Less than a year after loaning money to a struggling Canadian mining company, Coeur d’Alene-based Hecla Mining Co. says it will make a $12 million takeover bid for that company, Dolly Varden Silver Corp.

The purchase would be for all outstanding shares of Dolly Varden currently not owned by Hecla or its affiliates.

Mike Westerlund, Hecla’s vice president of investor relations, says Hecla has loaned Dolly Varden money previously for financing of its operations.

“We’re just willing to buy the whole thing at this point,” Westerlund says. Hecla thinks Dolly Varden has some projects that are promising, he says.

Westerlund says Hecla set a 35-day deadline for its share offer, which requires at least half of all shares be sold to Hecla.

Dolly Varden’s board of directors has the ability to shorten the minimum bid period, allowing shareholders to receive the benefits of Hecla’s offer sooner.

Officials at Dolly Varden couldn’t be reached for comment.

Hecla says the takeover bid was prompted by the company’s dissatisfaction with a recent loan arrangement made by Dolly Varden’s board of directors to pay back Hecla and another investor.

Says Hecla president and CEO Phillips S. Baker in a press release, “While we believe that Dolly Varden can one day be a significant silver producer, we are very concerned with the current board’s value destruction for shareholders.”

Baker said, “These directors aren’t acting in the shareholders’ best interests with a new loan arrangement that causes substantial dilution at a low share price.”

Specifically, he said, “The Dolly Varden board is proceeding with this arrangement despite Hecla’s expressed willingness months ago to extend the existing loan, and a formal offer that, compared to the proposed new loan, extends the maturity a year longer, provides a lower interest rate, and two times more new funding.”

Baker goes on to say that Dolly Varden’s board created a loan arrangement that starts with the issuing of warrants with an option value of almost 28 cents per share each and an exercise price of 30 cents per share. Hecla is offering 69 cents per share.

Based in Vancouver, British Columbia, Dolly Varden is involved in exploring and developing silver projects in northwestern British Columbia. Dolly Varden properties are considered to be highly prospective for holding high-grade precious metal deposits.

On June 13, Dolly Varden announced on its website it had secured term loans with three lenders that would provide $2.5 million to the company.

Approximately $2.1 million of the proceeds were going to be used to repay Hecla Canada Ltd. and another lender for loans they extended in 2015.

“The decision for this new loan was made after very careful consideration,” said Rosie Moore, director and interim CEO and president of Dolly Varden in a June 13 press release.

“The new short-term lending facility pays off the company’s existing loan and bears a lower interest rate but, most importantly, it allows us greater flexibility for loan repayment,” Moore said in the press release.

Moore added, “We wish to thank Hecla Canada Ltd., and Robert L. Gipson for their support, especially during 2015 which was a very difficult year for Dolly Varden and the junior minerals market in general. We sincerely hope that both will remain supportive shareholders of Dolly Varden as we strive to create value for all stakeholders.”

On Sept. 30, 2015, Dolly Varden secured a one-year, $2 million loan at a 5 percent rate with Hecla Canada Ltd. and Gipson, the company says.

The new loan would carry an interest rate of 4 percent with a payoff in six months. In connection with the new loan, a total of 2.5 million warrants would be issued to the new lenders within five business days of Dolly Varden receiving money from the new loan, Dolly Varden said in the press release.

In August 2012, Hecla acquired 20 million shares of Dolly Varden for $3.2 million. The acquisition then gave Hecla a 20 percent ownership interest in the company.

Hecla, through its wholly owned subsidiary Hecla Canada Ltd., controls 2.6 million Dolly Varden shares and 1.25 million Dolly Varden warrants, a security that entitles the holder to purchase the issuing company’s stock at a fixed price.

Hecla, and its shareholders who support the bid, hold in aggregate 5.1 million shares and 2.5 million warrants, equal to just over 34 percent of Dolly Varden’s shares on a fully diluted basis, Hecla says.

Hecla Canada Ltd. notified the TSX Venture Exchange, a stock exchange headquartered in Calgary, Alberta, of its concerns and has asked the exchange not to approve the issuance of warrants to Dolly Varden’s proposed new lenders, Westerlund says.

Hecla’s board of directors approved the takeover bid; it doesn’t require approval by the company’s shareholders.

Founded in 1891, Hecla is a silver producer operating mines in Alaska, Idaho, and Mexico. It is becoming a gold producer with a mine operation in Quebec, Canada.

In May, Hecla agreed to acquire Mines Management Inc., of Spokane. That transaction is expected to be completed during the third quarter of 2016 and is subject to approval by Mines Management shareholders.

Under the terms of the agreement, Mines Management shareholders will receive 0.2218 common shares of Hecla for every one share of Mines Management.

Once the transaction is completed, Hecla plans to evaluate Mines Management’s Montanore project, which is located in northwestern Montana and is considered one of the largest underdeveloped silver and copper deposits in North America.

Hecla’s plans to acquire Mines Management comes less than a year after it acquired another Spokane-area mining concern, Revett Mining Co. It completed its acquisition of Revett in June 2015 and took over its Rock Creek project then.