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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number | 1-8491

HECLA MINING COMPANY

(Exact name of registrant as specified in its Charter)

| Delaware |  | 77-0664171 |
| State or Other Jurisdiction of |  | I.R.S. Employer |
| Incorporation or Organization |  | Identification No. |
| 6500 N. Mineral Drive, Suite 200 |  |  |
| Coeur d'Alene, Idaho |  | 83815-9408 |
| Address of Principal Executive Offices |  | Zip Code |
208-769-4100
Registrant's Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.25 per share | HL | New York Stock Exchange
Series B Cumulative Convertible Preferred Stock, par value $0.25 per share | HL-PB | New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒ | Accelerated filer ☐
Non-accelerated filer ☐ | Smaller reporting company ☐
Emerging growth company ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class |  | Shares Outstanding May 5, 2022
Common stock, par value $0.25 per share |  | 539,049,637

Table of Contents

Hecla Mining Company and Subsidiaries

Form 10-Q

For the Quarter Ended March 31, 2022

INDEX*

| Page
PART I - Financial Information |
Item 1 – Condensed Consolidated Financial Statements (Unaudited) |
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - Three Months Ended March 31, 2022 and 2021 | 3
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2022 and 2021 | 4
Condensed Consolidated Balance Sheets - March 31, 2022 and December 31, 2021 | 5
Condensed Consolidated Statements of Changes in Stockholders' Equity - Three Months Ended March 31, 2022 and 2021 | 6
Notes to Condensed Consolidated Financial Statements (Unaudited) | 7
Forward-Looking Statements | 20
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 47
Item 4. Controls and Procedures | 49
PART II - Other Information |
Item 1 – Legal Proceedings | 49
Item 1A – Risk Factors | 49
Item 4 – Mine Safety Disclosures | 49
Item 6 – Exhibits | 49
Signatures | 51

*Items 2, 3 and 5 of Part II are omitted as they are not applicable.

2

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

Hecla Mining Company and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)

(Dollars and shares in thousands, except for per-share amounts)

|  | Three Months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
Sales of products |  | $ | 186,499 |  |  | $ | 210,852 |
Cost of sales and other direct production costs |  |  | 105,772 |  |  |  | 96,382 |
Depreciation, depletion and amortization |  |  | 35,298 |  |  |  | 47,069 |
Total cost of sales |  |  | 141,070 |  |  |  | 143,451 |
Gross profit |  |  | 45,429 |  |  |  | 67,401 |
Other operating expenses: |  |  |  |  |  |  |  |
General and administrative |  |  | 8,294 |  |  |  | 8,007 |
Exploration and pre-development |  |  | 12,808 |  |  |  | 6,690 |
Care and maintenance |  |  | 6,205 |  |  |  | 4,318 |
Provision for closed operations and reclamation |  |  | 901 |  |  |  | 3,709 |
Other operating expense |  |  | 2,463 |  |  |  | 3,648 |
Total other operating expense |  |  | 30,671 |  |  |  | 26,372 |
Income from operations |  |  | 14,758 |  |  |  | 41,029 |
Other income (expense): |  |  |  |  |  |  |  |
Interest expense |  |  | (10,406 | ) |  |  | (10,744 | )
Fair value adjustments, net |  |  | 5,965 |  |  |  | (1,875 | )
Net foreign exchange loss |  |  | (2,038 | ) |  |  | (2,064 | )
Other non-operating income (expense) |  |  | 1,505 |  |  |  | (152 | )
Total other expense |  |  | (4,974 | ) |  |  | (14,835 | )
Income before income and mining taxes |  |  | 9,784 |  |  |  | 26,194 |
Income and mining tax provision |  |  | (5,631 | ) |  |  | (4,743 | )
Net income |  |  | 4,153 |  |  |  | 21,451 |
Preferred stock dividends |  |  | (138 | ) |  |  | (138 | )
Income applicable to common stockholders |  | $ | 4,015 |  |  | $ | 21,313 |
Comprehensive income: |  |  |  |  |  |  |  |
Net income |  | $ | 4,153 |  |  | $ | 21,451 |
Change in fair value of derivative contracts designated as hedge transactions |  |  | (33,165 | ) |  |  | 1,832 |
Comprehensive (loss) income |  | $ | (29,012 | ) |  | $ | 23,283 |
Basic income per common share after preferred dividends |  | $ | 0.01 |  |  | $ | 0.04 |
Diluted income per common share after preferred dividends |  | $ | 0.01 |  |  | $ | 0.04 |
Weighted average number of common shares outstanding - basic |  |  | 538,490 |  |  |  | 534,101 |
Weighted average number of common shares outstanding - diluted |  |  | 544,061 |  |  |  | 540,527 |
Cash dividends per common share |  | $ | 0.00625 |  |  | $ | 0.00875 |

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

3

Table of Contents

Hecla Mining Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

|  | Three Months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
Operating activities: |  |  |  |  |  |  |  |
Net income |  | $ | 4,153 |  |  | $ | 21,451 |
Non-cash elements included in net income: |  |  |  |  |  |  |  |
Depreciation, depletion and amortization |  |  | 35,456 |  |  |  | 46,957 |
Provision for reclamation and closure costs |  |  | 1,643 |  |  |  | 4,529 |
Stock-based compensation expense |  |  | 1,271 |  |  |  | 500 |
Deferred taxes |  |  | 2,234 |  |  |  | 141 |
Fair value adjustments, net |  |  | (2,245 | ) |  |  | (8,623 | )
Foreign exchange loss |  |  | 2,280 |  |  |  | 1,755 |
Other non-cash items, net |  |  | 483 |  |  |  | 556 |
Change in assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 2,779 |  |  |  | (2,664 | )
Inventories |  |  | (5,081 | ) |  |  | 2,120 |
Other current and non-current assets |  |  | 1,696 |  |  |  | 1,528 |
Accounts payable and accrued liabilities |  |  | (13,907 | ) |  |  | (24,545 | )
Accrued payroll and related benefits |  |  | 6,909 |  |  |  | (7,995 | )
Accrued taxes |  |  | 3,754 |  |  |  | 2,031 |
Accrued reclamation and closure costs and other non-current liabilities |  |  | (3,516 | ) |  |  | 195 |
Cash provided by operating activities |  |  | 37,909 |  |  |  | 37,936 |
Investing activities: |  |  |  |  |  |  |  |
Additions to properties, plants, equipment and mineral interests |  |  | (21,478 | ) |  |  | (21,413 | )
Proceeds from sale of investments |  |  | 2,487 |  |  |  | — |
Proceeds from disposition of properties, plants and equipment |  |  | 617 |  |  |  | 19 |
Purchases of investments |  |  | (10,868 | ) |  |  | — |
Net cash used in investing activities |  |  | (29,242 | ) |  |  | (21,394 | )
Financing activities: |  |  |  |  |  |  |  |
Acquisition of treasury shares |  |  | (1,921 | ) |  |  | — |
Dividends paid to common and preferred stockholders |  |  | (3,509 | ) |  |  | (4,826 | )
Credit facility fees paid |  |  | (54 | ) |  |  | (82 | )
Repayments of finance leases |  |  | (1,695 | ) |  |  | (1,881 | )
Net cash used in financing activities |  |  | (7,179 | ) |  |  | (6,789 | )
Effect of exchange rates on cash |  |  | 519 |  |  |  | 167 |
Net increase in cash, cash equivalents and restricted cash and cash equivalents |  |  | 2,007 |  |  |  | 9,920 |
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |  |  | 211,063 |  |  |  | 130,883 |
Cash, cash equivalents and restricted cash and cash equivalents at end of period |  | $ | 213,070 |  |  | $ | 140,803 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 18,603 |  |  | $ | 18,406 |
Cash paid for income and mining taxes |  | $ | 679 |  |  | $ | 1,980 |
Significant non-cash investing and financing activities: |  |  |  |  |  |  |  |
Addition of finance lease obligations and right-of-use assets |  | $ | 2,864 |  |  | $ | 3,120 |
Accounts receivable for proceeds on exchange of investments |  | $ | — |  |  | $ | 1,832 |

