America’s largest and highest-grade silver producer adding Canada’s largest and highest-grade silver reserve

COEUR D'ALENE, Idaho--(BUSINESS WIRE)-- Hecla Mining Company (NYSE:HL) (Hecla) and Alexco Resource Corp. (NYSE American:AXU; TSX:AXU) (Alexco) are pleased to announce a definitive agreement for Hecla to acquire all of the outstanding common shares of Alexco that Hecla does not already own. Each outstanding common share of Alexco will be exchanged for 0.116 of a share of Hecla common stock implying consideration of US$0.47 per Alexco common share and a premium of 23% based on the companies’ 5-day volume weighted average price on the NYSE and NYSE American on July 1, 2022. In addition, Hecla will (i) provide interim financing to provide working capital and ensure the development and exploration at Keno Hill continues to be advanced and (ii) subscribe for additional common shares bringing its ownership stake to 9.9%.

Hecla has also entered into an agreement with Wheaton Precious Metals Corporation (WPM) to terminate its silver streaming interest at Alexco’s Keno Hill property in exchange for US$135 million of Hecla common stock conditional upon the completion of Hecla’s acquisition of Alexco.

Benefits to Hecla Shareholders

A large, high-grade silver property in the Yukon, a top 10 rated jurisdiction by the Fraser Institute
A fully permitted property with infrastructure that includes a 400 tonne per day mill, on-site camp facility, all-season highway access, and connection to the hydropower grid
Increases Hecla’s silver exposure by increasing proven and probable silver reserves 19% to 237 million ounces, measured and indicated resources 24% to 257 million ounces and inferred resources 7% to 523.7 million ounces
Potential to be Canada’s largest silver producer
Benefits to Alexco Shareholders

Delivers an immediate up-front premium to Alexco shareholders
Allows advancement of Keno Hill’s development with an immediate and non-dilutive interim financing
Partners with the United States’ largest silver producer
Transitions from a single asset and its development risk to a diversified production base of long-lived mines and a portfolio of high-quality exploration projects
A strong balance sheet to invest in Keno Hill and continue its history of resource expansion
Enhanced capital markets profile with increased analyst coverage and trading liquidity
“At Hecla, we have followed the Keno Hill project closely for a number of years, as it is one of the very few deposits that fit seamlessly into Hecla’s strategy of owning and operating high-grade properties in tier one jurisdictions,” said Phillips S. Baker Jr., President and CEO. “As the United States’ largest silver producer, producing over 40% of silver mined in the U.S., it is natural that Hecla acquires Keno Hill which could also make Hecla Canada’s largest silver producer. Silver is a critical element to decarbonize the economy and the need for domestic supply is growing. Acquiring Keno Hill allows Hecla to further meet this need with a secure high-grade silver development and exploration project that has a small environmental footprint.”

“This transaction delivers significant benefits to our stakeholders,” said Clynton Nauman, Chairman and CEO of Alexco. “By partnering with Hecla, an industry leader in high-grade narrow vein silver mining, we further position Keno Hill to achieve its full potential. There is no doubt that we have fallen well behind the development and production plan at Keno Hill – and our original estimate of achieving commercial production in early 2022. There are myriad reasons for those challenges, but fundamentally, they all led to an increasing level of stress across our business, which was having a negative impact on the share price, our finances, our employees, and other stakeholders. As a much larger business, Hecla has the organizational expertise and financial strength to build Keno Hill to the level and capacity required, while being able to continue to invest in exploration across the district, something that we, as Alexco, independently would likely struggle to achieve. Frankly, the opportunity now afforded to our employees, to the First Nation of Na-Cho Nyäk Dun and the wider Yukon community as a whole is superior to anything Alexco could offer in the short term. I look forward to working with Phil and his team at Hecla to close this transaction in September 2022.”

Terms of the Transaction

The agreement provides Alexco shareholders with 0.116 of a Hecla share for each Alexco common share they hold as of the effective date of the agreement. Hecla will issue approximately 18 million common shares to Alexco shareholders. Upon completion of the transactions with both WPM and Alexco, and assuming the July 1, 2022 5-day volume weighted average price of Hecla’s shares of US$4.13, WPM and Alexco shareholders will own approximately 5.6% and 3.0%, respectively, of the outstanding common shares of Hecla. The exact number of Hecla common shares to be issued to WPM will be calculated immediately before the closing date.

Hecla is providing Alexco with a US$30 million secured loan facility and is purchasing 8,984,100 Alexco Shares at C$0.50per share,having an aggregate value of C$4,492,050, which will result in 9.9% of Alexco Shares being held by Hecla or its affiliates. A portion of the loan will be immediately drawn and the remainder available on a revolving basis, and the use of proceeds will be for agreed upon working capital and capital expenditures purposes according to a plan jointly approved by Alexco and Hecla. The loan and share purchase are intended to provide Alexco with immediate working capital to continue development work at Keno Hill and are not conditional upon the completion of the transaction.

Board of Directors’ Recommendations

The Board of Directors of Alexco and Hecla have both unanimously approved the transaction. The Board of Directors of Alexco unanimously recommends that Alexco shareholders vote in favor of the transaction. Alexco’s directors and officers support the transaction and have entered into customary voting support agreements with Hecla agreeing to vote their Alexco shares in favor of the transaction. WPM has also entered into a voting support agreement with Hecla to vote its Alexco shares in favor of the transaction, resulting in approximately 4.9% of Alexco’s outstanding common shares being subject to voting support agreements to support the transaction.

