Hecla Mining Company (NYSE:HL) has made public its abandonment and termination of its bid for the Vancouver-based explorer, Dolly Varden Silver Corp (CVE:DV). The results of the withdrawal were disastrous because they affected the shares of the two entities. Expressing the company’s disappointment, Phillips S. Baker, Jr., Hecla’s President and CEO stated that Dolly Varden’s expensive debt financing was not in its favor. Baker also referred to the Dolly Varden’s planned dilutive private placement as a poison pill because it would increase the cost of acquiring it by more than 50%.
Hecla suffered a decline of 5.1% resulting in a $2.2 billion market valuation. Nevertheless, despite the disappointment, Hecla says it is still willing to maintain its 15.7% interest in Dolly Varden given that they had both vowed to have a long-term commitment to each other.
Dolly Varden Silver Corporation suffers too
As Hecla shared out its disappointment, Dolly Varden also had a share of the wrath. Its Micro-cap with a value of $11 million in Toronto fell 13% on the TSX Venture Exchange. The company’s which entirely owns a 9, 4000-hectare silver property in BC’s Northwest has had a market soar of 278% since the year began.
Rosie Moorem, Dolly Varden’s CEO, Director and Interim President says that it is just a matter of time before the company can get rid of its debt and gain the mandate of interacting with other debt-free peers. After that, it can re-focus on further exploration, expansion, and growth of its strategies.
What next for US silver producer
Reports indicate that Hecla’s unsolicited bid for Dolly Varden was an insider bid, a contention that was agreed upon by the Ontario Securities Commission. As such, Hecla has no much option other than to carry out an independent formal valuation with a report being submitted to the Company’s shareholders.
Apparently, the company which is a growing gold producer with operating mines in Alaska, Idaho, and Mexico is also into development of properties. Some of its pre-development properties can be found in U.S., Canada, and Mexico, which are among the six world-class silver and gold mining districts.
