-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OuG8LEHKfz/60DELSjFT9PkZBnxmCLtihWRxajdNPQ8FNbCfld/JSb3voMBuODFG CjWzJLgQVouAPWmXhPTEIw== 0000897101-02-000464.txt : 20020624 0000897101-02-000464.hdr.sgml : 20020624 20020624150649 ACCESSION NUMBER: 0000897101-02-000464 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20020624 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HECLA MINING CO/DE/ CENTRAL INDEX KEY: 0000719413 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 820126240 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-35201 FILM NUMBER: 02685339 BUSINESS ADDRESS: STREET 1: 6500 MINERAL DRIVE STREET 2: NONE CITY: COEUR D'ALENE STATE: ID ZIP: 83815-8788 BUSINESS PHONE: 2087694100 MAIL ADDRESS: STREET 1: 6500 MINERAL DRIVE STREET 2: NONE CITY: COEUR D'ALENE STATE: ID ZIP: 83815-8788 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HECLA MINING CO/DE/ CENTRAL INDEX KEY: 0000719413 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 820126240 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 6500 MINERAL DRIVE STREET 2: NONE CITY: COEUR D'ALENE STATE: ID ZIP: 83815-8788 BUSINESS PHONE: 2087694100 MAIL ADDRESS: STREET 1: 6500 MINERAL DRIVE STREET 2: NONE CITY: COEUR D'ALENE STATE: ID ZIP: 83815-8788 SC TO-I 1 hecla023143-to.txt HECLA MINING COMPANY SC TO-I SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- SCHEDULE TO ---------------------- (RULE 14D-100) ---------------------- TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------------- HECLA MINING COMPANY (Name of Subject Company) ---------------------- HECLA MINING COMPANY (Issuer and Offeror) ---------------------- SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK (Title of Class of Securities) ---------------------- 422704205 (CUSIP Number of Class of Securities) ---------------------- MICHAEL B. WHITE HECLA MINING COMPANY 6500 MINERAL DRIVE COEUR D'ALENE, IDAHO 83815-8788 Telephone: (208) 769-4110 Facsimile: (208) 769-7612 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) ---------------------- COPIES TO: JOHN H. BITNER BELL, BOYD & LLOYD LLC 70 WEST MADISON STREET, SUITE 3300 CHICAGO, ILLINOIS 60602 Telephone: (312) 807-4306 Facsimile: (312) 827-8048 CALCULATION OF FILING FEE ================================================================================ Transaction Valuation* Amount of Filing Fee - -------------------------------------------------------------------------------- $61,640,000 $12,328 ================================================================================ * ESTIMATED FOR PURPOSES OF CALCULATING THE AMOUNT OF THE FILING FEE ONLY. THE AMOUNT ASSUMES THE EXCHANGE OF ALL OUTSTANDING SHARES OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK FOR SHARES OF COMMON STOCK OF HECLA MINING COMPANY. IF ALL PREFERRED STOCK IS EXCHANGED, HECLA WOULD ISSUE AN AGGREGATE OF 16,100,000 SHARES OF ITS COMMON STOCK. BASED ON THE JUNE 17, 2002 AVERAGE OF THE REPORTED HIGH AND LOW PRICE OF HECLA SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK ON THE NEW YORK STOCK EXCHANGE, THE TRANSACTION VALUE IS $61,640,000. THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE WITH RULE 0-11 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EQUALS 1/50TH OF ONE PERCENT OF THE TRANSACTION VALUE. [ ] CHECK THE BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(a)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING. [ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER. Check the appropriate boxes below to designate any transactions to which the statement relates: [ ] THIRD-PARTY TENDER OFFER SUBJECT TO RULE 14d-1. [X] ISSUER TENDER OFFER SUBJECT TO RULE 13e-4. [ ] GOING PRIVATE TRANSACTION SUBJECT TO RULE 13e-3. [ ] AMENDMENT TO SCHEDULE 13D UNDER RULE 13d-2. Check the following box if the filing is a final amendment reporting the results of a tender offer: [ ] TENDER OFFER This Tender Offer Statement on Schedule TO ("Statement") is being filed by Hecla Mining Company ("Hecla"), a Delaware corporation, pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection with its offer of 7 shares of common stock, par value $0.25 per share, of Hecla ("Hecla Common Stock") in exchange for each of Hecla's 2,300,000 currently outstanding shares of Series B Cumulative Convertible Preferred Stock, par value $0.25 per share ("Hecla Preferred Stock") upon the terms and subject to the conditions set forth in the Offering Circular, dated June 24, 2002 (the "Offering Circular"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which, as they may be amended or supplemented from time to time, together constitute the "Offer"). The information in the Offer, including all schedules and annexes thereto, is hereby expressly incorporated herein by reference in response to all the items of this Statement, except as otherwise set forth below. ITEM 1. SUMMARY TERM SHEET. The information set forth in the Offering Circular under the caption "Summary Term Sheet" is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) The subject company and issuer of the securities subject to the Offer is Hecla Mining Company, a Delaware corporation. (b) The subject class of equity securities is the Series B Cumulative Convertible Preferred Stock of Hecla. As of the date of this Statement, there were outstanding 2,300,000 shares of Hecla Preferred Stock. (c) The Hecla Preferred Stock is listed on the New York Stock Exchange. The high and low sales price of the Hecla Preferred Stock for each quarter during the past two years is set forth in the Offering Circular under the caption "Market Prices for Common and Preferred Stock," and is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. The principal executive offices of the filing person, Hecla Mining Company, are located at 6500 Mineral Drive, Coeur d'Alene, Idaho 83815 and its telephone number is (208) 769-4110. Pursuant to General Instruction C to Schedule TO promulgated by the United States Securities and Exchange Commission (the "SEC"), the following persons are the directors and/or executive officers of Hecla: Phillips S. Baker, Jr. Director, President, Chief Operating Officer and Chief Financial Officer Arthur Brown Director, Chairman of the Board and Chief Executive Officer John E. Clute Director Joe Coors, Jr. Director David J. Christensen Director Ted Crumley Director Charles L. McAlpine Director Jorge E. Ordonez C. Director Dr. Anthony P. Taylor Director Thomas F. Fudge, Jr. Vice President - Operations Vicki J. Veltkamp Vice President - Investor and Public Relations Lewis E. Walde Vice President - Controller and Treasurer Michael Callahan Vice President - Corporate Development The address of each director and/or executive officer listed above is c/o Hecla Mining Company, 6500 Mineral Drive, Coeur d'Alene, Idaho 83815, and each such person's telephone number is (208) 769-4100. ITEM 4. TERMS OF THE TRANSACTION. (a) The information set forth in the sections of the Offering Circular captioned "The Exchange Offer," "Description of Capital Stock" and "Certain United States Federal Income Tax Consequences" is incorporated herein by reference. (b) None of the securities are to be purchased from any officer, director, or affiliate of Hecla. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS, AND AGREEMENTS. The information set forth in the sections of the Offering Circular captioned "The Exchange Offer- Agreements Relating to Hecla Securities" and "Description of Capital Stock - Preferred Stock" is incorporated herein by reference. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (a) The information set forth in the section of the Offering Circular captioned "Summary Term Sheet - Why is Hecla Making the Exchange Offer?" is incorporated herein by reference. (b) The securities acquired pursuant to the Offer will be retired. (c)(3) The information set forth in the sections of the Offering Circular captioned "Summary Term Sheet - Why is Hecla Making the Exchange Offer?", "Risk Factors" and "Capitalization" is incorporated herein by reference. ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The total amount of funds and other consideration required by Hecla to consummate the Offer in full and to pay related expenses is approximately $200,000 in cash and 16,100,000 shares of Hecla Common Stock. Hecla expects to obtain the cash required to consummate the exchange offer through working capital. The stock portion of the consideration issuable pursuant to the Offer consists of newly issued shares of Hecla Common Stock, which will be listed on the New York Stock Exchange and will be issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. In addition to the foregoing, the information set forth in the section of the Offering Circular captioned "The Exchange Offer - Expenses" is incorporated herein by reference. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) None of the persons named in response to Item 1003 of Regulation M-A, nor any associates or majority-owned subsidiaries of such persons, beneficially owns any of the subject securities. (b) None. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. The information set forth in the section of the Offering Circular captioned "The Exchange Offer - Solicitation" is incorporated herein by reference. ITEM 10. FINANCIAL STATEMENTS. (a) The following financial statements and financial information are incorporated herein by reference: (1) The audited consolidated financial statements of Hecla set forth in Hecla's Annual Report on Form 10-K for the fiscal year ended December 31, 2001; (2) The unaudited condensed consolidated financial statements of Hecla set forth in Hecla's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002; and (3) The information set forth in Exhibit 12 to Hecla's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 under the heading "Statement of Computation of Ratio of Earnings to Fixed Changes" is incorporated herein by reference. (4) The information set forth in the section of the Offering Circular captioned "Summary Historical and Pro Forma Financial Data" is incorporated herein by reference. Copies of the financial statements incorporated herein by reference pursuant to clauses (1) and (2) above can be obtained as provided in the section of the Offering Circular captioned "Where You Can Find More Information." (b) The information set forth in the section of the Offering Circular captioned "Summary Historical and Pro Forma Financial Data" is incorporated herein by reference. ITEM 11. ADDITIONAL INFORMATION. (a) Agreements, Regulatory Requirements and Legal Proceedings. (1) None. (2) Not applicable. (3) Not applicable. (4) Not applicable. (5) Not applicable. (b) Other Material Information. None ITEM 12. EXHIBITS. (a)(1) Offering Circular dated June 24, 2002.* (a)(2) Letter of Transmittal.* (a)(3) Letter to Clients.* (a)(4) Letter to Broker-Dealers.* (a)(5) Notice of Guaranteed Delivery.* (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* (a)(7) Press Release.* (b) None (d)(1) Stock Purchase Agreement, dated as of August 7, 2001, by and between Hecla and Copper Mountain Trust as trustee for Hecla Mining Company Retirement Plan and Lucky Friday Pension Plan.* (d)(2) Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock of Hecla (incorporated herein by reference to Exhibit 4.1(d) to Hecla's quarterly report on Form 10-Q dated June 30, 1993). (d)(3) Certificate of Designations, Preferences and Rights of Series B Cumulative Convertible Preferred Stock of Hecla (incorporated herein by reference to Exhibit 4.1(e) to Hecla's quarterly report on Form 10-Q dated June 30, 1993). (d)(4) Rights Agreement dated as of May 10, 1996, between Hecla Mining Company and American Stock Transfer & Trust Company, which includes the form of Rights Certificate of Designation setting forth the terms of the Series A Junior Participating Preferred Stock of Hecla Mining Company as Exhibit A and the summary of Rights to Purchase Preferred Shares as Exhibit B (incorporated herein by reference to Exhibit 4 to Hecla's current report on Form 8-K dated May 10, 1996). (d)(5) Employment agreement dated June 1, 2000, between Hecla Mining Company and Arthur Brown. (Hecla has substantially identical agreements with each of Messrs. Phillips S. Baker, Jr., Michael Callahan, Thomas F. Fudge, Vicki J. Veltkamp, and Lewis E. Walde. Such substantially identical agreements are not included as separate Exhibits) (incorporated herein by reference to Exhibit 10.2 to Hecla's quarterly report on Form 10-Q for the quarter ended September 30, 2000). (d)(6) 1987 Nonstatutory Stock Option Plan of the Hecla (incorporated herein by reference to Exhibit B to Hecla's Schedule 14A dated March 20, 1987). (d)(7) Hecla Mining Company 1995 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.4(c) to Hecla's quarterly report on Form 10-Q for the quarter ended June 30, 2001). (d)(8) Hecla Mining Company Stock Plan for Nonemployee Directors (incorporated herein by reference to Exhibit B to Hecla's Schedule 14A dated March 27, 1995). (d)(9) Hecla Mining Company Retirement Plan for Employees and Supplemental Retirement and Death Benefit Plan (incorporated herein by reference to Exhibit 10.11(a) to Hecla's annual report on Form 10-K for 1985). (d)(10) Supplemental Excess Retirement Master Plan Documents (incorporated herein by reference to Exhibit 10.5(b) to Hecla's annual report on Form 10-K for 1994). (d)(11) Hecla Mining Company Nonqualified Plans Master Trust Agreement (incorporated herein by reference to Exhibit 10.5(c) to Hecla's annual report on Form 10-K for 1994). (d)(12) Form of Indemnification Agreement dated May 27, 1987, between Hecla Mining Company and each of its Directors and Officers (incorporated herein by reference to Exhibit 10.15 to Hecla's annual report on Form 10-K for 1987). (d)(13) Summary of Short-term Performance Payment Plan (incorporated herein by reference to Exhibit 10.7 to Hecla's annual report on Form 10-K for 1994). (d)(14) Form of Retention Agreement dated July 20, 2001, between Hecla Mining Company and Arthur Brown. (Hecla has substantially identical agreements, with each of Messrs. Phillips S. Baker, Jr., William B. Booth, Thomas F. Fudge, Vicki J. Veltkamp, Lewis E. Walde, and Michael B. White (incorporated herein by reference to Exhibit 10.19 to Hecla's quarterly report on Form 10-Q for the quarter ended June 30, 2001). (d)(15) Restricted Stock Award Agreement dated November 6, 2001, between Hecla Mining Company and Phillips S. Baker, Jr.* (d)(16) Hollister Development Block Letter Agreement dated June 4, 2002, between Hecla Mining Company and Great Basin Gold Ltd.* *Filed herewith. ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. Not applicable. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. HECLA MINING COMPANY /S/ PHILLIPS S. BAKER, JR. --------------------------- PHILLIPS S. BAKER, JR. PRESIDENT June 24, 2002 EX-99.(A)(1) 3 hecla023143_ex-a1.txt OFFERING CIRCULAR EXHIBIT (a)(1) OFFER TO EXCHANGE 7 SHARES OF COMMON STOCK OF HECLA MINING COMPANY FOR EACH OUTSTANDING SHARE OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK OF HECLA MINING COMPANY - -------------------------------------------------------------------------------- THIS EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 22, 2002, UNLESS EXTENDED OR EARLIER TERMINATED. - -------------------------------------------------------------------------------- Hecla Mining Company, a Delaware corporation ("Hecla"), hereby offers (the "Exchange Offer"), upon the terms and conditions set forth in this Offering Circular and in the accompanying Letter of Transmittal, to exchange 7 shares of Hecla common stock, $0.25 par value ("Hecla Common Stock") for each outstanding share of Hecla Series B Cumulative Convertible Preferred Stock, $0.25 par value ("Hecla Preferred Stock"). Subject to the terms and conditions of the Exchange Offer, Hecla will issue 7 shares of Hecla Common Stock in exchange for each share of Hecla Preferred Stock that is properly tendered and not withdrawn prior to the expiration of the Exchange Offer. The Exchange Offer is not conditioned upon the exchange of a minimum number of shares of Hecla Preferred Stock. For a more detailed description of the Hecla Common Stock we are proposing to issue in the Exchange Offer, please see the section of this Offering Circular captioned "Description of Capital Stock -- Common Stock." The Exchange Offer is open to all holders of Hecla Preferred Stock and is subject to customary conditions. Subject to applicable securities laws and the terms set forth in this Offering Circular, we reserve the right to waive any and all conditions to the Exchange Offer, to extend the Exchange Offer, to terminate the Exchange Offer for any reason or no reason and otherwise to amend the Exchange Offer in any respect. IMPORTANT ANY HOLDER OF HECLA PREFERRED STOCK DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCK SHOULD EITHER (i) COMPLETE AND SIGN THE ENCLOSED LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL, HAVE THE SIGNATURE THEREON GUARANTEED (IF REQUIRED BY INSTRUCTION 1 TO THE LETTER OF TRANSMITTAL), MAIL OR DELIVER THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) AND ANY OTHER REQUIRED DOCUMENTS TO AMERICAN STOCK TRANSFER & TRUST COMPANY (THE "EXCHANGE AGENT") AND EITHER DELIVER THE CERTIFICATES FOR SUCH STOCK ALONG WITH THE LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT OR TENDER SUCH STOCK PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN THE SECTION OF THIS OFFERING CIRCULAR CAPTIONED "THE EXCHANGE OFFER - BOOK-ENTRY TRANSFER" OR (ii) REQUEST SUCH HOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH HOLDER. ANY HOLDER WHOSE HECLA PREFERRED STOCK IS REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO TENDER SUCH STOCK. ANY HOLDER OF HECLA PREFERRED STOCK WHO DESIRES TO TENDER BUT (i) WHOSE CERTIFICATES EVIDENCING SUCH STOCK ARE NOT IMMEDIATELY AVAILABLE, (ii) CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED IN THIS OFFERING CIRCULAR ON A TIMELY BASIS OR (iii) CANNOT DELIVER ALL REQUIRED DOCUMENTS TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFER, MAY TENDER SUCH HECLA PREFERRED STOCK BY FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN THE SECTION OF THIS OFFERING CIRCULAR CAPTIONED "THE EXCHANGE OFFER - GUARANTEED DELIVERY PROCEDURES." NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS OFFERING CIRCULAR IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------------- THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: AMERICAN STOCK TRANSFER & TRUST COMPANY THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS: GEORGESON SHAREHOLDER SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF RISKS YOU SHOULD CONSIDER BEFORE TENDERING YOUR HECLA PREFERRED STOCK. THE DATE OF THIS OFFERING CIRCULAR IS JUNE 24, 2002. THE EXCHANGE OFFER IS BEING MADE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SIMILAR EXEMPTIONS FROM REGISTRATION PROVIDED BY CERTAIN STATE SECURITIES LAWS. NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS OFFERING CIRCULAR, OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR (INCLUDING THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE). IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HECLA. THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL ANY SECURITIES TO, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES FROM, ANY PERSON IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. THIS OFFERING CIRCULAR SUMMARIZES VARIOUS DOCUMENTS AND OTHER INFORMATION. THOSE SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE DOCUMENTS AND INFORMATION TO WHICH THEY RELATE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF HECLA AND THE TERMS OF THE EXCHANGE OFFER, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR IS AS OF THE DATE HEREOF AND NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR THE OFFERING, SALE OR DELIVERY OF ANY SHARES OF HECLA COMMON STOCK SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME AFTER THE DATE HEREOF. NO REPRESENTATION IS MADE TO ANY OFFEREE OR PURCHASER OF HECLA COMMON STOCK REGARDING THE LEGALITY OF AN INVESTMENT IN HECLA COMMON STOCK BY THE OFFEREE OR PURCHASER UNDER ANY APPLICABLE LEGAL INVESTMENT OR SIMILAR LAWS OR REGULATIONS. THE CONTENTS OF THIS OFFERING CIRCULAR ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS OR TAX ADVICE WITH RESPECT TO AN INVESTMENT IN THE HECLA COMMON STOCK. ALL INQUIRIES RELATING TO THIS OFFERING CIRCULAR AND THE TRANSACTIONS CONTEMPLATED HEREBY SHOULD BE DIRECTED TO GEORGESON SHAREHOLDER, THE INFORMATION AGENT FOR THE EXCHANGE OFFER, AT THE TELEPHONE NUMBER OR ONE OF THE ADDRESSES LISTED ON THE BACK COVER PAGE OF THIS OFFERING CIRCULAR. PROSPECTIVE INVESTORS MAY ALSO OBTAIN ADDITIONAL INFORMATION FROM HECLA WHICH THEY MAY REASONABLY REQUIRE TO VERIFY THE INFORMATION CONTAINED HEREIN. QUESTIONS REGARDING THE PROCEDURES FOR TENDERING IN THE EXCHANGE OFFER AND REQUESTS FOR ASSISTANCE IN TENDERING YOUR HECLA PREFERRED STOCK SHOULD BE DIRECTED TO THE EXCHANGE AGENT AT ONE OF THE TELEPHONE NUMBERS AND ADDRESSES LISTED ON THE BACK COVER PAGE OF THIS OFFERING CIRCULAR. REQUESTS FOR COPIES OF THIS OFFERING CIRCULAR, HECLA'S FIRST QUARTER 2002 QUARTERLY REPORT ON FORM 10-Q, HECLA'S 2001 ANNUAL REPORT ON FORM 10-K, HECLA'S 2002 ANNUAL MEETING PROXY STATEMENT, OR THE ENCLOSED LETTERS OF TRANSMITTAL AND NOTICES OF GUARANTEED DELIVERY MAY BE DIRECTED TO EITHER THE EXCHANGE AGENT OR THE INFORMATION AGENT AT THE RESPECTIVE TELEPHONE NUMBERS AND ADDRESSES LISTED ON THE BACK COVER PAGE OF THIS OFFERING CIRCULAR. TABLE OF CONTENTS PAGE ---- Summary Term Sheet.............................................................1 Summary Description Of Hecla Common Stock and Hecla Preferred Stock...........7 Risk Factors...................................................................9 Use of Proceeds...............................................................21 Summary Historical and Pro Forma Capitalization and Other Financial Information...................................................................21 Market Prices for Common and Preferred Stock..................................25 The Exchange Offer............................................................25 Certain United States Federal Income Tax Considerations.......................31 Description of Capital Stock..................................................32 Agreements Relating to Hecla Securities.......................................38 Incorporation of Documents by Reference.......................................39 Special Note on Forward-Looking Statements....................................40 Where You Can Find More Information...........................................41 i SUMMARY TERM SHEET Through this Offering Circular and the enclosed letter of transmittal, Hecla Mining Company is offering to exchange 7 shares of Hecla Common Stock for each of Hecla's outstanding shares of Series B Cumulative Convertible Preferred Stock. (Such securities are sometimes referred to herein simply as "common stock" and "preferred stock;" Hecla is sometimes referred to herein as "we" and "our," and our offer is sometimes referred to herein as the "exchange offer.") The following are some of the questions that you may have as a holder of the preferred stock and answers to those questions. The following summary highlights selected information from this Offering Circular and may not contain all the information that you will need to make a decision regarding whether or not to tender your preferred stock in the exchange offer and accept shares of our common stock that we propose to exchange. This Offering Circular includes specific terms of the exchange offer, including a description of your preferred stock and the common stock we are proposing to exchange, as well as information regarding our business and some financial data. We encourage you to read carefully this Offering Circular and the documents to which we refer you in their entirety, including the discussion of risks and uncertainties affecting our common and preferred stock and our business included in the section of this Offering Circular captioned "Risk Factors" beginning on page 9. WHO IS MAKING THE EXCHANGE OFFER? The exchange offer is being made by Hecla Mining Company. Hecla is principally engaged in the exploration, development and mining of precious and nonferrous metals, including gold, silver, lead and zinc, with an emphasis on gold and silver. We own or have interests in a number of precious and nonferrous metals properties and industrial metals businesses. Our principal producing metals properties include: * the Greens Creek silver mine, a large polymetallic mine in which we own a 29.73% interest, located near Juneau, Alaska; * the San Sebastian silver mine, located in the State of Durango, Mexico; * the Lucky Friday silver mine, located near Mullan, Idaho; and * the La Camorra gold mine, located in the State of Bolivar, Venezuela. Our strategy is to focus our efforts and resources on expanding our gold and silver reserves through exploration efforts, primarily on properties we already own. In 2002, we intend to explore for additional reserves at, or in the vicinity of, the San Sebastian mine in Mexico, the La Camorra mine in Venezuela and the Greens Creek mine in Alaska. In furtherance of our strategy, in 2001, we sold certain subsidiaries that owned substantially all of our industrial minerals assets. We were originally incorporated in 1891. We are a Delaware corporation, with our principal executive offices located at 6500 Mineral Drive, Coeur d'Alene, Idaho 83815-8788, and our telephone number is (208) 769-4100. Our web site address is www.hecla-mining.com. Information contained in our web site is not incorporated by reference into this Offering Circular, and you should not consider information contained in our web site as part of this Offering Circular. See "Where You Can Find More Information." WHAT CLASS OF SECURITIES IS SOUGHT IN THE EXCHANGE OFFER? We are offering to acquire all of our currently outstanding Series B Cumulative Convertible Preferred Stock in exchange for newly issued shares of our common stock. As of the date of this Offering Circular, 2,300,000 shares of preferred stock were outstanding. For more information regarding the terms of the exchange offer, please see the section of this Offering Circular captioned "The Exchange Offer." WHAT IS HECLA OFFERING IN EXCHANGE FOR MY PREFERRED STOCK? We are offering 7 shares of our common stock in exchange for each share of preferred stock. This 7 for 1 exchange ratio substantially exceeds the 3.2154 for 1 ratio at which the preferred shares are currently convertible, according to their terms. If all of our preferred stock is exchanged, we will issue 16,100,000 shares of our common stock in the exchange offer. On June 12, 2002, the day before the proposed exchange offer was publicly announced, the reported closing price per share of our common stock on the New York Stock Exchange was $4.22, and the reported closing price per share of our preferred stock on the New York Stock Exchange was $21.95 per share. This represents a 34.6% premium in market prices of 7 shares of our common stock to 1 share of our preferred stock at the close of trading on the day prior to announcement. See "Market Prices for Common and Preferred Stock." For more information regarding the common stock we propose to exchange, and your preferred stock, please see the sections of this Offering Circular captioned "Description of Capital Stock." WHY IS HECLA MAKING THE EXCHANGE OFFER? Our board of directors believes it is appropriate to offer the holders of preferred stock the opportunity to exchange those shares for shares of Hecla common stock at a significantly higher rate (7 common shares for each preferred share) than the number of common shares the holders of preferred stock can convert into pursuant to the conversion terms of the preferred stock (3.2154 common shares). Our common stock is much more actively traded than our preferred stock. Preferred stock exchanged for common stock will be retired by Hecla, and all undeclared and unpaid dividends (currently $6.125 per share, or an aggregate of approximately $14.1 million, but which will be $7 per share, or an aggregate of $16.1 million prior to the expiration date of the exchange offer) will be extinguished, as will the liquidation preferences of any such retired preferred shares ($50 per share and $7.00 per share of undeclared and unpaid dividends, or an aggregate of $131.1 million). Given our current expectations as to capital, exploration and reclamation expenditures for the next several years, it is highly unlikely that we will pay dividends in arrears, or any future dividends, on our preferred stock. The arrearages may hinder our ability to raise capital or negotiate third-party mergers and acquisitions, and may adversely affect the market value of our common and preferred stock. We believe the prospect of not receiving future dividends may be untenable to many of our preferred holders, and that they should be given the opportunity to exchange their preferred shares for a more actively- traded security, at a substantial market price premium based on pre-announcement prices. To the extent the preferred shares are exchanged for common shares, the dividend arrearages will no longer be reflected in the Stockholder's Equity portion of our balance sheet, and net income applicable to common stockholders will be increased (but spread over an increased number of outstanding common shares). See "Summary Historical and Pro Forma Financial Information." The dividend arrearages have the effect of preventing us from paying any dividends on our common stock in cash or other property (other than dividends payable in common stock), and entitle the holders of preferred stock to elect two directors to our board of directors (as occurred at our annual meeting of stockholders on May 10, 2002). Such effects will only be eliminated if all preferred stock is retired, by conversion, redemption, purchase or exchange. WHAT MIGHT HECLA DO REGARDING PREFERRED STOCK OUTSTANDING AFTER THE EXCHANGE OFFER? We intend to consider means of retiring any preferred stock outstanding after the exchange offer, which may include additional tender or exchange offers, purchases in the open market or in privately-negotiated transactions and/or effecting a merger transaction in which the preferred stock is converted into or exchanged for other securities. Our board has considered, and may in the future decide to pursue, a merger of Hecla with another entity (which could be a third party or a direct or indirect subsidiary of Hecla) in which any of Hecla's preferred stock then 2 outstanding is converted in its entirety into another security, such as Hecla common stock. We believe that such a merger could be effected under the Delaware General Corporation Law and our certificate of incorporation and the related certificate of designation for the preferred stock without the vote or other consent of the holders of our preferred stock. Such a transaction might be at the same 7 for 1 ratio of common stock for preferred stock or some other ratio or for some other security. WHAT DOES HECLA'S BOARD OF DIRECTORS THINK OF THE EXCHANGE OFFER? Our board believes that the exchange offer is in Hecla's best interests, has unanimously approved it, and recommends that you accept it for the reasons set forth above under "Why is Hecla making the exchange offer?" and otherwise herein, subject to your individual needs and circumstances. You must make your own determination as to whether to tender your preferred stock for exchange and accept the common stock we propose to deliver. We urge you to read this Offering Circular carefully and the other documents to which we refer you in their entirety, including the discussion of risks and uncertainties affecting our business and your ownership of our common and preferred stock referred to immediately below under "What risks should I consider in deciding whether or not to tender my preferred stock?" and set forth in the section of this Offering Circular captioned "Risk Factors," and make your own decision. WHAT RISKS SHOULD I CONSIDER IN DECIDING WHETHER OR NOT TO TENDER MY PREFERRED STOCK? Many of the risks of owning our common stock, described in the section of this Offering Circular captioned "Risk