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

4

Table of Contents

Hecla Mining Company and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except shares)

|  | March 31, 2022 |  |  | December 31, 2021 |
ASSETS |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 212,029 |  |  | $ | 210,010 |
Accounts receivable: |  |  |  |  |  |  |  |
Trade |  |  | 33,324 |  |  |  | 36,437 |
Other, net |  |  | 8,586 |  |  |  | 8,149 |
Inventories: |  |  |  |  |  |  |  |
Concentrates, doré, and stockpiled ore |  |  | 29,852 |  |  |  | 25,906 |
Materials and supplies |  |  | 43,238 |  |  |  | 41,859 |
Other current assets |  |  | 16,927 |  |  |  | 19,266 |
Total current assets |  |  | 343,956 |  |  |  | 341,627 |
Investments |  |  | 29,204 |  |  |  | 10,844 |
Restricted cash and investments |  |  | 1,041 |  |  |  | 1,053 |
Properties, plants, equipment and mineral interests, net |  |  | 2,298,858 |  |  |  | 2,310,810 |
Operating lease right-of-use assets |  |  | 12,342 |  |  |  | 12,435 |
Deferred taxes |  |  | 45,562 |  |  |  | 45,562 |
Other non-current assets |  |  | 7,936 |  |  |  | 6,477 |
Total assets |  | $ | 2,738,899 |  |  | $ | 2,728,808 |
LIABILITIES |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 73,786 |  |  | $ | 68,100 |
Accrued payroll and related benefits |  |  | 34,864 |  |  |  | 28,714 |
Accrued taxes |  |  | 16,128 |  |  |  | 12,306 |
Finance and operating leases |  |  | 8,535 |  |  |  | 8,098 |
Accrued reclamation and closure costs |  |  | 10,594 |  |  |  | 9,259 |
Accrued interest |  |  | 5,232 |  |  |  | 14,454 |
Derivatives liabilities |  |  | 38,992 |  |  |  | 19,353 |
Other current liabilities |  |  | 109 |  |  |  | 99 |
Total current liabilities |  |  | 188,240 |  |  |  | 160,383 |
Finance and operating leases |  |  | 18,385 |  |  |  | 17,726 |
Accrued reclamation and closure costs |  |  | 103,612 |  |  |  | 103,972 |
Long-term debt |  |  | 508,852 |  |  |  | 508,095 |
Deferred tax liability |  |  | 140,810 |  |  |  | 149,706 |
Derivatives liabilities |  |  | 43,402 |  |  |  | 18,528 |
Other non-current liabilities |  |  | 7,055 |  |  |  | 9,611 |
Total liabilities |  |  | 1,010,356 |  |  |  | 968,021 |
Commitments and contingencies (Notes 4, 7, 8, and 10) |  |  |  |  |  |  |  |
STOCKHOLDERS’ EQUITY |
Preferred stock, 5,000,000 shares authorized: |  |  |  |  |  |  |  |
Series B preferred stock, $0.25 par value, 157,816 shares issued and outstanding, liquidation preference — $7,891 |  |  | 39 |  |  |  | 39 |
Common stock, $0.25 par value, 750,000,000 authorized shares; issued March 31, 2022 — 546,635,233 shares and December 31, 2021 — 545,534,760 shares |  |  | 136,657 |  |  |  | 136,391 |
Capital surplus |  |  | 2,036,417 |  |  |  | 2,034,485 |
Accumulated deficit |  |  | (353,007 | ) |  |  | (353,651 | )
Accumulated other comprehensive loss |  |  | (61,621 | ) |  |  | (28,456 | )
Less treasury stock, at cost; March 31, 2022 — 7,728,800 shares and December 31, 2021 - 7,395,295 shares issued and held in treasury |  |  | (29,942 | ) |  |  | (28,021 | )
Total stockholders’ equity |  |  | 1,728,543 |  |  |  | 1,760,787 |
Total liabilities and stockholders’ equity |  | $ | 2,738,899 |  |  | $ | 2,728,808 |

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

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Hecla Mining Company and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(Dollars are in thousands, except for share and per share amounts)

|  | Three Months Ended March 31, 2022 |
|  | Series B Preferred Stock |  |  | Common Stock |  |  | Additional Paid-In Capital |  |  | Accumulated Deficit |  |  | Accumulated Other Comprehensive Loss, net |  |  | Treasury Stock |  |  | Total |
Balances, January 1, 2022 |  | $ | 39 |  |  | $ | 136,391 |  |  | $ | 2,034,485 |  |  | $ | (353,651 | ) |  | $ | (28,456 | ) |  | $ | (28,021 | ) |  | $ | 1,760,787 |
Net income |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 4,153 |  |  |  | — |  |  |  | — |  |  |  | 4,153 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | 1,271 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,271 |
Incentive compensation units distributed (888,000 shares) |  |  | — |  |  |  | 222 |  |  |  | (222 | ) |  |  | — |  |  |  | — |  |  |  | (1,921 | ) |  |  | (1,921 | )
Common stock ($0.00625 per share) and Series B Preferred Stock ($0.875 per share) dividends declared |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,509 | ) |  |  | — |  |  |  | — |  |  |  | (3,509 | )
Common stock issued for 401(k) match (180,000 shares) |  |  | — |  |  |  | 44 |  |  |  | 883 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 927 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (33,165 | ) |  |  | — |  |  |  | (33,165 | )
Balances, March 31, 2022 |  | $ | 39 |  |  | $ | 136,657 |  |  | $ | 2,036,417 |  |  | $ | (353,007 | ) |  | $ | (61,621 | ) |  | $ | (29,942 | ) |  | $ | 1,728,543 |

|  | Three Months Ended March 31, 2021 |
|  | Series B Preferred Stock |  |  | Common Stock |  |  | Additional Paid-In Capital |  |  | Accumulated Deficit |  |  | Accumulated Other Comprehensive Loss, net |  |  | Treasury Stock |  |  | Total |
Balances, January 1, 2021 |  | $ | 39 |  |  | $ | 134,629 |  |  | $ | 2,003,576 |  |  | $ | (368,074 | ) |  | $ | (32,889 | ) |  | $ | (23,496 | ) |  | $ | 1,713,785 |
Net income |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 21,451 |  |  |  | — |  |  |  | — |  |  |  | 21,451 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | 483 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 483 |
Common stock ($0.00875 per share) and Series B Preferred Stock ($0.875 per share) dividends declared |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (4,826 | ) |  |  | — |  |  |  | — |  |  |  | (4,826 | )
Common stock issued for 401(k) match (165,000 shares) |  |  | — |  |  |  | 42 |  |  |  | 1,088 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,130 |
Shares issued to pension plans (3,500,000 shares) |  |  | — |  |  |  | 875 |  |  |  | 15,925 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,800 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,832 |  |  |  | — |  |  |  | 1,832 |
Balances, March 31, 2021 |  | $ | 39 |  |  | $ | 135,546 |  |  | $ | 2,021,072 |  |  | $ | (351,449 | ) |  | $ | (31,057 | ) |  | $ | (23,496 | ) |  | $ | 1,750,655 |

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

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Note 1. Basis of Preparation of Financial Statements

The accompanying unaudited interim condensed consolidated financial statements of Hecla Mining Company and its subsidiaries (collectively, “Hecla,” “the Company,” “we,” “our,” or “us,” except where the context requires otherwise) have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required annually by generally accepted accounting principles in the United States (“GAAP”). Therefore, this information should be read in conjunction with Hecla’s consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). The consolidated December 31, 2021 balance sheet data was derived from our audited consolidated financial statements. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The 2019 novel strain of coronavirus (“COVID-19”) was characterized as a global pandemic by the World Health Organization on March 11, 2020. We continue to take precautionary measures to mitigate the impact of COVID-19, including implementing operational plans and practices. As long as they are required, the operational practices implemented could continue to have an adverse impact on our operating results due to deferred production and revenues or additional costs. We incurred $0.4 million and $1.6 million in COVID-19 mitigation costs during the three months ended March 31, 2022 and 2021, respectively. We continue to monitor the rapidly evolving situation and guidance from federal, state, local and foreign governments and public health authorities and may take additional actions based on their recommendations. The extent of the impact of COVID-19 on our business and financial results will also depend on future developments, including the duration and spread of the outbreak and the success of the current vaccination programs and the related impact on prices, demand, creditworthiness and other market conditions and governmental reactions, all of which are highly uncertain.

Certain amounts in the prior year have been reclassified to conform to the current year presentation.

Note 2. Business Segments and Sales of Products

We discover, acquire and develop mines and other mineral interests and produce and market (i) concentrates, containing silver, gold, lead and zinc, (ii) carbon material containing silver and gold, and (iii) doré containing silver and gold. We are currently organized and managed in four segments: Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations.

General corporate activities not associated with operating mines and their various exploration activities, as well as discontinued operations and idle properties, are presented as “other.” Interest expense, interest income and income and mining taxes are considered general corporate items, and are not allocated to our segments.

