Note 4 - Environmental and Reclamation Activities

12 Months Ended

Dec. 31, 2013

Environmental Property Sale, Disposal or Abandonment Costs [Abstract]

Environmental Exit Costs by Cost [Table Text Block]

Note 4: Environmental and Reclamation Activities

The liabilities accrued for our reclamation and closure costs at December 31, 2013 and 2012, were as follows (in thousands):

	2013			2012
Operating properties:
Greens Creek	$	34,530		$	32,856
Lucky Friday		919			1,469
Casa Berardi		7,795			—
Non-operating properties:
San Sebastian		200			200
Grouse Creek		1,000			2,484
Coeur d’Alene Basin		55,499			70,786
Republic		3,023			3,538
All other sites		2,225			1,882
Total		105,191			113,215
Reclamation and closure costs, current		(58,425	)		(19,845	)
Reclamation and closure costs, long-term	$	46,766		$	93,370

The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2013, 2012 and 2011, was as follows (in thousands):

Balance at January 1, 2011	$	318,797
Accruals for estimated costs		7,869
Payment of reclamation obligations		(172,855	)
Balance at December 31, 2011		153,811
Accruals for estimated costs		4,325
Revision of estimated cash flows due to changes in reclamation plans		(3,738	)
Payment of reclamation obligations		(41,183	)
Balance at December 31, 2012		113,215
Accruals for estimated costs		2,250
Liability addition due to acquisition of the Casa Berardi unit		7,998
Payment of reclamation obligations		(18,272	)
Balance at December 31, 2013	$	105,191

On September 8, 2011, a Consent Decree (the “Consent Decree”) settling environmental litigation and related claims involving Hecla Limited pertaining to historic releases of mining wastes in the Coeur d'Alene Basin was approved and entered by the U.S. District Court in Idaho. The Consent Decree resolved all existing claims of the Plaintiffs against Hecla Limited and its affiliates under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) (and certain other statutes) for past response costs, future environmental remediation costs, and natural resource damages related to historic releases of mining wastes in the Coeur d'Alene River Basin. The Consent Decree also resolved all remaining obligations of Hecla Limited under the 1994 Consent Decree relating to the “Box,” a rectangular 21-square-mile site located near Kellogg, Idaho within the Bunker Hill Superfund site. The Consent Decree contains comprehensive terms of settlement, including financial terms which require that Hecla Limited pay, in the aggregate, $264.4 million to the Plaintiffs over approximately three years following the settlement. Payments of approximately $168 million, $25 million, and $15 million (and related interest) were made in October 2011, 2012, and 2013, respectively, pursuant to the terms of the Consent Decree. Hecla Limited remains obligated under the Consent Decree to pay approximately $55.5 million by August 2014, in the form of quarterly payments of the proceeds from the exercise of any outstanding Series 1 and Series 3 warrants (which have an exercise price of between $2.40 and $2.51 per share) during the quarter, with the remaining balance, if any, due in August 2014, regardless of whether any of the remaining warrants are exercised.

The obligation requires third party surety for which Hecla Limited pays an annual maintenance fee which will decrease as payments are made according to the foregoing schedule. Annual maintenance fees of $0.6 million, $0.4 million, and $0.3 million were paid in October 2011, 2012, and 2013, respectively.

Asset Retirement Obligations

Below is a reconciliation as of December 31, 2013 and 2012 (in thousands) of the asset retirement obligations ("ARO") relating to our operating properties, which are included in our total accrued reclamation and closure costs of $105.2 million and $113.2 million, respectively, discussed above. The estimated reclamation and abandonment costs were discounted using credit adjusted, risk-free interest rates ranging from 6% to 8% from the time we incurred the obligation to the time we expect to pay the retirement obligation.

	2013			2012
Balance January 1	$	34,325		$	37,643
Changes in obligations due to changes in reclamation plans		—			(3,720	)
Addition due to acquisition of the Casa Berardi unit		7,998			—
Accretion expense		1,958			1,128
Payment of reclamation obligations		(1,037	)		(726	)
Balance at December 31	$	43,244		$	34,325

The ARO for our Greens Creek mine of $36.1 million as of December 31, 2011 reflected a plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $53.4 million.  In April 2012, the United States Forest Service ("Forest Service") and state agencies issued a draft Environmental Impact Statement in connection with our proposal to increase tailings capacity at the Greens Creek mine. As part of that process and our regular (every 5 years) renewal of our Waste Management Permit with the State of Alaska, we submitted an update of our reclamation and closure plan having estimated undiscounted closure costs of approximately $73.9 million. The increase in closure costs resulted primarily from the inclusion of long term water treatment on an increased scale compared to what was included as part of our prior permit renewals. This increase in scale is the result of new interpretations of model data by the State that were not included in our prior permit renewals. Although the revised closure plan was not final, we believed that we had sufficient information to make a reasonable estimate of the change in the fair value of the ARO as of December 31, 2012.  In spite of the anticipated increase in undiscounted costs discussed above, the ARO liability for Greens Creek was reduced by $4.4 million to a balance of $32.9 million as of December 31, 2012, on a discounted basis, as a result of the update in the fourth quarter of 2012. The ARO decrease at December 31, 2012 was the result of (i) a large portion of the anticipated increase in overall undiscounted costs being related to long-term water treatment, which is scheduled to take place in years far out into the future, (ii) the effect of discounting the ARO layers associated with various plan updates using different discount rates, and (iii) a delay in the timing of some of the costs included in the previous reclamation and closure plan.

A Record of Decision was completed in late 2013 for proposed expansion of tailings capacity at Greens Creek. In addition, in early 2014 we were engaged in negotiations with the Forest Service and state agencies on their proposed revisions to our previously-submitted reclamation and closure plan. We have initiated work on an update of the closure plan which will include estimated costs related to future reclamation of the tailings expansion area and address the comments from the regulators. As a result, we anticipate recognizing an increase in the ARO asset and liability for Greens Creek in the first quarter of 2014. As part of the revised closure plan, we will be required to increase our current $30 million reclamation bond for Greens Creek, and we are currently evaluating bonding options. The increase in required bonding is likely to be a material amount, and there can be no assurance that this bonding capacity will be available to us.