Factors," apply to owning our preferred stock. See "Risk Factors - The exchange offer may adversely affect the market for the preferred stock, and otherwise adversely affect holders of preferred stock remaining after the exchange offer" for certain risks of not exchanging. See also the next question and answer regarding legal rights given up by those tendering. WHAT LEGAL RIGHTS WILL I GIVE UP BY TENDERING MY PREFERRED STOCK? By tendering your shares of preferred stock in the exchange offer, you will lose the preferential features of the preferred stock, which include the right to cumulative dividends at the rate of $0.875 per calendar quarter, if declared, in preference to any payment of cash dividends on the common stock, the $50 per preferred share preference in liquidation to the common stock, and the right to elect, with other preferred stockholders, two members of Hecla's board of directors while preferred dividends are in arrears (pursuant to which Mr. David J. Christensen and Dr. Anthony P. Taylor were elected to our board at our annual meeting of stockholders on May 10, 2002). See "Description of Capital Stock." By tendering, you will also lose any rights to cumulative preferred dividends in arrears of $6.125 per preferred share (soon to be $7 per preferred share), and may be unable to contest their non- payment. Our board intends to consider each quarter the payment of past and future dividends on preferred stock, but there should be no expectation that our board will ever declare or pay any such dividends, as described above under "Why is Hecla making the exchange offer?" IS HECLA CURRENTLY ABLE TO ISSUE COMMON STOCK IN A COMPLETE EXCHANGE? Yes. The consideration we are proposing to exchange consists of newly issued shares of our common stock. The exchange offer is being extended to you in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and has not been registered with the SEC. As a result, we are not required to have an effective registration statement on file with the SEC to register the issuance of the common stock in the exchange offer and, accordingly, the issuance of common stock need not be delayed pending SEC review of a registration statement filing. In addition, because the maximum of 16,100,000 common shares we propose to issue in the exchange offer represents less than the maximum number of shares that may be issued under the NYSE rules without stockholder approval, we are not required to obtain stockholder approval in order to complete the exchange offer. Although these shares represent in excess of 20% of our currently outstanding common stock (approximately 21.4%), based on our 75,120,705 common shares outstanding at May 31, 2002 and such an issuance would ordinarily require stockholder approval, the NYSE agreed with our position that the shares already listed for issuance upon conversion of the 3 preferred stock should not be counted for purposes of the 20% test. Accordingly, provided that none of the events described in the section of this Offering Circular captioned "The Exchange Offer -- Conditions to the Exchange Offer" has occurred, we expect to be able to issue any exchanged common stock immediately following the expiration of the exchange offer. For more information regarding the timing of the issuance of common stock in the exchange offer, please see the section of this Offering Circular captioned "The Exchange Offer -- Acceptance of Preferred Stock for Exchange; Delivery of Common Stock." The maximum of 16,100,000 common shares issuable if all preferred shares are exchanged represents approximately 18% of the common shares outstanding at May 31, 2002 plus those so issuable, which is approximately the percentage of common stock ownership of Hecla that preferred stockholders would have been entitled to on conversion of their preferred shares after they were originally issued in an underwritten public offering in June, 1993. WILL THE COMMON STOCK BE LISTED FOR TRADING? Our common stock is listed for trading on the New York Stock Exchange under the symbol "HL." For more information regarding the trading markets for the common stock and preferred stock, please see the sections of this Offering Circular captioned "Risk Factors -- You may not be able to sell the common stock when you want and, if you do, you may not be able to receive the price you want" and "-- The exchange offer may adversely affect the market for the preferred stock, and otherwise adversely affect holders of preferred stock remaining after the exchange offer." See also "Market Prices for Common and Preferred Stock." WHAT WILL BE THE FEDERAL INCOME TAX CONSEQUENCES TO ME IF I ACCEPT THE EXCHANGE OFFER? In general, if you exchange preferred stock for common stock in the exchange offer, a gain or loss will not be recognized by you for U.S. federal income tax purposes, subject to the discussion set forth in the section of this Offering Circular captioned "Certain United States Federal Income Tax Considerations." THE TAX CONSEQUENCES TO YOU OF THE EXCHANGE OFFER WILL DEPEND ON YOUR INDIVIDUAL SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISER FOR A FULL UNDERSTANDING OF THESE TAX CONSEQUENCES. WILL HECLA RECEIVE ANY CASH PROCEEDS FROM THE EXCHANGE OFFER? No. WHAT ARE THE CONDITIONS TO THE EXCHANGE OFFER? The exchange offer is not conditioned upon the exchange of a minimum number of shares of preferred stock. The exchange offer is, however, subject to a number of customary conditions, which we may waive. If any of these conditions is not satisfied, we will not be obligated to accept any properly tendered shares of preferred stock for exchange. In addition, we may decide to terminate the exchange offer for any reason or no reason and not accept for exchange any tendered shares of preferred stock. For more information regarding the conditions to the exchange offer, please see the section of this Offering Circular captioned "The Exchange Offer -- Conditions to the Exchange Offer." HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE EXCHANGE OFFER? You will have until 12:00 Midnight, New York City time, on July 22, 2002 to decide whether to tender your shares of preferred stock in the exchange offer, unless we extend it. If you cannot deliver the preferred stock certificates and other documents required to make a valid tender by that time, you may be able to use a guaranteed delivery procedure, which is described later in this Offering Circular. For more information regarding the time period for tendering your preferred stock, please see the section of this Offering Circular captioned "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Preferred Stock." 4 CAN THE EXCHANGE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES? We can elect to extend the exchange offer in our sole discretion, and we expressly reserve the right to do so. During any extension of the exchange offer, all shares of preferred stock previously tendered and not withdrawn will remain subject to the exchange offer and we may accept them for exchange. For more information regarding our right to extend the exchange offer, please see the section of this Offering Circular captioned "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Preferred Stock." HOW WILL I BE NOTIFIED IF THE EXCHANGE OFFER IS EXTENDED? If we extend the exchange offer, we will issue a press release or another form of public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration of the exchange offer. For more information regarding notification of exchange offer extensions, please see the section of this Offering Circular captioned "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Preferred Stock." HOW DO I TENDER MY PREFERRED STOCK? To tender your preferred stock, you must deliver the certificates representing your preferred stock, together with a completed letter of transmittal and any other documents required by the letter of transmittal, to American Stock Transfer & Trust Company, the exchange agent for the exchange offer, no later than the time the exchange offer expires. If your preferred stock is held in street name - that is, through a broker, dealer or other nominee - the preferred stock can be tendered by your nominee through The Depository Trust Company ("DTC"). If you cannot provide the exchange agent with all required documents prior to the expiration of the exchange offer, you may obtain additional time to do so by submitting a Notice of Guaranteed Delivery to the exchange agent, which must be certified by a broker, bank or other fiduciary that is a member of the Securities Transfer Agent Medallion Program or another eligible institution guarantee. You must also guarantee that these items will be received by the exchange agent within three New York Stock Exchange trading days. However, for your tender to be valid, the exchange agent must receive the missing items within that three trading-day period. For more information regarding the procedures for tendering your preferred stock, please see the section of this Offering Circular captioned "The Exchange Offer -- Procedures for Tendering Preferred Stock." UNTIL WHEN CAN I WITHDRAW PREVIOUSLY TENDERED PREFERRED STOCK? You can withdraw previously tendered preferred stock at any time until the exchange offer has expired and at any time after August 19, 2002, until we accept it for exchange. For more information regarding your right to withdraw tendered preferred stock, please see the section of this Offering Circular captioned "The Exchange Offer -- Withdrawal of Tenders." HOW DO I WITHDRAW PREVIOUSLY TENDERED PREFERRED STOCK? To withdraw previously tendered preferred stock, you must deliver a written notice of withdrawal, or a facsimile of one, to the exchange agent, with all information required by the notice of withdrawal completed, while you still have the right to withdraw the preferred stock. For more information regarding the procedures for withdrawing tendered preferred stock, please see the section of this Offering Circular captioned "The Exchange Offer -- Withdrawal of Tenders." WHEN WILL I RECEIVE THE COMMON STOCK IN EXCHANGE FOR MY PREFERRED STOCK? Subject to the satisfaction or waiver of all conditions to the exchange offer, and assuming we have not previously elected to terminate the exchange offer for any or no reason, in our sole discretion, we will accept for exchange all preferred stock that is properly tendered and not withdrawn prior to the expiration of the exchange offer at 12:00 Midnight, New York City time, on July 22, 2002. Promptly following this date, shares of common stock will be delivered in exchange for all preferred stock that is properly tendered and not withdrawn. For more information regarding our obligation to issue the common stock in exchange for tendered preferred stock, please see the section of this Offering Circular captioned "The Exchange Offer -- Acceptance of Preferred Stock for Exchange; Delivery of Common Stock." 5 WHAT HAPPENS IF MY PREFERRED STOCK IS NOT ACCEPTED FOR EXCHANGE? If we decide for any reason not to accept any preferred stock for exchange, we will return the preferred stock to the registered holder at our expense promptly after the expiration or termination of the exchange offer. In the case of preferred stock tendered by book-entry transfer into the exchange agent's account at DTC, as described above, DTC will credit any withdrawn or unaccepted preferred stock to the tendering holder's account at DTC. For more information regarding the withdrawal of tendered preferred stock, please see the sections of this Offering Circular captioned "The Exchange Offer -- Terms of the Exchange Offer; Period for Tendering Preferred Stock" and "-- Withdrawal of Tenders." WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE EXCHANGE OFFER? If you have questions regarding the information in this Offering Circular or the exchange offer generally, please contact Georgeson Shareholder, the information agent for the exchange offer. If you have questions regarding the procedures for tendering in the exchange offer or require assistance in tendering your preferred stock, please contact American Stock Transfer & Trust Company, the exchange agent for the exchange offer. If you would like copies of this Offering Circular, our First Quarter 2002 Quarterly Report on Form 10-Q, our 2001Annual Report on Form 10-K or our 2002 Annual Meeting Proxy Statement, please contact either Georgeson Shareholder or American Stock Transfer & Trust Company. You can call Georgeson Shareholder toll-free at (800) 649-2578. You can call American Stock Transfer & Trust Company at (718) 921-8200. You can also write to Georgeson Shareholder or American Stock Transfer & Trust Company at one of the addresses listed on the back cover page of this Offering Circular. You can also contact Hecla by writing to us at the following address: Hecla Mining Company 6500 Mineral Drive Coeur d'Alene, Idaho 83815 Attention: Vicki J. Veltkamp Vice President, Investor and Public Relations Phone number: (208) 769-4144 If you would like more general information about Hecla, please visit our web site at www.hecla-mining.com. Such information is not incorporated by reference into this Offering Circular. For more information regarding Hecla, please see the section of this Offering Circular captioned "Where You Can Find More Information." 6 SUMMARY DESCRIPTION OF HECLA COMMON STOCK AND HECLA PREFERRED STOCK The following summary highlights selected information about the terms of the common stock we propose to issue and the preferred stock you would exchange. For more detailed descriptions of the common stock and the preferred stock, please refer to the section of this Offering Circular captioned "Description of Capital Stock." COMMON STOCK Issuer..............................Hecla Mining Company Equity Securities Offered...........Up to an aggregate of 16,100,000 newly issued, fully paid and nonassessable shares of common stock, par value $0.25 per share, of Hecla Mining Company. Listing.............................We intend to apply for listing on the New York Stock Exchange of the shares of Hecla common stock to be issued in the exchange offer. It is a condition to the completion of the exchange offer that these shares be approved for listing, subject to official notice of issuance. Dividends...........................We have no present intention of paying dividends on our common stock in the foreseeable future (and our preferred dividend arrearages restrict us from paying any cash dividends on our common stock). Registration........................The exchange offer is being extended to you in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and has not been registered with the SEC. The common stock you receive in the exchange offer should be freely tradable, except by persons who are considered affiliates of Hecla, as that term is defined in the Securities Act, or persons who hold preferred stock that was previously held by an affiliate of Hecla. Voting..............................Each share of common stock is entitled to one vote per share on all matters submitted to a vote of stockholders (except for the election of two directors by holders of preferred stock in the case of preferred dividend arrearages). PREFERRED STOCK Issuer..............................Hecla Mining Company Number Of Shares Outstanding........2,300,000 shares of Series B Cumulative Convertible Preferred Stock, par value, $0.25 per share, of Hecla Mining Company. Listing.............................The preferred stock is listed on the New York Stock Exchange. That listing, as well as the registration of such stock under the Securities Exchange Act of 1934, may be affected by the results of the exchange offer. See "Risk Factors-- The exchange offer may adversely affect the market for the preferred stock, and otherwise adversely affect holders of preferred stock remaining after the exchange offer." 7 Dividends...........................The preferred stock is entitled to cumulative quarterly dividends of $0.875 per share. Seven quarterly dividends have not been declared or paid, and thus approximately $14.1 million of preferred dividends are in arrears. In addition, prior to the expiration date of the exchange offer, an additional quarterly dividend will not be declared or paid by us, resulting in a total of $16.1 million of preferred dividends in arrears. Liquidation Preference..............Each share of preferred stock has a liquidation preference of $50 per share, which means that in the event of the dissolution, liquidation or winding up of Hecla, holders of such shares would be entitled to that $50 per share payment, plus any dividend arrearages (currently approximately $14.1 million, but which will be $16.1 million prior to the expiration date of the exchange offer), to the extent available, before holders of common stock would be entitled to any payments in liquidation. Conversion..........................The preferred stock is currently convertible into 3.2154 shares of common stock, at the option of the holder. Voting..............................The preferred stock is not entitled to vote on any matters other than as required by Delaware law and, as a consequence of six successive quarterly arrearages, it is entitled to vote as a class annually on the election of two members to Hecla's board of directors. At Hecla's annual meeting of stockholders on May 10, 2002, the holders of preferred stock, voting as a class, elected Mr. David J. Christensen and Dr. Anthony P. Taylor to Hecla's board of directors. Redemption..........................The preferred stock is currently redeemable at the option of Hecla at $50 per share (plus $0.35 per share if redeemed between July 1, 2002 and June 30, 2003), plus all dividends in arrears ($6.125 per share at present, but soon to be $7 per share) up to the date fixed for redemption. Ranking.............................The preferred stock ranks senior to the common stock and any shares of Series A Preferred Stock which might be issued pursuant to Rights (see "Description of Capital Stock -- Rights") with respect to payment of dividends and amounts upon liquidation, dissolution or winding up. 8 RISK FACTORS You should carefully consider the risks and uncertainties described below, and all of the other information included or incorporated in this Offering Circular and the documents to which we refer, before you decide whether or not to exchange your shares of preferred stock for shares of our common stock. Any of the following risks could materially adversely affect our business, financial condition, or operating results and could negatively impact the value of the common stock and the preferred stock. RISKS RELATING TO THE EXCHANGE OFFER YOU MAY NOT BE ABLE TO SELL THE COMMON STOCK WHEN YOU WANT AND, IF YOU DO, YOU MAY NOT BE ABLE TO RECEIVE THE PRICE YOU WANT. Although our common stock has been actively traded on the New York Stock Exchange (NYSE), we cannot assure you that an active trading market for the common stock will continue or, if it does, at what prices the common stock may trade. The exchange offer will significantly increase the number of shares of our common stock outstanding, and could result in a decline in the market price of our common stock, particularly if exchanging preferred stockholders seek to sell substantial portions of the common stock received in the exchange offer. Therefore, you may not be able to sell the common stock when you want and, if you do, you may not be able to receive the price you want. Under the terms of the exchange offer, we are proposing to issue up to an aggregate of 16,100,000 shares of our common stock to the preferred stockholders. At May 31, 2002, there were issued and outstanding 75,120,705 shares of our common stock. Therefore, assuming 100% participation in the exchange offer, the consummation of the exchange offer will result in the issuance of an additional 16,100,000 shares of our common stock, or a 21.4% increase in the number of shares of our common stock outstanding at May 31, 2002. We cannot predict the extent to which this dilution will negatively affect the trading price of our common stock or the liquidity of the market for our common stock. In addition to sales by exchanging preferred holders, which require no registration with the SEC prior to sale, certain current or future holders of Hecla common stock have or may be given registration rights which may be exercised for registration with the SEC of shares for the sale of up to several million common shares of Hecla. See "Agreements Relating to Hecla Securities -- Stock Purchase Agreement" and "-- Letter Agreement with Great Basin Gold Ltd." Such sales could also adversely affect the trading prices and liquidity of the market for our common stock. No such registration statements have been filed, and any filed during the pendency of this exchange offer will be publicly- announced. THE EXCHANGE OFFER MAY ADVERSELY AFFECT THE MARKET FOR THE PREFERRED STOCK, AND OTHERWISE ADVERSELY AFFECT HOLDERS OF PREFERRED STOCK REMAINING AFTER THE EXCHANGE OFFER. Although our preferred stock has been traded on the NYSE, we cannot assure you that an active trading market for the preferred stock will continue or, if it does, at what prices the preferred stock may trade. The current market for our preferred stock is not very active, and is far less so than the market for our common stock. To the extent that shares of preferred stock are tendered and accepted for exchange in the exchange offer, the trading market for the remaining preferred stock will be more limited or may cease altogether. A preferred security with a smaller outstanding aggregate "float" may command a lower price than would a comparable preferred security with a larger float. Therefore, the market price for the unexchanged shares of preferred stock may be adversely affected to the extent that the shares of preferred stock tendered in the exchange offer reduces the float. The reduced float may also tend to make the trading prices of the preferred stock more volatile. Depending on the number of shares of preferred stock retired as a consequence of the exchange offer, the preferred stock may not continue to meet listing requirements of the NYSE, and the number of holders of record may be reduced to the point that Hecla could cause the preferred stock to no longer be registered under the Securities Exchange Act of 1934. The current NYSE continued listing requirements for preferred stock are an aggregate market value of publicly- held shares of at least $2,000,000 and at least 100,000 shares publicly-held. Stock may be removed from registration under the Securities Exchange Act of 1934 by an issuer if it is held by less than 300 holders of record. We have no current intention of applying for such delisting or such deregistration. 9 See the Section of this Offering Circular captioned "Risk Factors -- What might Hecla do regarding preferred stock outstanding after the exchange offer?" Our board will consider the payment of past and future dividends on our preferred stock on a quarterly basis, but there should be no expectation that past or future dividends will ever be declared and paid by our board. Further, it is unlikely that our board will determine to redeem any shares of preferred stock, which currently would require a cash payment $50 per share plus $6.125 per share of undeclared and unpaid dividends (plus, if effected after June 30, 2002 and before July 1, 2003, a $0.35 per share redemption premium, and, if effected after June 30, 2002, an additional $0.875 of undeclared and unpaid dividends). RISKS RELATING TO OWNING SHARES OF OUR COMMON STOCK SEE THE SECTION OF THIS OFFERING CIRCULAR CAPTIONED "RISK FACTORS -- RISKS RELATING TO THE EXCHANGE OFFER -- YOU MAY NOT BE ABLE TO SELL THE COMMON STOCK WHEN YOU WANT AND, IF YOU DO, YOU MAY NOT BE ABLE TO RECEIVE THE PRICE YOU WANT." OUR CURRENT AND FUTURE CASH POSITION MAY NOT PROVIDE US WITH SUFFICIENT LIQUIDITY. We had cash and cash equivalents at March 31, 2002, of approximately $8.6 million. We believe cash requirements over the remainder of 2002 will be funded through a combination of current cash, future cash flows from operations, amounts available under existing loan agreements, proceeds from potential asset sales and/or future debt or equity security issuances. Our ability to raise capital is highly dependent upon the commercial viability of our projects and the associated prices of the metals we produce. Because of the significant impact that changes in the prices of gold, silver, zinc and lead have on our financial condition, declines in these metals prices may negatively impact short-term liquidity and our ability to raise additional funding for long-term projects. In the event that cash balances decline to a level that cannot support our operations, our management will defer certain planned capital expenditures and exploration expenditures as needed to conserve cash for operations. If our plans are not successful, operations and liquidity may be adversely affected. ALTHOUGH OUR OPERATIONS WERE PROFITABLE IN 2001 AND THE FIRST QUARTER OF 2002, WE INCURRED LOSSES APPLICABLE TO COMMON STOCKHOLDERS DUE TO CUMULATIVE PREFERRED STOCK DIVIDENDS WHICH HAVE NOT BEEN DECLARED OR PAID, AND THERE CAN BE NO ASSURANCE THAT OUR OPERATIONS WILL REMAIN PROFITABLE. For the year ended December 31, 2001, we reported net income of $2.3 million (before preferred stock dividends of approximately $8.1 million), or $0.03 per share, compared to a net loss of approximately $84.0 million (before preferred stock dividends of approximately $8.1 million), or $1.26 per share of common stock for the year ended December 31, 2000. Dividends for our preferred stock brought the loss applicable to common stockholders for 2001 to $5.7 million, or $0.08 per share, compared to a loss of $92.0 million, or $1.38 per share in 2000, after dividends for our preferred shares (of which $4.0 million out of $8.1 million were declared and paid). The effects of the undeclared dividends are reflected in the loss applicable to common stockholders. For the first quarter of 2002, we reported net income of approximately $0.5 million (before preferred stock dividends of approximately $2.0 million), or $0.01 per share, compared to net income of $9.5 million (before preferred stock dividends of approximately $2.0 million), or $0.14 per share, in the first quarter of 2001 due to the gain of approximately $13.0 million recognized on the sale of Kentucky-Tennessee Clay Company in March 2001. After including a $2.0 million charge for the undeclared and unpaid preferred share dividend, a loss to common stockholders of $1.5 million, or $0.02 per share, was recorded for the first quarter of 2002, compared to income of $7.5 million, or $0.11 per share, in the first quarter of 2001. The effects of the undeclared dividends are reflected in the income (loss) applicable to common stockholders. As indicated above, although our operations were profitable in 2001 and in the first quarter of 2002, we have reported net losses applicable to common stockholders because we are obligated to report the cumulative quarterly dividends on our preferred stock, although the dividends have not been declared or paid. We have 2,300,000 shares of preferred stock outstanding. Holders of the preferred stock are entitled to receive cumulative cash dividends at the annual rate of $3.50 per share payable quarterly, when and if declared by our board of 10 directors. As of April 30, 2002, we had not declared and paid the equivalent of seven quarterly dividends of approximately $14.1 million in the aggregate. In addition, prior to the expiration date of the exchange offer, an additional quarterly dividend will not be declared or paid by us, resulting in a total of $16.1 million of preferred dividends in arrears. To the extent that shares of preferred stock are not tendered and accepted for exchange in the exchange offer, dividends will continue to accumulate. Our improvement in net income in 2001 and early in 2002 has been the result, in large part, of increased gold production, lower gold and silver production costs, lower interest expense, a gain on the sale of our subsidiary, Kentucky-Tennessee Clay Company and, recently, increased gold prices. Despite our recent improvement in net income, prior to 2001, we had incurred net losses from operations for each of the prior ten years. Many of the factors affecting our operating results are out of our control, and we cannot foresee whether our operations will generate sufficient revenue for us to be profitable. While metals prices improved in April and May of 2002 over average prices in 2001, there can be no assurance such prices will continue at or above such levels. OUR PREFERRED STOCK HAS A LIQUIDATION PREFERENCE OF $50 PER SHARE, OR $115.0 MILLION, PLUS DIVIDENDS IN ARREARS OF APPROXIMATELY $14.1 MILLION, WHICH WILL INCREASE SHORTLY TO $16.1 MILLION. This means that if we were liquidated at this time, and without giving effect to the exchange offer, holders of our preferred stock would be entitled to receive approximately $129.1 million from any liquidation proceeds before holders of our common stock would be entitled to receive any proceeds. WE ARE CURRENTLY INVOLVED IN ONGOING LITIGATION WHICH MAY ADVERSELY AFFECT US. There are several ongoing lawsuits in which we are involved. If any of these cases results in a substantial monetary judgment against us or is settled on unfavorable terms, our results of operations, financial condition and cash flows could be materially adversely affected. BUNKER HILL SUPERFUND SITE In 1994, we, as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), entered into a consent decree with the Environmental Protection Agency (EPA) and the state of Idaho, concerning environmental remediation obligations at the Bunker Hill Superfund site located at Kellogg, Idaho. The consent decree settled our response-cost liability under CERCLA at the Bunker Hill site. In August 2000, Sunshine Mining and Refining Company, which was also a party to the 1994 Consent Decree, filed for Chapter 11 bankruptcy and in January 2001, the Federal District Court approved a new Consent Decree between Sunshine, the U.S. Government and the Coeur d'Alene Indian Tribe which settled Sunshine's environmental liabilities in the Coeur d'Alene Basin lawsuits described below and released Sunshine from further obligations under the 1994 Consent Decree. In response to a request by us and ASARCO Incorporated, the Federal District Court in Idaho having jurisdiction over the 1994 Consent Decree ("1994 Decree") issued an Order in September 2001 that the 1994 Consent Decree should be modified in light of a significant change in factual circumstances not reasonably anticipated by the mining companies at the time they signed the 1994 Decree. In its Order, the Court reserved the final ruling on the appropriate modification to the 1994 Decree until after the issuance of the Record of Decision on the Basin-Wide Remedial Investigation/Feasibility Study. The EPA has indicated that the Record of Decision will be issued later in 2002. Based on the 2001 Order issued by the Court, we believe we are entitled to relief from the 2002 work program under the 1994 Decree within the Bunker Hill site. We and ASARCO have negotiated a reduced 2002 work program with the EPA and the state of Idaho pending the outcome of a final ruling of the Court. As of March 31, 2002, we have estimated and accrued an allowance for liability for remedial activity costs at the Bunker Hill site of $9.4 million. These estimated expenditures are anticipated to be made over the next three to five years. Although we believe the accrual is adequate based upon our current estimates of aggregate costs, it is reasonably possible that our estimate of our obligations may change in the near or longer term. 11 COEUR D'ALENE RIVER BASIN ENVIRONMENTAL CLAIMS COEUR D'ALENE INDIAN TRIBE CLAIMS In July 1991, the Coeur d'Alene Indian Tribe brought a lawsuit, under CERCLA, in Idaho Federal District Court against us and a number of other mining companies asserting claims for damages to natural resources downstream from the Bunker Hill site over which the Tribe alleges some ownership or control. The Tribe's natural resource damage litigation has been consolidated with the United States' litigation described below. U.S. GOVERNMENT CLAIMS In March 1996, the United States filed a lawsuit in Idaho Federal District Court against certain mining companies that conducted historic mining operations in the Silver Valley of northern Idaho, including us. The lawsuit asserts claims under CERCLA and the Clean Water Act and seeks recovery for alleged damages to or loss of natural resources located in the Coeur d'Alene River Basin in northern Idaho for which the United States asserts to be the trustee under CERCLA. The lawsuit asserts that the defendants' historic mining activity resulted in releases of hazardous substances and damaged natural resources within the Basin. The suit also seeks declaratory relief that we and other defendants are jointly and severally liable for response costs under CERCLA for historic mining impacts in the Basin outside the Bunker Hill site. We have asserted a number of defenses to the United States' claims. In May 1998, the EPA announced that it had commenced a Remedial Investigation/Feasibility Study under CERCLA for the entire Basin, including Lake Coeur d'Alene, in support of its response cost claims asserted in its March 1996 lawsuit. In October 2001, the EPA issued its proposed cleanup plan for the Basin, and EPA's Record of Decision on the cleanup plan is expected to be issued by EPA later in 2002. The first phase of the trial commenced on the consolidated Coeur d'Alene Indian Tribe's and the Federal District Court cases on January 22, 2001, and was concluded on July 30, 2001. In the first phase of the trial, the Court has been asked to determine the extent of liability, if any, of the defendants for the plaintiffs' CERCLA claims. The Court has also been asked to determine the liability of the United States for its historic involvement in the Basin. No decision on the issues before the Court in the first phase of the litigation has been issued. If liability is determined in the first phase, a second trial will be scheduled for 2002 or 2003 to address damages and remedy selection. Two of the defendant mining companies, Coeur d'Alene Mines Corporation and Sunshine Mining and Refining Company, settled their liabilities under the litigation during the first quarter of 2001. We and ASARCO are the only defendants remaining in the litigation. During 2000 and into 2001, we were involved in settlement negotiations with representatives of the U.S. government and the Coeur d'Alene Indian Tribe. We also participated with certain of the other defendants in the litigation in a State of Idaho led settlement effort. On August 16, 2001, we entered into an Agreement in Principle with the United States and the State of Idaho to settle the governments' claims for natural resource damages and cleanup costs related to the historic mining practices in the Coeur d'Alene Basin in northern Idaho. The settlement, if and when finalized in the form of a Consent Decree, would release us from further liability to the governments for our historic mining practices in the Coeur d'Alene Basin. The Agreement in Principle caps for a period of ten years the majority of the cleanup related expenditures we are responsible for annually at the Bunker Hill Superfund Site, the Grouse Creek mine and the Stibnite site in central Idaho. The Agreement limits these payments to the Government and/or cleanup obligations at these sites to a fixed annual cap of $5.0 million for each of the first two years of the Agreement and $6.0 million for each of the next eight years. We are committed to work and/or make payments of $4.0 million annually for the following 20 years thereafter. In addition, we would either have to pay or perform cleanup obligations amounting to 10% of our operating cash flow as adjusted for certain exploration expenditures. We would provide a security interest in assets with a value of $20 million which will decline over ten years. The Agreement in Principle does not include the Coeur d'Alene Indian Tribe; however, we hope to be able to include the Tribe as a party to the settlement under the terms of any final consent decree. We continue to negotiate the terms of a settlement with the United States and the State of Idaho that would resolve our environmental cleanup liabilities for historic mining practices in the Coeur d'Alene Basin. The ultimate terms of such a settlement and Consent Decree may differ from the terms of the Agreement in Principle. 