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The following tables present information about our reportable segments for the three months ended March 31, 2022 and 2021 (in thousands):

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Sales of products: |  |  |  |  |  |  |  |
Greens Creek |  | $ | 86,090 |  |  | $ | 98,409 |
Lucky Friday |  |  | 38,040 |  |  |  | 29,122 |
Casa Berardi |  |  | 62,101 |  |  |  | 72,911 |
Nevada Operations |  |  | 268 |  |  |  | 10,237 |
Other |  |  | — |  |  |  | 173 |
|  | $ | 186,499 |  |  | $ | 210,852 |
Income (loss) from operations: |  |  |  |  |  |  |  |
Greens Creek |  | $ | 34,586 |  |  | $ | 44,600 |
Lucky Friday |  |  | 8,771 |  |  |  | 6,323 |
Casa Berardi |  |  | (2,699 | ) |  |  | 11,706 |
Nevada Operations |  |  | (12,231 | ) |  |  | (3,140 | )
Other |  |  | (13,669 | ) |  |  | (18,460 | )
|  | $ | 14,758 |  |  | $ | 41,029 |

The following table presents identifiable assets by reportable segment as of March 31, 2022 and December 31, 2021 (in thousands):

|  | March 31, 2022 |  |  | December 31, 2021 |
Identifiable assets: |  |  |  |  |  |  |  |
Greens Creek |  | $ | 578,565 |  |  | $ | 589,944 |
Lucky Friday |  |  | 526,971 |  |  |  | 516,545 |
Casa Berardi |  |  | 710,374 |  |  |  | 701,868 |
Nevada Operations |  |  | 467,092 |  |  |  | 468,985 |
Other |  |  | 455,897 |  |  |  | 451,466 |
|  | $ | 2,738,899 |  |  | $ | 2,728,808 |

Sales of products by metal for the three-month periods ended March 31, 2022 and 2021 were as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Silver |  | $ | 66,332 |  |  | $ | 77,760 |
Gold |  |  | 77,168 |  |  |  | 101,408 |
Lead |  |  | 19,564 |  |  |  | 15,893 |
Zinc |  |  | 35,638 |  |  |  | 29,191 |
Less: Smelter and refining charges |  |  | (12,203 | ) |  |  | (13,400 | )
Sales of products |  | $ | 186,499 |  |  | $ | 210,852 |

Sales of products for the first three months of 2022 and 2021 included a net loss of $4.8 million and net gain of $2.8 million, respectively, on financially-settled forward option contracts for silver, gold, lead and zinc contained in our sales. See Note 8 for more information.

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Note 3. Income and Mining Taxes

Major components of our income and mining tax (provision) benefit for the three months ended March 31, 2022 and 2021 are as follows (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |
Domestic |  | $ | (2,103 | ) |  | $ | (2,277 | )
Foreign |  |  | (1,741 | ) |  |  | (2,286 | )
Total current income and mining tax provision |  |  | (3,844 | ) |  |  | (4,563 | )
Deferred: |  |  |  |  |  |  |  |
Domestic |  |  | (5,091 | ) |  |  | 896 |
Foreign |  |  | 3,304 |  |  |  | (1,076 | )
Total deferred income and mining tax provision |  |  | (1,787 | ) |  |  | (180 | )
Total income and mining tax provision |  | $ | (5,631 | ) |  | $ | (4,743 | )

The income and mining tax provision for the three-month periods ended March 31, 2022 and 2021 varies from the amounts that would have resulted from applying the statutory tax rates to pre-tax income due primarily to the impact of taxation in foreign jurisdictions and non-recognition of net operating losses and foreign exchange gains and losses in certain jurisdictions.

For the three-month period ended March 31, 2022, we used the annual effective tax rate method to calculate the tax provision, a change from the discrete method used for the three-month period ended March 31, 2021, due to reversal of valuation allowance in the fourth quarter of 2021. Valuation allowances on Nevada, Mexico and certain Canadian net operating losses were treated as discrete adjustments to the annual effective tax rate method calculation, partially causing the increase in the income tax rate for the three-month period ended March 31, 2022 as compared to March 31, 2021.

Note 4. Employee Benefit Plans

We sponsor defined benefit pension plans covering substantially all U.S. employees. Net periodic pension cost for the plans consisted of the following for the three-month periods ended March 31, 2022 and 2021 (in thousands):

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Service cost |  | $ | 1,566 |  |  | $ | 1,455 |
Interest cost |  |  | 1,369 |  |  |  | 1,248 |
Expected return on plan assets |  |  | (3,363 | ) |  |  | (2,313 | )
Amortization of prior service cost |  |  | 128 |  |  |  | 99 |
Amortization of net loss |  |  | 512 |  |  |  | 1,125 |
Net periodic pension cost |  | $ | 212 |  |  | $ | 1,614 |

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The service cost component of net periodic pension cost is included in the same line items of our condensed consolidated financial statements as other employee compensation costs, and the net gain of $1.4 million and net expense of $0.2 million for the three-month periods ended March 31, 2022 and 2021, respectively, related to all other components of net periodic pension cost is included in other (expense) income on our condensed consolidated statements of operations and comprehensive (loss) income.

We do not expect to be required to contribute to our defined benefit pension plans in 2022, but may do so.

Note 5. Income Per Common Share

We calculate basic income per common share on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated using the weighted average number of shares of common stock outstanding during the period plus the effect of potential dilutive common shares during the period using the treasury stock and if-converted methods.

Potential dilutive shares of common stock include outstanding unvested restricted stock awards, performance-based share awards, stock units, warrants and convertible preferred stock for periods in which we have reported net income. For periods in which we report net losses, potential dilutive shares of common stock are excluded, as their conversion and exercise would be anti-dilutive.

The following table represents net income per common share – basic and diluted (in thousands, except income (loss) per share):

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Numerator |  |  |  |  |  |  |  |
Net income |  | $ | 4,153 |  |  | $ | 21,451 |
Preferred stock dividends |  |  | (138 | ) |  |  | (138 | )
Net income applicable to common shares |  | $ | 4,015 |  |  | $ | 21,313 |
Denominator |  |  |  |  |  |  |  |
Basic weighted average common shares |  |  | 538,490 |  |  |  | 534,101 |
Dilutive incentive compensation units, warrants and deferred shares |  |  | 5,571 |  |  |  | 6,426 |
Diluted weighted average common shares |  |  | 544,061 |  |  |  | 540,527 |
Basic income per common share |  | $ | 0.01 |  |  | $ | 0.04 |
Diluted income per common share |  | $ | 0.01 |  |  | $ | 0.04 |

Diluted income per common share for the three-month periods ended March 31, 2022 and 2021 excludes the potential effects of outstanding shares of our convertible preferred stock, as their conversion would have no effect on the calculation of dilutive shares.

For the three months ended March 31, 2022, the calculation of diluted income per common share included (i) 1,954,773 incentive compensation units that were unvested during the period, (ii) 1,506,950 warrants to purchase one share of common stock and (iii) 2,109,056 deferred shares that were dilutive. For the three months ended March 31, 2021, the calculation of diluted income per common share included (i) 2,863,038 incentive compensation units that were unvested during the period, (ii) 1,536,615 warrants to purchase one share of common stock and (iii) 2,026,440 deferred shares that were dilutive.

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Note 6. Stockholders’ Equity

Stock-based Compensation Plans

Stock-based compensation expense for restricted stock unit and performance-based grants to employees and shares issued to non-employee directors totaled $1.3 million and $0.5 million for the first three months of 2022 and 2021, respectively.

Common Stock Dividends

On February 21, 2022, our Board of Directors declared a quarterly cash dividend of $0.00625 per share of common stock, consisting of $0.00375 per share for the minimum dividend component of our common stock dividend policy and $0.0025 per share for the silver-linked dividend component of the policy, for a total dividend of $3.4 million paid in March 2022. The realized silver price of $23.49 in the fourth quarter of 2021 satisfied the criterion for the silver-linked dividend component of our common stock dividend policy.

Note 7. Debt, Credit Facility and Leases

Our debt as of March 31, 2022 and December 31, 2021 consisted of our 7.25% Senior Notes due February 15, 2028 (“Senior Notes”) and our Series 2020-A Senior Notes due July 9, 2025 (the “IQ Notes”). The following tables summarize our long-term debt balances, excluding interest, as of March 31, 2022 and December 31, 2021 (in thousands):

|  | March 31, 2022 |
|  | Senior Notes |  |  | IQ Notes |  |  | Total |
Principal |  | $ | 475,000 |  |  | $ | 38,605 |  |  | $ | 513,605 |
Unamortized discount/premium and issuance costs |  |  | (5,324 | ) |  |  | 571 |  |  |  | (4,753 | )
Long-term debt balance |  | $ | 469,676 |  |  | $ | 39,176 |  |  | $ | 508,852 |

|  | December 31, 2021 |
|  | Senior Notes |  |  | IQ Notes |  |  | Total |
Principal |  | $ | 475,000 |  |  | $ | 38,051 |  |  | $ | 513,051 |
Unamortized discount/premium and issuance costs |  |  | (5,552 | ) |  |  | 596 |  |  |  | (4,956 | )
Long-term debt balance |  | $ | 469,448 |  |  | $ | 38,647 |  |  | $ | 508,095 |

The following table summarizes the scheduled annual future payments, including interest, for our Senior Notes, IQ Notes, and finance and operating leases as of March 31, 2022 (in thousands). The amounts for the IQ Notes are stated in U.S. dollars (“USD”) based on the USD/Canadian dollar (“CAD”) exchange rate as of March 31, 2022.

