii)  certain internal financial, operational, corporate and other information prepared or provided by the management of the Company, including internal operating and financial budgets and projections;
 xiii)  selected public market trading statistics and relevant financial information of the Company, Hecla and other public entities;
 xiv)  selected financial statistics and relevant financial information with respect to relevant precedent transactions;
 xv)   selected relevant reports published by equity research analysts and industry sources regarding the Company, Hecla and other comparable public entities;
 xvi)  a certificate addressed to us, dated as of the date hereof, from two senior officers of the Company, as to the completeness and accuracy of the Information (as defined below); and
 xvii)  such other information, analyses, investigations, and discussions as we considered necessary or appropriate in the circumstances.

 

In addition, we have participated in discussions with members of the senior management of the Company regarding its past and current business operations, financial condition and future prospects. We have also participated in discussions with DuMoulin Black LLP, legal counsel to the Company and Blake, Cassels & Graydon LLP, legal counsel to the Company and the Special Committee, concerning the Proposed Transaction, the Arrangement Agreement and related matters.

 

Assumptions and Limitations

 

Our Opinion is subject to the assumptions, qualifications and limitations set forth below.

 

We have not been asked to prepare and have not prepared a formal valuation or appraisal of any of the assets or securities of the Company, the Purchaser or any of their respective affiliates and our Opinion should not be construed as such.

 

With your permission, we have relied upon, and have assumed the completeness, accuracy and fair presentation of all financial and other information, data, advice, opinions and representations obtained by us from public sources, or provided to us by the Company or its affiliates or advisors or otherwise obtained by us pursuant to our engagement, and our Opinion is conditional upon such completeness, accuracy and fair presentation. We have not been requested to or attempted to verify independently the accuracy, completeness or fairness of presentation of any such information, data, advice, opinions and representations. We have not met separately with the independent auditors of the Company or Hecla in connection with preparing this Opinion and with your permission, we have assumed the accuracy and fair presentation of, and relied upon, the audited financial statements of the Company and Hecla and the reports of the auditors thereon and the interim unaudited financial statements of the Company and Hecla.

   
 -4- 

 

With respect to the historical financial data, operating and financial forecasts and budgets provided to us concerning the Company and relied upon in our financial analyses, we have assumed that they have been reasonably prepared on bases reflecting the most reasonable assumptions, estimates and judgements of management of the Company, having regard to the Company’s business, plans, financial condition and prospects.

 

We have also assumed that all of the representations and warranties contained in the Arrangement Agreement are correct as of the date hereof and that the Proposed Transaction will be completed substantially in accordance with its terms and all applicable laws and that the Circular will disclose all material facts relating to the Proposed Transaction and will satisfy all applicable legal requirements.

 

The Company has represented to us, in a certificate of two senior officers of the Company dated the date hereof, among other things, that the information, data and other material (financial or otherwise) provided to us by or on behalf of the Company, including the written information and discussions concerning the Company referred to above under the heading “Scope of Review” (collectively, the “Information”), are complete and correct at the date the Information was provided to us and that, since the date on which the Information was provided to us, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of the Company or any of its affiliates and no material change has occurred in the Information or any part thereof which would have or which would reasonably be expected to have a material effect on the Opinion.

 

We are not legal, tax or accounting experts and we express no opinion concerning any legal, tax or accounting matters concerning the Proposed Transaction or the sufficiency of this letter for your purposes.

 

Our Opinion is rendered on the basis of securities markets, economic and general business and financial conditions prevailing as at the date hereof and the conditions and prospects, financial and otherwise, of the Company and Hecla as they are reflected in the Information and as they were represented to us in our discussions with management of the Company and its affiliates and advisors. In our analyses and in connection with the preparation of our Opinion, we made numerous assumptions with respect to industry performance, general business, markets and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction.

 

The Opinion is being provided to the Special Committee for its exclusive use only in considering the Proposed Transaction and may not be published, disclosed to any other person, relied upon by any other person, or used for any other purpose, without the prior written consent of CIBC. Our Opinion is not intended to be and does not constitute a recommendation to the Board of Directors as to whether they should approve the Arrangement Agreement nor as a recommendation to any Shareholder as to how to vote or act at the Special Meeting or as an opinion concerning the trading price or value of any securities following the announcement or completion of the Proposed Transaction.

 

CIBC believes that its financial analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all factors and analyses together, could create a misleading view of the process underlying the Opinion. The preparation of a fairness opinion is complex and is not necessarily amenable to partial analysis or summary description and any attempt to carry out such could lead to undue emphasis on any particular factor or analysis.

   
 -5- 

 

The Opinion is given as of the date hereof and, although we reserve the right to change or withdraw the Opinion if we learn that any of the information that we relied upon in preparing the Opinion was inaccurate, incomplete or misleading in any material respect, we disclaim any obligation to change or withdraw the Opinion, to advise any person of any change that may come to our attention or to update the Opinion after the date of this Opinion.

 

Opinion

 

Based upon and subject to the foregoing and such other matters as we considered relevant, it is our opinion, as of the date hereof, that the Consideration to be received by Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to Shareholders other than Hecla and its affiliates.