12 As of March 31, 2002, we have accrued $42.7 million related to the properties covered by the Agreement in Principle. The range of liability for these sites could be up to $138.0 million on an undiscounted basis plus the percentage of operating cash flow. If, and when, the Agreement in Principle is finalized in the form of a Consent Decree, if the terms of the obligation are fixed and determinable, they may be discounted. We have accrued what management believes is the best estimate of the liability as of March 31, 2002. However, it is reasonably possible that our obligation may change in the near or long term depending on a number of factors, including finalization and entry of a Consent Decree. In addition, an adverse ruling against us for liability and damages in this matter could have a material adverse effect on us. PRIVATE CLASS ACTION LITIGATION On or about January 7, 2002, a class action complaint was filed in this matter in the Idaho District Court, County of Kootenai, against several corporate defendants, including us. We were served with the Complaint on January 29, 2002. The Complaint seeks certification of three plaintiff classes of Coeur d'Alene Basin residents and current and former property owners to pursue three types of relief: various medical monitoring programs, real property remediation and restoration programs and damages for diminution in property value, plus other damages and costs. We believe the Complaint is subject to challenge on a number of bases and intend to vigorously defend this litigation. On April 23, 2002, we filed a motion with the Court to dismiss the claims for relief relating to the medical monitoring programs and the remediation and restoration programs. The Court has scheduled a hearing on our motion for August 22, 2002. INSURANCE COVERAGE LITIGATION In 1991, we initiated litigation in the Idaho District Court, County of Kootenai, against a number of insurance companies that provided comprehensive general liability insurance coverage to us and our predecessors. We believe the insurance companies have a duty to defend and indemnify us under their policies of insurance for all liabilities and claims asserted against us by the EPA and the tribe under CERCLA related to the Bunker Hill site and the Basin in northern Idaho. In 1992, the Idaho State District Court ruled that the primary insurance companies had a duty to defend us in the Tribe's lawsuit. During 1995 and 1996, we entered into settlement agreements with a number of the insurance carriers named in the litigation. We have received a total of approximately $7.2 million under the terms of the settlement agreements. Thirty percent of these settlements were paid to the EPA to reimburse the U.S. government for past costs under the Bunker Hill site Consent Decree. Litigation is still pending against one insurer with trial suspended until the underlying environmental claims against us are resolved or settled. The remaining insurer in the litigation, along with a second insurer not named in the litigation, is providing us with a partial defense in all Basin environmental litigation. As of March 31, 2002, we have not reduced our accrual for reclamation and closure costs to reflect the receipt of any potential insurance proceeds. OTHER CLAIMS In 1997, our then subsidiary, Kentucky-Tennessee Clay Company (K-T Clay), terminated shipments (comprising approximately 1% of annual ball clay production) sold to animal feed producers, when the Food and Drug Administration determined trace elements of dioxin were present in poultry. Dioxin is inherently present in ball clays generally. On September 22, 1999, Riceland Foods (the primary purchaser of ball clay from K-T Clay used in animal feed) commenced litigation against K-T Clay in State Court in Arkansas to recover its losses and its insurance company's payments to downstream users of its animal feed. The complaint alleged negligence, strict liability and breach of implied warranties and seeks damages in excess of $7.0 million. Legal counsel retained by the insurance company for K-T Clay had the case removed to Federal District Court in Arkansas. In July 2000, a second complaint was filed against K-T Clay and us in Arkansas State Court by Townsends, Inc., another purchaser of animal feed containing ball clay sold by K-T Clay. A third complaint was filed in the Federal District Court in Arkansas on August 31, 2000, by Archer Daniels Midland Company, a successor in interest to Quincy Soybean Company, a third purchaser of ball clay sold by K-T Clay and used in the animal feed industry. The Townsends and Archer Daniels lawsuits allege damages totaling approximately $300,000 and $1.4 million, respectively. These complaints contain similar allegations to the Riceland Foods' case and legal counsel retained by the insurance carrier is defending K-T Clay and us in these lawsuits. We believe that these claims comprise substantially all the potential claims related to this matter. In January 2001, we were dismissed from the only lawsuit in which we had been named as a defendant. In March 2001, prior to trial, K-T Clay settled the Riceland Foods litigation against K-T Clay through settlement payment substantially 13 funded by K-T Clay's insurance carrier. K-T Clay contributed $230,000 toward the Riceland Foods settlement. In August 2001, the Federal District Court dismissed the Archer Daniels litigation; however, a similar lawsuit based upon implied warranty was refiled by Archer Daniels against K-T Clay on October 24, 2001, in Arkansas Federal Court. The defense of the Townsends lawsuit is being covered by insurance. We believe that K-T Clay's insurance coverage is available to cover the remaining claims. On March 27, 2001, we sold our interest in K-T Clay. However, we agreed to indemnify the purchaser of K-T Clay from all liability resulting from these dioxin claims and litigation to the extent not covered by insurance. Although the outcome of the remaining litigation or insurance coverage cannot be assured, we currently believe that there will be no material adverse effect on our results of operations, financial condition or cash flows from this matter. In March 2002, Independence Lead Mines Company ("Independence"), the holder of a net 18.52% interest in the Gold Hunter or DIA unitized area of the Lucky Friday mine, notified us of certain alleged defaults by us under the 1968 Lease Agreement between the unit owners (Independence and us under the terms of the 1968 DIA Unitization Agreement) as lessors and defaults by us as lessee and operator of the properties. We are a net 81.48% interest holder under these Agreements. Independence alleges that we violated the "prudent operator obligations" implied under the lease by undertaking the Gold Hunter project and violated certain other provisions of the Agreement with respect to milling equipment and calculating net profits and losses. The remedy requested by Independence is the termination of our lease of the DIA/Gold Hunter properties. Under the Lease Agreement, we have the exclusive right to manage, control and operate the DIA properties, and our decisions with respect to the character of work are final. The dispute has been filed in the Idaho State District Court for resolution. We believe that we have fully complied with all obligations of the 1968 Lease Agreement and will be able to successfully defend our right to operate the property under the Lease Agreement. See the Section of this Offering Circular captioned "Risk Factors -- The titles to some of our properties may be defective." We are subject to other legal proceedings and claims not disclosed above which have arisen in the ordinary course of our business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these other matters, it is the opinion of our management that the outcome of these other matters will not have a material adverse effect on our financial condition. See "Business - Legal Proceedings," in our 2001 Annual Report of Form 10-K and Note 5 of Notes to Consolidated Financial Statements in our First Quarter 2002 Report on Form 10-Q. OUR EARNINGS MAY BE AFFECTED BY METAL PRICE VOLATILITY. Our revenues are derived from the sale of gold, silver, lead and zinc, and as a result, our earnings are directly related to the prices of these metals. Gold, silver, lead and zinc prices fluctuate widely and are affected by numerous factors including: * expectations for inflation; * speculative activities; * relative exchange rate of the U.S. dollar; * global and regional demand and production; * political and economic conditions; and * production costs in major producing regions. These factors are beyond our control and are impossible for us to predict. If the market prices for these metals fall below our costs to produce them for a sustained period of time, we will experience additional losses and may have to discontinue development or mining at one or more of our properties. 14 In the past, we have used limited hedging techniques to reduce our exposure to price volatility, but we may not be able to do so in the future. See "-- Our hedging activities could expose us to losses." The following table sets forth the average daily closing prices of the following metals for 1980, 1985, 1990, 1995, 1997 and each year thereafter through 2001.
1980 1985 1990 1995 1997 1998 1999 2000 2001 Gold (1) (per oz.) $612.56 $317.26 $383.46 $384.16 $331.10 $294.16 $278.77 $279.03 $271.00 Silver (2) (per oz.) 20.63 6.14 4.82 5.19 4.90 5.53 5.25 5.00 4.39 Lead (3) (per lb.) 0.41 0.18 0.37 0.29 0.28 0.24 0.23 0.21 0.22 Zinc (4) (per lb.) 0.34 0.36 0.69 0.47 0.60 0.46 0.49 0.51 0.40
(1) London Final (2) Handy & Harman (3) London Metals Exchange -- Cash (4) London Metals Exchange -- Special High Grade - Cash The average daily closing prices for the first quarter 2002 for gold, silver, lead and zinc were $290.35 per ounce, $4.51 per ounce, $0.22 per pound and $0.36 per pound, respectively. On June 20, 2002, the closing prices for gold, silver, lead and zinc were $322.35 per ounce, $4.88 per ounce, $ 0.20 per pound and $ 0.34 per pound, respectively. THE VOLATILITY OF METALS PRICES MAY ADVERSELY AFFECT OUR DEVELOPMENT AND EXPLORATION EFFORTS. Our ability to produce gold and silver in the future is dependent upon our exploration efforts and our ability to develop new ore reserves. If prices for these metals decline, it may not be economically feasible for us to continue our development of a project or to continue commercial production at some of our properties. OUR DEVELOPMENT OF NEW ORE BODIES MAY COST MORE AND PROVIDE LESS RETURN THAN WE ESTIMATED. Our ability to sustain or increase our current level of production of metals partly depends on our ability to develop new ore bodies and/or expand existing mining operations. Before we can begin a development project, we must first determine whether it is economically feasible to do so. This determination is based on estimates of several factors, including: * reserves; * expected recovery rates of metals from the ore; * facility and equipment costs; * capital and operating costs of a development project; * future metals prices; * comparable facility and equipment costs; and * anticipated climate conditions. 15 Development projects may have no operating history upon which to base these estimates and these estimates are based in large part on our interpretation of geological data, a limited number of drill holes and other sampling techniques. As a result, actual cash operating costs and returns from a development project may differ substantially from our estimates. OUR ORE RESERVE ESTIMATES MAY BE IMPRECISE. Our ore reserve figures and cash operating costs are primarily estimates and are not guarantees that we will recover the indicated quantities of these metals. Reserves are estimates made by our technical personnel and no assurance can be given that the estimate of the amount of metals or the indicated level of recovery of these metals will be realized. Reserve estimation is an interpretive process based upon available data. Further, reserves are valued based on estimates of future costs and future prices. Our reserve estimates for properties that have not yet started may change based on actual production experience. In addition, the economic value of ore reserves containing relatively lower grades of mineralization may be adversely affected by: * declines in the market price of the various metals we mine; * increased production or capital costs; or * reduced recovery rates. Short-term operating factors relating to our ore reserves, such as the need to sequentially develop ore bodies and the processing of new or different ore grades, may adversely affect our profitability. We use forward sales contracts and other hedging techniques to partially offset the effects of a drop in the market prices of the metals we mine. However, if the price of metals that we produce declines substantially below the levels used to calculate reserves for an extended period, we could experience: * delays in new project development; * increased net losses; * reduced cash flow; * reductions in reserves; and * possible write-down of asset values. OUR AVAILABLE CASH AND CASH FLOWS MAY BE INADEQUATE TO FUND EXPANSION PROJECTS. Based upon our estimate of metals prices and metals production for 2002, we currently believe that our cash on hand, operating cash flows, amounts available under current credit facilities, proceeds from potential asset sales and/or future debt or equity security issuances will be adequate to fund our: * anticipated minimum capital expenditure requirements; * idle property expenditures; and * exploration expenditures. Cash flows from operations, however, could be significantly impacted if the market price of gold, silver, zinc and lead fluctuate. In the event that cash balances decline to a level that cannot support our operations, our management will defer certain planned capital and exploration expenditures as needed to conserve cash. If our plans are not successful, operations and liquidity may be adversely affected. 16 OUR MINERAL EXPLORATION EFFORTS MAY NOT BE SUCCESSFUL. We must continually replace ore reserves depleted by production. Our ability to expand or replace depleted ore reserves depends on the success of our exploration program. Mineral exploration, particularly for gold and silver, is highly speculative. It involves many risks and is often nonproductive. Even if we find a valuable deposit of minerals, it may be several years before production is possible. During that time, it may become economically unfeasible to produce those minerals. Establishing ore reserves requires us to make substantial capital expenditures and, in the case of new properties, to construct mining and processing facilities. As a result of these costs and uncertainties, we may not be able to expand or replace our existing ore reserves as they are depleted by current production. JOINT DEVELOPMENT AND OPERATING ARRANGEMENTS. We often enter into joint venture arrangements in order to share the risks and costs of developing and operating properties. For instance, our Greens Creek mine is operated through a joint venture arrangement. Typically, this arrangement means that we own a percentage of the assets in the joint venture. Under the agreement governing the joint venture relationship, each party is entitled to indemnification from each other party and is only liable for the liabilities of the joint venture in proportion to its interest in the joint venture. However, if a party fails to perform its obligations under the joint venture agreement, we could incur losses in excess of our pro-rata share of the joint venture. In the event any party so defaults, the joint venture agreement provides certain rights and remedies to the remaining participants, including the right to sell the defaulting party's percentage interest and use the proceeds to satisfy the defaulting party's obligations. We currently have no reason to believe that our joint venture partners will fail to meet their obligations. WE FACE STRONG COMPETITION FROM OTHER MINING COMPANIES FOR THE ACQUISITION OF NEW PROPERTIES. Mines have limited lives and as a result, we continually seek to replace and expand our reserves through the acquisition of new properties. In addition, there is a limited supply of desirable mineral lands available in the United States and other areas where we would consider conducting exploration and/or production activities. Because we face strong competition for new properties from other mining companies, some of whom have greater financial resources than we do, we may be unable to acquire attractive new mining properties on terms that we consider acceptable. THE TITLES TO SOME OF OUR PROPERTIES MAY BE DEFECTIVE. Unpatented mining claims constitute a significant portion of our undeveloped property holdings. The validity of these unpatented mining claims is often uncertain and may be contested. In accordance with mining industry practice, we do not generally obtain title opinions until we decide to develop a property. Therefore, while we have attempted to acquire satisfactory title to our undeveloped properties, some titles may be defective. In Mexico a claim has been made, in one court, as to the validity of the ownership of the Velardena mill and, in another court, the validity of a lien that predates acquisition of the mill by our subsidiary. There is no assurance that Hecla will win this litigation. Losing the litigation could result in an interruption of production or even the loss of the mill. OUR OPERATIONS MAY BE ADVERSELY AFFECTED BY RISKS AND HAZARDS ASSOCIATED WITH THE MINING INDUSTRY. Our business is subject to a number of risks and hazards including: * environmental hazards; * political and country risks; * industrial accidents; 17 * labor disputes; * unusual or unexpected geologic formations; * cave-ins; * explosive rock failures; and * flooding and periodic interruptions due to inclement or hazardous weather conditions. Such risks could result in: * damage to or destruction of mineral properties or producing facilities; * personal injury; * environmental damage; * delays in mining; * monetary losses; and * legal liability. For some of these risks, we maintain insurance to protect against these losses at levels consistent with our historical experience and industry practice. However, we may not be able to maintain this insurance, particularly if there is a significant increase in the cost of premiums. Insurance against environmental risks is generally too expensive for us and other companies in our industry, and, therefore, we do not maintain environmental insurance. To the extent we are subject to environmental liabilities, we would have to pay for these liabilities. Moreover, in the event that we are unable to fully pay for the cost of remedying an environmental problem, we might be required to suspend operations or enter into other interim compliance measures. OUR FOREIGN OPERATIONS ARE SUBJECT TO ADDITIONAL INHERENT RISKS. We currently conduct operations in Mexico and Venezuela and have exploration projects and operations in Mexico and South America. We anticipate that we will continue to conduct significant international operations in the future. Because we conduct operations internationally, we are subject to political and economic risks such as: * the effects of local political and economic developments; * exchange controls; * currency fluctuations; and * taxation and laws or policies of foreign countries and the United States affecting trade, investment and taxation. Consequently, our exploration, development and production activities outside of the United States may be substantially affected by factors beyond our control, any of which could materially adversely affect our financial position or results of operations. 18 WE FACE SUBSTANTIAL GOVERNMENTAL REGULATION AND ENVIRONMENTAL RISKS. Our business is subject to extensive federal, state and local laws and regulations governing development, production, labor standards, occupational health, waste disposal, use of toxic substances, environmental regulations, mine safety and other matters. We have been, and are currently involved in lawsuits in which we have been accused of violating environmental laws, and we may be subject to similar lawsuits in the future. New legislation and regulations may be adopted at any time that results in additional operating expense, capital expenditures or restrictions and delays in the mining, production or development of our properties. See "Risk Factors -- We are currently involved in ongoing litigation which may adversely affect us." We maintain reserves for costs associated with mine closure, reclamation of land and other environmental matters. At March 31, 2002, our reserves for these matters totaled $52.3 million. We anticipate that we will make expenditures relating to these reserves over the next several years. Future expenditures related to closure, reclamation and environmental expenditures are difficult to estimate due to: * the early stage of our investigation; * the uncertainties relating to the costs and remediation methods that will be required in specific situations; * the possible participation of other potentially responsible parties; and * changing environmental laws, regulations and interpretations. It is possible that, as new information becomes available, changes to our estimates of future closure, reclamation and environmental contingencies could materially adversely affect our future operating results. Various laws and permits require that financial assurances be in place for certain environmental and reclamation obligations and other potential liabilities. We currently have in place such financial assurances in the form of surety bonds. As of March 31, 2002, we also had set aside as restricted investments approximately $6.4 million as collateral for these bonds. The amount of the financial assurances and the amount required to be set aside by us as collateral for these financial assurances are dependent upon a number of factors, including our financial condition, reclamation cost estimates, development of new projects and the total dollar value of financial assurances in place. There can be no assurance that we will be able to maintain or add to our current level of financial assurances. OUR HEDGING ACTIVITIES COULD EXPOSE US TO LOSSES. From time to time, we engage in hedging activities, such as forward sales contracts and commodity put and call option contracts, to minimize the effect of declines in metals prices on our operating results. While these hedging activities may protect us against low metals prices, they may also limit the price we can receive on hedged products. As a result, we may be prevented from realizing possible revenues in the event that the market price of a metal exceeds the price stated in a forward sale or call option contract. We are also subject to posting margin if the margin free limit of $10 million is exceeded. In addition, we may experience losses if a counterparty fails to purchase under a contract when the contract price exceeds the spot price of a commodity. OUR BUSINESS DEPENDS ON GOOD RELATIONS WITH OUR EMPLOYEES. Certain of our employees are represented by unions. At June 17, 2002, there were 62 hourly employees at the Lucky Friday mine. The United Steelworkers of America is the bargaining agent for the Lucky Friday hourly employees. The current labor agreement expires June 16, 2003. At March 31, 2002, there were 95 hourly and 37 salaried employees at the San Sebastian mine. The National Mine and Mill Workers Union represents process plant hourly workers at San Sebastian. Under labor law, wage adjustments are negotiated annually and other contract terms every two years. The contract at San Sebastian is due for negotiation of wage and other terms in July 2002 and we anticipate a satisfactory contract will be negotiated, although there can be no assurance that this can be done without 19 a disruption to production. At March 31, 2002, there were 351 hourly and 39 salaried employees at our La Camorra Gold Mine, most of whom are represented by the Mine Workers Union. The contract with respect to La Camorra will expire in March 2004. We anticipate that we will be able to negotiate a satisfactory contract with each union, but there can be no assurance that this can be done without a disruption to production. WE MAY NOT BE ABLE TO MAINTAIN OUR NEW YORK STOCK EXCHANGE LISTING. We received stockholder approval at our annual stockholders' meeting on June 8, 2001, allowing a reverse split of our common stock at the discretion of our board of directors. We requested that the board be granted authority to implement a reverse split from the stockholders if necessary to remain listed on the New York Stock Exchange (NYSE). The choices of stock split ratios given to the directors were one for three, one for four, or one for five. The directors have the option to implement a reverse split at one of those ratios any time prior to June 8, 2003, or not at all. On December 26, 2001, we were notified by the NYSE that the trading prices for our common stock had fallen below the minimum criterion of $1.00 per share over a 30-day period. On February 14, 2002, we were notified that our stock price would be reviewed on June 26, 2002, to determine compliance with this listing requirement. On June 20, 2002, our average closing price over a 30-day period was $4.08 and we were in compliance with the listing criteria of the NYSE. OUR STOCKHOLDER RIGHTS PLAN AND PROVISIONS IN OUR CERTIFICATE OF INCORPORATION, OUR BY-LAWS AND DELAWARE LAW COULD DELAY OR DETER TENDER OFFERS OR TAKEOVER ATTEMPTS THAT MAY OFFER YOU A PREMIUM FOR YOUR COMMON STOCK. Our stockholder rights plan and provisions in our certificate of incorporation, our by-laws and Delaware law could make it more difficult for a third party to acquire control of us, even if that transaction would be beneficial to you. These impediments include: * the rights issued in connection with the stockholder rights plan that will substantially dilute the ownership of any person or group that acquires 15% or more of our outstanding common stock unless the rights are first redeemed by our board of directors, in its discretion. Furthermore, our board of directors may amend the terms of these rights, in its discretion, including an amendment to lower the acquisition threshold to any amount greater than 10% of the outstanding common stock; * the classification of our board of directors into three classes serving staggered three-year terms; * the ability of our board of directors to issue shares of preferred stock with rights as it deems appropriate without stockholder approval; * a requirement that special meetings of our board of directors may be called only by our chief executive officer or a majority of our board of directors; * a requirement that special meetings of stockholders may only be called pursuant to a resolution approved by a majority of our entire board of directors; * a prohibition against action by written consent of our stockholders; * a requirement that our board members may only be removed for cause and by an affirmative vote of at least 80% of the outstanding voting stock; * a requirement that our stockholders comply with advance-notice provisions to bring director nominations or other matters before meetings of our stockholders; * a prohibition against certain business combinations with an acquirer of 15% or more of our common stock for three years after such acquisition unless the stock acquisition or the business combination is approved by our board prior to the acquisition of the 15% interest, or after such acquisition our board and the holders of two-thirds of the other common stock approve the business combination; and 20 * a requirement that prohibits us from entering into some business combinations with interested stockholders without the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of voting stock. The existence of the stockholder rights plan and these provisions may deprive you of an opportunity to sell your stock at a premium over prevailing prices. The potential inability of our stockholders to obtain a control premium could adversely affect the market price for our common stock. DEPENDENCE ON KEY PERSONNEL We are currently dependent upon the ability and experience of our executive officers and there can be no assurance that we will be able to retain all of such officers. The loss of one or more of the officers could have a material adverse effect on our operations. We also compete with other companies both within and outside the mining industry in connection with the recruiting and retention of qualified employees knowledgeable in mining operations. Management's compensation has been structured assuming stockholder approval of increases in shares covered by our 1995 Stock Option Plan and 2002 Key Employee Deferred Compensation Plan. If the increases are not approved at the adjourned annual meeting of stockholders scheduled for July 18, 2002, we may be required to restructure management compensation, which could affect our ability to retain or recruit qualified managers. USE OF PROCEEDS We will not receive any cash proceeds from the exchange offer. All preferred stock that is properly tendered and not withdrawn in the exchange offer will be retired and cancelled. Accordingly, the issuance of shares of our common stock in the exchange offer will not result in any cash proceeds to us. SUMMARY HISTORICAL AND PRO FORMA CAPITALIZATION AND OTHER FINANCIAL INFORMATION The following summary historical and pro forma capitalization and pro forma financial information of Hecla Mining Company has been derived from, and should be read in conjunction with, the related consolidated financial statements and other financial information presented in Hecla's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, and Annual Report on Form 10-K for the year ended December 31, 2001, which are incorporated herein by reference. The unaudited pro forma information presents the effects of the exchange offer assuming that 100% and 50% of the preferred shares are exchanged for common shares, as if the exchange occurred as of January 1, 2001 for the unaudited statements of operations data and unaudited other data and as if the exchange occurred as of March 31, 2002 for the unaudited capitalization and balance sheet data. The pro forma results do not include deemed dividend charges that Hecla will incur as a result of the exchange offer, aggregating $35.0 million or $17.5 million assuming 100% and 50%, respectively, of the preferred stock is exchanged. This dividend relates to the difference (at an assumed price of $4.03 per share of common stock) between the market value of the 7 shares common stock issuable in the exchange for each share of preferred stock and the market value of the 3.2154 shares of common stock issuable under the conversion terms of the preferred stock. The actual amount of the dividend, which will have no effect on stockholders' equity, and will be reported in our results of operations for the period in which the exchange occurs as a line entry below net income, will be determined based on the market value of the common stock and the number of shares actually exchanged on the date of exchange. Assuming 100% and 50% exchange, Hecla would no longer need to report annual preferred stock dividend charges before income (loss) applicable to common shareholders of $8.1 million and $4.0 million, respectively. 21 CAPITALIZATION:
