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,

2018,

and the funded status as of

December

31,

2018

and

December

31,

2017

(in thousands):

	Pension Benefits
	2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	147,023		$	132,270
Service cost		5,009			4,786
Interest cost		5,508			5,356
Amendments		—			2,571
Change due to mortality change		2,713			—
Change due to discount rate change		(13,716	)		5,529
Actuarial loss		3,487			1,733
Benefits paid		(5,386	)		(5,222	)
Benefit obligation at end of year		144,638			147,023
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		99,922			87,357
Actual (loss) return on plan assets		(8,772	)		10,560
Employer contributions		10,565			7,227
Benefits paid		(5,386	)		(5,222	)
Fair value of plan assets at end of year		96,329			99,922
Underfunded status at end of year	$	(48,309	)	$	(47,101	)

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

December

31,

2018

and

December

31,

2017

(in thousands):

	Pension Benefits
	2018			2017
Current liabilities:
Accrued benefit liability	$	(597	)	$	(471	)
Non- current pension liability:
Accrued benefit liability		(47,711	)		(46,628	)
Accumulated other comprehensive loss		46,248			42,243
Net amount recognized	$	(2,060	)	$	(4,856	)

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

	Pension Benefits
	2018			2017
Discount rate: net periodic pension cost		3.83	%		4.14	%
Discount rate: projected benefit obligation		4.59	%		3.83	%
Expected rate of return on plan assets		6.62	%		6.80	%
Rate of compensation increase: net periodic pension cost		2.00	%		2.00	%
Rate of compensation increase: projected benefit obligation		2.00	%		2.00	%

The above assumptions were calculated based on information as of

December

31,

2018

and

December

31,

2017,

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

6.37%.

The vested benefit obligation is determined based on the actuarial present value of benefits to which employees are currently entitled, but based on employees' expected date of separation or retirement.

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

2018,

2017,

and

2016

(in thousands):

	Pension Benefits
	2018			2017			2016
Service cost	$	5,009		$	4,786		$	4,309
Interest cost		5,508			5,356			5,229
Expected return on plan assets		(6,536	)		(5,849	)		(5,299	)
Amortization of prior service benefit		61			(337	)		(337	)
Amortization of net gain from earlier periods		3,726			4,132			4,372
Net periodic pension cost	$	7,768		$	8,088		$	8,274

For

2018,

the service cost component of net periodic pension cost is included in the same line items of our consolidated financial statements as other employee compensation costs, and the net expense of

$2.8

million related to all other components of net periodic pension cost is included in other (expense) income on our consolidated statements of operations and comprehensive (loss) income. For

2017

and

2016,

all components of net periodic pension cost are included in the same line items of our consolidated financial statements as other employee compensation costs.

The allocations of investments at

December

31,

2018

and

December

31,

2017,

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
	2018			2017			2018			2017
Cash		1	%		—	%		1	%		—	%
Large cap U.S. equities		15	%		19	%		15	%		18	%
Small cap U.S. equities		6	%		9	%		6	%		10	%
Non-U.S. equities		23	%		27	%		23	%		26	%
Fixed income		24	%		21	%		24	%		20	%
Real estate		15	%		14	%		17	%		15	%
Absolute return hedge funds		6	%		5	%		6	%		6	%
Company stock		10	%		5	%		8	%		5	%
Total		100	%		100	%		100	%		100	%

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

$9.3

million and

$4.8

million at

December

31,

2018

and

December

31,

2017.

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		23	%		28	%
Real estate		15	%		18	%
Absolute return		5	%		7	%
Company stock/Real return		7	%		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,

2018

(in thousands):

	Hecla								Lucky Friday
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Investments measured at fair value
Interest-bearing cash	$	389	$	—	$	—	$	389	$	111	$	—	$	—	$	111
Common stock		7,874		—		—		7,874		1,428		—		—		1,428
Mutual funds		43,960		—		—		43,960		10,431		—		—		10,431
Total investments in the fair value hierarchy		52,223		—		—		52,223		11,970		—		—		11,970
Investments measured at net asset value
Real estate funds								11,926								3,231
Hedge funds								4,283								1,149
Common collective funds								9,221								2,326
Total investments measured at net asset value								25,430								6,706
Total fair value	$	52,223	$	—	$	—	$	77,653	$	11,970	$	—	$	—	$	18,676

The fair values by asset category in each plan, along with their hierarchy levels, were 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
Investments measured at fair value
Interest-bearing cash	$	351	$	—	$	—	$	351	$	100	$	—	$	—	$	100
Common stock		3,768		—		—		3,768		1,015		—		—		1,015
Mutual funds		47,181		—		—		47,181		11,511		—		—		11,511
Total investments in the fair value hierarchy		51,300		—		—		51,300		12,626		—		—		12,626
Investments measured at net asset value
Real estate funds								11,154								3,023
Hedge funds								4,247								1,140
Common collective funds								12,856								3,576
Total investments measured at net asset value		—		—		—		28,257		—		—		—		7,739
Total fair value	$	51,300	$	—	$	—	$	79,557	$	12,626	$	—	$	—	$	20,365

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 funds, hedge funds and common collective equity funds is measured using the net asset value per share (or its equivalent) practical expedient ("NAV"), and has

not

been categorized in the fair value hierarchy. There are

unfunded commitments related to these investments. There are

restrictions on redemptions of these funds as of

December

31,

2018,

except as limited by the redemption terms discussed below. The following summarizes information on the asset classes measured using NAV:

	Investment strategy	Redemption terms
Real estate funds	Invest in real estate properties among the four major property types (office, industrial, retail and multi-family)	Allowed quarterly with notice of between 45 and 60 days
Hedge funds	Invest in a variety of asset classes which aim to diversify sources of returns	Allowed quarterly with notice of 90 days
Common collective funds	Invest in U.S. large cap or small/medium public equities in actively traded managed equity portfolios	Allowed daily or with notice of 30 days

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
2019	$	6,835
2020		7,598
2021		7,775
2022		8,396
2023		8,710
Years 2024-2028		44,991

We made cash contributions to our defined benefit plans in

April

and

July 2018

of approximately

$1.3

million and

$1.2

million, respectively. In

September

and

November 2018,

we contributed

$5.5

million and

$2.1

million, respectively, in shares of our common stock. We expect to contribute a total of

$2.2

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

2019.

We expect to contribute approximately

$0.6

million to our unfunded supplemental executive retirement plan during

2019.

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, 2018				December 31, 2017
	ABO Exceeds Plan Assets		Plan Assets Exceed ABO		ABO Exceeds Plan Assets		Plan Assets Exceed ABO
Projected benefit obligation	$	144,637	$	—	$	147,023	$	—
Accumulated benefit obligation		140,350		—		141,775		—
Fair value of plan assets		96,329		—		99,922		—

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

December

31,

2018,

that have

not

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

	Pension Benefits
Unamortized net (gain)/loss	$	44,645
Unamortized prior service cost		1,603

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

2019

are (in thousands):

	Pension Benefits
Amortization of net loss	$	4,389
Amortization of prior service benefit		61

We do

not

expect to have any of the pension plans’ assets returned during

2019.

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

$3.7

million in

2018,

$3.5

million in

2017,

and

$3.5

million in

2016.

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

$4,000

2018,

$114,000

2017,

and

$442,000

2016,

with the decrease in

2017

and

2018

due to the ongoing strike (see

Note

for more information).