Note 9 - Debt, Credit Facility and Leases

12 Months Ended

Dec. 31, 2024

Line of Credit Facility [Abstract]

Debt, Credit Facility and Leases

Note 9: Debt, Credit Facility and Leases

Debt Summary

Our debt as of December 31, 2024 and 2023 consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”), our Investissement Quebec Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”) and any drawn amounts on our $225 million Credit Agreement. These debt arrangements are discussed further below. The following tables summarize our current and long-term debt balances, including principal amounts outstanding under the Credit Agreement, as of December 31, 2024 and 2023 (in thousands):

	December 31, 2024
	Senior Notes			IQ Notes			Credit Agreement		Total
Principal	$	475,000		$	33,525		$	23,000	$	531,525
Unamortized discount/premium and issuance costs		(2,816	)		92			—		(2,724	)
Total debt		472,184			33,617			23,000		528,801
Less: current debt		—			(33,617	)		—		(33,617	)
Long-term debt	$	472,184		$	—		$	23,000	$	495,184

	December 31, 2023
	Senior Notes			IQ Notes		Credit Agreement		Total
Principal	$	475,000		$	36,473	$	128,000	$	639,473
Unamortized discount/premium and issuance costs		(3,730	)		257		—		(3,473	)
Long-term debt	$	471,270		$	36,730	$	128,000	$	636,000

The following table summarizes the scheduled annual future payments, including interest, for the Senior Notes and IQ Notes as of December 31, 2024 (in thousands). The amounts for the IQ Notes are stated in USD based on the USD/CAD exchange rate as of December 31, 2024.

	Senior Notes		IQ Notes
2025	$	34,438	$	35,709
2026		34,438		—
2027		34,437		—
2028		479,305		—
Total	$	582,618	$	35,709

Senior Notes

On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes under our shelf registration statement previously filed with the Securities and Exchange Commission. The Senior Notes are governed by the Indenture, dated as of February 19, 2020, as amended, among Hecla and certain of our subsidiaries and The Bank of New York Mellon Trust Company, N.A., as trustee. On March 19, 2020, the net proceeds from the offering of the Senior Notes ($469.5 million) were used, together with cash on hand, to redeem all of our previously-outstanding 6.875% Senior Notes that were due in 2021 (the "2021 Notes.")

The Senior Notes are recorded net of a 1.16% initial purchaser discount totaling $5.5 million. The Senior Notes bear interest at a rate of 7.25% per year from the date of issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Senior Notes is payable on February 15 and August 15 of each year, commencing August 15, 2020. During 2024, 2023 and 2022, interest expense on the statement of operations and comprehensive (loss) income related to the Senior Notes and 2021 Notes and amortization of the initial purchaser discount and fees related to the issuance of the Senior Notes and 2021 Notes totaled $35.4 million, $34.4 million and $35.4 million, respectively.

The Senior Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries (the “Guarantors”). The Senior Notes and the guarantees are, respectively, Hecla's and the Guarantors' general senior unsecured obligations and are subordinated to all of Hecla's and the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Senior Notes are effectively subordinated to all of the liabilities of Hecla's subsidiaries that are not guaranteeing the Senior Notes, to the extent of the assets of those subsidiaries.

Since February 15, 2023, the Senior Notes are redeemable in whole or in part, on the redemption dates specified in the Indenture, at the following redemption prices (expressed as a percentage of the principal amount) plus accrued interest, if any, to the redemption

date: (i) 105.438% for the twelve-month period beginning after February 15, 2023, (ii) 103.625% for the twelve-month period beginning after February 15, 2024, (iii) 101.813% for the twelve-month period beginning after February 15, 2025, and (iv) 100.0% after February 15, 2026. Since February 15, 2023, we may redeem up to 35% of the Senior Notes with the net cash proceeds of certain equity offerings.

Upon the occurrence of a change of control (as defined in the Indenture), each holder of Senior Notes will have the right to require us to purchase all or a portion of such holder's Senior Notes pursuant to a change of control offer (as defined in the Indenture), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the rights of holders of the Senior Notes on the relevant record date to receive interest due on the relevant interest payment date.

IQ Notes

On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued CAD$50 million (USD$36.8 million at the time of the transaction) in aggregate principal amount of our IQ Notes to Investissement Québec, a financing arm of the Québec government. Because the IQ notes are denominated in CAD, the reported USD-equivalent principal balance will change with movements in the exchange rate. The IQ Notes were issued at a premium of 103.65%, or CAD$1.8 million, implying an effective annual yield of 5.74% and an aggregate principal amount to be repaid of CAD$48.2 million. The IQ Notes were issued in four equal installments of CAD$12.5 million on July 9, August 9, September 9 and October 9, 2020, with the first installment issued net of CAD$0.6 million in fees. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year, commencing January 9, 2021. The IQ Notes are senior and unsecured and are pari passu in all material respects with the Senior Notes, including with respect to guarantees of the IQ Notes by certain of our subsidiaries. The net proceeds from the IQ Notes are available for general corporate purposes, including open market purchases of a portion of the Senior Notes and to pay for capital expenditures at Casa Berardi. Under the note purchase agreement for the IQ Notes and subject to a force majeure event, we met the requirement to invest in the aggregate CAD$100 million at Casa Berardi and other exploration and development projects in Quebec over the four-year period commencing on July 9, 2020. During 2024, 2023 and 2022, interest expense related to the IQ Notes, including premium and origination fees, totaled $2.2 million, $2.3 million and $2.3 million, respectively. The IQ Notes are due and payable on July 9, 2025.