March 31, 2002 ----------------------------------------------- Pro Forma --------------------------------- Actual 100% 50% ------------- --------------------------------- (in thousands) Long-term debt, including current portion: Revolving bank debt $ 3,000 $ 3,000 $ 3,000 Project financing debt 12,895 12,895 12,895 Subordinated bank debt 3,000 3,000 3,000 ----------------------------------------------- Total long-term debt, including current portion $ 18,895 $ 18,895 $ 18,895 ----------------------------------------------- Stockholders' equity: Preferred stock, $0.25 par value, authorized 5,000,000 shares (1) 575 - 288 Common stock, $0.25 par value, authorized 100,000,000 shares (1) 18,590 22,615 20,603 Capital surplus (1) 405,450 401,800 403,524 Accumulated deficit (363,697) (363,697) (363,697) Accumulated other comprehensive loss (55) (55) (55) Less stock held by grantor trust - 81,696 common shares (264) (264) (264) Less stock held as unearned compensation - 57,106 common shares (44) (44) (44) Less treasury stock - 62,116 common shares (886) (886) (886) ----------------------------------------------- Total stockholders' equity $ 59,669 $ 59,469 $ 59,469 ----------------------------------------------- Total capitalization $ 78,564 $ 78,364 $ 78,364 ===============================================
(1) The pro forma adjustments reflect the effect of converting 100% and 50% of the preferred stock into common stock and the costs of the exchange. The table below presents the effects on authorized and issued preferred and common shares, preferred stock liquidation value and capital surplus at March 31, 2002 if 100% and 50% of the preferred stock is exchanged for common stock.
March 31, 2002 -------------------------------------------- Pro Forma ----------------------------- Actual 100% 50% -------------- ----------------------------- (in thousands) Preferred stock: Shares authorized 5,000 5,000 5,000 Shares issued 2,300 - 1,150 Liquidation preference $ 129,087 - $ 64,543 Common stock: Shares authorized (2) 100,000 100,000 100,000 Shares issued 74,361 90,461 82,411 Capital surplus $ 405,450 $ 401,800 $403,524
(2) The authorized common stock was increased to 200,000,000 shares in June, 2002. 22 STATEMENT OF OPERATIONS DATA:
Three Months Ended Year Ended March 31, 2002 December 31, 2001 --------------------------------------- --------------------------------------- Pro Forma Pro Forma -------------------------- --------------------------- Actual 100% 50% Actual 100% 50% ------------ -------------------------- ----------- --------------------------- (in thousands, except per share data) Revenues $ 23,383 $ 23,383 $ 23,383 $ 85,247 $ 85,247 $ 85,247 Gross profit $ 3,734 $ 3,734 $ 3,734 $ 4,719 $ 4,719 $ 4,719 Income (loss) from continuing operations $ 970 $ 970 $ 970 $ (9,582) $ (9,582) $ (9,582) Income (loss) from discontinued $ (484) $ (484) $ (484) $ 11,922 $ 11,922 $ 11,922 operations Net income $ 486 $ 486 $ 486 $ 2,340 $ 2,340 $ 2,340 Preferred stock dividends (3) $ (2,012) $ - $ (1,006) $ (8,050) $ - $ (4,025) Net income (loss) applicable to common shareholders (3) $ (1,526) $ 486 $ (520) $ (5,710) $ 2,340 $ (1,685) Weighted average shares outstanding 73,840 89,940 81,890 69,396 85,496 77,446 Basic and diluted income (loss) per common share (3): Income (loss) from continuing operations after preferred stock $ (0.01) $ 0.01 $ 0.00 $ (0.25) $ (0.11) $ (0.17) dividends Income (loss) from discontinued operations $ (0.01) $ (0.01) $ (0.01) $ 0.17 $ 0.14 $ 0.15 ------------------------------------------------------------------------------- Basic and diluted income (loss) per common share $ (0.02) $ 0.00 $ (0.01) $ (0.08) $ 0.03 $ (0.02) OTHER DATA: Ratio of earnings to fixed charges 1.39 2.94 1.64 n/a n/a n/a (4) Deficiency of earnings to cover n/a n/a n/a $ 9,582 $ 9,582 $ 9,582 fixed charges
(3) The pro forma adjustment illustrates the effect on cumulative preferred stock dividends and the impact on income (loss) applicable to common shareholders for the three months ended March 31, 2002 and the year ended December 31, 2001 and on basic and diluted income (loss) per common share if 100% and 50% of the preferred stock is exchanged. The pro forma results do not include deemed dividend charges that Hecla will incur as a result of the exchange offer, aggregating $35.0 million or $17.5 million assuming 100% and 50%, respectively, of the preferred stock is exchanged. This dividend relates to the difference (at an assumed price of $4.03 per share of common stock) between the market value of the 7 shares of common stock issuable in the exchange for each share of preferred stock and the market value of the 3.2154 shares of common stock issuable under the conversion terms of the preferred stock. The actual amount of the dividend, which will have no effect on stockholders' equity, and will be reported in our results of operations for the period in which the exchange occurs as a line entry below net income, will be determined based on the market value of the common stock and the number of shares actually exchanged on the date of exchange. Assuming 100% and 50% exchange, Hecla would no longer need to report annual preferred stock dividend charges before income (loss) applicable to common shareholders of $8.1 million and $4.0 million, respectively. (4) The pro forma ratio of earnings to fixed charges reflects the reduction in preferred stock dividends assuming 100% and 50% exchange of preferred stock into common stock. 23 BALANCE SHEET DATA:
March 31, 2002 ------------------------------------------------------- Pro Forma ------------------------------------ Actual 100% 50% ------------------ ------------------------------------ (in thousands, except per share amounts) Cash $ 8,619 $ 8,419 $ 8,419 Current assets, excluding cash 24,752 24,752 24,752 Noncurrent assets 120,581 120,581 120,581 ------------------------------------------------------- Total assets $ 153,952 $ 153,752 $ 153,752 ======================================================= Current liabilities $ 27,292 $ 27,292 $ 27,292 Long-term debt 14,612 14,612 14,612 Noncurrent debt, excluding long-term debt 52,379 52,379 52,379 ------------------------------------------------------- Total liabilities 94,283 94,283 94,283 Stockholders' equity 59,669 59,469 59,469 ------------------------------------------------------- Total liabilities and stockholders' equity $ 153,952 $ 153,752 $ 153,752 ======================================================= Book value per common share $ (0.93) $ 0.80 $ (0.07) =======================================================
24 MARKET PRICES FOR COMMON AND PREFERRED STOCK Our common stock is listed on the New York Stock Exchange under the symbol "HL". As of May 31, 2002, we had 8,755 common stockholders of record. Our series B preferred stock is also listed on the New York Stock Exchange under the symbol "HLPRB". As of June 17, 2002, we had 128 Series B preferred stockholders of record. Quarterly high and low stock prices, based on the New York Stock Exchange composite transactions as reported by NYSEnet.com, for both our common stock and our Series B preferred stock are reflected in the chart below. COMMON STOCK High ($) Low ($) - ------------- -------- ------- 2000 ---- First Quarter 2.00 1.25 Second Quarter 1.50 1.00 Third Quarter 1.13 0.75 Fourth Quarter 0.94 0.50 2001 ---- First Quarter 1.00 0.50 Second Quarter 1.70 0.66 Third Quarter 1.26 0.78 Fourth Quarter 1.27 0.77 2002 ---- First Quarter 1.99 0.90 Second Quarter (through June 20) 5.90 1.90 PREFERRED STOCK - --------------- 2000 ---- First Quarter 28.12 24.06 Second Quarter 25.44 19.06 Third Quarter 20.88 8.50 Fourth Quarter 9.88 6.00 2001 ---- First Quarter 9.00 5.94 Second Quarter 12.00 6.20 Third Quarter 10.59 7.80 Fourth Quarter 9.50 7.11 2002 ---- First Quarter 20.00 8.00 Second Quarter (through June 20) 31.35 18.56 On June 12, 2002, the day before the exchange offer was publicly announced, the reported closing price per share of common stock on the NYSE was $4.22, and the reported closing price per share of preferred stock on the NYSE was $21.95. On June 20, 2002, such prices were $4.35 and $30.10, respectively. THE EXCHANGE OFFER GENERAL The exchange offer is being extended to you in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and has not been registered with the SEC. The common stock you receive in the exchange offer should be freely tradable, except by persons who are considered affiliates of Hecla, as that term is defined in the Securities Act, or persons who hold preferred stock that was previously held by an affiliate of Hecla. 25 TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING PREFERRED STOCK This Offering Circular and the enclosed letter of transmittal constitute an offer to exchange 7 shares of our common stock for each share of preferred stock, subject to the terms and conditions described in this Offering Circular. This exchange offer is being extended to all holders of preferred stock. As of the date of this Offering Circular, 2,300,000 shares of preferred stock are outstanding. This Offering Circular and the enclosed letter of transmittal are first being sent on or about June 24, 2002, to all holders of preferred stock known to us. Subject to the conditions listed below, and assuming we have not previously elected to terminate the exchange offer for any reason or no reason, in our sole discretion, we will accept for exchange all preferred stock which is properly tendered on or prior to the expiration of the exchange offer and not withdrawn as permitted below. See "-- Conditions to the Exchange Offer." The exchange offer will expire at 12:00 Midnight, New York City time, on July 22, 2002. In our sole discretion, we may extend the period of time during which the exchange offer is open. Our obligation to accept preferred stock for exchange in the exchange offer is subject to the conditions listed below under the caption "-- Conditions to the Exchange Offer." We expressly reserve the right, at any time and from time to time, to extend the period of time during which the exchange offer is open, and thereby delay acceptance for exchange of any preferred stock. If we elect to extend the period of time during which the exchange offer is open, we will give you oral or written notice of the extension and delay, as described below. During any extension of the exchange offer, all preferred stock previously tendered and not withdrawn will remain subject to the exchange offer and may be accepted for exchange by us. We will return to the registered holder, at our expense, any preferred stock not accepted for exchange as promptly as practicable after the expiration or termination of the exchange offer. In the case of an extension, we will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration of the exchange offer. We expressly reserve the right to amend or terminate the exchange offer, and not to accept for exchange any preferred stock not previously accepted for exchange, if any of the events described below under the caption "-- Conditions to the Exchange Offer" should occur or for any other reason within our sole and absolute discretion. We will give you oral or written notice of any amendment, termination or non- acceptance as promptly as practicable. Following completion of the exchange offer, we may, in our sole discretion, seek to acquire preferred stock not tendered in the exchange offer by means of open market purchases, privately- negotiated acquisitions, redemptions or otherwise, or commence one or more additional cash tender or exchange offers to those holders of preferred stock who did not exchange their preferred stock for our common stock. CONDITIONS TO THE EXCHANGE OFFER THE EXCHANGE OFFER IS NOT CONDITIONED UPON THE EXCHANGE OF A MINIMUM NUMBER OF SHARES OF PREFERRED STOCK. Notwithstanding any other provision of the exchange offer, we will not be required to accept any preferred stock for exchange or to issue any common stock in exchange for preferred stock, and we may terminate or amend the exchange offer if, at any time before the acceptance of the preferred stock for exchange or the exchange of common stock, any of the following events occurs: * the exchange offer is determined to violate any applicable law or any applicable interpretation of the staff of the SEC; * the New York Stock Exchange has not approved for listing, subject to official notice of issuance, the shares of Hecla common stock to be issued in the exchange offer; * an action or proceeding is pending or threatened in any court or by any governmental agency or third party that might materially impair our ability to proceed with the exchange offer; 26 * any material adverse development occurs in any existing legal action or proceedings involving Hecla; or * we do not receive any governmental approval we deem necessary for the completion of the exchange offer. These conditions are for our benefit only and we may assert them regardless of the circumstances giving rise to any condition. We may also waive any condition in whole or in part at any time in our sole discretion. Our failure at any time to exercise any of the foregoing rights will not constitute a waiver of that right and each right is an ongoing right that we may assert at any time. Moreover, we are free to terminate the exchange offer for any reason, in our sole and absolute discretion, and not accept any tendered preferred stock for exchange. PROCEDURES FOR TENDERING PREFERRED STOCK When you tender your preferred stock, and we accept the preferred stock for exchange, this will constitute a binding agreement between you and us, subject to the terms and conditions set forth in this Offering Circular and the enclosed letter of transmittal. Unless you comply with the procedures described below under the caption "-- Guaranteed Delivery Procedures," you must do one of the following on or prior to the expiration of the exchange offer to participate in the exchange offer: * if you hold preferred stock in certificated form, tender your preferred stock by sending the certificates for your preferred stock, in proper form for transfer, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other documents required by the letter of transmittal, to American Stock Transfer & Trust Company, as exchange agent, at one of the addresses listed below under the caption "- Exchange Agent"; or * if you hold preferred stock in "street name," tender your preferred stock by using the book-entry procedures described below under the caption "--Book-Entry Transfer" and transmitting a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent's message instead of the letter of transmittal, to the exchange agent. In order for a book-entry transfer to constitute a valid tender of your preferred stock in the exchange offer, the exchange agent must receive a confirmation of book-entry transfer of your preferred stock into its account at The Depository Trust Company ("DTC") prior to the expiration of the exchange offer. The term "agent's message" means a message, transmitted by DTC and received by the exchange agent and forming a part of the book-entry confirmation, which states that DTC has received an express acknowledgment from you that you have received and have agreed to be bound by the letter of transmittal. If you use this procedure, we may enforce the letter of transmittal against you. THE METHOD OF DELIVERY OF CERTIFICATES FOR PREFERRED STOCK, LETTERS OF TRANSMITTAL, AGENT'S MESSAGES AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION. IF YOU DELIVER YOUR PREFERRED STOCK BY MAIL, WE RECOMMEND REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. PLEASE SEND ALL CERTIFICATES FOR PREFERRED STOCK, LETTERS OF TRANSMITTAL AND AGENT'S MESSAGES TO AMERICAN STOCK TRANSFER & TRUST COMPANY, THE EXCHANGE AGENT FOR THE EXCHANGE OFFER, AT ONE OF THE ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFERING CIRCULAR. PLEASE DO NOT SEND THESE MATERIALS TO US. Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless you are either: * a registered preferred stock holder and have not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal or 27 * you are exchanging preferred stock for the account of an eligible guarantor institution. An eligible guarantor institution means: * Banks, as defined in Section 3(a) of the Federal Deposit Insurance Act; * Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers and government securities brokers, as defined in the Securities Exchange Act of 1934, as amended; * Credit unions, as defined in Section 19B(1)(A) of the Federal Reserve Act; * National securities exchanges, registered securities associations and clearing agencies, as these terms are defined in the Exchange Act; and * Savings associations, as defined in Section 3(b) of the Federal Deposit Insurance Act. If signatures on a letter of transmittal or a notice of withdrawal are required to be guaranteed, the guarantor must be an eligible guarantor institution. If you plan to sign the letter of transmittal but you are not the registered holder of the preferred stock - which term, for this purpose, includes any participant in DTC's system whose name appears on a security position listing as the owner of the preferred stock - you must have certificates for the preferred stock signed by the registered holder of the preferred stock and that signature must be guaranteed by an eligible guarantor institution. You may also send a separate instrument of transfer or exchange signed by the registered holder and guaranteed by an eligible guarantor institution, but that instrument must be in a form satisfactory to us in our sole discretion. In addition, if a person or persons other than the registered holder or holders of preferred stock signs the letter of transmittal, certificates for the preferred stock must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder or holders that appear on the certificates for preferred stock. All questions as to the validity, form, eligibility, including time of receipt, and acceptance of preferred stock tendered for exchange will be determined by us in our sole discretion. Our determination will be final and binding. We reserve the absolute right to reject any and all tenders of preferred stock improperly tendered or to not accept any preferred stock, the acceptance of which might be unlawful as determined by us or our counsel. We also reserve the absolute right to waive any defects or irregularities or conditions of the exchange offer as to any preferred stock either before or after the expiration of the exchange offer, including the right to waive the ineligibility of any holder who seeks to tender preferred stock in the exchange offer. Our interpretation of the terms and conditions of the exchange offer as to any particular share of preferred stock either before or after the expiration of the exchange offer, including the terms and conditions of the letter of transmittal and the accompanying instructions, will be final and binding. Unless waived, any defects or irregularities in connection with tenders of preferred stock for exchange must be cured within a reasonable period of time, as determined by us. Neither we, the exchange agent nor any other person has any duty to give notification of any defect or irregularity with respect to any tender of preferred stock for exchange, nor will we have any liability for failure to give this notification. If you are a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or act in a similar fiduciary or representative capacity, and wish to sign the letter of transmittal or any certificates for preferred stock or bond powers, you must indicate your status when signing. If you are acting in any of these capacities, you must submit proper evidence satisfactory to us of your authority to so act unless we waive this requirement. ACCEPTANCE OF PREFERRED STOCK FOR EXCHANGE; DELIVERY OF COMMON STOCK Upon satisfaction or waiver of all of the conditions to the exchange offer, and assuming we have not previously elected to terminate the exchange offer for any reason or no reason, in our sole discretion, we will accept, promptly after the expiration of the exchange offer, all preferred stock properly tendered and not withdrawn and will issue the shares of common stock promptly after acceptance of the preferred stock. For purposes of the exchange offer, we will be deemed to have accepted properly tendered preferred stock for exchange when, as and if we have given oral or written notice of acceptance to the exchange agent, with written confirmation of any oral notice to be given promptly after any oral notice. 28 In all cases, the issuance of shares of our common stock in exchange for preferred stock will be made to a tendering holder only after the exchange agent timely receives either certificates for all physically tendered preferred stock, in proper form for transfer, or a book-entry confirmation of transfer of the preferred stock into the exchange agent's account at DTC, as the case may be, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other required documents or, in the case of a book-entry confirmation, a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent's message instead of the letter of transmittal. If for any reason we do not accept any tendered preferred stock or if certificates for preferred stock are submitted for a greater number of shares of preferred stock than the holder desires to exchange, we will return the unaccepted or non-exchanged preferred stock without expense to the registered tendering holder. In the case of preferred stock tendered by book-entry transfer into the exchange agent's account at DTC by using the book-entry procedures described below, the unaccepted or non- exchanged preferred stock will be credited to an account maintained by the tendering holder with DTC. Any preferred stock to be returned to the holder will be returned as promptly as practicable after the expiration or termination of the exchange offer. BOOK-ENTRY TRANSFER Within two business days after the date of this Offering Circular, the exchange agent will establish an account at DTC for the preferred stock tendered in the exchange offer. Once established, any financial institution that is a participant in DTC's system may make book-entry delivery of preferred stock by causing DTC to transfer the preferred stock into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. Although delivery of preferred stock may be effected through book-entry transfer at DTC, the letter of transmittal or facsimile of the letter of transmittal, with any required signature guarantees, or an agent's message instead of the letter of transmittal, and any other required documents, must be transmitted to and received by the exchange agent on or prior to the expiration of the exchange offer at one of the addresses listed below under the caption "-- Exchange Agent." In addition, the exchange agent must receive book-entry confirmation of transfer of the preferred stock into the exchange agent's account of DTC prior to the expiration of the exchange offer. If you cannot comply with these procedures, you may be able to use the guaranteed delivery procedures described below. GUARANTEED DELIVERY PROCEDURES If you are a registered holder of preferred stock and wish to tender your preferred stock, but * the certificates for preferred stock are not immediately available, * time will not permit your certificates for preferred stock or other required documents to reach the exchange agent before the expiration of the exchange offer, or * the procedure for book-entry transfer cannot be completed before the expiration of the exchange offer, you may effect a tender of your preferred stock if: * the tender is made through an eligible guarantor institution; * prior to the expiration of the exchange offer, the exchange agent receives from an eligible guarantor institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form we have provided, setting forth your name and address, and the amount of preferred stock you are tendering and stating that the tender is being made by notice of guaranteed delivery; these documents may be sent by overnight courier, registered or certified mail or facsimile transmission; * you guarantee that within three NYSE trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered preferred stock, in proper form for 29 transfer, or a book-entry confirmation of transfer of the preferred stock into the exchange agent's account at DTC, including the agent's message that forms a part of the book-entry confirmation, as the case may be, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and * the exchange agent receives the certificates for all physically tendered preferred stock, in proper form for transfer, or a book-entry confirmation of transfer of the preferred stock into the exchange agent's account at DTC, as the case may be, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other required documents or, in the case of a book-entry confirmation, a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent's message instead of the letter of transmittal, in each case, within three NYSE trading days after the date of execution of the notice of guaranteed delivery. WITHDRAWAL OF TENDERS YOU MAY WITHDRAW TENDERS OF PREFERRED STOCK AT ANY TIME PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFER AND AT ANY TIME AFTER AUGUST 19, 2002, UNTIL WE ACCEPT YOUR PREFERRED STOCK FOR EXCHANGE. For a withdrawal to be effective, a written notice of withdrawal must be received by the exchange agent prior to the expiration of the exchange offer (or at any time after August 19, 2002, until accepted for exchange) at one of the addresses listed below under the caption "-- Exchange Agent." Any notice of withdrawal must: (i) specify the name of the person who tendered the preferred stock to be withdrawn, (ii) identify the preferred stock to be withdrawn, (iii) be signed by the stockholder in the same manner as the original signature on the letter of transmittal by which such preferred stock was tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Exchange Agent register the transfer of such preferred stock in the name of the person withdrawing the tender, and (iv) where certificates for preferred stock have been transmitted, specify the name in which the shares of preferred stock are registered, if different from that of the withdrawing holder. If certificates for preferred stock have been delivered or otherwise identified to the exchange agent, then, prior to the release of the certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an eligible guarantor institution unless the holder is an eligible guarantor institution. If preferred stock has been tendered using the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn preferred stock and otherwise comply with the procedures of the book-entry transfer facility. All questions as to the validity, form and eligibility - including time of receipt - of these notices will be determined by us. Our determination will be final and binding. Any preferred stock properly withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any preferred stock which has been tendered for exchange but which is not exchanged for any reason will be returned to the registered holder without cost to that holder as soon as practicable after withdrawal, non- acceptance of tender or termination of the exchange offer. In the case of preferred stock tendered by book-entry transfer into the exchange agent's account at DTC by using the book-entry transfer procedures described above, any withdrawn or unaccepted preferred stock will be credited to the tendering holder's account at DTC. Properly withdrawn preferred stock may be retendered at any time on or prior to the expiration of the exchange offer by following one of the procedures described above under "-- Procedures for Tendering Preferred stock." EXCHANGE AGENT We have appointed American Stock Transfer & Trust Company as the exchange agent for the exchange offer. All completed letters of transmittal and agent's messages should be directed to the exchange agent at one of the addresses set forth below. All questions regarding the procedures for tendering in the exchange offer and requests for assistance in tendering your preferred stock should also be directed to the exchange agent at one of the following telephone numbers and addresses: 30 Delivery To: American Stock Transfer & Trust Company, Exchange Agent By Regular or Certified Mail: By Facsimile (Eligible Guarantor By Overnight Courier or Hand: Institutions Only): American Stock Transfer & Trust (718) 234-5001 American Stock Transfer & Trust Company Company 59 Maiden Lane To Confirm by Telephone or for 59 Maiden Lane New York, NY 10038 Information Call: New York, NY 10038 Attention: Reorganization Department (718) 921-8200 Attention: Reorganization Department
