Note

Senior Notes, Credit Facilities and Capital Leases

Senior Notes

April

12,

2013,

we completed an offering of

$500

million in aggregate principal amount of our Senior Notes due

May

2021

in a private placement conducted pursuant to Rule

144A

and Regulation S under the Securities Act of

1933,

as amended, and in

2014,

an additional

$6.5

million aggregate principal amount of the Senior Notes were issued to

one

of our pension plans. The Senior Notes were subsequently exchanged for substantially identical Senior Notes registered with the SEC. The Senior Notes are governed by the Indenture, dated as of

April

12,

2013,

as amended (the "Indenture"), among Hecla Mining Company ("Hecla") and certain of our subsidiaries and The Bank of New York Mellon Trust Company, N.A., as trustee. The net proceeds from the initial offering of the Senior Notes

($490

million) were used to partially fund the acquisition of Aurizon and for general corporate purposes, including expenses related to the Aurizon acquisition.

The Senior Notes are recorded net of a

initial purchaser discount totaling

$10

million at the time of the

April

2013

issuance and having an unamortized balance of

$5.2

million as of

March

31,

2017.

The Senior Notes bear interest at a rate of

6.875%

per year from the date of original 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

May

and

November

of each year, commencing

November

2013.

During the

three

months ended

March

31,

2017

and

2016,

interest expense related to the Senior Notes and amortization of the initial purchaser discount and fees related to the issuance of the Senior Notes totaled

$8.1

million and

$5.2

million, respectively. The interest expense related to the Senior Notes for the

three

months ended

March

31,

2017

and

2016

was net of

$0.9

million and

$3.8

million, respectively, in capitalized interest, primarily related to the

Shaft project at our Lucky Friday unit which was completed in

January

2017.

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.

The Senior Notes became redeemable in whole or in part, at any time and from time to time after

May

2016,

on the redemption dates and at the redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to the date of redemption.

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.

Credit Facilities

May

2016,

we entered into a

$100

million senior secured revolving credit facility with a

three

year term. The credit facility is collateralized by the shares of common stock held in our material domestic 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 replaced our previous

$100

million credit facility which had the same terms of collateral as described above. Below is information on the interest rates, standby fee, and financial covenant terms under our current credit facility:

Interest rates:
Spread over the London Interbank Offer Rate		2.25	-	3.25%
Spread over alternative base rate		1.25	-	2.25%
Standby fee per annum on undrawn amounts			0.50%

Covenant financial ratios:
Senior leverage ratio (debt secured by liens/EBITDA)	not more than 2.50:1
Leverage ratio (total debt less unencumbered cash/EBITDA) (1)	not more than 4.00:1
Interest coverage ratio (EBITDA/interest expense)	not more than 3.00:1

(1)

The leverage ratio was amended for to be

5.00:1

for

2016,

and reverted back to

4.00:1

effective

January

2017.

We are also able to obtain letters of credit under the facility, and for any such letters we are required to pay a participation fee of between

2.25%

and

3.25%

based on our total leverage ratio, as well as a fronting fee to each issuing bank of

0.20%

annually on the average daily dollar amount of any outstanding letters of credit. There were

$2.6

million in letters of credit outstanding as of

March

31,

2017.

We believe we were substantially in compliance with all covenants under the credit agreement and no amounts were outstanding as of

March

31,

2017.

We have not drawn funds on the current revolving credit facility as of the filing date of this report.

Capital Leases

We have entered into various lease agreements, primarily for equipment at our Greens Creek, Lucky Friday and Casa Berardi units, which we have determined to be capital leases.

March

31,

2017,

the total liability associated with the capital leases, including certain purchase option amounts, was

$11.7

million, with

$5.6

million of the liability classified as current and

$6.1

million classified as non-current. At

December

31,

2016,

the total liability balance associated with capital leases was

$11.5

million, with

$5.7

million of the liability classified as current and

$5.8

million classified as non-current. The total obligation for future minimum lease payments was

$12.3

million at

March

31,

2017,

with

$0.6

million attributed to interest.

March

31,

2017,

the annual maturities of capital lease commitments, including interest, were (in thousands):

Twelve-month period ending March 31,
2018	$	5,988
2019		3,946
2020		1,771
2021		604
Total		12,309
Less: imputed interest		(585	)
Net capital lease obligation	$	11,724