Coeur d’Alene-based Hecla Mining Co., which is the largest silver producer in the U.S., has agreed to acquire all outstanding stock that it doesn’t already own in Alexco Resource Corp., in a transaction that potentially will make Hecla also the largest silver producer in Canada.

Alexco owns and operates the historic Keno Hill Silver District in Canada’s Yukon Territory, which the company says is one of the highest-grade silver deposits in the world.

Announced this morning, the agreement provides Alexco shareholders with 18 million shares of Hecla common stock, at the rate of 0.116 Hecla shares for each Alexco common share. At that rate, the Alexco shares are valued at 47 cents per share including a 23% premium based on both companies’ five-day average price on the New York Stock Exchange as of July 1, according to the release.

Hecla also has entered into an agreement with Wheaton Precious Metals Corp. to terminate WPM’s interest in Keno Hill-produced silver in exchange for $135 million in Hecla common stock, conditional upon the completion of Hecla’s acquisition of the Alexco shares.

“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,” says Phillips S. Baker Jr., Hecla president and CEO, in the release. “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.”

Clynton Nauman, chairman and CEO of Alexco, says in the release, “By partnering with Hecla … we further position Keno Hill to achieve its full potential.”

In addition to the acquisition, Hecla will provide $30 million in interim financing for working capital ensure development and exploration continue at Keno Hill.

Upon completion of the transaction, which is expected to occur in this year's third quarter, Alexco and WPM will own 3% and 5.6%, respectively of the outstanding common shares of Hecla stock.

Hecla’s stock was priced at $3.61 per share at the close of trading Tuesday, July 5. The stock has traded at between $3.48 and $7.71 a share during the past 52 weeks.