DELIVERY OF A LETTER OF TRANSMITTAL OR AGENT'S MESSAGE TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL OR AGENT'S MESSAGE. Requests for copies of this Offering Circular, Hecla's First Quarter 2002 Quarterly Report on Form 10-Q, Hecla's 2001 Annual Report on Form 10-K, Hecla's 2002 Annual Meeting Proxy Statement, the enclosed Letter of Transmittal or the enclosed Notice of Guaranteed Delivery may be directed to either the exchange agent at one of the telephone numbers and addresses listed above or to the information agent at one of telephone numbers and addresses listed on the back cover page of this Offering Circular. EXPENSES We expect that we will have to pay about $200,000 in expenses relating to the exchange offer. We expect to obtain the cash required to pay our expenses through cash flow from operations. SOLICITATION The principal solicitation is being made by mail by the exchange agent. We will pay the exchange agent customary fees for its services, reimburse the exchange agent for its reasonable out-of-pocket expenses incurred in connection with the provision of these services and pay other expenses, including filing fees, blue sky fees and printing and distribution expenses. We will not make any payment to brokers, dealers or others soliciting acceptances of the exchange offer. We will, however, reimburse reasonable expenses incurred by brokers and dealers in forwarding this Offering Circular and the other exchange offer materials to the holders of the preferred stock. Additional solicitation may be made by telephone, facsimile or in person by officers and regular employees of Hecla and its affiliates and by persons so engaged by the exchange agent. TRANSFER TAXES You will not be obligated to pay any transfer taxes in connection with the tender of preferred stock in the exchange offer unless you instruct us to register your shares of common stock in the name of, or request that preferred stock not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder. In those cases, you will be responsible for the payment of any applicable transfer tax. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain anticipated U.S. federal income tax consequences to you if you tender shares of preferred stock in the exchange offer and we accept your tender and issue shares of common stock to you. No ruling has been or will be requested from the Internal Revenue Service (the "IRS") on any tax matter concerning the exchange offer. No assurances can be given that the IRS or a court considering these issues would agree with the positions or conclusions discussed below. 31 This summary is based on laws, regulations, rulings and decisions now in effect, all of which are subject to change, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular investor or to certain types of investors that may be subject to special tax rules (such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, certain traders in securities and persons that hold the preferred stock as part of a straddle or other integrated financial position). The discussion is limited to exchanging holders who are citizens or residents of the United States or are domestic corporations or that otherwise are subject to U.S. federal income taxation on a net basis and who hold the preferred stock and will hold the common stock as "capital assets" within the meaning of the Internal Revenue Code (the "Code"). YOU ARE URGED TO CONSULT YOUR TAX ADVISOR AS TO THE CONSEQUENCES TO YOU OF THE EXCHANGE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS. The exchange offer will be treated as a recapitalization for federal income tax purposes. Except as described in the next paragraph, if you exchange all or any portion of your shares of preferred stock for shares of common stock (i) no gain or loss will be recognized to you for federal income tax purposes and (ii) your basis in and holding period for the shares of common stock received will be the same as your basis in and holding period for the shares of preferred stock exchanged therefor. Section 305 of the Code authorizes the Secretary of the Treasury to issue regulations treating certain recapitalizations as distributions (which could potentially result in dividend income or in a reduction of basis) with respect to any stockholder whose proportionate interest in the earnings and profits or assets of the corporation is increased by such transaction. The regulations adopted by the Treasury provide that a distribution may result where a stockholder owning preferred stock with dividends in arrears exchanges his stock for other stock, but only if the fair market value of the common stock received in the exchange (determined immediately following the recapitalization) exceeds the issue price of the preferred stock surrendered. Because the issue price of our preferred stock is $50, the regulation will only be relevant if the fair market value of each common share immediately following the exchange offer is in excess of $7.14. This represents a 60.8% increase over the closing price of our common stock on June 20, 2002. If the fair market value of the common stock received per share of preferred exceeds $50, the amount of the deemed distribution will be the lesser of (i) the amount of such excess and (ii) the amount of the dividends in arrears. The amount, if any, described in the preceding sentence will be treated as a dividend to you to the extent of our current or accumulated "earnings and profits" and then will be applied against, and reduce, your basis in the common stock received. While the calculation of earnings and profits for federal income tax purposes involves difficult factual determinations and many questions as to which the law is unclear, we believe that we have no accumulated earnings and profits through December 31, 2001. DESCRIPTION OF CAPITAL STOCK The following statements are brief summaries of provisions of our capital stock. The summaries are qualified in their entirety by reference to the full text of our certificate of incorporation ("Charter"), bylaws and the Rights Agreement (as defined below). COMMON STOCK We are authorized to issue 200,000,000 shares of common stock, $0.25 par value per share, of which 75,120,705 shares of common stock were issued as of May 31, 2002. Subject to the rights of the holders of any outstanding shares of preferred stock, each share of common stock is entitled to: * one vote on all matters presented to the stockholders, with no cumulative voting rights; * receive such dividends as may be declared by the board of directors out of funds legally available therefor (we have no present intention of paying dividends on our common stock in the foreseeable future); 32 * in the event of our liquidation or dissolution, share ratably in any distribution of our assets. Holders of shares of common stock do not have preemptive rights or other rights to subscribe for unissued or treasury shares or securities convertible into such shares, and no redemption or sinking fund provisions are applicable. All outstanding shares of common stock are fully paid and nonassessable. All of our currently outstanding shares of common stock are listed on the New York Stock Exchange under the symbol "HL". We will apply for listing on the New York Stock Exchange of the shares of our common stock to be issued in the exchange offer. It is a condition to the completion of the exchange offer that these shares be approved for listing, subject to official notice of issuance. PREFERRED STOCK Our Charter authorizes us to issue 5,000,000 shares of preferred stock, par value $0.25 per share. The preferred stock is issuable in series with such voting rights, if any, designations, powers, preferences and other rights and such qualifications, limitations and restrictions as may be determined by our board of directors or a duly authorized committee thereof, without stockholder approval. The board may fix the number of shares constituting each series and increase or decrease the number of shares of any series. Currently, there are 2,300,000 shares of Series B Cumulative Convertible Preferred Stock outstanding. In addition, sufficient shares of preferred stock have been designated by us as Series A Junior Participating Preferred Shares and are reserved for issuance upon the exercise of certain preferred stock purchase rights associated with each share of outstanding common stock (the "Rights"), as described below. See "Description of Capital Stock -- Rights." All of the shares of Series B preferred stock are validly issued, fully paid and nonassessable. The Series B preferred stockholders have no preemptive rights with respect to any shares of our capital stock or any other securities convertible into or carrying rights or options to purchase any such shares. The Series B preferred stock is not subject to any sinking fund or other obligation of ours to redeem or retire the Series B preferred stock. Unless converted, purchased, exchanged or redeemed by us, the Series B preferred stock will have perpetual maturity. All of the shares of our Series B Preferred Stock are listed on the New York Stock Exchange under the symbol "HLPRB". RANKING The Series B preferred stock ranks senior to our common stock and any shares of Series A Preferred Shares issued pursuant to the Rights with respect to payment of dividends and amounts upon liquidation, dissolution or winding up. While any shares of Series B preferred stock are outstanding, we may not authorize the creation or issue of any class or series of stock that ranks senior to the Series B preferred stock as to dividends or upon liquidation, dissolution or winding up without the consent of the holders of 66?% of the outstanding shares of Series B preferred stock and any other series of preferred stock ranking on a parity with the Series B preferred stock as to dividends and upon liquidation, dissolution or winding up (a "Parity Stock"), voting as a single class without regard to series. However, we may create additional classes of Parity or Junior Stock, increase the authorized number of shares of Parity or Junior Stock or issue series of Parity or Junior Stock without the consent of any holder of Series B preferred stock. See "-- Voting Rights." 33 DIVIDENDS Series B preferred stockholders are entitled to receive, when, as and if declared by the board of directors out of our assets legally available therefor, cumulative cash dividends at the rate per annum of $3.50 per share of Series B preferred stock. Dividends on the Series B preferred stock are payable quarterly in arrears on October 1, January 1, April 1 and July 1 of each year (and, in the case of any undeclared and unpaid dividends, at such additional times and for such interim periods, if any, as determined by the board of directors), at such annual rate. Each such dividend is payable to holders of record as they appear on our stock records at the close of business on such record dates, which shall not be more than 60 days or less than 10 days preceding the payment dates corresponding thereto, as shall be fixed by the board of directors or a duly authorized committee thereof. Dividends are cumulative from the date of the original issuance of the Series B preferred stock, whether or not in any dividend period or periods we have assets legally available for the payment of such dividends. Accumulations of dividends on shares of Series B preferred stock do not bear interest. Dividends payable on the Series B preferred stock for any period greater or less than a full dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable on the Series B preferred stock for each full dividend period are computed by dividing the annual dividend rate by four. Except as provided in the next sentence, no dividend will be declared or paid on any Parity Stock unless full cumulative dividends have been paid on the Series B preferred stock for all prior dividend periods. If cumulative dividends on the Series B preferred stock for all prior dividend periods have not been declared or paid in full, then any dividend declared on the Series B preferred stock for any dividend period and on any Parity Stock will be declared ratably in proportion to undeclared and unpaid dividends on the Series B preferred stock and such Parity Stock. We will not (i) declare, pay or set apart funds for the payment of any dividend or other distribution with respect to any Junior Stock (as defined below) or (ii) redeem, purchase or otherwise acquire for consideration any Junior Stock or Parity Stock through a sinking fund or otherwise (except by conversion into, or exchange for shares of, Junior Stock, and other than a redemption or purchase or other acquisition of shares of our common stock made for purposes of our employee incentive or benefit plans), unless all undeclared and unpaid dividends with respect to the Series B preferred stock and any Parity Stock at the time such dividends are payable have been paid or funds have been set apart for payment of such dividends. As used herein, (i) the term "dividend" does not include dividends payable solely in shares of Junior Stock on Junior Stock, or in options, warrants or rights to holders of Junior Stock to subscribe for or purchase any Junior Stock, and (ii) the term "Junior Stock" means our common stock, any Series A preferred shares issued pursuant to the Rights, and any other class of our capital stock now or hereafter issued and outstanding that ranks junior as to the payment of dividends or amounts payable upon liquidation, dissolution and winding up to the Series B preferred stock. REDEMPTION The Series B preferred stock is redeemable at our option, in whole or in part, at $50.35 per share if redeemed between July 1, 2002 and June 30, 2003, and at $50 per share thereafter, plus, in each case, all dividends undeclared and unpaid on the Series B preferred stock up to the date fixed for redemption, upon giving notice as provided below. If fewer than all of the outstanding shares of Series B preferred stock are to be redeemed, the shares to be redeemed will be determined pro rata or by lot or in such other manner as prescribed by the board of directors. At least 30 days, but not more than 60 days, prior to the date fixed for the redemption of the Series B preferred stock, a written notice will be mailed to each holder of record of Series B preferred stock to be redeemed, notifying such holder of our election to redeem such shares, stating the date fixed for redemption thereof and calling upon such holder to surrender to us on the redemption date at the place designated in such notice the certificate or certificates representing the number of shares specified therein. On or after the redemption date, each holder of Series B preferred stock to be redeemed must present and surrender his certificate or certificates for such shares to us at the place designated in such notice and thereupon the redemption price of such shares will be paid to or on the order of the person whose name appears on such 34 certificate or certificates as the owner thereof and each surrendered certificate will be canceled. Should fewer than all the shares represented by any such certificate be redeemed, a new certificate will be issued representing the unredeemed shares. From and after the redemption date (unless we default in payment of the redemption price), all dividends on the shares of Series B preferred stock designated for redemption in such notice will cease to cumulate and all rights of the holders thereof as stockholders of Hecla, except the right to receive the redemption price thereof (including all undeclared and unpaid dividends up to the redemption date), will cease and terminate and such shares will not thereafter be transferred (except with our consent) on our books, and such shares shall not be deemed to be outstanding for any purpose whatsoever. On the redemption date, we must pay any undeclared and unpaid dividends in arrears for any dividend period ending on or prior to the redemption date. In the case of a redemption date falling after a dividend payment record date and prior to the related payment date, the Series B preferred stockholders at the close of business on such record date will be entitled to receive the dividend payable on such shares on the corresponding dividend payment date, notwithstanding the redemption of such shares following such dividend payment record date. Except as provided in the preceding sentences, no payment or allowance will be made for undeclared and unpaid dividends on any shares of Series B preferred stock called for redemption or on the shares of common stock issuable upon such redemption. At our election, we may, prior to the redemption date, deposit the redemption price of the shares of Series B preferred stock so called for redemption in trust for the holders thereof with a bank or trust company, in which case such notice to holders of the shares of Series B preferred stock to be redeemed will (i) state the date of such deposit, (ii) specify the office of such bank or trust company as the place of payment of the redemption price and (iii) call upon such holders to surrender the certificates representing such shares at such place on or after the date fixed in such redemption notice (which may not be later than the redemption date), against payment of the redemption price (including all undeclared and unpaid dividends up to the redemption date). Any moneys so deposited which remain unclaimed by the Series B preferred stockholders at the end of two years after the redemption date will be returned by such bank or trust company to us. LIQUIDATION PREFERENCE The Series B preferred stockholders are entitled to receive, in the event that we are liquidated, dissolved or wound up, whether voluntary or involuntary, $50 per share of Series B preferred stock plus an amount per share of Series B preferred stock equal to all dividends (whether or not earned or declared) undeclared and unpaid thereon to the date of final distribution to such holders (the "Liquidation Preference"), and no more. Until the Series B preferred stockholders have been paid the Liquidation Preference in full, no payment will be made to any holder of Junior Stock upon our liquidation, dissolution or winding up. If, upon any liquidation, dissolution or winding up, our assets, or proceeds thereof, distributable among the holders of the shares of Series B preferred stock are insufficient to pay in full the Liquidation Preference and the Liquidation Preference with respect to any other shares of Parity Stock, then such assets, or the proceeds thereof, will be distributed among the holders of shares of Series B preferred stock and any such Parity Stock ratably in accordance with the respective amounts which would be payable on such shares of Series B preferred stock and any such Parity Stock if all amounts payable thereof were paid in full. Neither a consolidation, merger or business combination of us with or into another corporation nor a sale or transfer of all or substantially all of our assets will be considered a liquidation, dissolution or winding up, voluntary or involuntary. VOTING RIGHTS Except as indicated below, or except as otherwise from time to time required by applicable law, the Series B preferred stockholders have no voting rights and their consent is not required for taking any corporate action. When and if the Series B preferred stockholders are entitled to vote, each holder will be entitled to one vote per share. Because we had not declared and paid six quarterly dividends on the Series B preferred stock, the Series B preferred stockholders, voting as a single class, elected two additional directors to the board at our recent annual meeting on May 10, 2002. The Series B preferred stockholders will have the same right at each subsequent annual meeting, until such time as all cumulative dividends have been paid in full. 35 The affirmative vote or consent of the holders of 66?% of the outstanding shares of the Series B preferred stock, voting separately as a class, is required for any amendment of our Charter which alters or changes the powers, preferences, privileges or rights of the Series B preferred stock so as to materially adversely affect the holders thereof. The affirmative vote or consent of the holders of shares representing 66?% of the outstanding shares of the Series B preferred stock and any other series of Parity Stock, voting as a single class without regard to series, is required to authorize the creation or issue of, or reclassify any of our authorized stock into, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any additional class or series of stock ranking senior to all such series of Parity Stock. However, we may create additional classes of Parity and Junior Stock, increase the number of shares of Parity and Junior Stock and issue additional series of Parity and Junior Stock without the consent of any holder of Series B preferred stock. Except as required by law, the Series B preferred stockholders are not entitled to vote on any merger or consolidation involving us or a sale of all or substantially all of our assets. See "--Conversion Price Adjustments." CONVERSION RIGHTS Each share of Series B preferred stock is convertible, in whole or in part at the option of the holders thereof, into shares of common stock at a conversion price of $15.55 per share of common stock (equivalent to a conversion rate of approximately 3.2154 shares of common stock for each share of Series B preferred stock), subject to adjustment as described below (the "Conversion Price"). The right to convert shares of Series B preferred stock called for redemption will terminate at the close of business on the day preceding a redemption date (unless we default in payment of the redemption price). For information as to notices of redemption, see "-- Redemption." Conversion of shares of Series B preferred stock, or a specified portion thereof, may be effected by delivering certificates evidencing such shares, together with written notice of conversion and a proper assignment of such certificates to us, or in blank to the principal corporate trust office of American Stock Transfer & Trust Company, our transfer agent. Each conversion will be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Series B preferred stock shall have been surrendered and notice (and, if applicable, payment of an amount equal to the dividend payable on such shares) received by us as aforesaid and the conversion shall be at the Conversion Price in effect at such time and on such date. Holders of shares of Series B preferred stock at the close of business on a dividend payment record date are entitled to receive the dividend payable on such shares on the corresponding dividend payment date notwithstanding the conversion of such shares following such dividend payment record date and prior to such dividend payment date. However, shares of Series B preferred stock surrendered for conversion during the period between the close of business on any dividend payment record date and the opening of business on the corresponding dividend payment date (except shares converted after the issuance of a notice of redemption with respect to a redemption with respect to a redemption date during such period, which will be entitled to such dividend) must be accompanied by payment of an amount equal to the dividend payable on such shares on such dividend payment date. A holder of shares of Series B preferred stock on a dividend record date who (or whose transferee) tenders any such shares for conversion into shares of common stock on such dividend payment date will receive the dividend payable by us on such shares of Series B preferred stock on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of shares of Series B preferred stock for conversion. Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of common stock issued upon such conversion. Fractional shares of common stock will not be issued upon conversion but, in lieu thereof, we will pay a cash adjustment based on the current market price of our common stock on the day prior to the conversion date. 36 CONVERSION PRICE ADJUSTMENTS The Conversion Price is subject to adjustment upon certain events, including (i) dividends (and other distributions) payable in common stock on any class of our capital stock, (ii) the issuance to all holders of common stock of certain rights or warrants (other than the Rights or any similar rights issued under any successor stockholders rights plan) entitling them to subscribe for or purchase common stock or securities which are convertible into common stock, (iii) subdivisions, combinations and reclassifications of common stock, and (iv) distributions to all holders of common stock of evidences of indebtedness of Hecla or assets (including securities, but excluding those dividends, rights, warrants and distributions referred to above and dividends and distributions paid in cash out of the profits or surplus of Hecla). In addition to the foregoing adjustments, we are permitted to make such reductions in the Conversion Price as we consider to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of our common stock. In case we are a party to any transaction, including, without limitation, a merger, consolidation or sale of all or substantially all of our assets, as a result of which shares of common stock will be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Series B preferred stock will thereafter be convertible into the kind and amount of shares of stock and other securities and property receivable (including cash or any combination thereof) upon the consummation of such transaction by a holder of that number of shares or fraction thereof of common stock into which one share of Series B preferred stock is convertible immediately prior to such transaction (assuming such holder of common stock failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non- electing shares). We may not become a party to any such transaction unless the terms thereof are consistent with the foregoing. No adjustment of the Conversion Price will be required to be made in any case until cumulative adjustments amount to 1% or more of the Conversion Price. Any adjustments not so required to be made will be carried forward and taken into account in subsequent adjustments. RIGHTS Each share of our common stock is accompanied by a series A junior participating preferred stock purchase right (Right) that trades with the share of common stock. Upon the terms and subject to the conditions of the Rights Agreement, a holder of a Right is entitled to purchase one one-hundredth of a share of Series A preferred stock at an exercise price of $50, subject to adjustment in several circumstances, including upon a merger. The Rights are currently represented by the certificates for our common stock and are not transferable apart therefrom. Transferable Rights certificates will be issued at the earlier of (1) the 10th day after the public announcement that any person or group has acquired beneficial ownership of 15% or more of our common stock (an "Acquiring Person") or (ii) the 10th day after a person commences, or announces an intention to commence, a tender or exchange offer the consummation of which would result in any person or group becoming an Acquiring Person. The 15% threshold for becoming an Acquiring Person may be reduced by the board of directors to not less than 10% prior to any such acquisition. All the outstanding Rights may be redeemed by us for $0.01 per Right prior to such time that any person or group becomes an Acquiring Person. Under certain circumstances, the board of directors may decide to exchange each Right (except Rights held by an Acquiring Person) for one share of common stock. The Rights will expire on May 19, 2006 unless earlier redeemed. A Right is presently attached to each issued and outstanding share of common stock. As long as the Rights are attached to and evidenced by the certificates representing our common stock, we will continue to issue one Right with each share of common stock that shall become outstanding. The Rights have certain antitakeover effects. The Rights may cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the board of directors. The Rights should not interfere with any merger or other business combination approved by the board of directors since the Rights may be redeemed by us prior to the consummation of such transactions. See "Risk Factors - Our stockholders rights plan and provisions in our 37 certificate of incorporation, our bylaws and Delaware law could delay our deter tender offers or takeover attempts that may offer you a premium for your common stock." AGREEMENTS RELATING TO HECLA SECURITIES EMPLOYMENT AGREEMENTS We have entered into employment agreements with several members of our management which provide, among other things, that upon a change of control of Hecla, the members of our management will be entitled to certain compensation and benefits. For purposes of the employment agreements, "change of control" is defined generally as any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) that becomes the "beneficial owner" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) our then outstanding shares of common stock or (ii) the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors. For further information regarding the terms of these employment agreements, see the section of our 2002 Annual Meeting Proxy Statement captioned "Executive Compensation," which is incorporated herein by reference. EMPLOYEE COMPENSATION ARRANGEMENTS With respect to our executive officers and certain key employees, we use two stock-based compensation plans, which are intended to give us a competitive advantage in attracting, retaining and motivating its officers and key employees, and are intended to provide us with the ability to provide incentives more directly linked to the profitability of our business and increases in stockholder value. These plans provide for the grant of options to purchase shares of our common stock and the issuance of restricted shares of our common stock, among other things. For further information regarding the terms of these plans and agreements, see the sections of our 2002 Annual Meeting Proxy Statement captioned "Executive Compensation -- Compensation of Executive Officers," and "Amendment to the Corporation's 1995 Stock Incentive Plan." In addition, as of November 6, 2001, we entered into a Restricted Stock Award Agreement with Phillips S. Baker, Jr., our President, Chief Operating Officer and Chief Financial Officer, and a member of our board of directors, wherein commencing on December 1, 2001, 25% of Mr. Baker's base salary is comprised of restricted shares of our common stock issued under the 1995 Stock Incentive Plan, which is distributed to Mr. Baker in substantially equal amounts in arrears on a quarterly basis through December 1, 2002. Further, we sponsor a stock plan for our non- employee directors. This plan provides that each nonemployee member of the board of directors will be credited annually on May 30 with shares of our common stock in addition to the current annual cash retainer paid to such directors. For further information regarding the terms of these plans and agreements, see the sections of our 2002 Annual Meeting Proxy Statement captioned "Executive Compensation -- Compensation of Directors," and "Amendment To Stock Plan For Non-employee Directors." STOCK PURCHASE AGREEMENT On August 27, 2001, we entered into a stock purchase plan with Copper Mountain Trust, as trustee for Hecla Mining Company Retirement Plan and Lucky Friday Pension Plan. Pursuant to this agreement, we sold in the aggregate 5,749,883 shares of our common stock to the trustee on behalf of the pension plans at a purchase price of $0.95 per share. In connection with the purchase, each plan received the right to request that we register with SEC under the Securities Act the shares of our common stock held by each plan. LETTER AGREEMENT WITH GREAT BASIN GOLD LTD. On June 4, 2002, we entered into a letter agreement with Great Basin Gold Ltd. to acquire a 50% working interest in their Ivanhoe high grade gold property located on the Carlin Trend in Nevada, subject to negotiating a 38 definitive agreement. The agreement provides us with an option to earn a 50% working interest in an area of Ivanhoe referred to as the Hollister Development Block, in return for funding and completing a $21.8 million, two-stage, advanced exploration and development program leading to commercial production. We would operate the exploration and development programs. Should we enter into the joint venture with Great Basin, we would be vested with a 50% interest in the Hollister Development Block after we completed the two stages of exploration and development, commenced commercial production and issued warrants to purchase shares of our common stock as described below. In addition, we would pay to Great Basin from our share of commercial production a sliding scale royalty based on the cash operating profit per ounce of gold equivalent production. The arrangement is subject to signing a definitive joint venture agreement within 45 days of June 4, 2002. Upon signing the definitive agreement, we and Great Basin have each agreed to issue a series of warrants exercisable within two years to purchase shares of the other company's common stock, at prevailing market prices at the time of their issuance. Accordingly, we would issue warrants to purchase 2,000,000 shares of our common stock to Great Basin and Great Basin would issue to us warrants to purchase 1,000,000 shares of its common stock. Additionally, we would issue warrants to purchase 1,000,000 shares of our common stock to Great Basin upon completion of Stage 1 and warrants to purchase 1,000,000 shares of our common stock on completion of Stage 2, and Great Basin would issue warrants to purchase 500,000 shares of its common stock to us at both such times. Each party has agreed it will use its best efforts to cause the shares underlying the respective warrants to be freely tradable within four months of the date the warrants are issued. In the case of Hecla, this means we will use our best efforts to register the shares underlying the warrants we grant to Great Basin with the SEC, and to list such shares with the NYSE, in each case within four months of the date the warrants are issued. CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS AND RIGHTS We have filed with the office of the Secretary of State of the State of Delaware a Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock of Hecla and a Certificate of Designations, Preferences and Rights of Series B Cumulative Convertible Preferred Stock of Hecla, each of which sets forth the terms of our Series A Junior Participating Preferred Stock and Series B Cumulative Convertible Preferred Stock, respectively. Pursuant to a Rights Agreement dated as of May 10, 1996, between us and American Stock Transfer & Trust Company, a holder of a Right is entitled to purchase one one-hundredth of a Series A preferred share at an exercise price of $50. The Rights are currently represented by the certificates for our common stock and are not transferable apart therefrom. See "Description of Our Capital Stock" for a more thorough discussion of our Certificates of Designations, Preferences and Rights and the Rights Agreement. Except as described in this Offering Circular, or in documents incorporated herein by reference, there are no contracts, arrangements, understandings or relationships in connection with the exchange offer between us or any of our directors or executive officers and any person with respect to the shares of our common stock to be issued in the exchange offer. