Note

10.

Debt, Credit Facility 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 1, 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

$3.3

million as of

September

30,

2018.

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 1

and

November 1

of each year, commencing

November 1, 2013.

During the

nine

months ended

September

30,

2018

and

2017,

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

$27.2

million and

$26.3

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

nine

months ended

September

30,

2017

was net of

$0.9

million in capitalized interest, primarily related to the

Shaft project at our Lucky Friday unit which was completed in

January 2017.

Interest expense for the

nine

months ended

September

30,

2017

also included

$1.1

million in costs related to our private offering of new Senior Notes in

June 2017

and concurrent tender offer to purchase our existing Senior Notes, which were

not

completed.

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 1, 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.

Ressources Québec Notes

March 5, 2018,

we entered into a note purchase agreement pursuant to which we issued

CAD$40

million (approximately

USD$30.8

million at the time of the transaction) in aggregate principal amount of our Series

2018

-A Senior Notes due

May 1, 2021 (

the “RQ Notes”) to Ressources Québec, a subsidiary of Investissment Québec, a financing arm of the Québec government. The RQ Notes were issued at a discount of

0.58%,

CAD$0.2

million, and bear interest at a rate of

4.68%

per year, payable on

May 1

and

November 1

of each year, commencing

May 1, 2018.

The RQ Notes are senior and unsecured and are pari passu in all material respects with the Senior Notes, including with respect to guarantees of the RQ Notes by certain of our subsidiaries. The net proceeds from the RQ Notes are required to be used for development and expansion of our Casa Berardi mine. During the

nine

months ended

September

30,

2018,

interest expense related to the RQ Notes, including discount and origination fees, totaled

$1.1

million.

Credit Facilities

July 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.

The credit facility increased to

$250

million in

November 2018

upon satisfaction of 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 credit facility in place as of

September

30,

2018:

Interest rates:
Spread over the London Interbank Offered 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 4.50:1
Interest coverage ratio (EBITDA/interest expense)	not less than 3.00:1

(

)

The leverage ratio will change to

4.00:1

effective

January 1, 2020.

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

September

30,

2018.

We believe we were in compliance with all covenants under the credit agreement and

amounts were outstanding as of

September

30,

2018.

We drew

$47.0

million on the facility in

July 2018

which we repaid in

September 2018.

With the exception of the

$3.0

million in letters of credit outstanding, we did

not

have a balance drawn on the revolving credit facility as of

September

30,

2018.

As a result of the acquisition of Klondex in

July 2018 (

see

Note

for more information), we assumed Klondex's revolving credit facility balance outstanding of

$35.0

million. We paid the

$35.0

million balance, and the Klondex credit facility was terminated, in

July 2018.

Capital Leases

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

September

30,

2018,

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

$14.7

million, with

$6.1

million of the liability classified as current and the remaining

$8.6

million classified as non-current. At

December

31,

2017,

the total liability balance associated with capital leases was

$11.8

million, with

$5.6

million of the liability classified as current and

$6.2

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

$15.7

million at

September

30,

2018,

with

$1.0

million attributed to interest.

September

30,

2018,

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

Twelve-month period ending September 30,
2019	$	6,182
2020		4,727
2021		3,543
2022		1,214
2023		9
Total		15,675
Less: imputed interest		(1,019	)
Net capital lease obligation	$	14,656