Note

Employee Benefit Plans

Pensions and Other Post-retirement Plans

We sponsor defined benefit pension plans covering substantially all U.S. employees. The following tables provide a reconciliation of the changes in the plans

’ benefit obligations and fair value of assets over the

two

-year period ended

December

31,

2017,

and the funded status as of

December

31,

2017

and

December

31,

2016

(in thousands):

	Pension Benefits
	2017			2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	132,270		$	120,237
Service cost		4,786			4,309
Interest cost		5,356			5,230
Amendments		2,571			—
Change due to discount rate change		5,529			5,088
Actuarial loss (gain)		1,733			2,412
Benefits paid		(5,222	)		(5,006	)
Benefit obligation at end of year		147,023			132,270
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		87,357			73,321
Actual return (loss) on plan assets		10,560			9,950
Employer contributions		7,227			9,092
Benefits paid		(5,222	)		(5,006	)
Fair value of plan assets at end of year		99,922			87,357
Underfunded status at end of year	$	(47,101	)	$	(44,913	)

The following table provides the amounts recognized in the consolidated balance sheets as of

December

31,

2017

and

December

31,

2016

(in thousands):

	Pension Benefits
	2017			2016
Current liabilities:
Accrued benefit liability	$	(471	)	$	(420	)
Non- current pension liability:
Accrued benefit liability		(46,628	)		(44,491	)
Accumulated other comprehensive loss		42,243			40,917
Net amount recognized	$	(4,856	)	$	(3,994	)

The benefit obligation and prepaid benefit costs were calculated by applying the following weighted average assumptions:

	Pension Benefits
	2017			2016
Discount rate: net periodic pension cost		4.14	%		4.45%
Discount rate: projected benefit obligation		3.83	%		4.14%
Expected rate of return on plan assets		6.80	%		7.20%
Rate of compensation increase: net periodic pension cost		2.00	%		2.00%
Rate of compensation increase: projected benefit obligation (1)		2.00	%	0.00%	/	2.00%

(

)

For

2016,

was assumed for years

2016

through

2018

and

was assumed thereafter.

The above assumptions were calculated based on information as of

December

31,

2017

and

December

31,

2016,

the measurement dates for the plans. The discount rate is based on the yield curve for investment-grade corporate bonds as published by the U.S. Treasury Department. The expected rate of return on plan assets is based upon consideration of the plan’s current asset mix, historical long-term return rates and the plan’s historical performance. Our current assumption for the rate on plan assets is

6.62%.

Net periodic pension cost for the plans consisted of the following in

2017,

2016,

and

2015

(in thousands):

	Pension Benefits
	2017			2016			2015
Service cost	$	4,786		$	4,309		$	4,216
Interest cost		5,356			5,229			4,823
Expected return on plan assets		(5,849	)		(5,299	)		(5,382	)
Amortization of prior service benefit		(337	)		(337	)		(337	)
Amortization of net gain from earlier periods		4,132			4,372			4,260
Net periodic pension cost	$	8,088		$	8,274		$	7,580

The allocations of investments at

December

31,

2017

and

December

31,

2016,

the measurement dates of the plan, by asset category in the Hecla Mining Company Retirement Plan and the Lucky Friday Pension Plan are as follows:

	Hecla						Lucky Friday
	2017			2016			2017			2016
Cash		—	%		3	%		—	%		3	%
Large cap U.S. equities		19	%		18	%		18	%		17	%
Small cap U.S. equities		9	%		9	%		10	%		9	%
Non-U.S. equities		27	%		24	%		26	%		25	%
Fixed income		21	%		20	%		20	%		20	%
Real estate		14	%		13	%		15	%		13	%
Absolute return hedge funds		5	%		6	%		6	%		6	%
Company stock		5	%		7	%		5	%		7	%
Total		100	%		100	%		100	%		100	%

"Company stock" asset category in the table above includes our common stock in the amounts of

$4.8

million and

$6.3

million at

December

31,

2017

and

December

31,

2016.

