Hecla Acquisition ULC and Hecla Mining Company

Decision

Headnote

Process for Exemptive Relief Application in Multiple Jurisdictions (passport application ) -- relief from take-over bid requirements to send bid and bid circular to security holders in connection with bid commenced by advertisement -- condition to bid not satisfied prior to deadline for sending bid and bid circular to security holders -- relief granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94.2(2)(c), 104(2)(c).

August 10, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

HECLA ACQUISITION ULC AND

HECLA MINING COMPANY

(the Filers)

DECISION

Background

The principal regulator in the Jurisdiction (the Decision Maker) has received an application from the Filers for a decision under under section 104(2) of the Securities Act (Ontario) (the Act) and the corresponding provisions of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (MI 62-104) exempting the Filers from the requirement to send their take-over bid and take-over bid circular to those security holders named in the list of U.S. Silver Corporation's security holders within two business days of receipt of such list from U.S. Silver Corporation pursuant to subsection s. 94.2(2)(c) of the Act (and the corresponding provisions of MI 62-104) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) The Ontario Securities Commission is the principal regulator for this application, and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in the provinces of British Columbia and Alberta (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. Hecla Mining Company (Hecla Mining) is a silver producer in the United States. It has two operating mines and exploration properties in United States and Mexico. The shares of Hecla are listed on the New York Stock Exchange under the symbol "HL".

2. Hecla Acquisition ULC (Hecla ULC) is an indirect wholly-owned subsidiary of Hecla Mining, and was created specifically for the purpose of making the take-over bid described in detail below (referred to herein collectively with Hecla Mining as Hecla).

3. Neither Hecla Mining nor Hecla ULC is a reporting issuer or the equivalent in any jurisdiction of Canada.

4. Neither Hecla nor Hecla ULC is in default of securities legislation in any Jurisdiction.

5. U.S. Silver Corporation (US Silver) is a corporation existing under the Canada Business Corporations Act, with a registered office in Toronto, Ontario. US Silver, through its wholly owned subsidiaries, owns silver-lead-copper mines in the United States.

6. The principal regulator of US Silver is the Ontario Securities Commission.

7. US Silver is a reporting issuer in the Provinces of British Columbia, Alberta, and Ontario. The common shares (Common Shares) and common share purchase warrants (Warrants) of US Silver are listed on the Toronto Stock Exchange under the symbols "USA" and "USA.WT", respectively. The Common Shares are also posted for trading on the OTCQX in the United States under the symbol "USSIF" and in Germany on the Frankfurt Stock Exchange under the symbol "QE2".

8. On June 7, 2012, US Silver and RX Gold & Silver Inc. issued a press release (the RX Gold Press Release) announcing the signing of a definitive agreement to combine the two companies by way of a plan of arrangement (the RX Gold Arrangement). The RX Gold Press Release is filed on Sedar.

9. Early on Monday, July 23, 2012, Hecla delivered an expression of interest letter to the board of directors of US Silver wherein Hecla proposed a business combination (the Hecla Proposal) of Hecla and US Silver.

10. On July 25, 2012, Hecla requested the US Silver shareholder and warrantholder lists (the Securityholder Lists) from US Silver.

11. On July 25, 2012, Hecla issued a news release (the Hecla News Release), announcing its intention to acquire all of the outstanding Common Shares and Warrants of US Silver (the Hecla Proposal). The Hecla News Release is filed on Sedar.

12. The Hecla News Release provided that the Hecla Proposal would commence by way of a newspaper advertisement, with a formal offer and take-over bid circular being mailed to holders of Common Shares and Warrants as soon as possible after US Silver made its shareholder and warrantholder lists available to Hecla, which lists Hecla requested be delivered by US Silver on July 25, 2012.

13. On July 26, 2012, Hecla published a newspaper advertisement in the National Post, National Edition, giving notice of the Hecla Proposal and encouraging holders of Common Shares and Warrants to accept the Hecla Proposal.

14. The Hecla Proposal is subject to a number of conditions, including the condition (the RX Condition) that the shareholders of US Silver shall not have approved the US Silver Special Resolution (defined below) at the US Silver Special Meeting (defined below) or the RX Gold Arrangement shall have otherwise terminated.

15. Management of US Silver called a special meeting (the US Silver Special Meeting) of shareholders of US Silver to be held on August 7, 2012, at which time the shareholders of US Silver would be asked to consider and vote on a special resolution authorizing the RX Gold Arrangement (the US Silver Special Resolution). The notice of special meeting and related management proxy circular related to the US Silver Special Meeting is filed on Sedar.

16. On August 2, 2012, Hecla received the Securityholder Lists, and as a consequence, pursuant to 94.2(2)(c) of the Act (and the corresponding provisions of MI 62-104), Hecla is required to send its take-over bid and take-over bid circular (the Hecla Circular) to shareholders of US Silver not later than two business days after receipt of the Securityholder Lists. Hecla is required to send the Hecla Circular to shareholders of US Silver not later than August 7, 2012.

17. On August 7, 2012, US Silver issued a press release announcing shareholders of US Silver had voted in favour of the US Silver Special Resolution at the US Silver Special Meeting.

18. On August 7, 2012, Hecla issued a press release responding to the US Silver press release and indicating that it will not proceed with the Hecla Proposal as a result of the shareholder vote.

19. Hecla has confirmed that it will not waive the RX Condition.

20. As a result, there is no need for Shareholders of US Silver to receive the Hecla Circular.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted.

"James Turner"
Vice-Chair
 
"Edward P. Kerwin"
Commissioner