Note

13.

Subsequent Events

Acquisition of Klondex Mines Ltd.

July 20, 2018,

we acquired all of the issued and outstanding common shares of Klondex Mines Ltd. ("Klondex") for consideration valued at

$2.24

per Klondex share (the "Arrangement"). Under the terms of the Arrangement, each holder of Klondex common shares had the option to receive either (i)

$2.47

in cash (the “Cash Alternative”), (ii)

0.6272

of a Hecla share per Klondex share (the “Share Alternative”), or (iii)

US$0.8411

in cash and

0.4136

of a Hecla share per Klondex share (the “Combined Alternative”), subject in the case of the Cash Alternative and the Share Alternative to pro-ration based on a maximum cash consideration of

$153.2

million and a maximum number of Hecla shares issued of

75,276,176.

Klondex shareholders also received shares of a newly formed company which holds the Canadian assets of Klondex. Klondex had

180,499,319

issued and outstanding common shares prior to consummation of the Arrangement. An additional

1,549,626

Klondex common shares were issued immediately prior to consummation of the Arrangement related to conversion of in-the-money Klondex share options and certain outstanding restricted share units, resulting in a total of

182,048,945

issued and outstanding Klondex common shares at the time of consummation of the Arrangement. In connection with the Arrangement, we also issued an aggregate of

4,136,000

warrants to purchase

one

share of our common stock (“Hecla Warrants”) to holders of warrants to purchase Klondex’s common stock. An aggregate of

2,068,000

Hecla Warrants have an exercise price of

$8.02

and expire in

April 2032.

An aggregate of

2,068,000

Hecla Warrants have an exercise price of

$1.57

and expire in

February 2029.

In addition, we settled share-based payment awards held by Klondex directors and employees for cash of

$2.0

million. Consideration transferred to consummate the Arrangement was comprised of total cash paid by us of

$155.2

million, issuance of

75,276,176

shares of our common stock valued at

$242.4

million, and issuance of the Hecla Warrants valued at

$10.1

million, for total estimated consideration of

$407.7

million. The calculation of consideration is preliminary and subject to change upon completion of the detailed valuation of assets acquired and liabilities assumed through the Arrangement.

Under the Arrangement, we also subscribed for

$7.0

million of common shares of a new company which holds the Canadian assets previously owned by Klondex.

Revolving Credit Facility

July 16, 2018,

we entered into a

$200

million senior secured revolving credit facility which replaced our previous

$100

million credit facility and has a term ending on

June 14, 2022,

provided, however, that if we do

not

refinance our outstanding Senior Notes due

May 1, 2021

November 1, 2020,

the term of the credit facility ends on

November 1, 2020.

We expect the credit facility to increase to

$250

million upon meeting certain conditions, including adding certain subsidiaries of Klondex as borrowers under the credit facility and pledging the assets of those subsidiaries as additional collateral under the credit facility. 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. 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 less than 3.00:1

(

)

The leverage ratio will change to

4.50:1

from

September 30, 2018

December 31, 2019,

and will revert back to

4.00:1

effective

January 1, 2020.

Since entering into the new credit facility we have drawn funds totaling

$47.0

million, which is outstanding as of the filing date of this report. Interest on borrowings on the credit facility is payable on

March 31,

June 30,

September 30,

and

December 31

of each year. 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

$3.0

million in letters of credit outstanding as of the filing date of this report.