Each plan's statement of investment policy delineates the responsibilities of the board, the retirement/pension committee, the investment manager(s), and investment adviser/consultant, and provides guidelines on investment management. Investment objectives are established for each of the asset categories included in the pension plans with comparisons of performance against appropriate benchmarks. Each plan's policy calls for investments to be supervised by qualified investment managers. The investment managers are monitored on an ongoing basis by our outside consultant, with formal reporting to us and the consultant performed each quarter. The policy sets forth the following allocation of assets:

	Target			Maximum
Large cap U.S. equities		17	%		20	%
Small cap U.S. equities		8	%		10	%
Non-U.S. equities		25	%		30	%
Fixed income		20	%		25	%
Real estate		15	%		18	%
Absolute return		5	%		7	%
Company stock/Real return		10	%		13	%

Each plan's statement of investment policy and objectives aspires to achieve the assumed long term rate of return on plan assets established by the plan

’s actuary plus

one

percent.

Accounting guidance has established a hierarchy of assets measured at fair value on a recurring basis. The

three

levels included in the hierarchy are:

Level

quoted prices in active markets for identical assets or liabilities

Level

significant other observable inputs

Level

significant unobservable inputs

The fair values by asset category in each plan, along with their hierarchy levels, are as follows as of

December

31,

2017

(in thousands):

	Hecla								Lucky Friday
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest-bearing cash	$	351	$	—	$	—	$	351	$	100	$	—	$	—	$	100
Common stock		3,768		—		—		3,768		1,015		—		—		1,015
Real estate		—		—		11,154		11,154		—		—		3,023		3,023
Common collective funds		—		14,802		2,301		17,103		—		4,115		601		4,716
Mutual funds		47,181		—		—		47,181		11,511		—		—		11,511
Total fair value	$	51,300	$	14,802	$	13,455	$	79,557	$	12,626	$	4,115	$	3,624	$	20,365

The following is a roll-forward of assets in Level

of the fair value hierarchy (in thousands):

	Hecla					Lucky Friday
	Real estate		Common collective funds			Real estate		Common collective funds
Beginning balance at January 1, 2017	$	8,974	$	2,108		$	2,389	$	550
Net unrealized gains on assets held at the reporting date		350		104			94		28
Purchases		1,830		2,108			540		550
Sales		—		(2,019	)		—		(527	)
Ending balance at December 31, 2017	$	11,154	$	2,301		$	3,023	$	601

Of the

$17.1

million in plan assets classified as level

$14.2

million was invested in real estate, and the remaining

$2.9

million was invested in collective investment funds.

The fair values by asset category in each plan, along with their hierarchy levels, were as follows as of

December

31,

2016

(in thousands):

	Hecla								Lucky Friday
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest-bearing cash	$	1,924	$	—	$	—	$	1,924	$	550	$	—	$	—	$	550
Common stock		4,973		—		—		4,973		1,340		—		—		1,340
Real estate		—		—		8,974		8,974		—		—		2,389		2,389
Common collective funds		—		12,379		2,108		14,487		—		3,427		550		3,977
Mutual funds		38,326		—		—		38,326		10,417		—		—		10,417
Total fair value	$	45,223	$	12,379	$	11,082	$	68,684	$	12,307	$	3,427	$	2,939	$	18,673

The following is a roll-forward of assets in Level

of the fair value hierarchy (in thousands):

	Hecla						Lucky Friday
	Real estate			Common collective funds			Real estate			Common collective funds
Beginning balance at January 1, 2016	$	10,326		$	4,462		$	2,856		$	1,309
Net unrealized gains on assets held at the reporting date		283			80			71			20
Purchases		333			—			90			—
Sales		(1,968	)		(2,434	)		(628	)		(779	)
Ending balance at December 31, 2016	$	8,974		$	2,108		$	2,389		$	550

Of the

$14.0

million in plan assets classified as level

$11.4

million was invested in real estate, and the remaining

$2.6

million was invested in collective investment funds.