 

Yours very truly,

 

(Signed) CIBC World Markets Inc.

 

 

   
   

APPENDIX E
INTERIM ORDER



 



 



 



 



 



 



 



 



 



 


   
   

APPENDIX F
NOTICE OF HEARING OF PETITION




 


   
   

APPENDIX G
DISSENT PROVISIONS

Pursuant to the Interim Order, Registered Shareholders have the right to dissent in respect of the Arrangement. Such right of dissent is described in this Circular. The full text of Division 2 (Dissent Proceedings) of Part 8 (Proceedings) of the BCBCA is set forth below.

DIVISION 2 OF PART 8 OF THE BRITISH COLUMBIA BUSINESS CORPORATIONS ACT

Definitions and application

237 (1) In this Division:

"dissenter" means a shareholder who, being entitled to do so, sends written notice of dissent when and as required by section 242;

"notice shares" means, in relation to a notice of dissent, the shares in respect of which dissent is being exercised under the notice of dissent;

"payout value" means,

(a) in the case of a dissent in respect of a resolution, the fair value that the notice shares had immediately before the passing of the resolution,

(b) in the case of a dissent in respect of an arrangement approved by a court order made under section 291 (2) (c) that permits dissent, the fair value that the notice shares had immediately before the passing of the resolution adopting the arrangement, or

(c) in the case of a dissent in respect of a matter approved or authorized by any other court order that permits dissent, the fair value that the notice shares had at the time specified by the court order,

excluding any appreciation or depreciation in anticipation of the corporate action approved or authorized by the resolution or court order unless exclusion would be inequitable.

(2) This Division applies to any right of dissent exercisable by a shareholder except to the extent that

(a) the court orders otherwise, or

(b) in the case of a right of dissent authorized by a resolution referred to in section 238 (1) (g), the court orders otherwise or the resolution provides otherwise.

Right to dissent

238 (1) A shareholder of a company, whether or not the shareholder’s shares carry the right to vote, is entitled to dissent as follows:

(a) under section 260, in respect of a resolution to alter the articles to alter restrictions on the powers of the company or on the business it is permitted to carry on;

   
   

(b) under section 272, in respect of a resolution to adopt an amalgamation agreement;

(c) under section 287, in respect of a resolution to approve an amalgamation under Division 4 of Part 9;

(d) in respect of a resolution to approve an arrangement, the terms of which arrangement permit dissent;

(e) under section 301 (5), in respect of a resolution to authorize or ratify the sale, lease or other disposition of all or substantially all of the company’s undertaking;

(f) under section 309, in respect of a resolution to authorize the continuation of the company into a jurisdiction other than British Columbia;

(g) in respect of any other resolution, if dissent is authorized by the resolution;

(h) in respect of any court order that permits dissent.

(2) A shareholder wishing to dissent must

(a) prepare a separate notice of dissent under section 242 for

(i) the shareholder, if the shareholder is dissenting on the shareholder’s own behalf, and

(ii) each other person who beneficially owns shares registered in the shareholder’s name and on whose behalf the shareholder is dissenting,

(b) identify in each notice of dissent, in accordance with section 242 (4), the person on whose behalf dissent is being exercised in that notice of dissent, and

(c) dissent with respect to all of the shares, registered in the shareholder’s name, of which the person identified under paragraph (b) of this subsection is the beneficial owner.

(3) Without limiting subsection (2), a person who wishes to have dissent exercised with respect to shares of which the person is the beneficial owner must

(a) dissent with respect to all of the shares, if any, of which the person is both the registered owner and the beneficial owner, and

(b) cause each shareholder who is a registered owner of any other shares of which the person is the beneficial owner to dissent with respect to all of those shares.

Waiver of right to dissent

239 (1) A shareholder may not waive generally a right to dissent but may, in writing, waive the right to dissent with respect to a particular corporate action.

(2) A shareholder wishing to waive a right of dissent with respect to a particular corporate action must

(a) provide to the company a separate waiver for

   
   

(i) the shareholder, if the shareholder is providing a waiver on the shareholder’s own behalf, and

(ii) each other person who beneficially owns shares registered in the shareholder’s name and on whose behalf the shareholder is providing a waiver, and

(b) identify in each waiver the person on whose behalf the waiver is made.

(3) If a shareholder waives a right of dissent with respect to a particular corporate action and indicates in the waiver that the right to dissent is being waived on the shareholder’s own behalf, the shareholder’s right to dissent with respect to the particular corporate action terminates in respect of the shares of which the shareholder is both the registered owner and the beneficial owner, and this Division ceases to apply to

(a) the shareholder in respect of the shares of which the shareholder is both the registered owner and the beneficial owner, and

(b) any other shareholders, who are registered owners of shares beneficially owned by the first mentioned shareholder, in respect of the shares that are beneficially owned by the first mentioned shareholder.

(4) If a shareholder waives a right of dissent with respect to a particular corporate action and indicates in the waiver that the right to dissent is being waived on behalf of a specified person who beneficially owns shares registered in the name of the shareholder, the right of shareholders who are registered owners of shares beneficially owned by that specified person to dissent on behalf of that specified person with respect to the particular corporate action terminates and this Division ceases to apply to those shareholders in respect of the shares that are beneficially owned by that specified person.