Twelve-month period ending March 31, |  | Senior Notes |  |  | IQ Notes |  |  | Finance Leases |  |  | Operating Leases |
2023 |  | $ | 34,438 |  |  | $ | 2,515 |  |  | $ | 6,365 |  |  | $ | 3,057 |
2024 |  |  | 34,438 |  |  |  | 2,515 |  |  |  | 4,881 |  |  |  | 2,528 |
2025 |  |  | 34,438 |  |  |  | 2,515 |  |  |  | 3,313 |  |  |  | 1,079 |
2026 |  |  | 34,438 |  |  |  | 39,295 |  |  |  | 943 |  |  |  | 1,059 |
2027 |  |  | 34,438 |  |  |  | — |  |  |  | — |  |  |  | 1,041 |
Thereafter |  |  | 505,130 |  |  |  | — |  |  |  | — |  |  |  | 6,174 |
Total |  | $ | 677,320 |  |  | $ | 46,840 |  |  | $ | 15,502 |  |  | $ | 14,938 |

Credit Facility

In July 2018, we entered into a $250 million senior secured revolving credit facility which has a term ending on February 7, 2023. As of March 31, 2022 and December 31, 2021, no borrowings were outstanding under the facility.

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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 4.00% of the amount of the letters of credit 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 $17.3 million in letters of credit outstanding as of March 31, 2022.

We believe we were in compliance with all covenants under the credit agreement as of March 31, 2022.

Note 8. Derivative Instruments

General

Our current risk management policy provides that up to 75% of:

| • | our future foreign currency-related operating cost exposure for five years into the future may be hedged;

| • | our planned lead and zinc metals price exposure for five years into the future, with certain other limitations, to be covered under derivatives programs that would establish a ceiling for prices to be realized on future metals sales; and

| • | our planned silver and gold metals price exposure for five years into the future, with certain other limitations, may be covered under derivatives programs that would establish a floor, but not a ceiling, for prices to be realized on future metals sales. We currently do not utilize this program.

In addition, our risk management policy provides for (i) potential additional programs to manage other foreign currency exposures and (ii) that price exposure between the time of shipment and final settlement on silver, gold, lead and zinc contained in our concentrate shipments may be covered under derivatives programs that would establish prices to be realized on those sales.

These instruments expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of the hedged commodity or foreign currency and (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions.

Foreign Currency

Our wholly-owned subsidiaries owning the Casa Berardi and San Sebastian operations are USD-functional entities which routinely incur expenses denominated in CAD and Mexican pesos (“MXN”), respectively. Such expenses expose us to exchange rate fluctuations between the USD and CAD and MXN. We utilize a program to manage our exposure to fluctuations in the exchange rate between the USD and CAD and the impact on our future operating costs denominated in CAD. In November 2021, we initiated a similar program related to future development costs denominated in CAD, and have used a similar program, on a limited basis, related to interest payments on our IQ Notes (see Note 7). The programs utilize forward contracts to buy CAD. Each contract related to operating costs is designated as a cash flow hedge, while contracts related to development and interest costs have not been designated as hedges as of March 31, 2022. As of March 31, 2022, we have 146 forward contracts outstanding to buy a total of CAD$276.7 million having a notional amount of USD$213.3 million. The CAD contracts are related to forecasted cash operating and development costs at Casa Berardi to be incurred from 2022 through 2025 and have CAD-to-USD exchange rates ranging between 1.2702 and 1.3333.

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As of March 31, 2022 and December 31, 2021, we recorded the following balances for the fair value of the contracts (in millions):

|  | March 31, |  |  | December 31, |
Balance sheet line item: |  | 2022 |  |  | 2021 |
Other current assets |  | $ | 3.9 |  |  | $ | 2.7 |
Other non-current assets |  |  | 3.9 |  |  |  | 2.5 |

Net unrealized gains of approximately $7.8 million related to the effective portion of the hedges were included in accumulated other comprehensive loss as of March 31, 2022. Unrealized gains and losses will be transferred from accumulated other comprehensive loss to current earnings as the underlying operating expenses are recognized. We estimate approximately $3.7 million in net unrealized gains included in accumulated other comprehensive loss as of March 31, 2022 will be reclassified to current earnings in the next twelve months. Net realized gains of approximately $1.1 million on contracts related to underlying operating expenses which have been recognized were transferred from accumulated other comprehensive loss and included in cost of sales and other direct production costs for the three months ended March 31, 2022. Net gains of approximately $0.4 million related to contracts not designated as hedges and no net unrealized gains or losses related to ineffectiveness of the hedges were included in fair value adjustments, net on our consolidated statements of operations and comprehensive income for the three months ended March 31, 2022.

Metals Prices

We are currently using financially-settled forward contracts to manage the exposure to:

| • | changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and

| • | changes in prices of zinc and lead (but not silver and gold) contained in our forecasted future concentrate shipments.

The following tables summarize the quantities of metals committed under forward sales contracts at March 31, 2022 and December 31, 2021:

March 31, 2022 |  | Ounces/pounds under contract (in 000's) |  |  | Average price per ounce/pound |
|  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |  |  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |
|  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |  |  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |
Contracts on provisional sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | 1,573 |  |  |  | 5 |  |  |  | 16,976 |  |  |  | 5,732 |  |  | $ | 24.73 |  |  | $ | 1,912 |  |  | $ | 1.27 |  |  | $ | 0.97 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | — |  |  |  | — |  |  |  | 37,644 |  |  |  | 46,517 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 1.31 |  |  | $ | 0.98 |
2023 settlements |  |  | — |  |  |  | — |  |  |  | 78,264 |  |  |  | 75,618 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 1.30 |  |  | $ | 1.00 |
2024 settlements |  |  | — |  |  |  | — |  |  |  | 64,650 |  |  |  | 23,149 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 1.32 |  |  | $ | 1.01 |

December 31, 2021 |  | Ounces/pounds under contract (in 000's) |  |  | Average price per ounce/pound |
|  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |  |  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |
|  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |  |  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |
Contracts on provisional sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | 1,814 |  |  |  | 6 |  |  |  | 13,371 |  |  |  | 4,575 |  |  | $ | 23.02 |  |  | $ | 1,812 |  |  | $ | 1.39 |  |  | $ | 0.96 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | — |  |  |  | — |  |  |  | 57,706 |  |  |  | 59,194 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 1.28 |  |  | $ | 0.98 |
2023 settlements |  |  | — |  |  |  | — |  |  |  | 76,280 |  |  |  | 71,650 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 1.29 |  |  | $ | 1.00 |

Effective November 1, 2021, we designated the contracts for lead and zinc contained in our forecasted future shipments as hedges for accounting purposes, with gains and losses deferred to accumulated other comprehensive loss until the hedged product ships. Prior to November 1, 2021, these contracts had not been designated as hedges for hedge accounting and were therefore marked-to-market through earnings each period. The forward contracts for silver and gold contained in our concentrate shipments have not been designated as hedges and are marked-to-market through earnings each period.

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We recorded the following balances for the fair value of the forward contracts as of March 31, 2022 and forward and put option contracts as of December 31, 2021 (in millions):

|  | March 31, 2022 |  |  | December 31, 2021 |
Balance sheet line item: |  | Contracts in an asset position |  |  | Contracts in a liability position |  |  | Net asset (liability) |  |  | Contracts in an asset position |  |  | Contracts in a liability position |  |  | Net asset (liability) |
Other current assets |  | $ | 0.3 |  |  | $ | (0.2 | ) |  | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current derivatives liability |  |  | 0.5 |  |  |  | (39.5 | ) |  |  | (39.0 | ) |  |  | 0.7 |  |  |  | (20.1 | ) |  |  | (19.4 | )
Other non-current liabilities |  |  | 0.1 |  |  |  | (43.5 | ) |  |  | (43.4 | ) |  |  | 0.4 |  |  |  | (18.9 | ) |  |  | (18.5 | )

Net unrealized losses of approximately $63.0 million related to the effective portion of the contracts designated as hedges were included in accumulated other comprehensive loss as of March 31, 2022, and are net of related deferred taxes. Unrealized gains and losses will be transferred from accumulated other comprehensive loss to current earnings as the underlying operating expenses are recognized. We estimate approximately $28.0 million in net unrealized losses included in accumulated other comprehensive loss as of March 31, 2022 would be reclassified to current earnings in the next twelve months. We recognized a net loss of $4.8 million, including a $0.3 million gain transferred from accumulated other comprehensive loss, and net gain of $2.8 million during the first quarters of 2022 and 2021, respectively, on the contracts utilized to manage exposure to prices of metals in our concentrate shipments, which is included in sales of products. The net losses and gains recognized on the contracts offset gains and losses related to price adjustments on our provisional concentrate sales due to changes to silver, gold, lead and zinc prices between the time of sale and final settlement.

We recognized $0.6 million in net losses and $0.5 million in net gains during the first quarters of 2022 and 2021, respectively, on the contracts utilized to manage exposure to prices for forecasted future sales. The net losses and gains on these contracts are included as a separate line item under other income (expense), as they relate to forecasted future sales, as opposed to sales that have already taken place but are subject to final pricing as discussed in the preceding paragraph. Increases in zinc and lead prices resulted in the net loss for the first quarter of 2022.