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents previously filed with the SEC are incorporated in this Offering Circular by reference: 1. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002; 2. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2001; 3. Our Proxy Statement on Schedule 14A relating to the 2002 Annual Meeting of Stockholders of Hecla; and 4. Our Current Report on Form 8-K dated April 15, 2002. 39 In addition to the foregoing, all reports and other documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Offering Circular and prior to the expiration date of the exchange offer shall be deemed to be incorporated herein by reference and to be a part hereof from the dates of filing of such reports and documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Offering Circular to the extent that a statement contained herein, or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular. SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS This Offering Circular includes or incorporates by reference forward-looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words such as "may," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate," and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties, and other factors that could cause our actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: * metals prices and price volatility; * amount and volatility of metals production; * costs of production; * remediation, reclamation and environmental costs; * regulatory matters; * the results or settlements of pending litigation; * cash flow; * revenue calculations; * the nature and availability of financing; * project development risks; * our ability to maintain our New York Stock Exchange listing; and * our success in the exchange offer and the effects of it on our common and preferred stock. See "Risk Factors" for a description of some of these factors. Other matters, including unanticipated events and conditions, also may cause our actual future results to differ materially from these forward-looking statements, and the market prices for our common and preferred stock to increase or decrease . We cannot assure you that our expectations will prove to be correct. In addition, all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements mentioned above. You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this Offering Circular. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 40 WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and current reports, proxy statements and other information with the SEC. We also furnish to our stockholders annual reports, which include financial statements audited by our independent certified public accountants, and other reports which the law requires us to send to our stockholders. Our SEC filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at "http://www.sec.gov." You may read and copy any reports, proxy statements, or other information that we file at the SEC's public reference room at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Our common stock and preferred stock are both listed on the New York Stock Exchange. You can inspect and copy reports, proxy statements and other information about us at the NYSE's offices at 20 Broad Street, New York, New York 10005. 41 We have appointed American Stock Transfer & Trust Company as the exchange agent for the exchange offer. All completed letters of transmittal and agent's messages should be directed to the exchange agent at one of the addresses set forth below. All questions regarding the procedures for tendering in the exchange offer and requests for assistance in tendering your preferred stock should also be directed to the exchange agent at one of the following telephone numbers and addresses: Delivery To: American Stock Transfer & Trust Company, Exchange Agent By Regular or Certified Mail: By Facsimile (Eligible Guarantor By Overnight Courier or Hand: Institutions Only): American Stock Transfer & Trust (718) 234-5001 American Stock Transfer & Trust Company Company 59 Maiden Lane 59 Maiden Lane To Confirm by Telephone or for New York, NY 10038 New York, NY 10038 Information Call: Attention: Reorganization Department Attention: Reorganization Department (718) 921-8200
DELIVERY OF A LETTER OF TRANSMITTAL OR AGENT'S MESSAGE TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL OR AGENT'S MESSAGE. We have appointed Georgeson Shareholder as the information agent for the exchange offer. All inquiries relating to this Offering Circular and the transactions contemplated hereby should be directed to the information agent at the telephone numbers and address set forth below. GEORGESON SHAREHOLDER 17 STATE STREET, 10TH FLOOR NEW YORK, NY 10004 BROKERS OR BANKS CALL: (212)440-9800 OR CALL TOLL FREE: (800) 649-2578 Requests for copies of this Offering Circular, Hecla's First Quarter 2002 Quarterly Report on Form 10-Q, Hecla's 2001 Annual Report on Form 10-K, Hecla's 2002 Annual Meeting Proxy Statement, the enclosed Letter of Transmittal or the enclosed Notice of Guaranteed Delivery may be directed to either the exchange agent or the information agent at the respective telephone numbers and addresses listed above. 42 EX-99.(A)(2) 4 hecla023143_ex-a2.txt LETTER OF TRANSMITTAL EXHIBIT (a)(2) OFFER TO EXCHANGE 7 SHARES OF COMMON STOCK OF HECLA MINING COMPANY FOR EACH OUTSTANDING SHARE OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK OF HECLA MINING COMPANY - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 22, 2002, UNLESS EXTENDED OR EARLIER TERMINATED. - -------------------------------------------------------------------------------- The Exchange Agent for the Exchange Offer is: AMERICAN STOCK TRANSFER & TRUST COMPANY
- -------------------------------------------------------------------------------------------------------------------- By Regular or Certified Mail: By Facsimile: By Overnight Courier or Hand: (Eligible Guarantor Institutions Only) American Stock Transfer & Trust American Stock Transfer & Trust Company (718) 234-5001 Company 59 Maiden Lane 59 Maiden Lane New York, NY 10038 To Confirm by Telephone or for New York, NY 10038 Attention: Reorganization Department Information Call: Attention: Reorganization Department (718) 921-8200 - --------------------------------------------------------------------------------------------------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE LISTED ABOVE, OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY OF YOUR SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders either if certificates for shares of Hecla's Series B Cumulative Convertible Preferred Stock ("Shares") are to be forwarded herewith or, unless an Agent's Message (as defined in Instruction 2) is utilized, if tenders of Shares are to be made by book-entry transfer to an account maintained by American Stock Transfer & Trust Company (the "Exchange Agent") at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the section of the Offering Circular, dated June 24, 2002 (the "Offering Circular") captioned "The Exchange Offer -- Book-Entry Transfer." Stockholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders." Holders of Shares ("Stockholders") whose certificates for such Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent on or prior to July 22, 2002 (as it may be extended, the "Expiration Date") or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in the section of the Offering Circular captioned "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. - -------------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ---------------------------------------------- Account Number: ------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------- - -------------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE COPY OF PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. Names(s) of Registered Holder(s): ------------------------------------------- Window Ticket Number (if any): ---------------------------------------------- Date of Execution: ---------------------------------------------------------- Name of Institution that Guaranteed Delivery: ------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DESCRIPTION OF CERTIFICATE(S) SURRENDERED - -------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF CERTIFICATE(S) SURRENDERED REGISTERED HOLDER(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY. (PLEASE FILL IN, IF BLANK) SEE INSTRUCTION 3) - -------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER OF CERTIFICATE REPRESENTED BY SHARES NUMBER(S) CERTIFICATE(S)* TENDERED** ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ TOTAL SHARES - -------------------------------------------------------------------------------- * Need not be completed by Book-Entry Stockholders. **Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the Transfer Agent are being tendered. See Instruction 4. [ ] CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE INSTRUCTION 11. Number of Shares represented by the lost or mutilated Certificates: --------- - -------------------------------------------------------------------------------- Ladies and Gentlemen: The undersigned hereby tenders to Hecla Mining Company ("Hecla"), a Delaware corporation, the above-described shares of preferred stock (the "Shares") of Hecla, pursuant to Hecla's offer to purchase all outstanding Shares in exchange for 7 shares of Hecla Common Stock (as defined in the Offering Circular) per Share, upon the terms and subject to the conditions set forth in the Offering Circular, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offering Circular, and any amendments or supplements hereto or thereto, constitute the "Exchange Offer"). Subject to and effective upon the acceptance for exchange of all or any portion of the Shares tendered by this Letter of Transmittal in accordance with the terms and subject to the conditions of the Exchange Offer -- including, if the Exchange Offer is extended or amended, the terms and conditions of any extension or amendment -- the undersigned hereby sells, assigns, and transfers to, or upon the order of, Hecla all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends on the Shares (including, without limitation, the issuance of additional Shares pursuant to a stock dividend or stock split, the issuance of other securities, the issuance of rights for the purchase of any securities, or any cash dividends) that are declared or paid by Hecla on or after the date of the Offering Circular and are payable or distributable to stockholders of record on a date prior to the transfer into the name of Hecla or its nominees or transferees on Hecla's stock transfer records of the Shares purchased pursuant to the Exchange Offer (collectively "Distributions"), and constitutes and irrevocably appoints the Exchange Agent the true and lawful agent, attorney-in-fact and proxy of the undersigned -- with full knowledge that the Exchange Agent is also acting as the agent of Hecla in connection with the Exchange Offer -- to the full extent of the undersigned's rights with respect to such Shares (and Distributions) with full power of substitution (such power of attorney and proxy being deemed to be an irrevocable power coupled with an interest), to (a) deliver Certificates (and Distributions), or transfer ownership of such Shares on the account books maintained by the Book-Entry Transfer Facility together, in either such case, with all accompanying evidence of transfer and authenticity, to or upon the order of Hecla upon receipt by the Exchange Agent, as the undersigned's agent, of the Hecla Common Stock, (b) present such Shares (and Distributions) for transfer on the books of Hecla, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and Distributions), all in accordance with the terms of the Exchange Offer. The undersigned hereby irrevocably appoints designees of Hecla, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or his or her substitute shall, in his or her sole discretion, deem proper, and otherwise act (including pursuant to written consent) with respect to all of the Shares tendered hereby which have been accepted for exchange by Hecla prior to the time of such vote or action (and Distributions) which the undersigned is entitled to vote at any meeting of stockholders of Hecla (whether annual or special and whether or not an adjourned meeting), or by written consent in lieu of such meeting, or otherwise. This power of attorney and proxy is coupled with an interest in Hecla and in the Shares and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for exchange of such Shares by Hecla in accordance with the terms of the Exchange Offer. Such acceptance for payment shall revoke, without further action, any other power of attorney or proxy granted by the undersigned at any time with respect to such Shares (and Distributions) and no subsequent powers of attorney or proxies will be given (and if given will be deemed not to be effective) with respect thereto by the undersigned. The undersigned understands that Hecla reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Hecla's acceptance for exchange of such Shares, Hecla is able to exercise full voting rights with respect to such Shares (and Distributions), including voting at any meeting of stockholders. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and Distributions), that the undersigned owns the Shares tendered hereby and that when the same are accepted for exchange by Hecla, Hecla will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Exchange Agent or Hecla to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and Distributions). In addition, the undersigned shall promptly remit and transfer to the Exchange Agent for the account of Hecla any and all other Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, Hecla shall be entitled to all rights and privileges as owner of such Distributions. The undersigned has read and agrees to all of the terms of the Exchange Offer. All authority herein conferred or herein agreed to be conferred shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, legal representatives, successors and assigns of the undersigned. Except as stated in the Offering Circular, this tender is irrevocable. The undersigned understands that valid tenders of Shares pursuant to any one of the procedures described in the section of the Offering Circular captioned "The Exchange Offer -- Procedures for Tendering Preferred Stock" and in the instructions hereto will constitute a binding agreement between the undersigned and Hecla upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Offering Circular, Hecla may not be required to accept for exchange any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Issuance Instructions," please issue the certificates representing the Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, and/or return any Certificates not tendered or accepted for exchange in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the certificates representing the Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, and/or return any Certificates not tendered or accepted for exchange (and accompanying documents as appropriate) to the undersigned at the address shown below the undersigned's signature. In the event that both the "Special Delivery Instructions" and the "Special Issuance Instructions" are completed, please issue the certificates representing the Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, and/or return any Certificates not tendered or accepted for exchange in the name(s) of, and deliver said certificates representing the Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, and/or return Certificates to, the person or persons so indicated. Book Entry Stockholders may request that any Shares not accepted for exchange be returned by crediting such account maintained at the Book-Entry Transfer Facility. The undersigned recognizes that Hecla has no obligation pursuant to the "Special Issuance Instructions" to transfer any Shares from the name of the registered holder thereof if Hecla does not accept for exchange any of such Shares. - --------------------------------------- ---------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 4, 5, 6 AND 7) To be completed ONLY (i) if To be completed ONLY if Certificates Certificates not tendered or exchanged not tendered or exchanged or the or the certificates representing the certificates representing the Hecla Hecla Common Stock, and cash in lieu Common Stock, and cash in lieu of of fractional shares of Hecla Common fractional shares of Hecla Common Stock, if any, are to be issued in the Stock, if any, are to be sent to name of someone other than the someone other than the undersigned, or undersigned, or (ii) if Shares to the undersigned at an address other tendered by book-entry transfer which than that shown above. are not exchanged are to be returned by credit to an account maintained at Mail certificate(s) to: the Book-Entry Transfer Facility. Name Issue certificate(s) and cash in lieu --------------------------------- of fractional shares of Hecla Common (Please Type or Print) Stock, if any, to: Address Name ------------------------------ --------------------------------- (Please Type or Print) -------------------------------------- Address -------------------------------------- ------------------------------ (Zip Code) - -------------------------------------- -------------------------------------- (Taxpayer Identification or - -------------------------------------- Social Security No.) (Zip Code) - -------------------------------------- (Taxpayer Identification or Social Security No.) Credit Shares not exchanged and tendered by book-entry transfer to the Book-Entry Transfer Facility set forth below: - -------------------------------------- Account Number - --------------------------------------- ---------------------------------------- - -------------------------------------------------------------------------------- IMPORTANT -- SIGN HERE STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 Signature(s) of Holder(s): ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Dated: __________________________, 2002 The above lines must be signed by the registered holder(s) as their name(s) appear(s) on the Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by a properly completed assignment from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Certificates to which this Letter of Transmittal relates are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by Hecla, submit evidence satisfactory to Hecla of such person's authority so to act. SEE INSTRUCTION 5. Name(s): -------------------------------------------------------------------- ----------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): ------------------------------------------------------ Address: -------------------------------------------------------------------- ----------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone No.: ------------------------------------------------ Taxpayer Identification or Social Security No.: ----------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE SIGNATURE GUARANTEE IN SPACE BELOW. Authorized Signature: ------------------------------------------------------- Name: ----------------------------------------------------------------------- (PLEASE PRINT) Name of Firm: --------------------------------------------------------------- Address: -------------------------------------------------------------------- ----------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone No.: ------------------------------------------------ Dated: , 2002 ---------------------------------------------------------------- - -------------------------------------------------------------------------------- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered herewith (which term, for purposes of this document, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of Shares), unless such holder(s) has completed either the box entitled "Special Exchange Instructions" or the box entitled "Special Delivery Instructions" on the inside front cover hereof or (ii) if such Shares are tendered for the account of a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agent Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. If the Certificates are registered in the name of a person other than the signer of this Letter of Transmittal or if delivery of certificates representing shares of Hecla Common Stock is to be made or Certificates not tendered or not accepted for payment are to be returned to a person other than the registered holder of the Certificates tendered, then the tendered Certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Certificates, with the signatures on the Certificates or stock powers guaranteed by an Eligible Institution as provided in this Letter of Transmittal. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be used either if Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in the section of the Offering Circular captioned "The Exchange Offer -- Book-Entry Transfer." Certificates, or timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the Exchange Agent's account at the Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth herein prior to the Expiration Date. Stockholders whose Certificates are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent prior to the Expiration Date or who cannot complete the procedures for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in the section of the Offering Circular captioned "The Exchange Offer -- Guaranteed Delivery Procedures." Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Hecla, must be received by the Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile hereof), with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. A "New York Stock Exchange trading day" is any day on which The New York Stock Exchange is open for business. If Certificates are forwarded separately to the Exchange Agent, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile hereof) must accompany each such delivery. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and Hecla may enforce such agreement against the participant. The method of delivery of Certificates, this Letter of Transmittal and all other required documents is at the option and sole risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted. All tendering stockholders, by execution of this Letter of Transmittal or facsimile hereof, waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the Certificate numbers and/or the number of Shares and any other required information should be listed on a separate schedule attached hereto and separately signed on each page thereof in the same manner as this Letter of Transmittal is signed. 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER) AND WITHDRAWAL RIGHTS. If fewer than all the Shares evidenced by any Certificate submitted are to be tendered, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In such case, new Certificate(s) for the remainder of the Shares that were evidenced by your old Certificate(s) will be sent to you, unless otherwise provided in the appropriate box marked "Special Issuance Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. To withdraw a tender of Shares in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein (i) prior to 12:00 Midnight, New York City time, on the Expiration Date, or (ii) from and after August 19, 2002 if we have not accepted the tendered Shares for exchange by that date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Shares to be withdrawn, (ii) identify the Shares to be withdrawn (including the certificate number), (iii) be signed by the stockholder in the same manner as the original signature on the Letter of Transmittal by which such Shares were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Exchange Agent register the transfer of such Shares in the name of the person withdrawing the tender, and (iv) specify the name in which any such Shares are to be registered, if different from that of the person having deposited the Shares to be withdrawn. All questions as to the validity, form, and eligibility (including time of receipt) of such notices will be determined by Hecla, whose determination shall be final and binding on all parties. Any Shares so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no certificates representing shares of Hecla Common Stock will be issued, and no cash will be paid in lieu of fractional shares of Hecla Common Stock, if any, with respect thereto unless the Shares so withdrawn are validly retendered. Properly withdrawn Shares may be retendered by following one of the procedures described in the Offering Circular under the caption "The Exchange Offer -- Procedures for Tendering Preferred Stock." 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Shares are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to Hecla of their authority so to act must be submitted. When this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of Certificates or separate stock powers are required unless delivery of certificates representing shares of Hecla Common Stock is to be made to, or Certificates for Shares not tendered or purchased are to be issued in the name of, a person other than the registered owner(s). Signatures on such Certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Shares listed, the Certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner(s) appear(s) on the Certificates. Signatures on such Certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as otherwise set forth in this Instruction 6, Hecla will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of exchanged Shares to it or its order pursuant to the Exchange Offer. If, however, delivery of certificates representing shares of Hecla Common Stock is to be made to, or if Certificates for Shares not tendered or exchanged are to be registered in the name of, any person other than the registered holder(s), or if tendered Certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If a certificate representing shares of Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, is to be issued in the name of and/or Certificates for unexchanged Shares are to be returned to a person other than the signer of this Letter of Transmittal, or if a certificate representing shares of Hecla Common Stock, and cash in lieu of fractional shares of Hecla Common Stock, if any, is to be sent and/or such Certificates are to be returned to someone other than the signer of this Letter of Transmittal, or to an address other than that shown on the front cover hereof, the appropriate boxes on this Letter of Transmittal should be completed. Book-Entry Stockholders may request that Shares not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such Book-Entry Stockholder may designate herein. If no such instructions are given, such Shares not exchanged will be returned by crediting the account at the Book-Entry Transfer Facility designated above. See Instruction 1. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may be directed to the Information Agent at its address set forth below. Requests for additional copies of the Offering Circular and this Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Such materials will be furnished at Hecla's expense. 9. WAIVER OF CONDITIONS. The conditions of the Exchange Offer may be waived by Hecla, in whole or in part, at any time or from time to time, in Hecla's sole discretion. 10. 30% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a stockholder whose tendered Shares are accepted for exchange is required to provide the Exchange Agent with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, or an adequate basis for exemption, the Internal Revenue Service may subject the stockholder or other payee to a $50 penalty, and the gross proceeds of any payments that are made to such stockholder or other payee with respect to Shares exchanged pursuant to the Exchange Offer may be subject to 30% backup withholding. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the stockholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" (the "W-9 Guidelines"). If backup withholding applies, the Exchange Agent is required to withhold 30% of any such payments made to the stockholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. To prevent backup withholding on payments that are made to a stockholder with respect to Shares exchanged pursuant to the Exchange Offer, the stockholder is required to notify the Exchange Agent of such stockholder's correct TIN by completing a Substitute Form W-9 certifying (i) that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and (ii) that (a) such stockholder is exempt from backup withholding, (b) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the Internal Revenue Service has notified such stockholder that such stockholder is no longer subject to backup withholding. Exempt stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt stockholder must enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" in Part 2 of such form, and sign and date the form. See the enclosed W-9 Guidelines for additional instructions. In order for a nonresident alien or foreign entity to qualify as exempt, such person must submit a completed Form W-8, "Certificate of Foreign Status" signed under penalties of perjury attesting to such exempt status. Such forms may be obtained from the Information Agent. If you do not have a TIN, consult the W-9 Guidelines for instructions on applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If you do not provide your TIN to the Exchange Agent within 60 days, backup withholding will begin and continue until you furnish your TIN to the Exchange Agent. NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE. The stockholder is required to give the Exchange Agent the TIN of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed W-9 Guidelines for additional guidance on which number to report. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Exchange Agent. The stockholder will then be instructed as to the steps that must be taken in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY HEREOF) OR AN AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. This page was left blank intentionally This page was left blank intentionally - -------------------------------------------------------------------------------- PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY - -------------------------------------------------------------------------------- SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ---------------------------- IRS FORM W-9 CERTIFY BY SIGNING AND Social Security Number PAYERS REQUEST FOR DATING BELOW. TAXPAYER OR IDENTIFICATION NUMBER ------------------------- ("TIN") Employee Identification Number(s) - -------------------------------------------------------------------------------- DEPARTMENT OF THE PART 2: CERTIFICATES -- Under penalties of perjury, I TREASURY INTERNAL certify that: REVENUE SERVICE (1) The number shown on this form is my correct taxpayer identification (or I am waiting for a number to be issued for me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. - -------------------------------------------------------------------------------- PART 3: Awaiting TIN - -------------------------------------------------------------------------------- CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE ----------------------------------------------- DATE ---------------------------------------------------- NAME ---------------------------------------------------- (Please Print) ADDRESS ------------------------------------------------- (Include Zip Code) - -------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE CERTIFICATES SURRENDERED IN CONNECTION WITH THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within the time of any payment, 30% of all reportable payments made to me thereafter will be withheld until I provide a number. Signature Date ---------------------------------- --------------------------- - -------------------------------------------------------------------------------- MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE EXCHANGE AGENT AT ONE OF ITS ADDRESSES SET FORTH BELOW: THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: AMERICAN STOCK TRANSFER & TRUST COMPANY