Notice of resolution

240 (1) If a resolution in respect of which a shareholder is entitled to dissent is to be considered at a meeting of shareholders, the company must, at least the prescribed number of days before the date of the proposed meeting, send to each of its shareholders, whether or not their shares carry the right to vote,

(a) a copy of the proposed resolution, and

(b) a notice of the meeting that specifies the date of the meeting, and contains a statement advising of the right to send a notice of dissent.

(2) If a resolution in respect of which a shareholder is entitled to dissent is to be passed as a consent resolution of shareholders or as a resolution of directors and the earliest date on which that resolution can be passed is specified in the resolution or in the statement referred to in paragraph (b), the company may, at least 21 days before that specified date, send to each of its shareholders, whether or not their shares carry the right to vote,

(a) a copy of the proposed resolution, and

(b) a statement advising of the right to send a notice of dissent.

   
   

(3) If a resolution in respect of which a shareholder is entitled to dissent was or is to be passed as a resolution of shareholders without the company complying with subsection (1) or (2), or was or is to be passed as a directors’ resolution without the company complying with subsection (2), the company must, before or within 14 days after the passing of the resolution, send to each of its shareholders who has not, on behalf of every person who beneficially owns shares registered in the name of the shareholder, consented to the resolution or voted in favour of the resolution, whether or not their shares carry the right to vote,

(a) a copy of the resolution,

(b) a statement advising of the right to send a notice of dissent, and

(c) if the resolution has passed, notification of that fact and the date on which it was passed.

(4) Nothing in subsection (1), (2) or (3) gives a shareholder a right to vote in a meeting at which, or on a resolution on which, the shareholder would not otherwise be entitled to vote.

Notice of court orders

241 If a court order provides for a right of dissent, the company must, not later than 14 days after the date on which the company receives a copy of the entered order, send to each shareholder who is entitled to exercise that right of dissent

(a) a copy of the entered order, and

(b) a statement advising of the right to send a notice of dissent.

Notice of dissent

242 (1) A shareholder intending to dissent in respect of a resolution referred to in section 238 (1) (a), (b), (c), (d), (e) or (f) must,

(a) if the company has complied with section 240 (1) or (2), send written notice of dissent to the company at least 2 days before the date on which the resolution is to be passed or can be passed, as the case may be,

(b) if the company has complied with section 240 (3), send written notice of dissent to the company not more than 14 days after receiving the records referred to in that section, or

(c) if the company has not complied with section 240 (1), (2) or (3), send written notice of dissent to the company not more than 14 days after the later of

(i) the date on which the shareholder learns that the resolution was passed, and

(ii) the date on which the shareholder learns that the shareholder is entitled to dissent.

(2) A shareholder intending to dissent in respect of a resolution referred to in section 238 (1) (g) must send written notice of dissent to the company

   
   

(a) on or before the date specified by the resolution or in the statement referred to in section 240 (2) (b) or (3) (b) as the last date by which notice of dissent must be sent, or

(b) if the resolution or statement does not specify a date, in accordance with subsection (1) of this section.

(3) A shareholder intending to dissent under section 238 (1) (h) in respect of a court order that permits dissent must send written notice of dissent to the company

(a) within the number of days, specified by the court order, after the shareholder receives the records referred to in section 241, or

(b) if the court order does not specify the number of days referred to in paragraph (a) of this subsection, within 14 days after the shareholder receives the records referred to in section 241.

(4) A notice of dissent sent under this section must set out the number, and the class and series, if applicable, of the notice shares, and must set out whichever of the following is applicable:

(a) if the notice shares constitute all of the shares of which the shareholder is both the registered owner and beneficial owner and the shareholder owns no other shares of the company as beneficial owner, a statement to that effect;

(b) if the notice shares constitute all of the shares of which the shareholder is both the registered owner and beneficial owner but the shareholder owns other shares of the company as beneficial owner, a statement to that effect and

(i) the names of the registered owners of those other shares,

(ii) the number, and the class and series, if applicable, of those other shares that are held by each of those registered owners, and

(iii) a statement that notices of dissent are being, or have been, sent in respect of all of those other shares;

(c) if dissent is being exercised by the shareholder on behalf of a beneficial owner who is not the dissenting shareholder, a statement to that effect and

(i) the name and address of the beneficial owner, and

(ii) a statement that the shareholder is dissenting in relation to all of the shares beneficially owned by the beneficial owner that are registered in the shareholder’s name.

(5) The right of a shareholder to dissent on behalf of a beneficial owner of shares, including the shareholder, terminates and this Division ceases to apply to the shareholder in respect of that beneficial owner if subsections (1) to (4) of this section, as those subsections pertain to that beneficial owner, are not complied with.

   
   

Notice of intention to proceed

243 (1) A company that receives a notice of dissent under section 242 from a dissenter must,

(a) if the company intends to act on the authority of the resolution or court order in respect of which the notice of dissent was sent, send a notice to the dissenter promptly after the later of

(i) the date on which the company forms the intention to proceed, and

(ii) the date on which the notice of dissent was received, or

(b) if the company has acted on the authority of that resolution or court order, promptly send a notice to the dissenter.

