Hecla Mining is buying Klondex Mines for US$462 million in a cash and stock. Under the terms of the deal, Klondex shareholders will receive US$2.47 per share, a 59 per cent premium to Klondex’s volume-weighted average price over the last 30 days.

“This transaction is an excellent outcome for Klondex and our shareholders, delivering premium value and a clear pathway to develop and optimize the Nevada mining assets and create further value in the future,” Klondex President and Chief Executive Officer Paul Huet said in a press release.

The crown jewels of the deal are Klondex’s mines in Nevada -- Fire Creek, Midas and Hollister -- which will increase Hecla’s annual production by 162,000 gold equivalent ounces. All-in costs per ounce at those mines came in at US$1,084 last fiscal year, far below the $1,767 at its True North mine 250 kilometers northeast of Winnipeg.

The takeover is subject to shareholder and regulatory approvals, with closing anticipated in the second quarter of this year. The agreement allows for a US$21-million break fee under certain circumstances.

Klondex’s Canadian assets, which includes the True North mining complex, will be spun out to existing shareholders as a new company dubbed Klondex Canada which will list on the Venture Exchange.

The True North facility produced about 24,636 gold equivalent ounces in fiscal 2017, falling short of expectations by as much as 45,000 ounces due to lower than anticipated mineral grades. The company put the operation under care and maintenance earlier this year while it reviewed its strategic alternatives.