Credit-risk-related Contingent Features

Certain of our derivative contracts contain cross default provisions which provide that a default under our revolving credit agreement would cause a default under the derivative contract. As of March 31, 2022, we have not posted any separate collateral related to these contracts. The fair value of derivatives in a net liability position related to these agreements was $83.2 million as of March 31, 2022, which includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of the cross default provisions at March 31, 2022, we could have been required to settle our obligations under the agreements at their termination value of $83.2 million.

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Note 9. Fair Value Measurement

Fair value adjustments, net is comprised of the following:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
(Loss) gain on derivative contracts |  | $ | (201 | ) |  | $ | 473 |
Unrealized gain (loss) on investments in equity securities |  |  | 6,100 |  |  |  | (3,506 | )
Gain on disposition or exchange of investments |  |  | 66 |  |  |  | 1,158 |
Total fair value adjustments, net |  | $ | 5,965 |  |  | $ | (1,875 | )

Accounting guidance has established a hierarchy for inputs used to measure assets and liabilities at fair value on a recurring basis. The three levels included in the hierarchy are:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: significant other observable inputs; and

Level 3: significant unobservable inputs.

The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).

Description |  | Balance at March 31, 2022 |  |  | Balance at December 31, 2021 |  | Input Hierarchy Level
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |
Money market funds and other bank deposits |  | $ | 212,029 |  |  | $ | 210,010 |  | Level 1
Current and non-current investments: |  |  |  |  |  |  |  |  |
Equity securities – mining industry |  |  | 29,204 |  |  |  | 14,470 |  | Level 1
Trade accounts receivable: |  |  |  |  |  |  |  |  |
Receivables from provisional concentrate sales |  |  | 33,324 |  |  |  | 36,437 |  | Level 2
Restricted cash balances: |  |  |  |  |  |  |  |  |
Certificates of deposit and other bank deposits |  |  | 1,041 |  |  |  | 1,053 |  | Level 1
Derivative contracts - other current assets and other non-current assets: |  |  |  |  |  |  |  |  |
Metal forward contracts |  |  | 74 |  |  |  | — |  | Level 2
Foreign exchange contracts |  |  | 7,829 |  |  |  | 5,207 |  | Level 2
Total assets |  | $ | 283,501 |  |  | $ | 267,177 |  |
Liabilities: |  |  |  |  |  |  |  |  |
Derivative contracts - current and non-current derivatives liabilities: |  |  |  |  |  |  |  |  |
Metal forward contracts |  | $ | 82,394 |  |  | $ | 37,873 |  | Level 2
Foreign exchange contracts |  |  | — |  |  |  | 8 |  | Level 2
Total Liabilities |  | $ | 82,394 |  |  | $ | 37,881 |  |

Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value, and a small portion consists of municipal bonds having maturities of less than 90 days, which are recorded at fair value.

Current and non-current restricted cash balances consist primarily of certificates of deposit, U.S. Treasury securities, and other deposits and are valued at cost, which approximates fair value.

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Non-current investments consist of marketable equity securities of mining companies which are valued using quoted market prices for each security. During the first quarter of 2022, we acquired equity securities of various mining companies for a total cost of $10.9 million, and disposed of mining company equity securities acquired for $2.4 million for proceeds of $2.5 million. No such activity occurred during the first quarter of 2021.

Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metal.

We use financially-settled forward contracts to manage exposure to changes in the exchange rate between USD and CAD, and the impact on CAD-denominated operating and capital costs incurred at Casa Berardi (see Note 8 for more information). The fair value of each contract represents the present value of the difference between the forward exchange rate for the contract settlement period as of the measurement date and the contract settlement exchange rate.

We use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our concentrate shipments that have not reached final settlement (see Note 8 for more information). The fair value of each forward contract represents the present value of the difference between the forward metal price for the contract settlement period as of the measurement date and the contract settlement metal price.

At March 31, 2022, our Senior Notes and IQ Notes were recorded at their carrying value of $469.7 million and $39.2 million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $498.5 million and $40.5 million, respectively, at March 31, 2022. Quoted market prices, which we consider to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. Unobservable inputs which we consider to be Level 3, including an assumed current annual yield of 6%, are utilized to estimate the fair value of the IQ Notes. See Note 7 for more information.

Note 10. Commitments, Contingencies and Obligations

General

We follow GAAP guidance in determining our accruals and disclosures with respect to loss contingencies, and evaluate such accruals and contingencies for each reporting period. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

Johnny M Mine Area near San Mateo, McKinley County and San Mateo Creek Basin, New Mexico

In August 2012, Hecla Limited and the EPA entered into a Settlement Agreement and Administrative Order on Consent for Removal Action (“Consent Order”) regarding the Johnny M Mine Area near San Mateo, McKinley County, New Mexico. Mining at the Johnny M Mine was conducted for a limited period of time by a predecessor of Hecla Limited, and the EPA had previously asserted that Hecla Limited may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for environmental remediation and past costs incurred by the EPA at the site. Under the Consent Order, Hecla Limited agreed to pay (i) $1.1 million to the EPA for its past response costs at the site and (ii) any future response costs at the site under the Consent Order, in exchange for a covenant not to sue by the EPA. In December 2014, Hecla Limited submitted to the EPA the Engineering Evaluation and Cost Analysis (“EE/CA”) for the site which recommended on-site disposal of mine-related material. In January 2021, the parties began negotiating a new consent order to design and implement the on-site disposal response action recommended in the EE/CA. Based on the foregoing, we believe it is probable that Hecla Limited will incur a liability for the CERCLA removal action and we increased our accrual by $2.9 million to $9.0 million in the first quarter of 2021 primarily representing estimated costs to begin design and implementation of the remedy. It is possible that Hecla Limited’s liability will be more than $9.0 million, and any increase in liability could have a material adverse effect on Hecla Limited’s or our results of operations or financial position.

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The Johnny M Mine is in an area known as the San Mateo Creek Basin (“SMCB”), which is an approximately 321 square mile area in New Mexico that contains numerous legacy uranium mines and mills. In addition to Johnny M, Hecla Limited’s predecessor was involved at other mining sites within the SMCB. The EPA appears to have deferred consideration of listing the SMCB site on CERCLA’s National Priorities List (“Superfund”) by removing the site from its emphasis list, and is working with various potentially responsible parties (“PRPs”) at the site in order to study and potentially address perceived groundwater issues within the SMCB. The EE/CA discussed above relates primarily to contaminated rock and soil at the Johnny M site, not groundwater and not elsewhere within the SMCB site. It is possible that Hecla Limited’s liability at the Johnny M Site, and for any other mine site within the SMCB at which Hecla Limited’s predecessor may have operated, will be greater than our current accrual of $9.0 million due to the increased scope of required remediation.

In July 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the SMCB site or for costs incurred by the EPA in cleaning up the site. The EPA stated it has incurred approximately $9.6 million in response costs to date. On May 2, 2022, Hecla Limited received a letter from an attorney representing a PRP notifying Hecla Limited that three PRPs will seek cost recovery and contribution from Hecla Limited under CERCLA for certain investigatory work performed by the PRPs at the SMCB site. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by the various PRPs.

Carpenter Snow Creek and Barker-Hughesville Sites in Montana

In July 2010, the EPA made a formal request to Hecla for information regarding the Carpenter Snow Creek Superfund site located in Cascade County, Montana. The Carpenter Snow Creek site is located in a historic mining district, and in the early 1980s Hecla Limited leased 6 mining claims and performed limited exploration activities at the site. Hecla Limited terminated the mining lease in 1988.

In June 2011, the EPA informed Hecla Limited that it believes Hecla Limited, and several other PRPs, may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA stated in the letter that it has incurred approximately $4.5 million in response costs and estimated that total remediation costs may exceed $100 million. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning the site, including the relative contributions of contamination by various other PRPs.

In February 2017, the EPA made a formal request to Hecla for information regarding the Barker-Hughesville Mining District Superfund site located in Judith Basin and Cascade Counties, Montana. Hecla Limited submitted a response in April 2017. The Barker-Hughesville site is located in a historic mining district, and between approximately June and December 1983, Hecla Limited was party to an agreement with another mining company under which limited exploration activities occurred at or near the site.

In August 2018, the EPA informed Hecla Limited that it and several other PRPs may be liable for cleanup of the site or for costs incurred by the EPA in cleaning up the site. The EPA did not include an amount of its alleged response costs to date. Hecla Limited cannot with reasonable certainty estimate the amount or range of liability, if any, relating to this matter because of, among other reasons, the lack of information concerning past or anticipated future costs at the site and the relative contributions of contamination by various other PRPs.