(2) A notice sent under subsection (1) (a) or (b) of this section must

(a) be dated not earlier than the date on which the notice is sent,

(b) state that the company intends to act, or has acted, as the case may be, on the authority of the resolution or court order, and

(c) advise the dissenter of the manner in which dissent is to be completed under section 244.

Completion of dissent

244 (1) A dissenter who receives a notice under section 243 must, if the dissenter wishes to proceed with the dissent, send to the company or its transfer agent for the notice shares, within one month after the date of the notice,

(a) a written statement that the dissenter requires the company to purchase all of the notice shares,

(b) the certificates, if any, representing the notice shares, and

(c) if section 242 (4) (c) applies, a written statement that complies with subsection (2) of this section.

(2) The written statement referred to in subsection (1) (c) must

(a) be signed by the beneficial owner on whose behalf dissent is being exercised, and

(b) set out whether or not the beneficial owner is the beneficial owner of other shares of the company and, if so, set out

(i) the names of the registered owners of those other shares,

(ii) the number, and the class and series, if applicable, of those other shares that are held by each of those registered owners, and

(iii) that dissent is being exercised in respect of all of those other shares.

(3) After the dissenter has complied with subsection (1),

   
   

(a) the dissenter is deemed to have sold to the company the notice shares, and

(b) the company is deemed to have purchased those shares, and must comply with section 245, whether or not it is authorized to do so by, and despite any restriction in, its memorandum or articles.

(4) Unless the court orders otherwise, if the dissenter fails to comply with subsection (1) of this section in relation to notice shares, the right of the dissenter to dissent with respect to those notice shares terminates and this Division, other than section 247, ceases to apply to the dissenter with respect to those notice shares.

(5) Unless the court orders otherwise, if a person on whose behalf dissent is being exercised in relation to a particular corporate action fails to ensure that every shareholder who is a registered owner of any of the shares beneficially owned by that person complies with subsection (1) of this section, the right of shareholders who are registered owners of shares beneficially owned by that person to dissent on behalf of that person with respect to that corporate action terminates and this Division, other than section 247, ceases to apply to those shareholders in respect of the shares that are beneficially owned by that person.

(6) A dissenter who has complied with subsection (1) of this section may not vote, or exercise or assert any rights of a shareholder, in respect of the notice shares, other than under this Division.

Payment for notice shares

245 (1) A company and a dissenter who has complied with section 244 (1) may agree on the amount of the payout value of the notice shares and, in that event, the company must

(a) promptly pay that amount to the dissenter, or

(b) if subsection (5) of this section applies, promptly send a notice to the dissenter that the company is unable lawfully to pay dissenters for their shares.

(2) A dissenter who has not entered into an agreement with the company under subsection (1) or the company may apply to the court and the court may

(a) determine the payout value of the notice shares of those dissenters who have not entered into an agreement with the company under subsection (1), or order that the payout value of those notice shares be established by arbitration or by reference to the registrar, or a referee, of the court,

(b) join in the application each dissenter, other than a dissenter who has entered into an agreement with the company under subsection (1), who has complied with section 244 (1), and

(c) make consequential orders and give directions it considers appropriate.

(3) Promptly after a determination of the payout value for notice shares has been made under subsection (2) (a) of this section, the company must

(a) pay to each dissenter who has complied with section 244 (1) in relation to those notice shares, other than a dissenter who has entered into an agreement with the company under subsection (1) of this section, the payout value applicable to that dissenter’s notice shares, or

   
   

(b) if subsection (5) applies, promptly send a notice to the dissenter that the company is unable lawfully to pay dissenters for their shares.

(4) If a dissenter receives a notice under subsection (1) (b) or (3) (b),

(a) the dissenter may, within 30 days after receipt, withdraw the dissenter’s notice of dissent, in which case the company is deemed to consent to the withdrawal and this Division, other than section 247, ceases to apply to the dissenter with respect to the notice shares, or

(b) if the dissenter does not withdraw the notice of dissent in accordance with paragraph (a) of this subsection, the dissenter retains a status as a claimant against the company, to be paid as soon as the company is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the company but in priority to its shareholders.

(5) A company must not make a payment to a dissenter under this section if there are reasonable grounds for believing that

(a) the company is insolvent, or

(b) the payment would render the company insolvent.

Loss of right to dissent

246 The right of a dissenter to dissent with respect to notice shares terminates and this Division, other than section 247, ceases to apply to the dissenter with respect to those notice shares, if, before payment is made to the dissenter of the full amount of money to which the dissenter is entitled under section 245 in relation to those notice shares, any of the following events occur:

(a) the corporate action approved or authorized, or to be approved or authorized, by the resolution or court order in respect of which the notice of dissent was sent is abandoned;

(b) the resolution in respect of which the notice of dissent was sent does not pass;

(c) the resolution in respect of which the notice of dissent was sent is revoked before the corporate action approved or authorized by that resolution is taken;

(d) the notice of dissent was sent in respect of a resolution adopting an amalgamation agreement and the amalgamation is abandoned or, by the terms of the agreement, will not proceed;

(e) the arrangement in respect of which the notice of dissent was sent is abandoned or by its terms will not proceed;

(f) a court permanently enjoins or sets aside the corporate action approved or authorized by the resolution or court order in respect of which the notice of dissent was sent;

(g) with respect to the notice shares, the dissenter consents to, or votes in favour of, the resolution in respect of which the notice of dissent was sent;

(h) the notice of dissent is withdrawn with the written consent of the company;

   
   

(i) the court determines that the dissenter is not entitled to dissent under this Division or that the dissenter is not entitled to dissent with respect to the notice shares under this Division.