- -------------------------------------------------------------------------------------------------------------------- By Regular or Certified Mail: By Facsimile: By Overnight Courier or Hand: (Eligible Guarantor Institutions Only) American Stock Transfer & Trust American Stock Transfer & Trust Company (718) 234-5001 Company 59 Maiden Lane 59 Maiden Lane New York, NY 10038 To Confirm by Telephone or for New York, NY 10038 Attention: Reorganization Department Information Call: Attention: Reorganization Department (718) 921-8200 - --------------------------------------------------------------------------------------------------------------------
Questions and requests for assistance may be directed to the Information Agent at its address and telephone number listed below. Additional copies of the Offering Circular, the Letter of Transmittal and other offer materials may be obtained from the Information Agent, and will be furnished promptly at Hecla's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS: GEORGESON [LOGO] SHAREHOLDER 17 STATE STREET, 10TH FLOOR NEW YORK, NY 10004 BANKS AND BROKERS CALL: (212)440-9800 CALL TOLL FREE: (800) 649-2578 EX-99.(A)(3) 5 hecla023143_ex-a3.txt LETTER TO CLIENTS EXHIBIT (a)(3) OFFER TO EXCHANGE 7 SHARES OF COMMON STOCK OF HECLA MINING COMPANY FOR EACH OUTSTANDING SHARE OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK OF HECLA MINING COMPANY TO OUR CLIENTS: Enclosed for your consideration is an Offering Circular, dated June 24, 2002 (the "Offering Circular"), and the related Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Hecla Mining Company ("Hecla") to exchange up to 16,100,000 shares of common stock, par value $0.25 per share, of Hecla for up to all of Hecla's issued and outstanding Share of Series B Cumulative Convertible Preferred Stock (the "Shares"), upon the terms and subject to the conditions described in the Offering Circular and the Letter of Transmittal. The Exchange Offer is subject to satisfaction or waiver of certain conditions that are described in the Offering Circular under the caption "The Exchange Offer - Conditions to the Exchange Offer." These materials are being forwarded to you as the beneficial owner of the Shares held by us for your account but not registered in your name. A TENDER OF THE SHARES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Shares held by us for your account, pursuant to the terms and conditions set forth in the enclosed Offering Circular and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Shares on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 12:00 Midnight, New York City time, on July 22, 2002, unless the Exchange Offer is extended. Any Shares tendered pursuant to the Exchange Offer may be withdrawn at any time before the expiration of the Exchange Offer. Your attention is directed to the following: * The Exchange Offer is for any and all Shares. * The Exchange Offer is subject to certain conditions set forth in the Offering Circular under the caption "The Exchange Offer - Conditions to the Exchange Offer." * Any transfer taxes incident to the transfer of Shares from the holder to Hecla will be paid by Hecla, except as otherwise provided in Instruction 6 of the Letter of Transmittal. * The Exchange Offer expires at 12:00 Midnight, New York City time, on July 22, 2002, unless the Exchange Offer is extended. If you wish to have us tender your Shares, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER SHARES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the Exchange Offer made by Hecla Mining Company with respect to its Series B Cumulative Convertible Preferred Stock. This will instruct you to tender the Shares held by you for the account of the undersigned, subject to the terms and conditions set forth in the Offering Circular and the related Letter of Transmittal. Please tender the Shares held by you for my account as indicated below: Series B Cumulative Convertible Preferred Stock _____________ (Number of Shares) |_| Please do not tender any Shares held by you for my account. Dated: _______________________ __, 2002 Signature(s): _____________________________________________________________ Print Name(s) here: _______________________________________________________ Print Address(es): ______________________________________________________ Area Code and Telephone Number(s): ______________________________________ Tax Identification or Social Security Number(s): ________________________ NONE OF THE SHARES HELD BY US FOR YOUR ACCOUNT WILL BE TENDERED UNLESS WE RECEIVE WRITTEN INSTRUCTIONS FROM YOU TO DO SO. UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL THE SHARES HELD BY US FOR YOUR ACCOUNT. 2 EX-99.(A)(4) 6 hecla023143_ex-a4.txt LETTER TO BROKER-DEALERS EXHIBIT (a)(4) OFFER TO EXCHANGE 7 SHARES OF COMMON STOCK OF HECLA MINING COMPANY FOR EACH OUTSTANDING SHARE OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK OF HECLA MINING COMPANY TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Hecla Mining Company ("Hecla") is offering, subject to the terms and conditions set forth in the Offering Circular, dated June 24, 2002 (the "Offering Circular"), relating to the offer (the "Exchange Offer") of Hecla to exchange up to 16,100,000 shares of common stock, par value $0.25 per share, of Hecla for up to all of Hecla's issued and outstanding Share of Series B Cumulative Convertible Preferred Stock (the "Shares"). We are requesting that you contact your clients for whom you hold Shares regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, or who hold Shares registered in their own names, we are enclosing the following documents: * The Offering Circular; * The Letter of Transmittal for your use and for the information of your clients; * A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if (a) certificates for the Shares are not immediately available, (b) time will not permit the certificates for the Shares or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer or (c) the procedure for book-entry transfer cannot be completed prior to the expiration of the Exchange Offer; * A form of letter which may be sent to your clients for whose account you hold Shares registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with respect to the Exchange Offer; * Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and * Return envelopes addressed to American Stock Transfer & Trust Company, the Exchange Agent for the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 22, 2002, UNLESS THE EXCHANGE OFFER IS EXTENDED (AS IT MAY BE EXTENDED, THE "EXPIRATION DATE"). SHARES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE. Unless a holder of the Shares complies with the procedures described in the Offering Circular under the caption "The Exchange Offer - Guaranteed Delivery Procedures," the holder must do one of the following on or prior to the Expiration Date to participate in the Exchange Offer: * tender the Shares by sending the certificates for the Shares, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, to American Stock Transfer & Trust Company, as Exchange Agent, at one of the addresses listed in the Offering Circular under the caption "The Exchange Offer - Exchange Agent"; or * tender the Shares by using the book-entry procedures described in the Offering Circular under the caption "The Exchange Offer - Book Entry Transfer" and transmitting a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent's Message instead of the Letter of Transmittal, to the Exchange Agent. In order for a book-entry transfer to constitute a valid tender of Shares in the Exchange Offer, the Exchange Agent must receive a confirmation of book-entry transfer (a "Book-Entry Confirmation") of the Shares into the Exchange Agent's account at The Depository Trust Company prior to the Expiration Date. The term "Agent's Message" means a message, transmitted by The Depository Trust Company and received by the Exchange Agent and forming a part of the Book-Entry Confirmation, which states that The Depository Trust Company has received an express acknowledgment from the tendering holder of Shares that the holder has received and has agreed to be bound by the Letter of Transmittal. If a registered holder of Shares wishes to tender the Shares in the Exchange Offer, but (a) the certificates for the Shares are not immediately available, (b) time will not permit the certificates for the Shares or other required documents to reach the Exchange Agent before the Expiration Date, or (c) the procedure for book-entry transfer cannot be completed before the Expiration Date, a tender of Shares may be effected by following the Guaranteed Delivery Procedures described in the Offering Circular under the caption "The Exchange Offer - Guaranteed Delivery Procedures." Hecla will, upon request, reimburse brokers, dealers, commercial banks, trust companies and other nominees for reasonable and necessary costs and expenses incurred by them in forwarding the Offering Circular and the related documents to the beneficial owners of Shares held by them as nominee or in a fiduciary capacity. Hecla will pay or cause to be paid all stock transfer taxes applicable to the exchange of Shares in the Exchange Offer, except as set forth in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to American Stock Transfer & Trust Company, the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal or Georgeson Shareholder, the Information Agent for the Exchange Offer, at the address and telephone numbers set forth in the Offering Circular. Very truly yours, HECLA MINING COMPANY NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF HECLA OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFERING CIRCULAR OR THE LETTER OF TRANSMITTAL. Enclosures 2 EX-99.(A)(5) 7 hecla023143_ex-a5.txt NOTICE OF GUARANTEED DELIVERY EXHIBIT (a)(5) HECLA MINING COMPANY NOTICE OF GUARANTEED DELIVERY PURSUANT TO THE OFFERING CIRCULAR DATED JUNE 24, 2002 This Notice of Guaranteed Delivery relates to the offer (the "Exchange Offer") of Hecla Corporation ("Hecla") to exchange up to 16,100,000 shares of common stock, par value $0.25 per share, of Hecla for up to all of Hecla's issued and outstanding Share of Series B Cumulative Convertible Preferred Stock (the "Shares"). You must use this Notice of Guaranteed Delivery, or one substantially equivalent to this form, to accept the Exchange Offer if you are a registered holder of Shares and wish to tender your Shares, but (1) the certificates for the Shares are not immediately available, (2) time will not permit your certificates for the Shares or other required documents to reach American Stock Transfer & Trust Company, as exchange agent (the "Exchange Agent"), before 12:00 Midnight, New York City time, on July 22, 2002 (or any such later date and time to which the Exchange Offer may be extended (the "Expiration Date") or (3) the procedure for book-entry transfer cannot be completed before the Expiration Date. You may effect a tender of your Shares utilizing the guaranteed delivery procedure if (a) the tender is made through an Eligible Guarantor Institution (as defined in the Offering Circular under the caption "The Exchange Offer - Procedures for Tendering Preferred Stock"); (b) prior to the Expiration Date, the Exchange Agent receives from an Eligible Guarantor Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in this form, setting forth your name and address, and the amount of Shares you are tendering and stating that the tender is being made by Notice of Guaranteed Delivery (these documents may be sent by overnight courier, registered or certified mail or facsimile transmission); (c) you guarantee that within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Shares, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offering Circular under the caption "The Exchange Offer - Procedures for Tendering Preferred Stock") of transfer of the Shares into the Exchange Agent's account at The Depository Trust Company (including the Agent's Message (as defined in the Offering Circular under the caption "The Exchange Offer - Procedures for Tendering Preferred Stock") that forms a part of the Book-Entry Confirmation), as the case may be, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, will be deposited by the Eligible Guarantor Institution with the Exchange Agent; and (d) the Exchange Agent receives the certificates for all physically tendered Shares, in proper form for transfer, or a Book- Entry Confirmation of transfer of the Shares into the Exchange Agent's account at The Depository Trust Company, as the case may be, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other required documents or, in the case of a Book-Entry Confirmation, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent's Message instead of the Letter of Transmittal, in each case, within three NYSE trading days after the date of execution of this Notice of Guaranteed Delivery. Capitalized terms used but not defined herein have the meanings assigned to them in the Offering Circular. - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JULY 22, 2002 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF SHARES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 12:00 MIDNIGHT ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- DELIVER TO: AMERICAN STOCK TRANSFER & TRUST COMPANY, EXCHANGE AGENT
- ---------------------------------------- -------------------------------------- -------------------------------------- By Regular or Certified Mail: By Facsimile: By Overnight Courier or Hand: (Eligible Guarantor Institutions American Stock Transfer & Trust Company Only) American Stock Transfer & Trust 59 Maiden Lane Company New York, NY 10038 (718) 234-5001 59 Maiden Lane Attention: Reorganization Department New York, NY 10038 To Confirm by Telephone or for Attention: Reorganization Department Information Call: (718) 921-8200 - ---------------------------------------- -------------------------------------- --------------------------------------
DELIVERY OF A LETTER OF TRANSMITTAL OR AGENT'S MESSAGE TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL OR AGENT'S MESSAGE. Ladies and Gentlemen: Subject to the terms and conditions set forth in the Offering Circular and the accompanying Letter of Transmittal, the undersigned hereby tenders to Hecla Mining Company the number of Shares set forth below pursuant to the guaranteed delivery procedure described in the Offering Circular under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." - ----------------------------------------- ------------------------------------- Number of Shares Tendered: If Shares will be delivered by -------------- book-entry transfer to The Depository Trust Company, provide - ---------------------------------------- account number. Certificate Nos. (if available): Account Number: -------- --------------------- - ---------------------------------------- - ----------------------------------------- ------------------------------------- 2 - -------------------------------------------------------------------------------- PLEASE SIGN HERE Signature(s) of Holder(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Dated: , 2002 Telephone Number: (____) ______________ ------------------------- The above lines must be signed by the registered holder(s) of Shares as their name(s) appear(s) on the certificate(s) for the Shares or by person(s) authorized to become registered holder(s) by a properly completed endorsement or assignment and documents transmitted with this Notice of Guaranteed Delivery. If Shares to which this Notice of Guaranteed Delivery relates are held of record by two or more joint holders, then all such holders must sign this Notice of Guaranteed Delivery. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by Hecla, submit evidence satisfactory to Hecla of such person's authority so to act. Name(s): ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): ---------------------------------------------------------- Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone No.: ---------------------------------------------------- Taxpayer Identification or Social Security No.: --------------------------------- DO NOT SEND CERTIFICATES REPRESENTING SHARES WITH THIS FORM. CERTIFICATES REPRESENTING SHARES SHOULD ONLY BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. - -------------------------------------------------------------------------------- 3 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"), hereby guarantees to deliver to the Exchange Agent, at its address set forth above, either the Shares tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Shares to the Exchange Agent's account at The Depository Trust Company, pursuant to the procedures for book-entry transfer set forth in the Offering Circular, in either case together with one or more properly completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and any other required documents within five business days after the date of execution of this Notice of Guaranteed Delivery. THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL AND SHARES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED. - ---------------------------------------- -------------------------------------- Name of Firm: -------------------------- ------------------------------------- (Please Type or Print) Authorized Signature Address: Name: ------------------------------- -------------------------------- (Please Type or Print) - --------------------------------------- Title: - --------------------------------------- ------------------------------- (Zip Code) Date: -------------------------------- Area Code and Telephone No.: ----------- - ---------------------------------------- -------------------------------------- NOTE: DO NOT SEND CERTIFICATES REPRESENTING SHARES WITH THIS FORM. CERTIFICATES REPRESENTING SHARES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL. 4 EX-99.(A)(6) 8 hecla023143_ex-a6.txt GUIDELINES FOR CERTIFICATION OF TAXPAYER ID EXHIBIT (a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- ----------------------------------------------------- ------------------------------------------------------- GIVE THE TAXPAYER GIVE THE TAXPAYER IDENTIFICATION IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------- ------------------------------------------------------- 1. An individual's The individual 9. A valid trust, The legal entity (Do not account estate, or pension furnish the identifying trust number of the personal 2. Two or more The actual owner of the representative or trustee individuals (joint account or, if combined unless the legal entity account) funds, any one of the itself is not designated individuals (1) in the account title.) (5) 3. Husband and wife The actual owner of the (joint account) account or, if joint 10. Corporate account The corporation funds, either person (1) 11. Religious, The organization 4. Custodian account of The minor (2) charitable, or a minor (Uniform Gift educational to Minors Act) organization account 5. Adult and minor The adult or, if the 12. Partnership account The partnership (joint account) minor is the only held in the name of contributor, the minor (1) the business 6. Account in the name The ward, minor, or 13. Association, club, or The organization of guardian or incompetent person (3) other tax-exempt committee for a organization designated ward, minor, or incompetent 14. A broker or The broker or nominee person. registered nominee 7. a. The usual The grantor-trustee (1) 15. Account with the The public entity revocable savings Department of trust account Agriculture in the (grantor is also name of a public trustee) entity (such as a State or local b. So-called trust The actual owner (1) government, school account that is not a district, or prison) legal or valid trust that receives under State law agricultural program payments 8. Sole proprietorship The owner (4) account
- -------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's, or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: * A corporation. * An organization exempt from tax under section 501(a), or an individual retirement arrangement (IRA) or custodial account under section 403(b)(7). * The United States or any of its agencies or instrumentalities. * A state, the District of Columbia, a possession of the United States, or any political subdivisions or instrumentalities. * A foreign government, or any of its political subdivisions, agencies, or instrumentalities. * An international organization or any of its agencies or instrumentalities. * A foreign central bank of issue. * A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. * A futures commission merchant registered with the Commodity Futures Trading Commission. * A real estate investment trust. * An entity registered at all times during the tax year under the Investment Company Act of 1940. * A common trust fund operated by a bank under section 584(a). * A financial institution. * A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. * A trust exempt from tax under section 664 or described in section 4947. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: * Payments to nonresident aliens subject to withholding under section 1441. * Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. * Payments of patronage dividends where the amount received is not paid in money. * Payments made by certain foreign organizations. * Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: * Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. * Payments of tax-exempt interest (including exempt-interest dividends under section 852). * Payments described in section 6049(b)(5) to non-resident aliens. * Payments on tax-free covenant bonds under section 1451. * Payments made by certain foreign organizations. * Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6042, 6045, 6049, 6050A, and 6050N. PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 30% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTIES FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 9 hecla023143_ex-a7.txt PRESS RELEASE EXHIBIT (a)(7) 6500 Mineral Drive o Coeur d'Alene, Idaho 83815-8788 * 208/769-4100 * FAX 208/769-7612 2002-14 [HECLA LOGO] 2002-14 NEWS RELEASE HECLA TENDERS OFFER FOR PREFERRED B SHARES FOR IMMEDIATE RELEASE June 13, 2002 COEUR D'ALENE, IDAHO -- Hecla Mining Company (HL & HL-PrB:NYSE) today announced its intent to offer to holders of its Series B Cumulative Convertible Preferred stock to exchange each of their Preferred shares for seven (7) shares of Hecla Common stock. The offer will be open for 20 business days from the time the final offer document has been mailed to preferred shareholders, which is expected to occur within the next few days. At yesterday's closing stock price (June 12, 2002), the offer would compute to $29.54 in common stock value for each share of Preferred stock, which closed at $21.95 yesterday, a 35% premium over market value. Hecla Chairman and Chief Executive Officer Arthur Brown said, "Our board of directors and management thought long and hard about an offer that would benefit both our common and preferred shareholders. We believe acceptance of this offer will bring value to common shareholders by removing the dividend associated with the preferred stock, which is currently a total of $8 million annually. It will benefit preferred shareholders by offering them a premium to the market value of their preferred stock and give them the opportunity to participate in further upside value through the common stock." Brown continued, "The board of directors makes the decision each quarter on whether to declare a dividend for the preferred stock. However, we have many priorities for our cash and do not intend to resume payment of preferred dividends at this time. We realize the prospect of no dividends may be untenable for some Preferred B holders, so we feel this offer is a good opportunity for preferred shareholders to trade out of the Preferred B stock at a premium." The offer is more than twice the value the Preferred B shareholders would get if they exercised their right of conversion at the ratio of 3.2154 common shares (specified in the preferred stock terms) for each preferred share. If every preferred shareholder accepts the tender offer, preferred shareholders would hold about 17.5% of the total percentage of Hecla stock ownership. This is approximately the same percentage of common stock ownership rights they received when the preferred shares were originally issued in 1993. Brown said, "Although this offer is at a discount to the face value of $50 for the preferred shares when they were originally issued, it is certainly a premium to the low price they have traded at in the past year. And on a percentage basis, preferred shareholders will maintain close to the same total ownership of Hecla that they had when the shares were issued. In the meantime, they were able to collect about $58 million in dividends since 1993." Preferred B shareholders will be notified as to the logistics of accepting and implementing the tender offer with the mailing of the offer document within the next two weeks. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 111-year-old company, Hecla has long been well known in the mining world and financial markets as a primary silver producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB. Statements made which are not historical facts, such as anticipated payments, production, sales of assets, exploration results and plans, costs, prices or sales performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production, project development risks and ability to raise financing. Refer to the company's Form 10-Q and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements. NOTICE This announcement is neither an offer to purchase nor a solicitation of an offer to sell common or preferred stock of Hecla Mining Company. At the time the offer is commenced, Hecla Mining Company will file a Tender Offer Statement with the U.S. Securities and Exchange Commission. The Tender Offer Statement (including the Offering Circular attached as an exhibit thereto, a related Letter of Transmittal and other offer documents) will contain important information which should be read carefully before any decision is made with respect to the offer. The Offering Circular, the related Letter of Transmittal and certain other offer documents will be made available to all holders of the Series B Cumulative Convertible Preferred Stock at no expense to them. The Tender Offer Statement (including the Offering Circular, the related Letter of Transmittal and all other offer documents filed with the Securities and Exchange Commission) will also be available for free at the Securities and Exchange Commission's web site at www.sec.gov. Contact: Vicki J. Veltkamp, vice president - investor and public relations, 208/769-4144 Hecla's Home Page can be accessed on the Internet at: http://www.hecla-mining.com EX-99.