Note

Environmental and Reclamation Activities

The liabilities accrued for our reclamation and closure costs at

December

31,

2016

and

2015,

were as follows (in thousands):

	2016			2015
Operating properties:
Greens Creek	$	39,014		$	41,338
Lucky Friday		9,194			5,212
Casa Berardi		5,475			5,494
San Sebastian		5,425			1,189
Non-operating properties:
Troy mine		16,167			17,295
South Dakota and Colorado Superfund Sites		—			16,300
Johnny M		5,830			5,830
Republic		1,500			774
All other sites		2,975			2,106
Total		85,580			95,538
Reclamation and closure costs, current		(5,653	)		(20,989	)
Reclamation and closure costs, long-term	$	79,927		$	74,549

The activity in our accrued reclamation and closure cost liability for the years ended

December

31,

2016,

2015

and

2014,

was as follows (in thousands):

Balance at January 1, 2014	$	105,191
Accruals for estimated costs		6,863
Accretion expense		3,089
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		15,114
Accretion expense		1,904
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
Accruals for estimated costs		672
Accretion expense		3,191
Revision of estimated cash flows due to changes in reclamation plans		2,759
Liability addition due to acquisition of Mines Management		1,124
Payment of reclamation obligations		(17,704	)
Balance at December 31, 2016	$	85,580

September

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

-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.

June

2015,

we completed the acquisition of Revett, giving us

100%

ownership of the Troy mine and other interests in northwestern Montana (see

Note

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 held an environmental risk transfer program ("insurance policy") which would have funded 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. In the

third

quarter of

2016,

we reached a settlement on the insurance policy for cash proceeds to us of

$16.0

million.

On each of

June

15,

2016

and

September

19,

2016,

a Consent Decree settling environmental claims involving our wholly-owned subsidiary, CoCa Mines, Inc. ("CoCa") at the Nelson Tunnel/Commodore Waste Rock Pile site (Colorado) and Gilt Edge site (South Dakota) was approved and entered by the U.S. District Court in Colorado and South Dakota, respectively. Pursuant to the Consent Decrees, CoCa paid an aggregate of

million in

August

2016

to the United States and the State of Colorado, and an aggregate of

$3.9

million in

November

2016

to the United States and the State of South Dakota (insurers and another potentially responsible party ("PRP") paid an additional

$6.4

million to settle the Gilt Edge matter). As a result, CoCa has resolved the claims with respect to the Gilt Edge and Nelson Tunnel sites. During the negotiations leading up to these settlements, in the

second

quarter of

2015

we accrued

$9.9

million by recording a liability for the total amount that would be paid by CoCa to settle these matters, and an asset for the amount to be recovered by CoCa from insurers and the other settling PRP with respect to the Gilt Edge site.

Asset Retirement Obligations

Below is a reconciliation as of

December

31,

2016

and

2015

(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

$85.6

million and

$95.5

million, respectively, discussed above. The estimated reclamation and abandonment costs were discounted using credit adjusted, risk-free interest rates ranging from

14.5%

from the time we incurred the obligation to the time we expect to pay the retirement obligation.

	2016			2015
Balance January 1	$	53,233		$	46,539
Changes in obligations due to changes in reclamation plans		2,760			4,112
Addition due to development and production at our San Sebastian unit		—			1,189
Accretion expense		3,191			1,904
Payment of reclamation obligations		(76	)		(511	)
Balance at December 31	$	59,108		$	53,233

In the

third

quarter of

2016,

we updated our ARO at Lucky Friday to reflect a reclamation plan that includes estimated costs for reclamation and closure of the mine and mill upon the end of the known mine life, in addition to reclamation of existing tailings impoundments already considered. The previous plan contemplated stabilization, clean-up and ongoing monitoring and maintenance of the mine and mill site. The change to the reclamation plan resulted in an increase in total undiscounted costs of approximately

$22.6

million, and an increase to the ARO asset and liability of

$3.3

million after discounting the costs to present value.

In the

third

quarter of

2016,

we updated the ARO at San Sebastian to include estimated costs for filling the open pits at the end of their known life, resulting in an increase in undiscounted costs of

$4.3

million and in increase in the ARO asset and liability of

$4.5

million.

In the

fourth

quarter of

2016,

we revised the ARO at Greens Creek to include costs for reclamation of additional waste rock, along with updated timing of estimated reclamation costs. The change resulted in an increase in undiscounted costs of

$3.7

million, but a decrease in the ARO asset and liability of

$5.0

million due to the impact of discounting costs to present value and the change in estimated timing costs.

The ARO layers related to the changes described above were discounted using a credit adjusted, risk-free interest rate of

6.5%

and inflation rates ranging from

3.25%.