Note 4 - Environmental and Reclamation Activities

12 Months Ended

Dec. 31, 2015

Environmental And Reclamation Activities [Abstract]

Environmental And Reclamation Activities [Text Block]

Note 4: Environmental and Reclamation Activities

The liabilities accrued for our reclamation and closure costs at December 31, 2015 and 2014, were as follows (in thousands):

	2015			2014
Operating properties:
Greens Creek	$	41,338		$	39,237
Lucky Friday		5,212			1,069
Casa Berardi		5,494			6,233
San Sebastian		1,189			—
Non-operating properties:
Troy mine		17,295			—
South Dakota and Colorado Superfund Sites		16,300			1,200
Johnny M		5,830			5,830
Republic		774			1,389
All other sites		2,106			2,292
Total		95,538			57,250
Reclamation and closure costs, current		(20,989	)		(1,631	)
Reclamation and closure costs, long-term	$	74,549		$	55,619

The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2015, 2014 and 2013, was as follows (in thousands):

Balance at January 1, 2013	$	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
Accruals for estimated costs		9,952
Revision of estimated cash flows due to changes in reclamation plans		675
Payment of reclamation obligations		(58,568	)
Balance at December 31, 2014		57,250
Accruals for estimated costs		17,018
Revision of estimated cash flows due to changes in reclamation plans		4,112
Addition due to development and production at our San Sebastian unit		1,189
Liability addition due to acquisition of Revett		17,513
Payment of reclamation obligations		(1,544	)
Balance at December 31, 2015	$	95,538

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 required 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. In addition, a payment of approximately $14.1 million in proceeds from warrants exercised during the second quarter of 2014 was made in July 2014. Finally, a payment of approximately $41.3 million, consisting primarily of proceeds from the exercise of the remaining outstanding warrants, was made in August 2014, which satisfied Hecla Limited's remaining payment obligations under the Consent Decree.

In June 2015, we completed the acquisition of Revett, giving us 100% ownership of the Troy mine and other interests in northwestern Montana (see Note 15 for more information). As a result, we recorded a $17.5 million liability for the present value of estimated costs for reclamation and closure of the Troy mine. Revett holds an environmental risk transfer program ("insurance policy") which would fund costs incurred prior to the expiration date of March 29, 2020 for reclamation at the Troy mine up to a maximum limit of $16.8 million. We believe it is probable that we will utilize the full amount of the insurance policy, and have therefore also recorded a $16.8 million "Reclamation insurance" asset for the fair value of the insurance policy.

As further discussed in Note 7, settlement negotiations with the United States have been ongoing with respect to the Gilt Edge site in South Dakota and the Nelson Tunnel/Commodore site in Colorado. Although we have not reached a final settlement with the United States, based on the current status of negotiations we believe it is probable that CoCa Mines, Inc. will incur a settlement liability for response costs at the sites. Our best estimate of that net liability as of the date of this report, after payments from insurance proceeds and from another party to the Gilt Edge settlement, is $9.9 million. We have accrued that net amount by recording a liability for the total estimated amount that would be paid by CoCa and an asset for the estimated amount that would be recovered by CoCa from insurers and the other party to the settlement.  There can be no assurance that we will settle these CoCa environmental matters.

Asset Retirement Obligations

Below is a reconciliation as of December 31, 2015 and 2014 (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 $95.5 million and $57.3 million, respectively, discussed above. The estimated reclamation and abandonment costs were discounted using credit adjusted, risk-free interest rates ranging from 6% to 14.5% from the time we incurred the obligation to the time we expect to pay the retirement obligation.

	2015			2014
Balance January 1	$	46,539		$	43,244
Changes in obligations due to changes in reclamation plans		4,112			675
Addition due to development and production at our San Sebastian unit		1,189			—
Accretion expense		1,904			3,089
Payment of reclamation obligations		(511	)		(469	)
Balance at December 31	$	53,233		$	46,539

In the fourth quarter of 2015, we updated our ARO at Lucky Friday to reflect a reclamation plan including revised estimated costs and timing for reclamation of existing Mine Tailing Impoundment Structures, for an increase in total undiscounted costs of approximately $7.3 million. This resulted in an increase to the ARO asset and liability of $4.1 million after discounting the costs to present value. The ARO layer related to this change was discounted using a credit adjusted, risk-free interest rate of 14.5% and an inflation rate of 2.25%. The current plan also includes estimated costs for stabilization and clean-up of the mine and mill site and ongoing monitoring and maintenance. In 2016, we anticipate development of a plan that includes estimated costs for reclamation and closure of the mine and mill upon the end of the known mine life, and another update to the ARO asset and liability may be required upon completion of the plan.

At the end of the third quarter of 2015, we made the decision to develop shallow open-pit mines at our San Sebastian project in Mexico, and development commenced in the fourth quarter of 2015. The reclamation plan related to this activity involves estimated undiscounted costs of $1.5 million, resulting in a $1.2 million ARO asset and liability recorded in the fourth quarter of 2015 after discounting the estimated costs to present value.