Hecla Mining to acquire Revett

Hecla Mining Company announced Friday an agreement to acquire Revett Mining Inc. The agreement was reached Thursday and, assuming shareholder approval, is expected to close late in the second quarter of 2015.

Revett’s long-anticipated Rock Creek project, expected to provide a much-needed boost to the depressed economies of Lincoln and Sanders counties, was Hecla’s motivation for purchasing Revett.

“The main impetus behind the acquisition is Rock Creek,” said Hecla vice president for external affairs Luke Russell.

For Revett the motivation is pure economics.

Revett fell on hard times in late 2012, when unexpected seismic activity prompted them to voluntarily shut down the Troy Mine and dig a new, safer, adit from which to access the copper and silver deposits. After two years of work, Revett finally started ramping back up to full production until copper prices collapsed in early 2015, forcing Revett to suspend operations and place the mine on care and maintenance status.

“It was like the perfect storm for us,” said Revett board of directors chairman Tim Lindsey. “We had the seismic activity and then just as we started to rebound from that the bottom fell out of the metals market. We just couldn’t weather that storm, even though the summit was in sight.”

Lindsey compared the situation to adventurer Jon Krakauer’s disastrous ascent up Mount Everest in 1996. Krakauer’s expedition, well-financed and highly trained, scaled to nearly the top of the mountain before an unexpected storm struck, killing eight members of the party.

“We had the financing, we had the experience. Then we got to the point where we could see the summit and the storm hit,” he said. “Our storm was the precipitous decline in copper prices. That was the external factor we just couldn’t control.”

The transition, said Revett president and chief executive officer John Shanahan, isn’t something to fear.

“We’ve known the management and technical teams at Hecla for years. They’re a solid company with the resources and experience to make Rock Creek a world-class project,” he said.

Hecla has experience mining in environmentally sensitive areas. The company currently operates the Greens Creek Mine in and around the Admiralty Island National Monument in Alaska.

“We want to bring that experience to Rock Creek,” Russell said.

Shanahan agreed.

“A project like Rock Creek needs a world-class company, like Hecla, to make it successful,” he said.

Hecla, founded in 1891, is the nation’s oldest mining company and recently celebrated its 50-year anniversary of public trading on the New York Stock Exchange.

Lindsey said Hecla holds the same core values as Revett.

“The vision that we had, about the safety of our people, stewardship of the environment and support for the community, they’re going to have that same commitment,” he said.

Both Lindsey and Shanahan were hopeful, but acknowledged the bittersweet nature of the change.

“The Troy Mine, for us, was everything,” Shanahan said. “I’ve grown very fond of northwest Montana. I know the workforce we had at Troy was as good as any we’d find anywhere on this planet.”

Lindsey also spoke about losing Troy as a downside to the deal.

“The downside is that the transaction is focused on Rock Creek,” he said. “Revett wanted to leave the Troy Mine on care and maintenance, but Hecla is going to transition the mine to full closure and reclamation. There’s always a sadness when a base industry has to say ‘that’s it.’”

The closure of the Troy Mine was something for which Revett had long-planned. They had, Shanahan said, an insurance policy and restricted funds set aside for just that purpose, when the time came.

The reclamation project, once approval is obtained from the Forest Service, will take an estimated two to three years. Russell was uncertain as to the number of jobs provided by the reclamation, although he said there would be a number of contractors involved in the project.

“How do you move forward with Troy Mine on care and maintenance and the continuation of developing Rock Creek?” Lindsey asked. “This seemed like the best opportunity for all of the stakeholders involved, including the shareholders and the community.”

The way the agreement is structured, Revett shareholders will receive .1622 shares of Hecla stock for each share of Revett. Based upon Hecla’s closing price as of March 25, $3.23, the trade represents a gain of more than 30 percent in value for Revett shareholders.

Russell said representatives of Hecla will be working closely with the Forest Service to finalize the permitting of Rock Creek and move the project to full production as quickly as possible.

“We are going to sit down with the Forest Service to better understand their timeline and status,” he said. “We’re looking forward to working with them on this project.”

“Hecla has been through many of these ups and downs in the metals markets,” Lindsey said. “They’ll carry this thing to the summit.”