Note 7 - Debt, Credit Agreement and Leases

9 Months Ended

Sep. 30, 2023

Disclosure Text Block [Abstract]

Debt, Credit Facility and Leases

Note 7. Debt, Credit Agreement and Leases

Our debt as of September 30, 2023 and December 31, 2022 consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”), our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on our $150 million Credit Agreement, which is described separately below. The following tables summarize our long-term debt balances, excluding interest and borrowings under the Credit Agreement, as of September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023
	Senior Notes			IQ Notes		Total
Principal	$	475,000		$	35,677	$	510,677
Unamortized discount/premium and issuance costs		(3,958	)		284		(3,674	)
Long-term debt balance	$	471,042		$	35,961	$	507,003

	December 31, 2022
	Senior Notes			IQ Notes		Total
Principal	$	475,000		$	35,614	$	510,614
Unamortized discount/premium and issuance costs		(4,640	)		392		(4,248	)
Long-term debt balance	$	470,360		$	36,006	$	506,366

The following table summarizes the scheduled annual future payments, including interest, for our Senior Notes, IQ Notes, and finance and operating leases as of September 30, 2023 (in thousands). Operating leases are included in other current and non-current liabilities on our condensed consolidated balance sheets. The amounts for the IQ Notes are stated in U.S. dollars (“USD”) based on the USD/Canadian dollar (“CAD”) exchange rate as of September 30, 2023.

Twelve-month period ending September 30,	Senior Notes		IQ Notes		Finance Leases			Operating Leases
2024	$	34,438	$	2,324	$	9,313		$	1,802
2025		34,438		37,468		8,888			1,277
2026		34,438		—		6,415			1,273
2027		34,438		—		3,389			1,199
2028		487,912		—		4,156			1,081
Thereafter		—		—		—			5,807
		625,664		39,792		32,161			12,439
Less: effect of discounting		—		—		(2,918	)		(3,069	)
Total	$	625,664	$	39,792	$	29,243		$	9,370

Credit Agreement

On July 21, 2022, we entered into a revolving credit facility (the "Credit Agreement") with various financial institutions (the “Lenders”), Bank of Montreal and Bank of America, N.A. as letters of credit issuers, and Bank of America, N.A., as administrative agent for the Lenders and as swingline lender, to replace our prior credit agreement. The Credit Agreement is a $150 million senior secured revolving facility, with an option to be increased in an aggregate amount not to exceed $75 million. Any revolving loans under the Credit Agreement have a maturity date of July 21, 2026. Proceeds of the revolving loans under the Credit Agreement may be used for general corporate purposes. The interest rate on the outstanding loans under the Credit Agreement is based on the Company’s net

leverage ratio and is calculated at (i) Term Secured Overnight Financing Rate ("SOFR") plus 2% to 3.5% or (ii) Bank of America’s Base Rate plus 1% to 2.5% with Base Rate being the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus .50% or (iii) Term SOFR plus 1.00%. For each amount drawn, we elect whether we draw on a one, three or six month basis or annual basis for SOFR. If we elect to draw for greater than six months, we pay interest quarterly on the outstanding amount.

We are also required to pay a commitment fee of between 0.45% to 0.78750%, depending on our net leverage ratio. Letters of credit issued under the Credit Agreement bear a fee between 2.00% and 3.50% based on our net leverage ratio, as well as a fronting fee to each issuing bank at an agreed upon rate per annum on the average daily dollar amount of our letter of credit exposure.

Hecla Mining Company and certain of our subsidiaries are the borrowers under the Credit Agreement, while certain of our other subsidiaries are guarantors of the borrowers’ obligations under the Credit Agreement. As further security, the Credit Agreement is collateralized by a mortgage on the Greens Creek mine, the equity interests of subsidiaries that own the Greens Creek mine or are part of the Greens Creek Joint Venture and our subsidiary Hecla Admiralty Company (the “Greens Creek Group”), and by all of the Green Creek Group’s rights and interests in the Greens Creek Joint Venture Agreement, and in all assets of the joint venture and of any member of the Greens Creek Group.

At September 30, 2023, we had net draws of $80.0 million outstanding at an interest rate of 8.0%, and $6.7 million of outstanding letters of credit. Letters of credit that are outstanding reduce availability under the Credit Agreement.

We believe we were in compliance with all covenants under the Credit Agreement as of September 30, 2023.