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Litigation Related to Klondex Acquisition

On May 24, 2019, a purported Hecla stockholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against Hecla and certain of our executive officers, one of whom is also a director. The complaint, purportedly brought on behalf of all purchasers of Hecla common stock from March 19, 2018 through and including May 8, 2019, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks, among other things, damages and costs and expenses. Specifically, the complaint alleges that Hecla, under the authority and control of the individual defendants, made certain material false and misleading statements and omitted certain material information regarding Hecla’s Nevada Operations. The complaint alleges that these misstatements and omissions artificially inflated the market price of Hecla common stock during the class period, thus purportedly harming investors. Filings with the court regarding our motion to dismiss the lawsuit were completed in the first quarter of 2021. We cannot predict the outcome of this lawsuit or estimate damages if plaintiffs were to prevail. We believe that these claims are without merit and intend to defend them vigorously.

Related to this class action lawsuit, Hecla has been named as a nominal defendant in a shareholder derivative lawsuit which also names as defendants certain current and past (i) members of Hecla’s board of directors and (ii) officers of Hecla. The case was filed on May 4, 2022 in the Delaware Chancery Court. In general terms, the suit alleges breaches of fiduciary duties by the individual defendants, waste of corporate assets and unjust enrichment, and seeks damages, purportedly on behalf of Hecla.

Debt

See Note 7 for information on the commitments related to our debt arrangements as of March 31, 2022.

Other Commitments

Our contractual obligations as of March 31, 2022 included open purchase orders and commitments of approximately $7.7 million, $10.1 million, $0.2 million and $4.6 million for various capital and non-capital items at Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations, respectively. We also have total commitments of approximately $15.5 million relating to scheduled payments on finance leases, including interest, primarily for equipment at our Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations, and total commitments of approximately $14.9 million relating to payments on operating leases (see Note 7 for more information). As part of our ongoing business and operations, we are required to provide surety bonds, bank letters of credit, and restricted deposits for various purposes, including financial support for environmental reclamation obligations and workers compensation programs. As of March 31, 2022, we had surety bonds totaling $183.5 million and letters of credit totaling $17.3 million in place as financial support for future reclamation and closure costs, self-insurance, and employee benefit plans. The obligations associated with these instruments are generally related to performance requirements that we address through ongoing operations. As the requirements are met, the beneficiary of the associated instruments cancels or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure of the sites. We believe we are in compliance with all applicable bonding requirements and will be able to satisfy future bonding requirements as they arise.

Other Contingencies

We also have certain other contingencies resulting from litigation, claims, EPA investigations, and other commitments and are subject to a variety of environmental and safety laws and regulations incident to the ordinary course of business. We currently have no basis to conclude that any or all of such contingencies will materially affect our financial position, results of operations or cash flows. However, in the future, there may be changes to these contingencies, or additional contingencies may occur, any of which might result in an accrual or a change in current accruals recorded by us, and there can be no assurance that their ultimate disposition will not have a material adverse effect on our financial position, results of operations or cash flows.

Note 11. Developments in Accounting Pronouncements

Accounting Standards Updates Adopted

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles to certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and with early adoption permitted. We adopted the update as of January 1, 2022, which did not have a material impact on our consolidated financial statements or disclosures.

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In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The update is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted the new standard effective January 1, 2022, which did not have a material impact on our consolidated financial statements or disclosures.

Accounting Standards Updates to Become Effective in Future Periods

In 2017, the United Kingdom’s Financial Conduct Authority ("FCA") announced that after 2021 it would no longer compel banks to submit the rates required to calculate the London Interbank Offered Rate ("LIBOR"), which have been widely used as reference rates for various securities and financial contracts, including loans, debt and derivatives. This announcement indicated that the continuation of LIBOR on the current basis would not be guaranteed after 2021. Subsequently in March 2021, the FCA announced some USD LIBOR tenors (overnight, 1 month, 3 month, 6 month and 12 month) will continue to be published until June 30, 2023. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate ("SOFR"). Currently, our credit facility and certain of our derivative instruments reference LIBOR-based rates. Our credit facility contains provisions specifying alternative interest rate calculations to be employed when LIBOR ceases to be available as a benchmark and we have adhered to the ISDA 2020 IBOR Fallbacks Protocol, which will govern our derivatives upon the final cessation of USD LIBOR. ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as amended, helps limit the accounting impact from contract modifications, including hedging relationships, due to the transition from LIBOR to alternative reference rates that are completed by December 31, 2022. We do not expect a significant impact to our financial results, financial position or cash flows from the transition from LIBOR to alternative reference interest rates, but we will continue to monitor the impact of this transition until it is completed.

Note 12. Subsequent Events

During April 2022, we invested approximately $10 million in mining company securities.

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Forward-Looking Statements

Certain statements contained in this Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, are intended to be covered by the safe harbor provided for under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities, including reserves and other mineralization. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

These risks, uncertainties and other factors include, but are not limited to, those set forth under Part I, Item 1A – Risk Factors in our annual report filed on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Hecla Mining Company or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “Hecla,” “the Company,” “we,” “us” and “our” refer to Hecla Mining Company and its consolidated subsidiaries, except where the context requires otherwise. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our 2021 Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Forward-Looking Statements” above for further discussion). References to “Notes” are Notes included in our Notes to Condensed Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to losses or income per share are on a diluted basis.

Overview

Established in 1891, we believe we are the oldest operating precious metals mining company in the United States. We are the largest silver producer in the United States, producing over 40% of the United States silver production at our Greens Creek and Lucky Friday operations. We produce gold at our Casa Berardi operation in Quebec, Canada, and Greens Creek, and at our Nevada Operations segment prior to suspension of operations during 2021. Based upon our operational footprint, we believe we have low political and economic risk compared to other mines located in other parts of the world. Our exploration interests are located in the United States, Canada and Mexico. Our operating and strategic framework is based on expanding our production and locating and developing new resource potential in a safe and responsible manner.

First Quarter 2022 Highlights

Operational:

| • | Produced 3.3 million ounces of silver and 41,642 ounces of gold. See Consolidated Results of Operations below for information on total cost of sales and cash costs and AISC, after by-product credits, per silver and gold ounce for the three-month periods ended March 31, 2022 and 2021.

| • | Continued our trend of strong safety performance, as our All Injury Frequency Rate (“AIFR”) for the first quarter of 2022 was 1.48, 30% below the U.S. national average for MSHA's “metal and nonmetal” category and within 3% of our AIFR of 1.45 for the full year of 2021.

| • | Continued mitigation of the impacts of COVID-19 through refinement of our operational plans and procedures to protect our workforce, operations and communities while maintaining liquidity.

Financial:

| • | Reported sales of products of $186.5 million.

| • | Generated $37.9 million in net cash provided by operating activities after bi-annual interest payments totaling $18.5 million on the Senior Notes and IQ Notes. See the Financial Liquidity and Capital Resources section below for further discussion.

| • | Made capital expenditures (excluding lease additions and other non-cash items) of approximately $21.5 million, including $3.1 million at Greens Creek, $9.7 million at Lucky Friday, $7.8 million at Casa Berardi and $0.9 million at the Nevada Operations.

| • | Generated $16.4 million in free cash flow. A reconciliation of the non-GAAP measure free cash flow to net cash provided by operating activities, the nearest GAAP measure, is included in the Reconciliation of Cash Flows From Operating Activities (GAAP) to Free Cash Flow (Non-GAAP) section below.

| • | Returned $3.5 million, or 21% of free cash flows, to our shareholders through payment of dividends.

| • | Spent $12.8 million on exploration and pre-development activities.

| • | Achieved the above while increasing our cash balance to $212.0 million, which was $2.0 million higher than at December 31, 2021, with no borrowings on our revolving credit facility, as of March 31, 2022.

Our current business strategy is to focus our financial and human resources in the following areas:

| • | rapidly responding to the threats from the COVID-19 pandemic to protect our workforce, operations and communities while maintaining liquidity;

| • | operating our properties safely, in an environmentally responsible and cost-effective manner;

| • | maintaining and investing in exploration and pre-development projects in the vicinities of eleven mining districts and projects we believe to be under-explored and under-invested: Greens Creek on Alaska's Admiralty Island located near Juneau; North Idaho's Silver Valley in the historic Coeur d'Alene Mining District; the silver-producing district near Durango, Mexico; in the vicinity of our Casa Berardi mine and the Heva-Hosco project in the Abitibi region of northwestern Quebec, Canada; our projects located in two districts in Nevada; our projects in northwestern Montana; the Creede district of southwestern Colorado; the Kinskuch project in British Columbia, Canada; and the Republic mining district in Washington state;

| • | improving operations at each of our mines, which includes incurring costs for new technologies and equipment;

| • | expanding our proven and probable reserves, mineral resources and production capacity at our properties;

| • | conducting our business with financial stewardship to preserve our financial position in varying metals price and operational environments;

| • | advancing permitting of one or both of our Montana projects; and

| • | continuing to seek opportunities to acquire and invest in mining and exploration properties and companies.