Shareholders entitled to return of shares and rights

247 If, under section 244 (4) or (5), 245 (4) (a) or 246, this Division, other than this section, ceases to apply to a dissenter with respect to notice shares,

(a) the company must return to the dissenter each of the applicable share certificates, if any, sent under section 244 (1) (b) or, if those share certificates are unavailable, replacements for those share certificates,

(b) the dissenter regains any ability lost under section 244 (6) to vote, or exercise or assert any rights of a shareholder, in respect of the notice shares, and

(c) the dissenter must return any money that the company paid to the dissenter in respect of the notice shares under, or in purported compliance with, this Division.

 

 

   
   

APPENDIX H
INFORMATION CONCERNING HECLA


APPENDIX H

INFORMATION CONCERNING HECLA

The following information should be read in conjunction with the information concerning Hecla appearing elsewhere in the Circular. Capitalized terms used, but not otherwise defined in this Appendix H shall have the meaning ascribed to them in the Circular.

TABLE OF CONTENTS    
CURRENCY   2
TECHNICAL INFORMATION   2
DOCUMENTS INCORPORATED BY REFERENCE   2
CORPORATE STRUCTURE   3
BUSINESS OF HECLA   4
SUMMARY DESCRIPTION OF THE BUSINESS   4
MATERIAL MINERAL PROPERTIES   18
DIVIDEND POLICY   18
DESCRIPTION OF HECLA’S SECURITIES   20
CONSOLIDATED CAPITALIZATION   22
OPTIONS TO PURCHASE SECURITIES   23
PRIOR SALES   24
TRADING PRICE AND VOLUME   24
PRINCIPAL SECURITYHOLDERS   25
DIRECTORS AND EXECUTIVE OFFICERS   25
INDEBTEDNESS OF DIRECTORS AND OFFICERS   29
LEGAL PROCEEDINGS AND REGULATORY ACTIONS   30
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS   32
AUDITORS, TRANSFER AGENT AND REGISTRAR   33
MATERIAL CONTRACTS   33
EXPERTS   34
OTHER MATERIAL FACTS   35
RISK FACTORS   35
SCHEDULE "A" A-1

 


 

CURRENCY

All references in this Appendix H to “$” or “US$” or “USD” or US dollars mean United States dollars.

TECHNICAL INFORMATION

Dr. Dean W.A. McDonald, a “qualified person” (“QP”) as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and not independent of Hecla, has reviewed and approved the scientific and technical information contained in pages 1 to 52, inclusive, of this Appendix H.

Dr. Dean W.A. McDonald, P. Geo, Ralph M. Barker, P.E., Robert J. Golden, P.E., Bradley Kucera, P.E. and Allen R. Anderson, P.E., each QPs and not independent of Hecla, other than Mr. Anderson who is independent of Hecla within the meaning of NI 43-101, have reviewed and approved the scientific and technical information contained in pages A-2 to A-18, inclusive, of this Appendix H.

Dr. Dean McDonald, P. Geo., Mr. Bryan Morgen, P.E., and Mr. Bill Hancock, RM SME, each QPs and not independent of Hecla, other than Mr. Hancock who is independent of Hecla within the meaning of NI 43-101, have reviewed and approved the scientific and technical information contained in pages A-19 to A-36, inclusive, of this Appendix H.

DOCUMENTS INCORPORATED BY REFERENCE

Information in respect of Hecla has been incorporated by reference in the Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from Hecla at Hecla’s corporate headquarters located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho, by email request to info@hecla-mining.com, or by calling Hecla, Investor Relations at 208-769-4100. In addition, copies of the documents incorporated herein by reference may be obtained through Hecla’s SEDAR profile located at www.sedar.com. The following documents of Hecla, filed with securities commissions or similar authorities in Canada are specifically incorporated by reference into and form an integral part of this Circular:

(i)      the audited annual consolidated financial statements of Hecla as at and for the years ended December 31, 2012, 2011 and 2010, together with the notes thereto and the auditors’ report therein;
(ii)      Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of Hecla’s Annual Report on Form 10-K for the year ended December 31, 2012 (“MD&A”);
(iii)      Item 8, “Financial Statements and Supplementary Data”, of Hecla’s Annual Report on Form 10-K for the year ended December 31, 2012;
(iv)      Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of Hecla’s Annual Report on Form 10-K for the year ended December 31, 2011;
(v)      Item 8, “Financial Statements and Supplementary Data”, of Hecla’s Annual Report on Form 10-K for the year ended December 31, 2011; and
(vi)      Pages 25 to 69, inclusive, of Hecla’s Proxy Statement, Annual Meeting of Shareholders May 15, 2013, dated April 3, 2013.

