Ceramic Industry News

Hecla Sues Zemex For Failure To Close Deal

January 29, 2001
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Hecla Mining Co. brought suit recently in federal court in Chicago against Zemex Corp. of Toronto, Canada, for refusing to close on the purchase of Hecla's industrial minerals subsidiary, Kentucky- Tennessee Clay Co. Zemex's U.S. subsidiary had signed an agreement in November to buy K-T Clay for $68 million. The lawsuit seeks to require Zemex to complete the transaction and fulfill the contract as it agreed, and to hold Zemex fully responsible for all damages suffered as a consequence of its failure to honor its commitments in the purchase agreement. The purchase agreement provided for a closing of the sale late last week and Hecla notified Zemex it was prepared to close. Hecla said Zemex wrongfully claimed K-T Clay had suffered a material adverse effect in an attempt to substantially reduce the purchase price. In addition, Hecla said, Zemex clearly misrepresented its ability to obtain sufficient financing for the transaction.

In response to the suit, Richard Lister, president of Zemex Corporation, stated: "We are very surprised and disappointed by Hecla's attempt to turn K-T Clay's adverse operating results into a breach of contract lawsuit. The significant operating loss at K-T Clay was not caused by Zemex; the business was (and still is) owned and operated by Hecla." Mr. Lister further stated, "Hecla's attempt to claim that Zemex misrepresented its ability to obtain financing is completely false. Zemex had fully committed financing for the transaction; that financing is not available today solely by reason of the material adverse change which has occurred at K-T Clay." Mr. Lister finally stated, "Notwithstanding Hecla's press release and lawsuit, Zemex has acted in an entirely appropriate fashion and in the utmost good faith. Zemex still has a strong desire to purchase K-T Clay at a price which is fairly reflective of its value, and is prepared to devote all resources necessary to accomplish this goal in a timely fashion if Hecla has a similar willingness."

For additional information, call Hecla at(208) 769-4144 or visit http://www.hecla-mining.com; or call Zemex at (770) 392-8660 or visit www.zemex.com/minerals.

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