We strive to achieve excellent mine safety and health performance. We seek to implement this goal by: training employees in safe work practices; establishing, following and improving safety standards; investigating accidents, incidents and losses to avoid recurrence; involving employees in the establishment of safety standards; and participating in the National Mining Association’s CORESafety program. We seek to implement reasonable best practices with respect to mine safety and emergency preparedness. We respond to issues outlined in investigations and inspections by MSHA, the Commission of Labor Standards, Pay Equity and Occupational Health and Safety in Quebec, and the Mexico Ministry of Economy and Mining and continue to evaluate our safety practices. There can be no assurance that our practices will mitigate or eliminate all safety risks. Achieving and maintaining compliance with regulations will be challenging and may increase our operating costs. See Item 1A. Risk Factors - We face substantial governmental regulation, including the Mine Safety and Health Act, various environmental laws and regulations and the 1872 Mining Law in our 2021 Form 10-K.

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Since its outbreak in 2020, the COVID-19 pandemic continues to impact our operational practices and we continue to incur incremental costs and modify our operational plans to keep our workforce safe. In 2020, the pandemic adversely impacted our expected production of gold at Casa Berardi and exploration drilling at Greens Creek. We incurred $0.4 million and $1.6 million in COVID-19 mitigation costs during the three months ended March 31, 2022 and 2021, respectively. To mitigate the impact of COVID-19, we have taken precautionary measures, including implementing operational plans and practices and increasing our cash reserves. As long as they are required, the operational practices implemented could continue to have an adverse impact on our operating results due to additional costs or deferred production and revenues. There is uncertainty related to the potential additional impacts COVID-19 and any subsequent variants could have on our operations and financial results for the rest of 2022. In our 2021 Form 10-K, see Item IA. Risk Factors - Natural disasters, public health crises (including COVID-19), political crises, and other catastrophic events or other events outside of our control may materially and adversely affect our business or financial results and COVID-19 virus pandemic may heighten other risks for information on how restrictions related to COVID-19 have recently affected some of our operations.

A number of key factors may impact the execution of our strategy, including regulatory issues and metals prices. Metals prices can be very volatile and are influenced by a number of factors beyond our control (except on a limited basis through the use of derivative contracts). See Item 7. Critical Accounting Estimates in our 2021 Form 10-K and above in Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited). The average realized prices of gold, lead and zinc were higher, with the average realized price for silver lower, in the first three months of 2022 than in the comparable period last year, as illustrated by the table in Results of Operations below. While we believe longer-term global economic and industrial trends could result in continued demand for the metals we produce, prices have been volatile and there can be no assurance that current prices will continue.

Volatility in global financial markets and other factors can pose a significant challenge to our ability to access credit and equity markets, should we need to do so, and to predict sales prices for our products. To help mitigate this challenge, we utilize forward contracts to manage exposure to declines in the prices of (i) silver, gold, zinc and lead contained in our concentrates that have been shipped but have not yet settled, and (ii) zinc and lead that we forecast for future concentrate shipments. In addition, we have in place a $250 million revolving credit agreement, of which $17.3 million was used as of March 31, 2022 for letters of credit, leaving approximately $232.7 million available for borrowing.

Another challenge for us is the risk associated with environmental litigation and ongoing reclamation activities. As described Item 1A. Risk Factors in our 2021 Form 10-K and above in Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited), it is possible that our estimate of these liabilities (and our ability to estimate liabilities in general) may change in the future, affecting our strategic plans. We are involved in various environmental legal matters and the estimate of our environmental liabilities and liquidity needs, as well as our strategic plans, may be significantly impacted as a result of these matters or new matters that may arise. We strive to ensure that our activities are conducted in compliance with applicable laws and regulations and attempt to resolve environmental litigation on terms as favorable to us as possible.

Consolidated Results of Operations

Sales of products by metal for the three-month periods ended March 31, 2022 and 2021, and the approximate variances attributed to differences in metals prices, sales volumes and smelter terms, were as follows:

(in thousands) |  | Silver |  |  | Gold |  |  | Base metals |  |  | Less: smelter and refining charges |  |  | Total sales of products |
Three months ended March 31, 2021 |  | $ | 77,760 |  |  | $ | 101,408 |  |  | $ | 45,084 |  |  | $ | (13,400 | ) |  | $ | 210,852 |
Variances - 2022 versus 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Price |  |  | (2,613 | ) |  |  | 4,298 |  |  |  | 12,316 |  |  |  | (76 | ) |  |  | 13,925 |
Volume |  |  | (8,726 | ) |  |  | (28,453 | ) |  |  | (2,198 | ) |  |  | 1,369 |  |  |  | (38,008 | )
Smelter terms |  |  | (89 | ) |  |  | (85 | ) |  |  | — |  |  |  | (96 | ) |  |  | (270 | )
Three months ended March 31, 2022 |  | $ | 66,332 |  |  | $ | 77,168 |  |  | $ | 55,202 |  |  | $ | (12,203 | ) |  | $ | 186,499 |

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Average market and realized metals prices for the three-month periods ended March 31, 2022 and 2021 were as follows:

|  |  | Three months ended March 31, |
|  |  | 2022 |  |  | 2021 |
Silver – | London PM Fix ($/ounce) |  | $ | 23.95 |  |  | $ | 26.29 |
| Realized price per ounce |  | $ | 24.68 |  |  | $ | 25.66 |
Gold – | London PM Fix ($/ounce) |  | $ | 1,874 |  |  | $ | 1,798 |
| Realized price per ounce |  | $ | 1,880 |  |  | $ | 1,770 |
Lead – | LME Final Cash Buyer ($/pound) |  | $ | 1.06 |  |  | $ | 0.92 |
| Realized price per pound |  | $ | 1.08 |  |  | $ | 0.92 |
Zinc – | LME Final Cash Buyer ($/pound) |  | $ | 1.70 |  |  | $ | 1.25 |
| Realized price per pound |  | $ | 1.79 |  |  | $ | 1.32 |

Average realized prices typically differ from average market prices primarily because concentrate sales are generally recorded as revenues at the time of shipment at forward prices for the estimated month of settlement, which differ from average market prices. Due to the time elapsed between shipment of concentrates and final settlement with the customers, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices each period through final settlement. For the first quarters of 2022 and 2021, we recorded net positive price adjustments to provisional settlements of $1.0 million and $0.6 million, respectively. The price adjustments related to silver, gold, lead and zinc contained in our concentrate shipments were largely offset by gains and losses on forward contracts for those metals. See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information. The gains and losses on these contracts are included in revenues and impact the realized prices for silver, gold, lead and zinc. Realized prices are calculated by dividing gross revenues for each metal (which include the price adjustments and gains and losses on the forward contracts discussed above) by the payable quantities of each metal included in concentrate and doré shipped during the period.

Total metals production and sales volumes for each period are shown in the following table:

|  |  | Three Months Ended March 31, |
|  |  | 2022 |  |  | 2021 |
Silver - | Ounces produced |  |  | 3,324,708 |  |  |  | 3,459,446 |
| Payable ounces sold |  |  | 2,687,261 |  |  |  | 3,030,026 |
Gold - | Ounces produced |  |  | 41,642 |  |  |  | 52,004 |
| Payable ounces sold |  |  | 41,053 |  |  |  | 57,286 |
Lead - | Tons produced |  |  | 10,863 |  |  |  | 10,704 |
| Payable tons sold |  |  | 9,054 |  |  |  | 8,668 |
Zinc - | Tons produced |  |  | 14,946 |  |  |  | 16,107 |
| Payable tons sold |  |  | 9,947 |  |  |  | 11,027 |

The difference between what we report as “ounces/tons produced” and “payable ounces/tons sold” is attributable to the difference between the quantities of metals contained in our products versus the portion of those metals actually paid for by our customers pursuant to our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades which impact the amount of metals contained in concentrates produced and sold.