Cormark Securities Inc. provided an opinion to the Alexco Board of Directors that the transaction is fair from a financial point of view to Alexco shareholders as of the date of the arrangement agreement, and subject to the assumptions, limitations and qualifications in the opinion.

Transaction Conditions and Timing

The transaction will be implemented by a Court-approved plan of arrangement under the Business Corporations Act (British Columbia) and requires the approval of: (i) 66 2/3% of the votes cast by the holders of Alexco’s common shares, (ii) 66 2/3% of the votes cast by the affected securityholders of Alexco voting as a single class, and (iii) if applicable, a majority of the votes cast by the holders of Alexco’s common shares after excluding any votes of Hecla and other persons required to be excluded under Canadian Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting.

The Alexco-Hecla and WPM-Hecla transactions are each subject to applicable regulatory approvals and customary closing conditions. The agreement provides for customary deal-protection provisions, including a non-solicitation covenant on the part of Alexco, a right for Hecla to match any superior proposal and a termination fee of US$10 million, payable by Alexco to Hecla, under certain circumstances.

It is anticipated that the special meeting will be held in September 2022 with the acquisition expected to close later that month.

Advisors and Counsel

BMO Capital Markets is acting as financial advisor to Hecla in connection with the Transaction. Osler, Hoskin & Harcourt LLP is serving as Canadian counsel to Hecla and K&L Gates is acting as U.S. counsel to Hecla.

Cormark Securities Inc. is acting as financial advisor to Alexco. Blake, Cassels & Graydon LLP is serving as counsel to Alexco.

Conference Call Details

Hecla will host a conference call on July 5, 2022 at 8:30 a.m. Eastern Time to discuss the acquisition. You may join the conference call by dialing toll-free 888-330-2391. The participant code is 4812168. Hecla’s live and archived webcast can be accessed at www.hecla-mining.com under Investors.

About Hecla

Founded in 1891, Hecla Mining Company (NYSE:HL) is the largest silver producer in the United States. In addition to operating mines in Alaska, Idaho and Quebec, Canada, the Company owns a number of exploration properties and pre-development projects in world-class silver and gold mining districts throughout North America.

About Alexco

Alexco is the owner and operator of the historic Keno Hill Silver District in Canada’s Yukon Territory, one of the highest-grade silver deposits in the world.

Important Additional Information About the transaction and Where to Find It

This material relates to Hecla’s proposed acquisition (the “Transaction”) of Alexco. Shares of Hecla’s common stock (the “Hecla Shares”) issued in connection with the proposed Transaction may be registered pursuant to a registration statement to be filed with the SEC or issued pursuant to an available exemption. This information is not a substitute for any registration statement or any other document that Hecla may file with the SEC or that it or Alexco may send to their respective shareholders in connection with the offer and/or issuance of Hecla Shares. Investors are urged to read any registration statement, if and when filed, and all other relevant documents that may be filed with the SEC or with Canadian regulatory authorities as and if they become available because they will contain important information about the issuance of Hecla Shares. Documents, if and when filed with the SEC, will be available free of charge at the SEC’s website (www.sec.gov) and under Hecla’s profile on the SEDAR website at www.sedar.com. You may also obtain these documents by contacting Hecla’s Investor Relations department at Hecla Mining Company; Investor Relations; 1-800-HECLA91 (1-800-432-5291); hmc-info@hecla-mining.com. Thisrelease does not constitute an offer to sell or the solicitation of an offer to buy any securities.

In connection with the proposed transaction, Alexco will file proxy soliciting materials with the SEC and/or Canadian regulatory authorities. The information contained in any such filing may not be complete and may be updated, amended or changed.SHAREHOLDERS ARE URGED TO READ SUCH MATERIALS WHEN AVAILABLE AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SEC AND/OR CANADIAN REGULATORY AUTHORITIES CAREFULLY IN THEIR ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.

Proxy solicitation materials will be mailed to Alexco’s shareholders seeking their approval of the Transaction. Anyone may also obtain a copy of such materials free of charge once available by directing a request to: Alexco Resource Corp., Suite 1225, Two Bentall Centre, 555 Burrard Street, Box 216, Vancouver, British Columbia, V7X 1M9, Attention: Investor Relations or, Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, ID 83815-9408; Investor Relations; 1-800-HECLA91 (1-800-432-5291). In addition, any relevant materials filed with the SEC will be available free of charge at the SEC’s website at www.sec.gov and under Alexco’s profile on the SEDAR website at www.sedar.com. Interested persons may also access copies of such documentation filed with the SEC by visiting Alexco’s website at www.alexcoresource.com.

Participants in Solicitation

Hecla, Alexco, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Hecla is set forth in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 23, 2022, its proxy statement for its 2022 annual meeting of shareholders, which was filed with the SEC on April 12, 2022, and its Current Report on Form 8-K, which was filed with the SEC on May 27, 2022. These documents may be obtained free of charge from the SEC’s website at www.sec.gov and Hecla’s website at www.hecla-mining.com. Information about the directors and executive officers of Alexco is set forth in its Management Information Circular filed on SEDAR on May 5, 2022. This document may be obtained free of charge from SEDAR at www.sedar.com and Alexco’s website at www.alexcoresource.com. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Alexco information circular and other relevant materials to be filed on SEDAR and with the SEC when they become available. These documents may be obtained free of charge from SEDAR at www.sedar.com and the SEC’s website at www.sec.gov and Alexco’s website at www.alexcoresource.com.

Cautionary Statements to Investors on Forward-Looking Statements

Forward-Looking Statements relating to Hecla

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws, including Canadian etc. etc.

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