Note 9. Credit Facilities and Capital Leases

6 Months Ended

Jun. 30, 2012

Note 9. Credit Facilities and Capital Leases

Credit Facilities

We have a $100 million senior secured revolving credit facility, which is collateralized by the shares of common stock held in our material subsidiaries and by our joint venture interests in the Greens Creek mine, all of our rights and interests in the joint venture agreement, and all of our rights and interests in the assets of the joint venture. This credit facility originated from a $60 million senior secured revolving credit agreement entered into in October 2009. The agreement was amended in December 2010 to extend the term of the agreement, reduce the commitment fee rate and interest rate spreads, allow the issuance of secured and unsecured debt and investments to governmental authorities as payment of obligations owed to such authorities, and to allow the release of certain liens and security interests granted to the lenders to secure the credit facility. The agreement was again amended on October 10, 2011 to increase the secured revolving credit facility to $100 million. Amounts borrowed under the credit agreement are available for general corporate purposes. The interest rate on outstanding loans under the agreement is between 2.75% and 3.5% above the LIBOR or an alternative base rate plus an applicable margin of between 1.75% and 2.5%. We are required to pay a standby fee of between 0.825% and 1.05% per annum on undrawn amounts under the revolving credit agreement. The credit facility is effective until September 30, 2014. We incurred $0.2 million in interest expense in the first six months of 2012 for the amortization of loan origination fees and $0.4 million in interest expense for commitment fees relating to the credit agreement.

The credit agreement includes various covenants and other limitations related to our various financial ratios and indebtedness and investments, as well as other information and reporting requirements, including the following limitations:

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Leverage ratio (calculated as total debt divided by EBITDA) of not more than 3.0:1.

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Interest coverage ratio (calculated as EBITDA divided by interest expense) of not less than 3.0:1.

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Current ratio (calculated as current assets divided by current liabilities) of not less than 1.10:1.

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Tangible net worth of greater than $500 million.

We were in compliance with all covenants under the credit agreement as of June 30, 2012. We have not drawn funds on the current revolving credit facility as of the filing date of this quarterly report on Form 10-Q.

On August 2, 2012, we increased our revolving credit facility from $100 million to $150 million, with the amended agreement extending three years from signing. The LIBOR margin increased from 2.75% - 3.50% under the current facility to 3.00% - 3.75% under the amended facility, and the base margin rate increased from 1.75% - 2.50% to 2.00% - 2.75%. Financial covenants, anticipated use of borrowings, and other terms and conditions remain unchanged from the facility discussed above.

Capital Leases

We have entered into various lease agreements since 2009 for equipment at our Greens Creek and Lucky Friday units, which we have determined to be capital leases. We have a total liability of $13.6 million at June 30, 2012, relating to the lease obligations, with $4.6 million of the liability classified as current and $9.1 million classified as non-current. At December 31, 2011, the total liability balance associated with capital leases was $10.3 million, with $4.0 million of the liability classified as current and $6.3 million classified as non-current. The total obligation for future minimum lease payments was $14.4 million at June 30, 2012, with $0.8 million attributed to interest.

At June 30, 2012, the annual maturities of capital lease commitments, including interest, are (in thousands):

Twelve-month period ending June 30,
	2013	$	4,460
	2014		4,267
	2015		3,668
	2016		1,984
	2017		10
	Total		14,389
	Less: imputed interest		(783	)
	Net capital lease obligation	$	13,606

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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