Note

13.

Guarantor Subsidiaries

Presented below are Hecla’s unaudited interim condensed consolidating financial statements as required by Rule

of Regulation S-

of the Securities Exchange Act of

1934,

as amended, resulting from the guarantees by certain of Hecla's subsidiaries (the "Guarantors") of the Senior Notes (see

Note

for more information). The Guarantors consist of the following of Hecla's

100%

-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Montana, Inc.; Revett Silver Company; RC Resources, Inc.; Troy Mine Inc.; Revett Exploration, Inc.; Revett Holdings, Inc.; Mines Management, Inc.; Newhi Corp.; Montanore Minerals Corp.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; and Hecla Juneau Mining Company. We completed the initial offering of the Senior Notes on

April 12, 2013,

and a related exchange offer for virtually identical notes registered with the SEC on

January 3, 2014.

The unaudited interim condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited interim condensed consolidated financial statements set forth elsewhere in this report. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate Hecla, the Guarantors, and our non-guarantor subsidiaries are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Hecla and its subsidiaries and among the subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do

not

represent business activity with

third

-party customers, vendors, and other parties. Examples of such eliminations include the following:

•

Investments in subsidiaries

. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.

•

Capital contributions

. Certain of Hecla's subsidiaries do

not

generate cash flow, either at all or sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. On an annual basis, when

not

otherwise intended as debt, the boards of directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.

•

Debt.

Inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.

•

Dividends.

Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On an annual basis, the boards of directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.

•

Deferred taxes

. Our ability to realize deferred tax assets and liabilities is considered on a consolidated basis for subsidiaries within the United States, with all subsidiaries' estimated future taxable income contributing to the ability to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary

may

possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would

not

be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.

Separate financial statements of the Guarantors are

not

presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (

) the sale or disposal of all or substantially all of the assets of the Guarantor; (

) the sale or other disposition of the capital stock of the Guarantor; (

) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (

) Hecla ceases to be a borrower as defined in the indenture; and (

) upon legal or covenant defeasance or satisfaction and discharge of the indenture.

Effective

December 31, 2015,

Hecla Limited (our wholly owned subsidiary) sold

100%

of its ownership of Hecla Alaska LLC (its wholly owned subsidiary) to Hecla Mining Company for consideration totaling approximately

$240.8

million. The consideration consisted of satisfaction of inter-company debt between Hecla Limited and Hecla Mining Company and an obligation by Hecla Mining Company, under certain circumstances, to fund a limited amount of the capital requirements of Hecla Limited for up to

five

years. Hecla Alaska LLC owns a

29.7331%

interest in the joint venture which owns the Greens Creek mine. The presentation of unaudited interim condensed consolidating financial statements below reflects the effective date for accounting purposes of

January 1, 2016.

Unaudited Interim Condensed Consolidating Balance Sheets

	As of June 30, 2017
	Parent		Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Assets
Cash and cash equivalents	$	100,480	$	26,770		$	36,863		$	—		$	164,113
Other current assets		52,728		36,677			38,816			(576	)		127,645
Properties, plants, and equipment - net		1,986		1,256,606			774,914			—			2,033,506
Intercompany receivable (payable)		432,177		(229,725	)		(330,748	)		128,296			—
Investments in subsidiaries		1,496,848		—			—			(1,496,848	)		—
Other non-current assets		2,606		193,833			5,294			(147,841	)		53,892
Total assets	$	2,086,825	$	1,284,161		$	525,139		$	(1,516,969	)	$	2,379,156

Liabilities and Stockholders' Equity
Current liabilities	$	35,523	$	51,195		$	32,735		$	(5,665	)	$	113,788
Long-term debt		501,604		3,838			3,375			—			508,817
Non-current portion of accrued reclamation		—		60,849			18,431			—			79,280
Non-current deferred tax liability		—		12,630			123,086			(14,456	)		121,260
Other non-current liabilities		47,312		5,547			766			—			53,625
Stockholders' equity		1,502,386		1,150,102			346,746			(1,496,848	)		1,502,386
Total liabilities and stockholders' equity	$	2,086,825	$	1,284,161		$	525,139		$	(1,516,969	)	$	2,379,156

	As of December 31, 2016
	Parent		Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Assets
Cash and cash equivalents	$	113,275	$	24,388		$	32,114		$	—		$	169,777
Other current assets		33,950		52,400			35,537			(573	)		121,314
Properties, plants, and equipment - net		2,103		1,258,890			771,692			—			2,032,685
Intercompany receivable (payable)		404,121		(222,072	)		(307,018	)		124,969			—
Investments in subsidiaries		1,496,787		—			—			(1,496,787	)		—
Other non-current assets		4,186		199,957			5,337			(161,579	)		47,901
Total assets	$	2,054,422	$	1,313,563		$	537,662		$	(1,533,970	)	$	2,371,677

