The company said Hecla Canada has agreed to subscribe for 15.4 million common shares of Dolly Varden at a price of $0.65 per share, generating gross proceeds of $10 million, and raising Hecla’s stake in the junior to 15.7% from 10.6%.
“Hecla’s support for Dolly Varden Silver’s Kitsault Valley Project in B.C.’s prolific Golden Triangle is validated with today’s financing news,’’ said Dolly Varden CEO Shawn Khunkhun. “Hecla is the world’s fastest growing established silver producer and the largest in the U.S. and soon to be in Canada.’’
Dolly Varden said $6 million of the net proceeds of the offering will be used for exploration, mineral resource expansion and related costs in the Kitsault Valley project, with the balance to be used for working capital and G&A costs.
Dolly Varden shares advanced on the news, rising 2.8% or $0.02 to 72 cents. The shares trade in a 52-week range of $1.24 and 56 cents.
In connection with the offering, Dolly Varden has agreed with Hecla that the company will not complete any further debt of equity financings for the remainder of 2023. Additionally, Dolly Varden has agreed that between January 1, 2024 and September 1, 2024, without the consent of Hecla, it will not complete any debt or equity financings other than equity financings for net proceeds to the company of up to $15 million and provided that the issue price under such financings is greater than $0.65 per security.
Dolly Varden is focused on advancing the wholly-owned Kitsault Valley Project, which covers 163 square kilometres and hosts the high-grade silver and gold resources of Dolly Varden and Homestake Ridge along with the past producing Dolly Varden and Torbit silver mines.
The entire property is considered to be highly prospective for hosting high-grade precious metal deposits since it comprises the same structural and stratigraphic setting that hosts numerous other on-trend, high-grade deposits, including Eskay Creek and Brucejack.
The property is also considered to be an advanced exploration stage property with targets that are well understood. However, the company has said mine restarts will require the discovery of additional silver resources and the confirmation of historic resources that were known at the cessation of mining in 1959.
Dolly Varden is a member of the British Columbia Regional Mining Alliance (BCRMA), which was set up by the B.C. Government along with First Nations, and several exploration companies from B.C.’s northwest region to promote B.C.’s mining opportunities internationally.