Credit Agreement

On July 21, 2022, we entered into a revolving credit agreement (the "Original 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. The Original Credit Agreement was amended on May 3, 2024, when we entered into a First Amendment to Credit Agreement (the “First Amendment”), which made certain changes to the Original Credit Agreement (the Original Credit Agreement, as amended, modified and supplemented by the First Amendment, is referred to hereafter as the “Credit Agreement”). The First Amendment modified the Original Credit Agreement as follows:

•Increased the amount available for borrowing to $225 million from $150 million;

•Extended the maturity date to July 21, 2028 from July 21, 2026 (the maturity date of the Credit Agreement will be accelerated to August 15, 2027 if our Senior Notes are not refinanced by that date);

•National Bank, TD Securities, Bank of Nova Scotia and ING were added as new Lenders and Credit Suisse AG, New York Branch assigned its interests in the Original Credit Agreement to its affiliate UBS AG, Stamford Branch immediately prior to entering into the First Amendment.

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 14 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

Greens 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.

As of December 31, 2024, $6.2 million (2023: $6.9 million) was used for letters of credit, and $23.0 million (2023: $128.0 million) was drawn on the facility leaving $195.8 million available for borrowing.

We believe we were in compliance with all covenants under the Credit Agreement as of December 31, 2024.

Finance Leases

We have entered into various lease agreements, primarily for equipment at our operations, which we have determined to be finance leases. At December 31, 2024, the total liability associated with the finance leases, including certain purchase option amounts, was $21.9 million (2023: $26.8 million), with $8.2 million (2023: $9.8 million) of the liability classified as current and $13.7 million (2023: $17.0 million) classified as non-current. The assets related to these leases are recorded in properties, plants, equipment and mine development, net, on our consolidated balance sheets and totaled $14.0 million as of December 31, 2024 (2023: $20.3 million), net of accumulated depreciation. Expense during 2024, 2023 and 2022 related to finance leases included $7.9 million, $12.6 million and $7.1 million, respectively, for amortization of the related assets, and $0.9 million, $0.9 million and $0.9 million, respectively, for interest expense. The total obligation for future minimum finance lease payments was $24.1 million as of December 31, 2024, with $2.2 million attributed to interest. Our finance leases as of December 31, 2024 had a weighted average remaining term of 1.7 years (2023: 2.2 years) and a weighted average discount rate of 9.7% (2023: 9.9%).

At December 31, 2024, the annual maturities of finance lease commitments, including interest, were (in thousands):

Twelve-month period ending December 31,
2025	$	9,576
2026		7,849
2027		3,962
2028		1,099
2029		1,099
More than 5 years		550
Total		24,135
Less: effect of interest		(2,223	)
Net finance lease obligation	$	21,912

Operating Leases

We have entered into various lease agreements, primarily for equipment, buildings and other facilities, and land at our operations and corporate offices, which we have determined to be operating leases. Some of the operating leases allow for extension of the lease beyond the current term at our option. We have considered the likelihood and estimated duration of the extension options in determining the lease term for measurement of the liability and right-of-use asset. For our operating leases as of December 31, 2024, we have assumed a weighted average discount rate of 5.7% (2023: 6.5%). As of December 31, 2024, the total liability balance associated with the operating leases was $8.0 million (2023: $8.6 million), with $0.9 million (2023: $0.8 million) of the liability classified as current as part of Other Current Liabilities and the remaining $7.1 million (2023: $7.8 million) classified as non-current as part of Other Non-Current Liabilities on our balance sheet. The right-of-use assets for our operating leases are recorded as a non-current asset on our consolidated balance sheets and totaled $7.5 million and $8.3 million as of December 31, 2024 and 2023, respectively. During 2024, 2023 and 2022, operating lease expense, and cash paid for operating leases included in net cash provided by operating activities, totaled $3.8 million, $3.1 million and $3.1 million, respectively. The weighted-average remaining lease term for our operating leases as of December 31, 2024 was 7.3 years (2023: 9.8 years).

At December 31, 2024, the annual maturities of undiscounted operating lease payments, including assumed extensions beyond the current lease terms, were (in thousands):

Twelve-month period ending December 31,
2025	$	1,299
2026		1,299
2027		1,192
2028		1,054
2029		990
More than 5 years		4,916
Total		10,750
Less: effect of discounting		(2,755	)
Operating lease liability	$	7,995