Copper and Silver Markets Warming Up?

Mergers and acquisitions are normally a good sign for the market and investors. On Tuesday, it was announced that Hecla Mining (NYSE:HL) had signed an agreement to acquire Mines Management (NYSEMKT:MGN,TSX:MGT) in an all stock deal where each common share of Mines Management will be exchanged for 0.2218 shares of Hecla.

According to the release, this represents a 41 percent premium to Mines Management’s ten day volume weighted average price on May 20, 2016.

Mine Management’s flagship project is the Montanore copper and silver project located approximately 10 miles from Hecla’s Rock Creek project and 50 miles from their Lucky Friday Mine in Idaho. Hecla is the largest primary silver producer in the United States.

The merger looks to make sense from a geographic and geology perspective and is expected to close in Q3 2016 subject to approval from Mines Management shareholders.

The executive teams both endorsed the proposed merger with Glenn Dobbs, Mines Management CEO, stating “The Montanore Project has been significantly advanced by Mines Management and, with the issuance of the final Environmental Impact Statement and Records of Decision early this year, now is the time to pass it on to Hecla to further advance the project and put it into production.”

Phillips S. Baker, Jr., Hecla’s president and CEO added “Hecla is the logical company to move Montanore forward, with its close proximity to Rock Creek, as well as its similar geology and scale. We have considerable experience operating Greens Creek in a National Monument which will, combined with our financial strength and commitment to the community and environment, help Montanore reach its full potential.”

The market reacted positively to the news. Shares of Mines Management were up 32 percent to $0.85 in New York, with trading volumes coming in at 3.35 million relative to a daily average of 158,512. In Toronto, the company saw its shares rise 33 percent to $1.11.

To read the full press release please click here.

The copper and silver markets have been challenging as of late, so perhaps Tuesday’s news is the start of some consolidation in the space. That could certainly be good news for investors.

What investors can learn from this proposed deal is to look for companies with projects that are in close proximity, and where one company significantly stronger financially. We look forward to reporting successful completion of this transaction later this year.

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