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Hecla Mining to Acquire Aurizon Mines

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 4, 2013) - The Board of Directors of Aurizon Mines Ltd. (TSX:ARZ)(NYSE MKT:AZK) ("Aurizon" or the "Company") today announced that it has entered into a definitive agreement pursuant to which Hecla Mining Company (NYSE:HL) will acquire all of the outstanding diluted common shares of Aurizon for approximately CAD$796 million. The transaction will be implemented by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia).

Under the terms of the Arrangement, Aurizon shareholders may elect to receive in exchange for each Aurizon Share, CAD$4.75 per share or 0.9953 of a Hecla share or a combination of both, subject in each case to pro-ration based on a maximum cash consideration of approximately CAD$513.6 million and a maximum of approximately 57,000,000 Hecla shares. Assuming that all shareholders elect to receive either cash or Hecla shares, the consideration will be fully pro-rated with each shareholder being entitled to receive CAD$3.11 in cash and 0.3446 of a Hecla share for each Aurizon share.

The CAD$4.75 per share offer price represents an approximately 12% premium to the current impliedCAD$4.26 per share value of the Alamos Offer based on the closing share price of Alamos Gold Inc. on March 1, 2013 and assuming that all shareholders elected to receive cash or shares.

My Comments:

This takeover appears to be competitive grudge match with Coeur d’Alene Mining. First, Coeur makes an acquisition of Orko Silver, and now this. Both of these takeovers are not good for shareholders in my opinion. When companies spend money to grow, unless the acquisitions are strategic or very cheap, they do not help shareholders. This takeover will take years for their balance sheet to recover. What many companies fail to understand is that what creates shareholder value is their balance sheet and share dilution. These takeovers nearly always do damage to both. What is crucial for shareholder value is HOW companies grow. This is what organic growth is all about. When you spend $800 million to purchase a company, then you are not using organic growth. Instead, you are adding debt to the balance sheet.

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