Dolly Varden Silver Responds to Hecla’s Formal Takeover Offer

July 11, 2016 – Vancouver, BC: Dolly Varden Silver Corporation (TSX.V: DV | U.S.: DOLLF) (the “Company” or “DollyVarden”) acknowledges that on July 8, 2016 Hecla Mining Company (together with its affiliates, “Hecla”) filed a formal takeover bid circular to purchase all of the outstanding shares of Dolly Varden (the “Hecla Offer”). Hecla announced its intent to make this unsolicited insider bid in a news release on June 27, 2016.

Hecla Launches Insider Bid after Dolly Varden Announces Repayment of Restrictive Hecla Loan

The Hecla Offer was precipitated by Dolly Varden’s announcement, two weeks previously, on June 13, 2016, that it would replace a restrictive loan from Hecla (as agent) (the “Restrictive Loan”) with a new flexible loan that would allow Dolly Varden to issue equity to discharge all Company debt and raise funds for exploration. The Company’s Board was concerned that, as an exploration stage company with no source of operating revenue to repay its indebtedness, keeping the Restrictive Loan in place was not in the best interest of Dolly Varden. In particular, the Board was concerned that the Restrictive Loan would: inhibit the Company from raising equity capital; starve the Company of liquidity and its ability to remain a going concern; prevent Dolly Varden from creating future shareholder value through exploration expenditures on its prospective Dolly Varden silver property; and ultimately risk forfeiture of the Dolly Varden property to Hecla, as it was pledged as security under the Restrictive Loan. Unfortunately, Hecla repeatedly withheld consent for the Company to issue equity in order to discharge the Restrictive Loan, which forced Dolly Varden to arrange for the new loan. Accordingly, the Company used funds drawn from the new loan to pay off the Restrictive Loan on July 4, 2016.

No Action Required by Shareholders

Once a thorough review of the Hecla Offer and other alternatives has been completed, the Board will communicate its recommendations to shareholders by issuing a news release and filing and mailing a circular to them within the requisite 15-day statutory time frame. In the interim, the Board advises shareholders not to take any action with respect to the Hecla Offer.

The Hecla Offer does not expire until 4:00 p.m. (Toronto time) on October 21, 2016 and shareholders have ample time to carefully consider the Hecla Offer and the Board’s recommendation before making any decision. Shareholders should not feel coerced into unnecessarily restricting their own liquidity by depositing shares prematurely.

Dolly Varden formed a Special Committee comprised of independent directors to evaluate the Hecla Offer and consider other alternatives (announced on July 4, 2016). The Special Committee has engaged Fort Capital Partners as its financial advisor and Mr. Robert Pirooz, Q.C. of Mirador Law Corporation as its independent counsel.

Hecla Offer Fails to Provide an Independent Valuation and Essential Information to Shareholders

Shareholders are warned that the Hecla Offer does not include a formal valuation of Dolly Varden prepared by an independent valuator under the supervision of the Special Committee, as is required in connection with “insider bids” under Ontario and Quebec securities laws. This is a material deficiency in the Hecla Offer. The valuation requirement is a cornerstone of the protections afforded in Canada to minority shareholders of a public company when an insider with access to material undisclosed information seeks to acquire control from the minority shareholders. The Company is particularly concerned that Hecla is withholding material information from Dolly Varden’s shareholders concerning the prospective Kinskuch exploration property – which adjoins and surrounds the Dolly Varden property on three sides – and the circumstances under which Hecla acquired that property in May 2016. Without this information the Company’s shareholders are placed at a significant informational disadvantage in assessing the true value of the Company, as its Dolly Varden property represents a critical component of a broader “area play” by Hecla involving the Kinskuch property. The Company is applying to the relevant regulatory authorities for an order to require Hecla to comply with the valuation requirement under Ontario and Quebec securities laws and to provide this crucial information to Dolly Varden’s shareholders.

Dolly Varden to Move Forward with Financing

In the meantime, Dolly Varden intends to move forward with its plans to raise CDN$6,000,000 in a non-brokered private placement consisting of both common shares and flow-through shares (see news release dated July 5, 2016). Proceeds of the financing will be used to pay off the new loan (~CDN$2,500,000), for exploration of the Dolly Varden silver project (~CDN$2,500,000) and for working capital purposes (~CDN$1,000,000). The Board believes that this level of capitalization and use of proceeds are reasonable and in the best long-term interests of the Company to create a strong platform for value-creation unhindered by indebtedness. The Company is disappointed that Hecla has chosen to engage in frivolous and costly litigation by making an application to the British Columbia Securities Commission to have the private placement cease traded in a continued effort to restrict Dolly Varden’s access to capital – which the Company believes is designed to obstruct both its opportunity to create value through exploration and its ability to canvass for alternative transactions which may benefit Dolly Varden more than the Hecla Offer. The Company strongly opposes such tactics.

A Commitment to Acting in the Best Interests of the Company

“The Board is humbled by the outpouring of support from shareholders and other public mining companies that it has received since the Hecla Offer was announced. The Hecla Offer has clearly validated the Board’s expectation that a repayment of the Restrictive Loan would unlock value for the Company and, regrettably, has confirmed that Hecla sought to keep the Restrictive Loan in place ultimately to acquire the Dolly Varden silver property – without paying any consideration to shareholders. While Hecla has criticized the new loan and private placement as being dilutive, without those transactions shareholders would have risked a total loss of their investment to Hecla. Considerable dilution and costs could also have been avoided if Hecla had not withheld its consent for an equity issuance,” stated independent director Tom Wharton, Chair of the Special Committee. “The Board will give due consideration to any offer made for fair value where its shareholders are on a level informational playing field with a bidder. But, it is critical that insider bidders comply with the law and reveal all material information that our shareholders need in order to make an informed decision. We are making every effort to protect our shareholders’ rights.”

About Dolly Varden – Dolly Varden Silver Corporation is a mineral exploration company focused on the exploration of the Dolly Varden silver property located in northwestern British Columbia, Canada. The entire Dolly Varden property is considered to be highly prospective for hosting high-grade precious metal deposits, since it comprises the same structural and stratigraphic setting that host numerous other, on-trend, high-grade deposits (Eskay Creek, Brucejack). The Company’s common shares are listed and traded on the TSX Venture Exchange under the symbol DV and on the OTCBB system under the symbol DOLLF.


This release may contain forward-looking statements or information. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Dolly Varden to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward looking statements or information relate to, among other things, the Hecla Offer not being withdrawn, the closing of the Company’s private placement financing, the use of proceeds of the Company’s private placement financing, the realization of Dolly Varden’s stated goal to become debt free, the impact of the Kinskuch property on the value of the Company, the Company’s application for an order to require Hecla to comply with the valuation requirement under Ontario and Quebec securities laws, and the continued exploration and valuation of the Dolly Varden silver property. These forward-looking statements are based on management’s current expectations and beliefs, but given the uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward-looking statements or information. The Company disclaims any obligation to update, or to publicly announce, any such statements, events or developments except as required by law.

For additional information on risks and uncertainties, see the Company’s most recently filed annual management discussion & analysis (“MD&A”), which is available on SEDAR at and on the Company’s website at The risk factors identified in the MD&A are not intended to represent a complete list of factors that could affect the Company.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information:
Dolly Varden Silver Corporation
Rosie Moore, Interim CEO and President