The content of any Form 8-K or Form 10-Q filed by Hecla with securities commissions or similar authorities in Canada after the date of this Circular and prior to the Effective Date will be deemed to be incorporated by reference into this Circular.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for the purposes of this Circular to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the

2


 

document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Circular.

CORPORATE STRUCTURE

Incorporation and Office

Hecla Limited was originally established in Idaho in 1891 and is a wholly owned subsidiary of Hecla. Hecla is incorporated in Delaware under the Delaware General Corporation Law. Hecla’s current holding company structure dates from Hecla’s incorporation in 2006 and the renaming of its subsidiary (previously Hecla Mining Company) as Hecla Limited.

Hecla’s corporate headquarters is located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho.

Intercorporate Relationships

The diagram below shows Hecla’s corporate structure with respect to its subsidiaries that, as of December 31, 2012, account for 10% of the consolidated assets or revenue of Hecla. Hecla owns either directly or indirectly 100% of each of the subsidiaries and each was formed in the State of Delaware. Hecla owns its interest in: (i) the Lucky Friday mine primarily through Hecla Limited; and (ii) the Greens Creek mine through its interests in Hecla Admiralty Company and Hecla Limited.


3


 

The following chart summarizes Hecla’s expected corporate structure (including non-material subsidiaries) immediately following completion of the Arrangement.


BUSINESS OF HECLA

Summary Description of the Business

Established in 1891 in northern Idaho’s Silver Valley, Hecla is one of the oldest publicly-traded precious metals mining companies operating in the U.S. and Hecla believes it is the largest primary silver producer and the second largest zinc and third largest lead producer in the U.S. Hecla has operating mines in Idaho and Alaska and exploration properties and pre-development properties in four world-class silver mining districts in the U.S. and Mexico.

At present Hecla’s material properties consist of the following mines and projects:

  • the Greens Creek mine, an underground mine producing silver, gold, lead and zinc and nearby exploration, located in Southeast Alaska (“Greens Creek”); and
  • the Lucky Friday mine, an underground mine producing silver, lead and zinc, and nearby exploration, located in Mullan, Idaho (“Lucky Friday”).

Hecla’s other properties consist of the following:

  • San Sebastian, a project located near Durango, Mexico;
  • San Juan Silver, a project located near Creede, Colorado; and
  • Silver Valley, a project located in Idaho’s Silver Valley.

4


 

The map below shows the locations of Hecla’s operating mines and exploration and pre-development projects, as well as its corporate offices located in Coeur d’Alene, Idaho and Vancouver, British Columbia.


Hecla is organized and managed into two segments that encompass its operating units: the Greens Creek mine and the Lucky Friday mine.

The Greens Creek Unit, Admiralty Island, Alaska

The Greens Creek mine has been 100%-owned since April of 2008 when Hecla acquired the outstanding 70.3% interest which it did not own from indirect subsidiaries of Rio Tinto, plc. The Greens Creek mine is located on Admiralty Island, near Juneau, Alaska, and has been in production since 1989, with a temporary care and maintenance period from April 1993 through July 1996. During 2012, the Greens Creek mine contributed US$320.9 million, or 100%, to Hecla’s consolidated sales. See the section entitled “The Greens Creek Segment” in the MD&A which is incorporated by reference herein.

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The Greens Creek ore body contains silver, zinc, gold and lead. Greens Creek is an underground mine which produces approximately 2,100 to 2,300 tons of ore per day. The primary mining methods are standard underground mining methods: cut-and-fill stoping and longhole stoping. These methods utilize rubber-tired equipment to access the veins through ramps developed outside of the orebody. In both methods, an underground excavation is made and a cut is taken along the strike of the vein, and subsequently filled with a concrete-like mixture called paste, or if the area is finished, waste rock. Once the paste has cured, using the ramp system, additional mining occurs above, underneath, or to the side of the paste, depending on the shape of the ore.

In the Greens Creek ore processing facility, the ore is ground to a sand-like size; a crusher and a large mill, termed a SAG (semi-autogenous grinding) mill, are used to reduce the rock to this smaller size. Subsequently, chemical reagents and air bubbles are used to “float” the metal apart from the rock. The “flotation” product, or concentrate, is shipped to smelters in Canada, Japan, China and Korea for final processing into saleable metals. A gravity circuit recovers free gold that exists as electrum, a gold/silver alloy in the ore. In 2012, ore was processed at an average rate of approximately 2,157 tons per day, and mill recovery totaled approximately 73% silver, 78% zinc, 68% lead and 61% gold. The doré is further refined by precious metal refiners and sold to banks, and the three concentrate products are sold to a number of major smelters worldwide.

The net book value of the Greens Creek mine property and its associated plant, equipment and mineral interests was approximately $681 million as of December 31, 2012. Based on current ore reserve estimates, the currently known remaining mine life at Greens Creek is ten years.

The Lucky Friday Unit, Coeur d’Alene, Idaho

The Lucky Friday mine is 100%-owned by Hecla Limited and is located in the Coeur d’Alene Mining District in northern Idaho. It has been a producing mine for Hecla since 1958.

