Note

Income Taxes

Major components of our income tax provision (benefit) for the

three

and

nine

months ended

September 30, 2018

and

2017

are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Current:
Domestic	$	—		$	—		$	1		$	(12,797	)
Foreign		80			(3,959	)		4,250			17,491
Total current income tax provision (benefit)		80			(3,959	)		4,251			4,694

Deferred:
Domestic		(3,778	)		1,980			(3,778	)		(13,958	)
Foreign		1,019			(3,151	)		(1,957	)		(8,300	)
Total deferred income tax provision (benefit)		(2,759	)		(1,171	)		(5,735	)		(22,258	)
Total income tax provision (benefit)	$	(2,679	)	$	(5,130	)	$	(1,484	)	$	(17,564	)

The current income tax provisions for the

three

and

nine

months ended

September

30,

2018

and

2017

vary from the amounts that would have resulted from applying the statutory income tax rate to pre-tax income due primarily to the impact of taxation in foreign jurisdictions, a valuation allowance on the majority of U.S. deferred taxes and the impact of the change in accounting method treatment of the

Shaft development costs in

2017.

As of

September

30,

2018,

we have a net deferred tax liability in the U.S. of

$46.7

million, a net deferred tax liability in Canada of

$118.1

million and a net deferred tax asset in Mexico of

$1.9

million, for a consolidated worldwide net deferred tax liability of

$162.9

million.

With the acquisition of Klondex on

July 20, 2018 (

see

Note

), we acquired a U.S. consolidated tax group (the "Klondex U.S. Group") that did

not

join the existing consolidated U.S. tax group of Hecla Mining Company and subsidiaries (“Legacy Hecla”). Under acquisition accounting, we recorded a net deferred tax liability of

$50.1

million. For the

three

and

nine

months ended

September

30,

2018,

we recorded a tax benefit of

$3.8

million on a net tax loss of

$15.2

million in the Klondex U.S. group.

For Legacy Hecla, we recorded a full valuation allowance in the U.S. in

December 2017

as a result of U.S. tax reform. Our circumstances at

September

30,

2018

continued to support a full valuation allowance in the U.S. for Legacy Hecla. In the

first

quarter of

2017,

we received consent from the Internal Revenue Service to permit us to take a different income tax position relating to the timing of deductions for the

Shaft development costs at Lucky Friday. This tax accounting method change substantially revised the timing of deductions for these costs for regular tax and Alternative Minimum Tax ("AMT") relative to our projected life of mine and projected taxable income. These timing changes caused us to revise our assessment of the ability to generate sufficient future taxable income to realize our deferred tax assets, resulting in a valuation allowance release of approximately

$15

million.