(D)(1) 10 hecla023143_ex-d1.txt STOCK PURCHASE AGGREEMENT EXHIBIT (d)(1) STOCK PURCHASE AGREEMENT Stock Purchase Agreement ("Agreement") entered into as of the 27th day of August, 2001, between Hecla Mining Company, a Delaware corporation ("Company"), Copper Mountain Trust ("Trustee") for the Hecla Mining Company Retirement Plan and Lucky Friday Pension Plan ("Purchaser" or "Trustee"). The Company agrees to sell and the Purchaser agree to purchase 5,749,883 shares of common stock, $0.25 par value, of the Company ("Shares") at a purchase price of $0.95 per Share. The Purchaser shall purchase 4,610,174 shares on behalf of the Hecla Mining Company Retirement Plan and shall purchase 1,139,709 shares on behalf of the Lucky Friday Pension Plan. The closing of the sale of the Shares to the Purchaser shall take place at 10:00 a.m. on August 28, 2001, at the executive office of the Company, at which time the Company shall deliver to the Purchaser certificates representing their respective Shares registered in the names of the Purchaser, and the Purchaser shall cause the purchase price of the Shares to be purchased by each to be wire transferred to an account specified by the Company. The Purchaser has been instructed by Consulting Fiduciaries, Inc., the independent fiduciary to the Trustee to enter into this Agreement on behalf of the Plans. The Company represents and warrants to the Purchaser that (i) the Company has the power, and has been authorized, to enter into this Agreement and to effect the transactions contemplated by it, and this Agreement has been duly executed on behalf of the Company and is binding and enforceable on it, and (ii) the Shares when delivered and paid for will be validly issued, fully paid and non-assessable and listed (subject to notice of issuance) on the New York Stock Exchange. The Purchaser represents and warrants to the Company that it has the power, and has been duly authorized, to enter into this Agreement and effect the transactions contemplated by it, and this Agreement has been duly executed on behalf of such Purchaser and is binding and enforceable on it. The Purchaser represents and warrants to the Company that it is an accredited investor as defined in Regulation D promulgated under the Securities Act of 1933 ("Securities Act") and that it understands that the Shares have not been registered under the Securities Act and may not be resold by the Purchaser without registration under the Securities Act or an exemption therefrom. Certificates for the Shares will bear the following legend: The shares of common stock of Hecla Mining Company represented by this certificate have been issued pursuant to an exemption from registration under the Securities Act of 1933 and may not be resold without registration thereunder or an exemption therefrom. The issuer may require an opinion of counsel reasonably satisfactory to it to the effect that such an exemption is available before permitting transfer of such shares. The following Sections 1 through 5 shall apply if the Purchaser desires to sell Shares at a time and in a fashion that registration or an exemption from registration under the Securities Act is not available for the sale. The independent fiduciary or investment manager appointed by the Company will be responsible for directing the Trustee to exercise the Purchaser's rights under Sections 1 through 5, including the number of Shares to be registered for the Purchaser. 1. Registration of Shares on Request. (a) Upon the written request of the Purchaser covering at least 1,000,000 Shares which are not registered or otherwise eligible for sale under Rule 144 or some other exemption under the Securities Act within the succeeding 90 days, the Company shall prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement under the Securities Act, on such form and in such manner as the Company may deem appropriate for the sale 2 or other disposition of such number of the Shares as shall be specified in such written request and use its reasonable best efforts to cause such registration statement to become effective as soon as practicable after such registration statement is filed; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 1(a) at any time prior to January 1, 2002. In connection therewith, the Company will prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus or prospectuses used in connection therewith as it deems necessary to keep such registration statement effective for a reasonable period from the effective date thereof (but not more than 45 days from the effective date thereof) so as to permit the offering and sale by the Purchaser in accordance with the intended method or methods of distribution described in the registration statement, subject to earlier termination in the event all the shares are sold thereunder or as otherwise terminated or delayed pursuant to this Agreement. (b) The Company shall be entitled to postpone the filing of any registration statement pursuant to this Section 1 otherwise required to be prepared and filed by it (i) if the Company is currently engaged in a self-tender or exchange offer and the filing of a registration statement would cause a violation of the Securities Exchange Act of 1934, (ii) if the Chief Executive Officer of the Company certifies to the Purchaser that the Company is engaged in, or plans to engage within 60 days in, a registered public offering (including a registration statement on Form S-4 or the then substantial equivalent thereof); or (iii) such other circumstances exist as shall, in the reasonable judgment of the Company's Board of Directors, make a public offering of the Company's securities impracticable (provided that the Company may postpone the filing of a registration statement pursuant to this subparagraph (iii) not more than once in any 12-month period and for a period not to exceed 90 days). In the event of such postponement, the Company shall be required, upon 3 the request of the Purchaser, to file the registration statement pursuant to this Section 1 as soon as practicable after the termination or consummation of any of the events set forth in (i), (ii) and (iii) above. The Company shall select the underwriter or underwriters to be used in connection with any public offering of securities registered pursuant to this Section 1. (c) The Company shall not be obligated to file more than two registration statements in response to a request from the Purchaser delivered pursuant to this Section 1. The filing of a registration statement relating to the Shares in response to such a request of the Purchaser shall not count against such limitation in the event the Purchaser is precluded from completing the sale of the Shares contemplated by such registration statement due to a failure by the Company to perform any obligation in the related underwriting agreement or due to a material change in the Company's business. 2. Piggy-Back Registration. If at any time subsequent to December 31, 2001 and prior to December 31, 2003, the Company proposes to register any of its equity securities (other than pursuant to Section 1 or for securities issued with respect to any acquisition or any employee stock option, stock purchase, or similar plan or any other securities to be registered pursuant to a special purpose registration) under the Securities Act on Form S-1, Form S-2, Form S-3 or any other form of general application for sale of securities to the public in an underwritten offering upon which may be registered securities similar to the Shares, it will each such time at least 30 days prior to the anticipated filing date of such proposed registration statement give written notice to the Purchaser of its intention so to do and, upon the written request of the Purchaser made within 10 days after the receipt of any such notice, the Company will use its reasonable best efforts to effect the registration under the Securities Act of the Shares which the Company has been so requested to register; provided, however, that in connection with a registration described in 4 this Section 2 in which the securities being registered are intended to be sold in an underwritten public offering, if in the opinion of the managing underwriter or underwriters marketing considerations require the reduction of the number of shares of Common Stock covered by any such registration, the number of Shares to be registered on behalf of the Purchaser and the number of shares of Company common stock to be registered on behalf of any other selling stockholders shall be reduced (to zero if necessary) pro rata, according to the aggregate number of shares of Company common stock requested to be registered by the Purchaser and any other selling stockholders participating in such registration. 3. Registration Procedures. If and when the Company is required to effect the registration of any of the Shares under the Securities Act as provided in this Agreement: (a) The Company shall furnish to the Purchaser and to the managing underwriters with respect to the underwriting related thereto such number of copies of each preliminary prospectus and final prospectus and supplement thereto as may be reasonably necessary in order to effect the sale of the Shares to be offered and sold. (b) The Company shall promptly notify the Purchaser in the event any prospectus then in use contains any untrue statement of a material fact or any omission of a material fact necessary to make the statements therein, in light of the circumstances in which they were made not misleading, and, upon receipt of such notice, the Purchaser shall not offer or sell any securities covered by such prospectus and shall return all copies of such prospectus to the Company if requested to do so by the Company, and, at the request of the Purchaser, the Company shall promptly prepare and furnish to the Purchaser a reasonable number of copies of a supplement to such prospectus so that, as supplemented, the prospectus no longer contains any untrue statement of a material fact or any omission of a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. 5 (c) The Company shall use its reasonable best efforts to qualify any offering of the Shares under any applicable Blue Sky or other securities laws of such states as may be reasonably specified by the Purchaser or the managing underwriter with respect to such offering; provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to subject itself to taxation in any such jurisdiction or to file any general consent to service of process. (d) The Company shall afford the Purchaser and their legal representatives the opportunity to make such reasonable examination and inquiry into the financial condition and business of the Company as the Purchaser may reasonably deem necessary or prudent in connection with the preparation of the registration statement or any other materials to be used in connection with an offering, sale, or distribution by the Purchaser. (e) Upon exercising registration rights in accordance with Section 1 or Section 2, as the case may be, the Purchaser shall provide the Company with all information regarding the Purchaser as the Company may from time to time reasonably request in connection with the preparation of the registration statement. (f) The Purchaser shall bear all underwriting fees, discounts and commissions attributable to the Shares which are sold by them pursuant to such registration. The Company will otherwise pay all costs and expenses in connection with any registration and filing fees, all printing expenses, and all Blue Sky fees and expenses (including fees and expenses of its counsel in connection with Blue Sky surveys). 6 4. Indemnification. In the event of any registration of any of the Shares of the Purchaser under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Purchaser and its directors and officers and each underwriter of such securities and each other person, if any, who controls the Purchaser or each such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser or its directors or officers or each such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which the Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading; and the Company will reimburse the Purchaser, each such director and officer, each such underwriter and each such controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by the Purchaser or controlling person specifically for use in the preparation thereof. Such indemnity shall remain in full force and effect irrespective of any investigation by any person indemnified above. 7 The Company may require, as a condition to including any of the Shares in any registration statement filed pursuant to Section 1 or 2 hereof, that the Company shall have received an undertaking satisfactory to it from the Purchaser to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall sign such registration statement and any person who controls the Company within the meaning of the Securities Act, with respect to losses, claims, damages or liabilities arising from any statement in or omission from such registration statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by the Purchaser specifically for use in the preparation of such registration statement, preliminary prospectus, final prospectus, amendment or supplement. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 4, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 4, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from 8 the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expense subsequently incurred by the latter in connection with the defense thereof. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. 5. Holdback Agreement. So long as the Purchaser is the holder of Shares representing no less than 1% of the outstanding common stock of the Company, if the Company initiates a registration of the Company's securities in which the securities being registered are intended to be sold in an underwritten public offering, the Purchaser agrees, upon request of the underwriters managing such underwritten public offering, not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of any of the Shares (other than those included in the registration) without the prior written consent of such managing underwriters for such period of time from the effective date of such registration as may be requested by such managing underwriters. 6. Successors and Assigns. All covenants and agreements contained in this Agreement by or on behalf of either of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties, whether so expressed or not. 7. Changes in Shares. If the Shares are changed by stock split, reverse stock split, merger, consolidation or recapitalization, references to Shares herein shall be deemed to refer to the securities received for each Share so affected. 9 8. Notices. Any notices required or permitted to be sent hereunder shall be delivered personally or mailed, certified mail, return receipt requested, or delivered by electronic facsimile or overnight courier service to the following addresses, or such other address as any party hereto designates by written notice to the other, and shall be deemed to have been give upon delivery, if delivered personally or by electronic facsimile, three days after mailing, if mailed, or one business day after delivery to the courier, if delivered by overnight courier service: If to the Company, to: Hecla Mining Company 6500 Mineral Drive Coeur d'Alene, Idaho 83815-8780 Phone: (208) 769-4100 Fax: (208) 769-4159 Attn: Michael B. White General Counsel If to the Purchaser, to: Copper Mountain Trust, Trustee 601 SW Second Avenue, Suite 1800 Portland, Oregon 97204 Phone: (503) 295-3600 Fax: (503) 229-0561 Attn: T.R. West Vice President Copy to: Consulting Fiduciaries, Inc. 400 Skokie Boulevard Northbrook, Illinois 60062 Phone: (847) 559-9838 Fax: (847) 559-9840 Attn: David L. Heald Principal 9. Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware without regard to principles of conflicts of law. 10. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. 10 11. Consent to Jurisdiction; Waiver of Trial by Jury. The parties hereto hereby irrevocably agree that any suit, action, proceeding or claim relating to this Agreement may be brought only in the state or federal courts in the State of Delaware. Each party irrevocably waives any objection to the venue or jurisdiction of any proceeding brought in such courts, and any claim that such proceeding has been brought in an inconvenient forum. Each party waives its right to trial by jury, and agrees that service of process may be made in any manner specified in Section 8 above. The parties hereto have executed this Agreement as of the date first set forth above. HECLA MINING COMPANY By: /s/ Authorized Signatory --------------------------------------------- Name: ---------------------------------------- Title: --------------------------------------- By: COPPER MOUNTAIN TRUST, TRUSTEE For the Hecla Mining Company Retirement Plan By: /s/ Authorized Signatory ----------------------------------------- Name: ------------------------------------ Title: ----------------------------------- By: COPPER MOUNTAIN TRUST, TRUSTEE For the Lucky Friday Pension Plan By: /s/ Authorized Signatory ----------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 11 EX-99.(D)(15) 11 hecla023143_ex-d15.txt RESTRICTED STOCK AWARD AGREEMENT EXHIBIT (d)(15) AGREEMENT THIS AGREEMENT is made this 6th day of November 2001 by and between Hecla Mining Company (the "Company") and Phillips S. Baker, Jr. (the "Employee"). WHEREAS, the Company wishes to assure itself of stability and continuity of management throughout the period of financial and organizational restructuring required to restore the Company to financial health and stability. WHEREAS, the Company recognizes that the financial and operational restructuring may require the Company to engage in certain mergers, consolidations, major sales of assets and businesses, and similar fundamental changes in the structure and/or control of the Company, and that these fundamental changes may have a substantial effect on the organization of the Company and key executive positions. WHEREAS, the Company believes that the key executives charged with the development and implementation of the Company's restructuring must be assured of economic and other security from the uncertainties inherent in the restructuring, including the risk to their continued employment. NOW, THEREFORE, this Agreement is made to assure the fulfillment of the Company's objectives in a manner which serves the best interests of the Company by providing the Employee with certain additional compensation for the continued services of the Employee during the period of uncertainty which will exist during the development and implementation of the Company's restructuring. Accordingly, the Company and the Employee agree as follows: 1. Implementation of Agreement. This Agreement shall become effective on the date of the Agreement as identified above and unless extended by mutual agreement shall end on the earliest of January 7, 2003, the fourth business day after the date as of which the Employee's employment terminates for any reason, or the date of a Change in Control of the Company, as defined in that certain Employment Agreement between the Company and the Employee dated November 6, 2001, or any amendment or replacement of such agreement. Nothing in this Agreement is intended to supersede, invalidate, or duplicate the provisions of any other agreement in force with the Employee, except to the extent that this Agreement provides any additional compensation as provided herein. If the Employee remains in the employ of the Company in his current capacity or in such other capacity as to which the Company and the Employee may agree, the Employee shall be entitled to the additional compensation as provided below. 2. Additional Retention Compensation. As additional compensation for the continued retention of the Employee's services until the respective dates indicated below during the proposed period of restructuring, the following retention bonus amounts shall be paid to the Employee: 1 (a) On June 30, 2002, the amount of $66,000.00. (b) On December 31, 2002, the amount of $132,000.00. 3. Payment of Retention Compensation. The retention compensation bonus amounts provided in Paragraph 2 above shall be paid to the Employee by the Company on or within three business days after the dates indicated. If the Company fails to pay any such amount, the amount unpaid shall bear interest at a rate of ten percent per annum. No amount which has not then become due hereunder shall become payable hereunder following the earlier of the date of a Change in Control of the Company as described in Paragraph 1 above or the date of the Employee's termination of employment for any reason; provided that if the Employee's employment is involuntarily terminated by the Company without cause (as defined below), any remaining unpaid amounts hereunder shall be accelerated and shall become immediately due, and shall be paid at the time of the Employee's termination of employment without cause or within three business days thereafter. For this purpose, termination without cause means termination of the Employee's employment for other than the Employee's (i) death, (ii) total and permanent disability, (iii) intentional and continued gross malfeasance or nonfeasance of a material nature, (iv) refusal to or failure to attempt to follow the written legal directions of the Board of Directors or a more senior executive to which the Employee directly reports which are consistent with the Employee's responsibilities relating to the Company's businesses, or (v) conviction of a felony. 4. Non-Alienation. The Employee shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any payments provided under this Agreement; and no payments payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. This provision does not affect beneficiary designations or testamentary dispositions to the extent applicable. 5. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Idaho. 6. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Employee lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 7. Successors; Binding Agreement. All provisions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company (including any successor to, or assignee of, any of the assets or business of the Company), and the term "Company" as used herein shall include Hecla Mining Company and all such successors and assigns. The Company will require any such successor assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall entitle the 2 Employee to compensation from the Company in the same amount and on the same terms as would be payable hereunder by the successor assignee employer as provided herein. 8. Counterparts. This Agreement may be executed in two or more counterparts, any one of which shall constitute an original without reference to the others. IN WITNESS WHEREOF, the Employee has executed this Agreement and, pursuant to the authorization from its Board of Directors, the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. HECLA MINING COMPANY By: __/s/ Arthur Brown______________ Arthur Brown Chairman and Chief Executive Officer __/s/ Phillips S. Baker, Jr.____ Phillips S. Baker, Jr. 3 EX-99.(D)(16) 12 hecla023143_ex-d16.txt HOLLISTER DEVELOPMENT BLOCK LETTER AGREEMENT EXHIBIT (d)(16) GREAT BASIN GOLD LTD. 1020-800 W PENDER ST. VANCOUVER, BC CANADA V6C 2V6 TEL 604 684O 6365 FAX 604 684O 8092 TOLL FREE 1 800 667O 2114 http://www.hdgold.com - --------------------- June 4, 2002 Mr. Arthur Brown and Mr. Michael Callahan Chairman and CEO/Vice President, Corporate Development Hecla Mining Company 6500 Mineral Drive Box C - 8000 Coeur d'Alene, ID 83814 Dear Arthur and Michael: RE: HOLLISTER DEVELOPMENT BLOCK LETTER AGREEMENT Great Basin Gold Ltd. ("GBG") hereby grants to Hecla Mining Company ("Hecla") an option to earn a 50% working interest, subject to the Purchase Price Royalty as set out below; in the Hollister Development Block, and to allow Hecla to become the "Project Operator" for completion of reserve delineation work, feasibility study, development and operations. In order to earn the interest, Hecla must fund a two-stage advanced exploration and development program leading to production and operations at the Hollister Development Block within the Ivanhoe Property. Hecla will also receive a priority right to recover its actual Stage I and II work program costs plus 15% from 100% of Preproduction Revenues and, its Prorata share (50%) of net cash proceeds from commercial operation profits prior to the implementation of the Purchase Price Royalty which will occur when such costs have been recovered. The following are further particulars of the deal structure. OPTION TO EARN A 50% WORKING Hecla will acquire the right to earn a 50% INTEREST working interest in the Hollister Development Block of the Ivanhoe Property, subject to the Purchase Price Royalty more particularly described below. The Option to earn a 50% working interest vests on signing a definitive Option/Joint Venture Operating Agreement which will require Hecla's commitment to fund the Stage I Program, more particularly described below, and Hecla issuing 2 million Hecla Warrants to Great Basin ("Tranche 1 Hecla Warrants"). On the date that Hecla elects to commence Stage II, Hecla shall issue 1 million warrants to Great Basin ("Tranche 2 Hecla Warrants"). OPTION EXERCISE AND Vesting of Hecla's 50% Working Interest CONSIDERATION (exercise of Option to Purchase) would occur upon (1) Hecla funding and completing 100% of the Stage I and II work programs, more particularly described below, or (2) the commencement of commercial production, and (3) upon Hecla issuing 1 million Hecla Warrants at the time of Page 1 of 4 vesting ("Tranche 3 Hecla Warrants"). Stage I is a firm commitment by Hecla, subject to receipt of Stage I permits pursued in an expeditious manner by Hecla, whereas the balance of the expenditures for Stage II are at Hecla's option. Within 60 days after completion of Stage I, Hecla must provide its proposed Stage II budget for review and approval by the Management Committee. Thereafter, Hecla has 45 days to elect to proceed with Stage II. If the Stage II budget, as approved, plus the actual costs incurred in Stage I exceed US$21.8 million, Hecla has the right to vest by making a payment to the Joint Venture equal to US$21.8 million less the actual costs of Stage I paid by Hecla, and issuing Tranche 2 and 3 Hecla Warrants. GBG WARRANTS In consideration for Hecla's funding the Stage I and Stage II work programs, upon receipt of each tranche of Hecla Warrants, GBG will issue to Hecla warrants to purchase shares in GBG ("GBG Warrants") as follows: 1 million GBG Warrants upon receipt of Tranche 1 Hecla Warrants; 500,000 GBG Warrants upon receipt of Tranche 2 Hecla Warrants; and 500,000 GBG Warrants upon receipt of Tranche 3 Hecla Warrants. WARRANT TERMS All Hecla and GBG warrants will be priced at the 20 day weighted average per share trading price on the NYSE, in the case of Hecla and TSX in the case of GBG, calculated immediately prior to issuance. All warrants will be exercisable for two years from the date of grant. GBG shall use its best efforts to ensure that the underlying GBG shares are freely tradeable with four months from the date of grant. Hecla shall file a registration statement with the SEC and use its best efforts to obtain regulatory approval thereof so that the underlying shares are freely tradeable in the US within 4 months from the date of grant. HOLLISTER DEVELOPMENT BLOCK The Hollister Development Block is defined as the surface area within mine grid co-ordinates 34,000E to 40,000E; 35,000N to 42,000N; and from surface to 4,000 feet above sea level. PURCHASE PRICE ROYALTY Hecla will pay Great Basin from production US$50 (subject to adjustment) per ounce of gold equivalent (gold plus silver production) on Hecla's 50% share of production commencing on the date that Hecla recovers from metal or ore sales 115% of the actual costs funded by Hecla for the Stage I and II work programs. The recovery of Hecla's Stage I and II actual costs shall be derived from 100% of pre-production revenue and Hecla's 50% of net cash proceeds from commercial production. Page 2 of 4 The purchase price royalty is subject to certain adjustment(s) to reflect the cash operating profits (per ounce). The US$50/oz Purchase Price Royalty is applicable to cash operating profits/oz of gold equivalent production within the range of US$100-$200/oz. Should the cash operating profits/oz drop below US$100/oz, then for all such production the Purchase Price Royalty will be reduced by US$0.50 for every US$1.00 that the cash operating profit is below US$100/oz. In the event the cash operating profits/oz is greater than US$200/oz, then the Purchase Price Royalty will be increased by US$0.50 for each US$1.00 that the cash operating profits/oz exceeds US$200/oz. The Hollister Development Block work programs to be carried out will generally consist of the programs as outlined below. Great Basin and Hecla will work together to refine and optimize Stage I and II development programs, time lines, and costs. HOLLISTER DEVELOPMENT BLOCK WORK PROGRAMS STAGE I - ------- UNDERGROUND DEVELOPMENT, 1. Plan, engineer and permit scope of work. EXPLORATION, AND 2. Develop underground access to Gwenivere FEASIBILITY STUDY and Clementine veins, including some equipment purchases. Delineate ore shoots within veins. 3. Convert resource to reserve based on diamond drilling program. 4. Complete feasibility study. GBG and Hecla's estimated cost of this program is US$10.3 million, and would be completed approximately 12 months after date of issuance of permit(s), however, some permitting and Stage I work program activities will run concurrently. STAGE II - -------- DEVELOPMENT PROGRAM 1. Possible future development, loop of underground to surface. 2. Underground production development. 3. Production equipment. 4. Engineering, procurement and management construction. The ultimate decision how to proceed with Stage II; will be predicated on the results of the above Stage I program. GBG and Hecla's estimated cost of this program is US$11.5 million and would take approximately 12 months to complete. Page 3 of 4 The Hollister Development Block Project would be operated within the framework of an industry standard joint venture arrangement, representing each party's respective participating working interest. However within the joint venture arrangement, project management would be structured as follows: 1. Management Committee representation and voting rights are borne in proportion to the working interest of GBG and Hecla with deadlocks, after Stage I and Stage II, referred to binding arbitration only after standard joint venture dispute resolution mechanisms. The exception being that during Stage I and II, the following voting/decision making process will be followed: (a) GBG and Hecla shall have a 50/50 voting right on all issues; (b) if there is a deadlock then the issue shall be given to the respective presidents of GBG and Hecla for a period of up to 21 calendar days for the two of them to discuss, document and resolve; (c) thereafter, a Management Committee meeting shall be reconvened within 14 calendar days and after taking into consideration the Presidents' resolve or unresolve, as documented, a new vote taken; and (d) if the vote is still deadlocked, Hecla shall have the casting vote. 2. Project Management: operations level wherein Hecla, as the Project Operator, would present budgets and programs to the Management Committee for approval. Hecla would have the mandate and authority to complete the approved programs and scope of work according to its best judgment utilizing sound exploration and mining practices. Hecla would be the Project Operator within the Operating Joint Venture Agreement, and the Joint Venture would enter into a Services and Operating Agreement with Hecla in this regard and Hecla would receive remuneration commensurate with these responsibilities. 3. Subsequent exploration and/or development Programs will be funded by the parties in accordance with their participating interests. Parties will have 30 days after adoption of a program to elect and a further 60 days to fund their working interest. We see this as an opportunity to work with a respected operating team and a mutually beneficial opportunity to capitalize on the excellent mineral potential of the Hollister Development Block at the Ivanhoe Property. The local situation provides us with a low cost opportunity to become a significant producer of high-grade ores for sale or tolling at any one of the various milling operations in the area. Given the grades of resources presently outlined, a reserve delineation production decision might well be justified on relatively low initial reserve tonnage. If the foregoing correctly reflects your agreement and the basis upon which you agree to enter into a formal Option and Joint Venture Agreement ("OJVA"), please sign both copies of this agreement and return one to the undersigned. This Letter Agreement is subject to the parties completing a mutually agreeable OJVA that will supersede this Letter Agreement and is subject to approval by Hecla's Board of Directors and GBG's Board of Directors. Both parties will use best efforts to incorporate all the terms of this Letter Agreement into a completed OJVA within 45 calendar days from the date hereof and obtain Hecla and GBG Board of Director approval within 5 calendar days of signing this Letter Agreement. We look forward to working with Hecla to bring the Hollister Development Block into production. Yours truly, Agreed and Accepted By: GREAT BASIN GOLD LTD. HECLA MINING COMPANY /s/ Ronald W. Thiessen /s/ Arthur Brown Ronald W. Thiessen Arthur Brown President and CEO Chairman and CEO June 4, 2002 June 4, 2002 Page 4 of 4 -----END PRIVACY-ENHANCED MESSAGE-----