Production at the Lucky Friday mine was suspended during 2012 as a result of the mine being placed on temporary care and maintenance while Hecla removed built-up cementitious material from the silver shaft, pursuant to an order by the U.S. Mine Safety and Health Administration (the “MSHA”). The silver shaft is approximately one-mile deep, 18 foot diameter, concrete-lined shaft from surface (the “Silver Shaft”), the primary access way from surface at the Lucky Friday mine. Limited production recommenced in the first quarter of 2013, and Hecla expects full production to resume in approximately mid-2013. See the section entitled “The Lucky Friday Segment” in the MD&A which is incorporated by reference herein.

Lucky Friday is a deep underground silver, lead and zinc mine. The primary mining method at the Lucky Friday mine is a standard underground method, cut-and-fill. This method utilizes rubber-tired equipment to access the veins through ramps developed outside of the ore body. In this method, an underground excavation is made and a cut is taken along the strike of the vein, and subsequently filled with a concrete-like mixture called paste, or if the area is finished, with waste rock. Once the paste has cured, using the ramp system, additional mining occurs above, underneath, or to the side of the paste, depending on the shape of the ore.

The processing mill at Lucky Friday is similar to that at Greens Creek, although the scale is smaller, and neither gold nor bulk concentrate are produced. Lead and zinc concentrates are shipped to smelters for final processing. Current processing capacity of the Lucky Friday facility is a nominal 1,000 tons per day.

In 2011, ore was processed at an average rate of approximately 905 tons per day. In 2011, mill recovery totaled approximately 93% silver, 93% lead and 87% zinc. All lead and zinc concentrate production during 2011 was shipped to Teck Cominco Limited’s smelter in Trail, British Columbia.

The net book value of the Lucky Friday mine property and its associated plant, equipment and mineral interests was approximately $253 million as of December 31, 2012. Based on current estimates of reserves, mineralized material, and other resources, the currently expected mine life at the Lucky Friday is approximately 26 years. In addition, the #4 shaft project, an internal shaft currently under construction at the Lucky Friday mine (the “#4 Shaft”), will, upon its completion, provide deeper access and is expected to expand the mine’s operations. Construction of the #4 Shaft as currently designed is expected to cost approximately $200 million, including approximately $92 million already spent as of December 31, 2012, with completion expected in 2016. Hecla believes that its current capital resources will allow it to complete the project. However, there are a number of factors that could affect completion of the project.

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Other Projects

San Sebastian, Durango, Mexico

Hecla owns 100% interest in the project near Durango, Mexico. Hecla’s concession holdings cover approximately 48,008 hectares (185 square miles), including the Francine, Middle and Andrea vein systems and multiple outlying active exploration areas.

Underground development along the Francine vein started in May 2001, and reached full production during the second quarter of 2002. Mining of economic ore on the upper Francine vein was completed during the first quarter of 2005. The mine has been placed on care and maintenance as exploration continues on the property, including the Hugh zone, which is located 100 to 600 meters below historic mining. Mining of economic ore at Don Sergio was completed in the fourth quarter of 2005 and reclamation of this portion of the mine site was completed during 2006. San Sebastian’s life of mine (“LOM”) production over four years was 11.2 million ounces of silver and 155,937 ounces of gold.

Re-examination of district potential near the Francine vein led to the discovery of the Andrea vein in 2011 and the Middle vein in 2012. The Middle vein contains significant high-grade silver and gold as outlined by systematic drilling in 2012 and, due to proximity to the Francine vein and Hugh zone, the exploitation of the Middle vein would likely use the same infrastructure. In 2012, there were also resource additions on the Andrea vein. In an attempt to build on these additions, scoping studies are in progress to determine the production viability, rate and sequencing of mining the three resource areas and are expected to be completed in the third quarter of 2013. Concurrent with the completion of the scoping studies, a ramp is being engineered for initial construction, expected in 2013, to allow access to both the Hugh zone and Middle vein. Currently there is an infill drill program on the Middle vein to increase the confidence level of the resource that may allow conversion to reserve status once a positive feasibility study is completed.

San Juan Silver, Creede, Colorado

In December 2011, Hecla’s wholly-owned subsidiary, Rio Grande Silver, Inc. (“RGS”), acquired the remaining 30% joint venture interest that it did not already own from its partners in approximately 55% of the 21-square-mile consolidated land package in the famous Creede Mining District, one of Colorado’s most prolific silver-producing districts. The RGS wholly-owned property encompasses known mineralization on the Bulldog, Amethyst and Equity vein structures and includes the historic Bulldog mine, which produced 25 million ounces of silver for Homestake Mining before closing in 1985 as a result of then depressed metals prices. The Creede Mining District has a proven history of strong silver production. In addition, Hecla maintains a 70% interest in a joint venture that encompasses the remaining San Juan Silver land package, which contains the less explored targets and is on the east and west flanks of the RGS property.

