Note

Debt, Credit Facilities 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 was 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 Mines Ltd. ("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

$3.0

million as of

December

31,

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

2018,

2017

and

2016,

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

$36.3

million,

$35.3

million and

$20.1

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

2017

and

2016

was net of

$0.9

million and

$16.2

million, respectively, in capitalized interest, primarily related to the

Shaft project at our Lucky Friday unit which was completed in

January 2017.

Interest expense for

2017

also included

$0.9

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. There are

covenants on the Senior Notes.

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. Because the RQ notes are denominated in CAD, the reported USD-equivalent principal balance changes with movements in the exchange rate. 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. There are

covenants on the RQ Notes. The net proceeds from the RQ Notes are required to be used for development and expansion of our Casa Berardi mine. During

2018,

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

$1.4

million.

As of

December

31,

2018,

the annual future obligations related to our debt, including interest, were (in thousands):

Twelve-month period ending December 31,	Senior Notes			RQ Notes			Total
2019	$	34,822		$	1,372		$	36,194
2020		34,822			1,372		$	36,194
2021		518,107			29,778		$	547,885
Total		587,751			32,522			620,273
Less: interest		(81,251	)		(3,202	)	$	(84,453	)
Principal		506,500			29,320			535,820
Less: unamortized discount		(3,021	)		—		$	(3,021	)
Long-term debt	$	503,479		$	29,320		$	532,799

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 by

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 also 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 4.50:1
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

December

31,

2018.

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

amounts were outstanding as of

December

31,

2018.

We drew

$71.0

million on the facility and repaid that amount in

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

December

31,

2018,

with

$48.0

million drawn as of the date of this report.

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 operating units, which we have determined to be capital leases. At

December

31,

2018,

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

$13.1

million, with

$5.3

million of the liability classified as current and

$7.9

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

$14.0

million at

December

31,

2018,

with

$0.9

million attributed to interest.

December

31,

2018,

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

Twelve-month period ending December 31,
2019	$	5,745
2020		4,480
2021		3,052
2022		733
2023		23
Total		14,033
Less: imputed interest		(898	)
Net capital lease obligation		13,135
Current portion of capital leases		5,264
Long-term capital leases	$	7,871