Liabilities and Stockholders' Equity
Current liabilities	$	22,401	$	86,730		$	40,093		$	(22,999	)	$	126,225
Long-term debt		500,979		3,065			2,773			—			506,817
Non-current portion of accrued reclamation		—		63,025			16,902			—			79,927
Non-current deferred tax liability		—		14,212			122,855			(14,212	)		122,855
Other non-current liabilities		51,198		5,108			(325	)		28			56,009
Stockholders' equity		1,479,844		1,141,423			355,364			(1,496,787	)		1,479,844
Total liabilities and stockholders' equity	$	2,054,422	$	1,313,563		$	537,662		$	(1,533,970	)	$	2,371,677

Unaudited Interim Condensed Consolidating Statements of Operations

	Three Months Ended June 30, 2017
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Revenues	$	807		$	70,344		$	63,128		$	—		$	134,279
Cost of sales		(186	)		(40,816	)		(36,501	)		—			(77,503	)
Depreciation, depletion, amortization		—			(13,502	)		(12,067	)		—			(25,569	)
General and administrative		(5,721	)		(4,094	)		(494	)		—			(10,309	)
Exploration and pre-development		(66	)		(2,496	)		(4,343	)		—			(6,905	)
Research and development		—			(312	)		—			—			(312	)
Gain on derivative contracts		2,487			—			—			—			2,487
Foreign exchange gain (loss)		7,666			1			(11,550	)		—			(3,883	)
Lucky Friday suspension-related costs		—			(8,024	)		—			—			(8,024	)
Equity in earnings of subsidiaries		(2,355	)		—			—			2,355			—
Other (expense) income		(29,115	)		(1,557	)		(2,400	)		20,890			(12,182	)
Income (loss) before income taxes		(26,483	)		(456	)		(4,227	)		23,245			(7,921	)
(Provision) benefit from income taxes		—			1,068			3,727			(20,890	)		(16,095	)
Net income (loss)		(26,483	)		612			(500	)		2,355			(24,016	)
Preferred stock dividends		(138	)		—			—			—			(138	)
Income (loss) applicable to common stockholders		(26,621	)		612			(500	)		2,355			(24,154	)
Net income (loss)		(26,483	)		612			(500	)		2,355			(24,016	)
Changes in comprehensive income (loss)		2,878			—			847			(847	)		2,878
Comprehensive income (loss)	$	(23,605	)	$	612		$	347		$	1,508		$	(21,138	)

	Six Months Ended June 30, 2017
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Revenues	$	(3,286	)	$	153,297		$	126,812		$	—		$	276,823
Cost of sales		(334	)		(83,588	)		(72,257	)		—			(156,179	)
Depreciation, depletion, amortization		—			(29,268	)		(25,253	)		—			(54,521	)
General and administrative		(12,190	)		(6,413	)		(912	)		—			(19,515	)
Exploration and pre-development		(310	)		(4,397	)		(7,964	)		—			(12,671	)
Research and development		—			(995	)		—			—			(995	)
Loss on derivative contracts		(5,322	)		—			—			—			(5,322	)
Foreign exchange gain (loss)		10,133			(43	)		(16,235	)		—			(6,145	)
Lucky Friday suspension-related costs		—			(9,605	)		—			—			(9,605	)
Equity in earnings of subsidiaries		346			—			—			(346	)		—
Other (expense) income		13,781			(2,409	)		(9,470	)		(23,930	)		(22,028	)
Income (loss) before income taxes		2,818			16,579			(5,279	)		(24,276	)		(10,158	)
(Provision) benefit from income taxes		—			(7,901	)		(3,053	)		23,930			12,976
Net income (loss)		2,818			8,678			(8,332	)		(346	)		2,818
Preferred stock dividends		(276	)		—			—			—			(276	)
Income (loss) applicable to common stockholders		2,542			8,678			(8,332	)		(346	)		2,542
Net income (loss)		2,818			8,678			(8,332	)		(346	)		2,818
Changes in comprehensive income (loss)		6,082			—			758			(758	)		6,082
Comprehensive income (loss)	$	8,900		$	8,678		$	(7,574	)	$	(1,104	)	$	8,900

