Silver Stocks (SIL) Firm, M&A Activity Heating Up

SILVER STOCKS NEWS – Silver stocks were mixed on Monday as the Global X Silver Miners ETF (SIL) hovered near unchanged at $18.49 per share in mid-day trading.  The silver stocks ETF stabilized while the spot price of silver advanced $0.13, or 0.5%, to $27.97 per ounce.  Precious metals held firm despite moderate strength in the U.S. dollar, which rose 0.2% against a composite of the world’s most traded currencies.

Silver stocks in the news of late included Hecla Mining (HL), as its hostile bid for U.S. Silver Corp (USA.TSX) ran into further resistance this morning.  Last Wednesday, Hecla reported its intention to purchase U.S. Silver for C$1.80 per share –a 23% premium over U.S. Silver’s share price on the day prior to the announcement.

Hecla Mining asserted that its offer represented a superior proposal to a bid by RX Gold & Silver Inc (RXE.TSXV), which on June 7th signed a definitive agreement to merge with U.S. Silver.  RX Gold & Silver’s offer is comprised of an all-stock transaction under which U.S. Silver shareholders will receive 0.67 shares in the newly merged company for each share of U.S. Silver, representing approximately 70% of the combined company.

As part of RX Gold & Silver’s offer, the board of directors of both companies unanimously recommended that shareholders vote for the merger.  Additionally, Sprott Asset Management LP – the largest shareholder of each company – signed a lock-up agreement supporting the Transaction.

This morning, U.S. Silver responded to Hecla’s bid by urging its shareholders to reject Hecla’s offer in favor of the business combination with RX Gold & Silver.  “The Board of Directors continues to believe that the proposed combination transaction with RX Gold will provide long term value to U.S. Silver in excess of the consideration being offered under the Hecla Offer,” U.S. Silver contended.

U.S. Silver – which will hold its shareholder vote on the RX Gold & Silver proposal on August 7th – went on to say that “The Board of Directors believes that the Hecla Offer is opportunistically timed to take advantage of a recent period during which silver prices, and the share price of companies in the silver industry, have been at a low point. If successful, the Hecla Offer would deny U.S. Silver shareholders the opportunity to participate in future value accretion as the silver price recovers.

While Hecla Mining (HL) has yet to publicly respond, its shares inched lower by 0.8% to $4.63 in mid-day trading.

Other notable silver stocks in the red on Monday included First Majestic Silver (AG) and Silver Standard Resources (SSRI).  AG fell by 1.1% to $16.66 while SSRI slipped 0.6% to $12.62 per share.

In contrast, SIL components Coeur d’Alene Mines (CDE), Pan American Silver (PAAS), and Silver Wheaton (SLW) each moved into positive territory.  CDE rose by 0.6% to $16.57, PAAS by 1.3% to $14.50, and SLW by 1.5% to $27.88 per share.