RGS is carrying out plans to re-access the Bulldog underground workings. Regaining access to the historic workings will provide underground drill platforms to confirm and potentially expand resources, as well as provide a means to develop future mining plans. Recent drilling from the surface has defined mineralization 1,500 feet north of the current resource. Additional in-fill drilling is expected to be conducted in this area from underground. Hecla is currently excavating a 2,800-foot long decline, and it has advanced over 800 feet. The decline will access the old Bulldog mine workings and orebody.

Silver Valley, Mullan, Idaho

Hecla owns a significant land position consisting of approximately 25 square miles in Northern Idaho’s Silver Valley, along Interstate 90, located in the Coeur d’Alene Mining District (which includes the Lucky Friday mine), where Hecla was founded over 120 years ago. This district has produced 1.2 billion ounces of silver in its history—one of the most prolific silver districts in the world. On this land position are many historic mines, which in the aggregate have produced more than 340 million ounces of silver, or about 25% of the entire historic production of the Silver Valley.

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Even though there has been a significant amount of silver mined from Hecla’s land holdings within the Silver Valley, very little modern exploration has actually taken place. Hecla believes that successful exploration could lead to new mineral discoveries as a result of its geologists evaluating historical information and geologic data and applying new technologies that allow them to take both a more comprehensive and more detailed look at the whole geologic structure of this mining district. Hecla has already identified many prospective targets in this long-term exploration effort including in the Star-Morning and Noonday vein systems, which its geologists explored during 2011 and 2012.

Hecla continuously evaluates investments in various projects in geographic locations that it believes to be under-explored and under-developed. Hecla has recently acquired the Monte Cristo project in an exploration stage site located in central Nevada and ownership interests in companies with exploration potential.

Mineral Reserve and Mineral Resource Summaries

Lucky Friday-Mineral Reserves

The following information is extracted from and is based on assumptions, qualifications and procedures which are described in the NI 43-101 technical report entitled “Technical Report on the Lucky Friday Mine, Shoshone County; Idaho U.S.A., NI 43-101 Report” dated March 28, 2013 (the “Lucky Friday Technical Report”) by Dr. Dean W.A. McDonald, P. Geo, Ralph M. Barker, P.E., Robert J. Golden, P.E., Bradley Kucera, P.E. and Allen R. Anderson, P.E.

The Lucky Friday Technical Report documents the geological block modeling, the mineable reserve and LOM plan, mineral processing, environmental and social issues and the financial assessment of the mining operations. Reference should be made to the full text of the Lucky Friday Technical Report which is available for review on Hecla’s SEDAR profile located at www.sedar.com. In addition, summary technical information relating to the Lucky Friday Mine is set in Schedule “A” to this Appendix H.

Lucky Friday Total Estimated Ore Reserves as of 12/31/2012

Lucky Friday Mine

 

Tons

 

Ag

(Oz/ton)

Pb

(%)

Zn

(%)

Ag

(Ounces)

Pb

(Tons)

Zn

(Tons)

Proven Reserve

Estimate 12/31/2012

2,206,600

12.1

7.4

2.7

26,778,900

163,350

58,560

Probable Reserve

Estimate12/31/2012

1,931,700

 14.8

 8.7

 3.2

 28,676,000

 167,400

 62,290

Total Ore Reserves

Estimate 12/31/2012

4,138,300

13.5

8.0

3.0

55,454,900

330,750

120,850

 

Lucky Friday-Mineral Resources

Lucky Friday Total Estimated Ore Resources as of 12/31/2012

 

 

Lucky Friday Mine 

Tons

Ag

(Oz/ton)

Pb

(%)

Zn

(%)

Ag

(Ounces)

Pb

(Tons)

Zn

(Tons)

Measured Resources

Estimate 12/31/2012

10,608,470 5.8 3.9 2.4 61,313,000 417,130 259,420
Indicated Resources Estimate 12/31/2012 8,420,130 5.6 3.7 2.2 47,391,430 314,330 181,050
Measured and Indicated Resources Estimate 12/31/2012 19,028,600 5.7 3.8 2.3 108,704,430 731,460 440,470
Inferred Resources Estimate 12/31/12 6,921,860 9.1 5.6 2.3 62,651,500 384,930 158,240

 


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Greens Creek-Mineral Reserves

The following information is extracted from and is based on assumptions, qualifications and procedures which are described in the NI 43-101 technical report entitled “Greens Creek Polymetallic Mine Alaska, NI 43-101 Technical Report on Operations” dated March 28, 2013 (the “Greens Creek Technical Report”) by Dr. Dean McDonald, P. Geo., Bryan Morgan, P.E., and Bill Hancock, RM SME.

The Greens Creek Technical Report documents the geological block modeling, the mineable reserve and LOM plan, mineral processing, environmental and social issues and the financial assessment of the mining operations. Reference should be made to the full text of the Greens Creek Technical Report which is available for review on Hecla’s SEDAR profile located at www.sedar.com. In addition, summary technical information relating to the Greens Creek Mine is set in Schedule “A” to this Appendix H.

Greens Creek Total Estimated Ore Reserves as of 12/31/2012

        Gold Silver Lead Zinc   Gold   Silver   Lead   Zinc
Classification Zone   Tons (Oz/ton) (Oz/ton) (%) (%)   (Ounces)   (Ounces)   (Tons)   (Tons)
Proven East          
  West          
  9 A