	Three Months Ended June 30, 2016
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Revenues	$	(5,659	)	$	87,992		$	88,969		$	—		$	171,302
Cost of sales		—			(47,203	)		(35,750	)		—			(82,953	)
Depreciation, depletion, amortization		—			(15,238	)		(14,659	)		—			(29,897	)
General and administrative		(6,474	)		(3,679	)		(206	)		—			(10,359	)
Exploration and pre-development		(113	)		(1,360	)		(2,410	)		—			(3,883	)
Loss on derivative contracts		(6	)		—			—			—			(6	)
Acquisition costs		(394	)		(8	)		—			—			(402	)
Equity in earnings of subsidiaries		37,111			—			—			(37,111	)		—
Other (expense) income		(349	)		2,623			(8,732	)		(1,732	)		(8,190	)
Income (loss) before income taxes		24,116			23,127			27,212			(38,843	)		35,612
(Provision) benefit from income taxes		—			(8,386	)		(4,842	)		1,732			(11,496	)
Net income (loss)		24,116			14,741			22,370			(37,111	)		24,116
Preferred stock dividends		(138	)		—			—			—			(138	)
Income (loss) applicable to common stockholders		23,978			14,741			22,370			(37,111	)		23,978
Net income (loss)		24,116			14,741			22,370			(37,111	)		24,116
Changes in comprehensive income (loss)		1,239			—			1,193			(1,193	)		1,239
Comprehensive income (loss)	$	25,355		$	14,741		$	23,563		$	(38,304	)	$	25,355

	Six Months Ended June 30, 2016
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Revenues	$	(11,794	)	$	169,261		$	144,852		$	—		$	302,319
Cost of sales		—			(93,956	)		(63,317	)		—			(157,273	)
Depreciation, depletion, amortization		—			(31,844	)		(23,928	)		—			(55,772	)
General and administrative		(11,714	)		(8,202	)		(657	)		—			(20,573	)
Exploration and pre-development		(158	)		(2,647	)		(4,432	)		—			(7,237	)
Loss on derivative contracts		(6	)		—			—			—			(6	)
Acquisition costs		(394	)		(8	)		—			—			(402	)
Equity in earnings of subsidiaries		16,120			—			—			(16,120	)		—
Other (expense) income		31,444			6,959			(44,250	)		(18,561	)		(24,408	)
Income (loss) before income taxes		23,498			39,563			8,268			(34,681	)		36,648
(Provision) benefit from income taxes		—			(13,219	)		(18,492	)		18,561			(13,150	)
Net income (loss)		23,498			26,344			(10,224	)		(16,120	)		23,498
Preferred stock dividends		(276	)		—			—			—			(276	)
Income (loss) applicable to common stockholders		23,222			26,344			(10,224	)		(16,120	)		23,222
Net income (loss)		23,498			26,344			(10,224	)		(16,120	)		23,498
Changes in comprehensive income (loss)		2,304			8			2,253			(2,261	)		2,304
Comprehensive income (loss)	$	25,802		$	26,352		$	(7,971	)	$	(18,381	)	$	25,802

Unaudited Interim Condensed Consolidating Statements of Cash Flows

	Six Months Ended June 30, 2017
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Cash flows from operating activities	$	9,131		$	13,792		$	10,757		$	12,141		$	45,821
Cash flows from investing activities:
Additions to properties, plants, and equipment		—			(19,132	)		(26,832	)					(45,964	)
Other investing activities, net		(8,500	)		1,266			(22	)		(424	)		(7,680	)
Cash flows from financing activities:
Dividends paid to stockholders		(2,257	)		—			—						(2,257	)
Payments on debt		—			(3,044	)		(671	)					(3,715	)
Other financing activity		(11,169	)		9,501			20,430			(11,717	)		7,045
Effect of exchange rate changes on cash		—			—			1,086			—			1,086
Changes in cash and cash equivalents		(12,795	)		2,383			4,748			—			(5,664	)
Beginning cash and cash equivalents		113,275			24,387			32,115			—			169,777
Ending cash and cash equivalents	$	100,480		$	26,770		$	36,863		$	—		$	164,113

	Six Months Ended June 30, 2016
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Cash flows from operating activities	$	22,190		$	(8,639	)	$	40,815		$	31,772		$	86,138
Cash flows from investing activities:														—
Additions to properties, plants, and equipment		(40	)		(43,677	)		(33,243	)					(76,960	)
Other investing activities, net		(15,248	)		317			(3,900	)		—			(18,831	)
Cash flows from financing activities:														—
Dividends paid to stockholders		(2,190	)		—			—						(2,190	)
Payments on debt		(1,339	)		(3,836	)		(520	)					(5,695	)
Other financing activity		4,948			36,863			(5,385	)		(31,772	)		4,654
Effect of exchange rate changes on cash		—			—			1,288			—			1,288
Changes in cash and cash equivalents		8,321			(18,972	)		(945	)		—			(11,596	)
Beginning cash and cash equivalents		94,167			42,692			18,350			—			155,209
Ending cash and cash equivalents	$	102,488		$	23,720		$	17,405		$	—		$	143,613