One trend that has been seen of late is that when companies make acquisitions, their shares have often been rising after news breaks. The old historic reaction was that the buyer’s stock drops and the shares rise in the company being acquired. So what are investors supposed to think when Hecla Mining Company (NYSE: HL) is going back to the old merger reaction rather than a win-win, seeing its shares tank for announcing the acquisition of Mines Management, Inc. (NYSEMKT: MGN)?

Hecla announced on Tuesday a merger agreement whereby it will acquire Mines Management in a stock transaction. Terms of the deal call for each outstanding common share of Mines Management to be exchanged for 0.2218 of a common share of Hecla — what was a 41% premium to Mines Management shares if you use the average 10-day price average of both companies’ shares.

As usual, this transaction is subject to approval by Mines Management shareholders. The merger is currently expected to close in the third quarter, 2016. The transaction

As far as what Hecla gets here, it intends to advance the evaluation program of Montanore in northwestern Montana. The company said that Montanore is considered one of the largest undeveloped silver and copper deposits in North America.

For a reference here, the Montanore project is located about 10 miles from Hecla’s Rock Creek project. It is also located about 50 miles north of Hecla’s Lucky Friday Mine in Idaho. Mines Management’s interest in the Montanore silver-copper project was said to include 10 patented mining claims and 861 unpatented mining claims, located in Sanders and Lincoln Counties in northwestern Montana.

What was so interesting here is that Hecla shares were down handily on the news. Sure, some may be tied to recent gold or silver weakness. Its stock was down 7.5% at $3.92 versus a prior 44.24 closing price. Hecla shares have a 52-week range of $1.45 to $4.73 and its market cap is $1.51 billion.

Mines Management shares were last seen up 33.5% at $0.848 on the buyout news. It hit a new 52-week high on the news, and the adjusted 52-week range is $0.11 to $0.89. Mines Management is said to have a market cap of almost $27 million according to Yahoo! Finance, and that is after its acquisition premium.

Here is what Mines Management said back in February upon receipt of final record of decision for the Montanore silver-copper project:

The Montanore deposits were discovered in the 1980s and explored by previous operators at a cost of more than $100 million, which ceased in the 1990s when metals prices were low. Since acquisition of the Montanore in 2002, Mines Management has spent over $75 million on dewatering and partial rehabilitation of the 14,000 ft. decline, construction of site infrastructure, revised and updated resource estimates and a Preliminary Economic Assessment (PEA), as well as re-permitting the entire project.

Mineralized material within two zones is estimated at 81.5 million tons with grades of 2.04 ounces per ton silver and 0.75% copper. Mineralization is open in several directions, and a third zone of mineralization has been identified, all of which management believes have potential to expand the resource. An independent PEA published in 2011 describes an underground bulk mining scenario utilizing conventional crushing and flotation processes which would extract a high quality concentrate for sale to smelters at low underground mining and processing costs. Initial throughput of 12,500 tons per day is projected to produce more than 6 million ounces of silver and 50 million pounds of copper annually, with potential for expansion up to a permitted capacity of 20,000 tons per day.

The company further went on to say on its Montanore project overview page:

Mines Management’s wholly owned Montanore Project hosts one of the world’s largest Silver-Copper deposits containing in-situ mineralization estimated at more than 230 million ounces of silver and nearly 2 billion pounds of copper, not considering dilution or sub-economic mineralized zones.

The project has already undergone extensive engineering, and is designed with an initial production capacity of approximately 12,500 tons per day estimated to yield 8 million ounces of silver and 60 million pounds of copper, with the added potential to increase production.

Here is how ETFs are starting to dominate the gold demand again.

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