Generally, investments are valued based on information provided by fund managers to each plan's trustee as reviewed by management and its investment advisers. Mutual funds and equities are valued based on available exchange data. Commingled equity funds consist of publicly-traded investments. Fair value for real estate and private equity partnerships is primarily based on valuation methodologies that include

third

-party appraisals, comparable transactions, and discounted cash flow valuation models.

The following are estimates of future benefit payments, which reflect expected future service as appropriate, related to our pension plans (in thousands):

Year Ending December 31,	Pension Plans
2018	$	6,400
2019		6,571
2020		7,278
2021		7,404
2022		8,044
Years 2023-2027		41,589

We made cash contributions to our defined benefit plans of approximately

$1.2

million in

April 2017

and

$5.7

million in

July 2017,

with

additional contributions in

2017.

We expect to contribute a total of

$3.8

million in cash or shares of our common stock to our defined benefit plans in

2018.

We expect to contribute approximately

$0.5

million to our unfunded supplemental executive retirement plan during

2018.

The following table indicates whether our pension plans had accumulated benefit obligations ("ABO") in excess of plan assets, or plan assets exceeded ABO (amounts are in thousands).

	December 31, 2017				December 31, 2016
	ABO Exceeds Plan Assets		Plan Assets Exceed ABO		ABO Exceeds Plan Assets		Plan Assets Exceed ABO
Projected benefit obligation	$	147,023	$	—	$	132,270	$	—
Accumulated benefit obligation		141,775		—		128,102		—
Fair value of plan assets		99,922		—		87,357		—

For the pension plans, the following amounts are included in "Accumulated other comprehensive loss, net" on our balance sheet as of

December

31,

2017,

that have

not

yet been recognized as components of net periodic benefit cost (in thousands):

	Pension Benefits
Unamortized net (gain)/loss	$	40,579
Unamortized prior service cost	1,664

The amounts in "Accumulated other comprehensive loss, net" expected to be recognized as components of net periodic benefit cost during

2018

are (in thousands):

	Pension Benefits
Amortization of net loss	$	3,726
Amortization of prior service benefit	61

We do

not

expect to have any of the pension plans

’ assets returned during

2018.

Non-U.S. employees are

not

eligible to participate in the defined benefit pension plans that we maintain for U.S. employees. Canadian employees participate in Canada's public retirement income system, which includes the following components: (i) the Canada (or Quebec) Pension Plan, which is a contributory, earnings-related social insurance program, and (ii) the Old Age Security program. In addition, the Registered Retirement Savings Plan is a tax-deferred individual savings plan available to Canadian employees. Mexican employees participate in Mexico's public retirement income system, which is based on contributions the employee, employer and the government submit to the retirement savings system. The system is administered through savings accounts managed by private fund managers selected by the participant.

Capital Accumulation Plans

Our Capital Accumulation Plan ("Hecla

401

(k) Plan") is available to all U.S. salaried and certain hourly employees and applies immediately upon employment. Employees

may

contribute from

50%

of their annual compensation to the plan (subject to statutory limits). We make a matching contribution in the form of cash or stock of

100%

of an employee

’s contribution up to

of the employee’s earnings. Our matching contributions were approximately

$3.5

million in

2017,

$3.5

million in

2016,

and

$3.4

million in

2015.

Payment of matching contributions to the Hecla

401

(k) Plan is allowed to be made in Hecla common stock on a quarterly basis.

We also maintain a

401

(k) plan that is available to all hourly employees at the Lucky Friday unit after completion of

six

months of service. Employees

may

contribute from

50%

of their compensation to the plan (subject to statutory limits). The matching contribution is

55%

of an employee

’s contribution up to, but

not

exceeding,

of the employee’s earnings. Our contributions were approximately

$114,000

2017,

$442,000

2016,

and

$391,000

2015,

with the decrease in

2017

due to the ongoing strike (see

Note

for more information).