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Note 4 - Environmental and Reclamation Activities | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Environmental and Reclamation Activities [Text Block] | Note 4: Environmental and Reclamation Activities The liabilities accrued for our reclamation and closure costs at December 31, 2016 and 2015, were as follows (in thousands):
|  | 2016 |  |  | 2015 |
Operating properties: |  |  |  |  |  |  |  |
Greens Creek |  | $ | 39,014 |  |  | $ | 41,338 |
Lucky Friday |  |  | 9,194 |  |  |  | 5,212 |
Casa Berardi |  |  | 5,475 |  |  |  | 5,494 |
San Sebastian |  |  | 5,425 |  |  |  | 1,189 |
Non-operating properties: |  |  |  |  |  |  |  |
Troy mine |  |  | 16,167 |  |  |  | 17,295 |
South Dakota and Colorado Superfund Sites |  |  | — |  |  |  | 16,300 |
Johnny M |  |  | 5,830 |  |  |  | 5,830 |
Republic |  |  | 1,500 |  |  |  | 774 |
All other sites |  |  | 2,975 |  |  |  | 2,106 |
Total |  |  | 85,580 |  |  |  | 95,538 |
Reclamation and closure costs, current |  |  | (5,653 | ) |  |  | (20,989 | )
Reclamation and closure costs, long-term |  | $ | 79,927 |  |  | $ | 74,549 |
The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2016, 2015 and 2014, was as follows (in thousands):
Balance at January 1, 2014 |  | $ | 105,191 |
Accruals for estimated costs |  |  | 6,863 |
Accretion expense |  |  | 3,089 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | 675 |
Payment of reclamation obligations |  |  | (58,568 | )
Balance at December 31, 2014 |  |  | 57,250 |
Accruals for estimated costs |  |  | 15,114 |
Accretion expense |  |  | 1,904 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | 4,112 |
Addition due to development and production at our San Sebastian unit |  |  | 1,189 |
Liability addition due to acquisition of Revett |  |  | 17,513 |
Payment of reclamation obligations |  |  | (1,544 | )
Balance at December 31, 2015 |  |  | 95,538 |
Accruals for estimated costs |  |  | 672 |
Accretion expense |  |  | 3,191 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | 2,759 |
Liability addition due to acquisition of Mines Management |  |  | 1,124 |
Payment of reclamation obligations |  |  | (17,704 | )
Balance at December 31, 2016 |  | $ | 85,580 |
On September 8, 2011, a Consent Decree (the “Consent Decree”) settling environmental litigation and related claims involving Hecla Limited pertaining to historic releases of mining wastes in the Coeur d'Alene Basin was approved and entered by the U.S. District Court in Idaho. The Consent Decree resolved all existing claims of the Plaintiffs against Hecla Limited and its affiliates under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) (and certain other statutes) for past response costs, future environmental remediation costs, and natural resource damages related to historic releases of mining wastes in the Coeur d'Alene River Basin. The Consent Decree also resolved all remaining obligations of Hecla Limited under the 1994 Consent Decree relating to the “Box,” a rectangular 21 -square-mile site located near Kellogg, Idaho within the Bunker Hill Superfund site. The Consent Decree contains comprehensive terms of settlement, including financial terms which required that Hecla Limited pay, in the aggregate, $264.4 million to the Plaintiffs over approximately three years following the settlement. Payments of approximately $168 million, $25 million, and $15 million (and related interest) were made in October 2011, 2012, and 2013, respectively, pursuant to the terms of the Consent Decree. In addition, a payment of approximately $14.1 million in proceeds from warrants exercised during the second quarter of 2014 was made in July 2014. Finally, a payment of approximately $41.3 million, consisting primarily of proceeds from the exercise of the remaining outstanding warrants, was made in August 2014, which satisfied Hecla Limited's remaining payment obligations under the Consent Decree. In June 2015, we completed the acquisition of Revett, giving us 100% ownership of the Troy mine and other interests in northwestern Montana (see Note 15 for more information). As a result, we recorded a $17.5 million liability for the present value of estimated costs for reclamation and closure of the Troy mine. Revett held an environmental risk transfer program ("insurance policy") which would have funded costs incurred prior to the expiration date of March 29, 2020 for reclamation at the Troy mine up to a maximum limit of $16.8 million. In the third quarter of 2016, we reached a settlement on the insurance policy for cash proceeds to us of $16.0 million. On each of June 15, 2016 and September 19, 2016, a Consent Decree settling environmental claims involving our wholly-owned subsidiary, CoCa Mines, Inc. ("CoCa") at the Nelson Tunnel/Commodore Waste Rock Pile site (Colorado) and Gilt Edge site (South Dakota) was approved and entered by the U.S. District Court in Colorado and South Dakota, respectively. Pursuant to the Consent Decrees, CoCa paid an aggregate of $6 million in August 2016 to the United States and the State of Colorado, and an aggregate of $3.9 million in November 2016 to the United States and the State of South Dakota (insurers and another potentially responsible party ("PRP") paid an additional $6.4 million to settle the Gilt Edge matter). As a result, CoCa has resolved the claims with respect to the Gilt Edge and Nelson Tunnel sites. During the negotiations leading up to these settlements, in the second quarter of 2015 we accrued $9.9 million by recording a liability for the total amount that would be paid by CoCa to settle these matters, and an asset for the amount to be recovered by CoCa from insurers and the other settling PRP with respect to the Gilt Edge site. Asset Retirement Obligations Below is a reconciliation as of December 31, 2016 and 2015 (in thousands) of the asset retirement obligations ("ARO") relating to our operating properties, which are included in our total accrued reclamation and closure costs of $85.6 million and $95.5 million, respectively, discussed above. The estimated reclamation and abandonment costs were discounted using credit adjusted, risk-free interest rates ranging from 6% to 14.5% from the time we incurred the obligation to the time we expect to pay the retirement obligation.
|  | 2016 |  |  | 2015 |
Balance January 1 |  | $ | 53,233 |  |  | $ | 46,539 |
Changes in obligations due to changes in reclamation plans |  |  | 2,760 |  |  |  | 4,112 |
Addition due to development and production at our San Sebastian unit |  |  | — |  |  |  | 1,189 |
Accretion expense |  |  | 3,191 |  |  |  | 1,904 |
Payment of reclamation obligations |  |  | (76 | ) |  |  | (511 | )
Balance at December 31 |  | $ | 59,108 |  |  | $ | 53,233 |
In the third quarter of 2016, we updated our ARO at Lucky Friday to reflect a reclamation plan that includes estimated costs for reclamation and closure of the mine and mill upon the end of the known mine life, in addition to reclamation of existing tailings impoundments already considered. The previous plan contemplated stabilization, clean-up and ongoing monitoring and maintenance of the mine and mill site. The change to the reclamation plan resulted in an increase in total undiscounted costs of approximately $22.6 million, and an increase to the ARO asset and liability of $3.3 million after discounting the costs to present value. In the third quarter of 2016, we updated the ARO at San Sebastian to include estimated costs for filling the open pits at the end of their known life, resulting in an increase in undiscounted costs of $4.3 million and in increase in the ARO asset and liability of $4.5 million. In the fourth quarter of 2016, we revised the ARO at Greens Creek to include costs for reclamation of additional waste rock, along with updated timing of estimated reclamation costs. The change resulted in an increase in undiscounted costs of $3.7 million, but a decrease in the ARO asset and liability of $5.0 million due to the impact of discounting costs to present value and the change in estimated timing costs. The ARO layers related to the changes described above were discounted using a credit adjusted, risk-free interest rate of 6.5% and inflation rates ranging from 2% to 3.25%.

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