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Sales, total cost of sales, gross profit, Cash Cost, After By-product Credits, per Ounce (“Cash Cost”) (non-GAAP) and All-In Sustaining Cost, After By-product Credits, per Ounce (“AISC”) (non-GAAP) at our operations for the three-month periods ended March 31, 2022 and 2021 were as follows (in thousands, except for Cash Cost and AISC):

|  | Silver |  |  | Gold |
|  | Greens Creek |  |  | Lucky Friday |  |  | Other (2) |  |  | Total Silver (3) |  |  | Casa Berardi |  |  | Nevada Operations |  |  | Total Gold |
Three Months Ended March 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales |  | $ | 86,090 |  |  | $ | 38,040 |  |  | $ | — |  |  | $ | 124,130 |  |  | $ | 62,101 |  |  | $ | 268 |  |  | $ | 62,369 |
Total cost of sales |  |  | (49,638 | ) |  |  | (29,264 | ) |  |  | — |  |  |  | (78,902 | ) |  |  | (62,168 | ) |  |  | — |  |  |  | (62,168 | )
Gross profit (loss) |  | $ | 36,452 |  |  | $ | 8,776 |  |  | $ | — |  |  | $ | 45,228 |  |  | $ | (67 | ) |  | $ | 268 |  |  | $ | 201 |
Cash Cost After By-product Credits, per Silver or Gold Ounce (1) |  | $ | (0.90 | ) |  | $ | 6.57 |  |  | $ | — |  |  | $ | 1.09 |  |  | $ | 1,516 |  |  | $ | — |  |  | $ | 1,516 |
AISC, After By-product Credits, per Silver or Gold ounce (1) |  | $ | 1.90 |  |  | $ | 13.15 |  |  | $ | — |  |  | $ | 7.64 |  |  | $ | 1,810 |  |  | $ | — |  |  | $ | 1,810 |
Three Months Ended March 31, 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales |  | $ | 98,409 |  |  | $ | 29,122 |  |  | $ | 173 |  |  | $ | 127,704 |  |  | $ | 72,911 |  |  | $ | 10,237 |  |  | $ | 83,148 |
Total cost of sales |  |  | (53,181 | ) |  |  | (22,794 | ) |  |  | (94 | ) |  |  | (76,069 | ) |  |  | (59,927 | ) |  |  | (7,455 | ) |  |  | (67,382 | )
Gross profit |  | $ | 45,228 |  |  | $ | 6,328 |  |  | $ | 79 |  |  | $ | 51,635 |  |  | $ | 12,984 |  |  | $ | 2,782 |  |  | $ | 15,766 |
Cash Cost After By-product Credits, per Silver or Gold Ounce (1) |  | $ | (0.67 | ) |  | $ | 7.62 |  |  | $ | — |  |  | $ | 1.40 |  |  | $ | 1,027 |  |  | $ | 1,416 |  |  | $ | 1,052 |
AISC, After By-product Credits, per Silver or Gold ounce (1) |  | $ | 1.59 |  |  | $ | 14.24 |  |  | $ | — |  |  | $ | 7.21 |  |  | $ | 1,272 |  |  | $ | 1,461 |  |  | $ | 1,284 |

| (1) | A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

| (2) | Includes results for San Sebastian, which was an operating segment prior to 2021.

| (3) | The calculation of AISC, After By-product Credits, per Ounce for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining exploration and capital costs.

While revenue from zinc, lead and gold by-products is significant, we believe that identification of silver as the primary product of Greens Creek and Lucky Friday is appropriate because:

| • | silver has historically accounted for a higher proportion of revenue than any other metal and is expected to do so in the future;

| • | we have historically presented each of these operations as a producer primarily of silver, based on the original analysis that justified putting the project into production, and believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;

| • | metallurgical treatment maximizes silver recovery;

| • | the Greens Creek and Lucky Friday deposits are massive sulfide deposits containing an unusually high proportion of silver; and

| • | in most of their working areas, Greens Creek and Lucky Friday utilize selective mining methods in which silver is the metal targeted for highest recovery.

Likewise, we believe the identification of gold, lead and zinc as by-product credits at Greens Creek and Lucky Friday is appropriate because of their lower economic value compared to silver and due to the fact that silver is the primary product we intend to produce. In addition, we have not consistently received sufficient revenue from any single by-product metal to warrant classification of such as a co-product.

We periodically review our revenues to ensure that reporting of primary products and by-products is appropriate. Because for Greens Creek and Lucky Friday we consider zinc, lead and gold to be by-products of our silver production, the values of these metals offset operating costs within our calculations of Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce.

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We believe the identification of silver as a by-product credit is appropriate at Casa Berardi and Nevada Operations because of its lower economic value compared to gold and due to the fact that gold is the primary product we intend to produce there. In addition, we do not receive sufficient revenue from silver at Casa Berardi and Nevada Operations to warrant classification of such as a co-product. Because we consider silver to be a by-product of our gold production at Casa Berardi and Nevada Operations, the value of silver offsets operating costs within our calculations of Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce.

For the first quarter of 2022, we recorded income applicable to common stockholders of $4.0 million ($0.01 per basic common share), compared to income of $21.3 million ($0.04 per basic common share) during the first quarter of 2021. The following factors contributed to the results for the first three months of 2022 compared to the first quarter of 2021:

| • | Variances in gross profit (loss) at our operations as illustrated in the table above. See the Greens Creek, Lucky Friday, Casa Berardi and Nevada Operations sections below.

| • | Exploration and pre-development expense increased by $6.1 million in the first quarter of 2022 compared to the first quarter of 2021. In the first quarter of 2022, exploration was primarily at San Sebastian, Casa Berardi, Nevada Operations and Greens Creek. Pre-development expense for the first quarter of 2022 totaled $3.1 million compared to $0.7 million in the first quarter of 2021, with the increase for development of a decline to the Hatter Graben area at the Hollister mine in Nevada.

| • | Care and maintenance costs increased by $1.9 million in the first quarter of 2022 compared to the first quarter of 2021 due to suspension of production at Nevada Operations. See the Nevada Operations section below.

The impact of these factors was partially offset by the following:

| • | Fair value adjustments, net resulted in a gain of $6.0 million in the first quarter of 2022 compared to a loss of $1.9 million the first quarter of 2021 (see Note 9 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information).

| • | Provision for closed operations and environmental matters decreased by $2.8 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to a $2.9 million increase in the accrual for estimated costs at the Johnny M site in New Mexico in the first quarter of 2021 (see Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information).

| • | Lower other operating expense by $1.2 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to project costs incurred to identify and implement potential operational improvements at Casa Berardi in the first quarter 2021, partially offset by similar project costs incurred at Greens Creek in the first quarter of 2022.

| • | An income and mining tax provision of $5.6 million in the first quarter of 2022 compared to a provision of $4.7 million in the first quarter of 2021 (see Note 3 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information).

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Greens Creek

Dollars are in thousands (except per ounce and per ton amounts) |  | Three months ended March 31, |
|  | 2022 |  |  | 2021 |
Sales |  | $ | 86,090 |  |  | $ | 98,409 |
Cost of sales and other direct production costs |  |  | (38,218 | ) |  |  | (38,360 | )
Depreciation, depletion and amortization |  |  | (11,420 | ) |  |  | (14,821 | )
Total cost of sales |  |  | (49,638 | ) |  |  | (53,181 | )
Gross profit |  | $ | 36,452 |  |  | $ | 45,228 |
Tons of ore milled |  |  | 211,687 |  |  |  | 194,080 |
Production: |  |  |  |  |  |  |  |
Silver (ounces) |  |  | 2,429,782 |  |  |  | 2,584,870 |
Gold (ounces) |  |  | 11,402 |  |  |  | 13,266 |
Zinc (tons) |  |  | 12,494 |  |  |  | 13,354 |
Lead (tons) |  |  | 4,883 |  |  |  | 4,924 |
Payable metal quantities sold: |  |  |  |  |  |  |  |
Silver (ounces) |  |  | 1,772,391 |  |  |  | 2,247,274 |
Gold (ounces) |  |  | 7,922 |  |  |  | 10,547 |
Zinc (tons) |  |  | 8,092 |  |  |  | 9,097 |
Lead (tons) |  |  | 3,063 |  |  |  | 3,645 |
Ore grades: |  |  |  |  |  |  |  |
Silver ounces per ton |  |  | 13.84 |  |  |  | 16.01 |
Gold ounces per ton |  |  | 0.07 |  |  |  | 0.09 |
Zinc percent |  |  | 6.56 |  |  |  | 7.62 |
Lead percent |  |  | 2.76 |  |  |  | 3.06 |
Total production cost per ton |  | $ | 192.16 |  |  | $ | 182.61 |
Cash Cost, After By-product Credits, per Silver Ounce (1) |  | $ | (0.90 | ) |  | $ | (0.67 | )
AISC, After By-product Credits, per Silver Ounce (1) |  | $ | 1.90 |  |  | $ | 1.59 |
Capital additions |  | $ | 3,092 |  |  | $ | 1,772 |

| (1) | A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The $8.8 million decrease in gross profit during the first quarter of 2022 compared to the same 2021 period was the result of lower sales volumes, as a result of lower ore grades and the timing of concentrate shipments, and lower average silver prices, partially offset by higher average gold, zinc and lead prices.

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The chart below illustrates the factors contributing to the variances in Cash Cost, After By-product Credits, per Silver Ounce for the first quarter of 2022 compared to the first quarter of 2021:

The following table summarizes the components of Cash Cost, After By-product Credits, per Silver Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Cash Cost, Before By-product Credits, per Silver Ounce |  | $ | 21.82 |  |  | $ | 18.98 |
By-product credits |  |  | (22.72 | ) |  |  | (19.65 | )
Cash Cost, After By-product Credits, per Silver Ounce |  | $ | (0.90 | ) |  | $ | (0.67 | )

The following table summarizes the components of AISC, After By-product Credits, per Silver Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
AISC, Before By-product Credits, per Silver Ounce |  | $ | 24.62 |  |  | $ | 21.24 |
By-product credits |  |  | (22.72 | ) |  |  | (19.65 | )
AISC, After By-product Credits, per Silver Ounce |  | $ | 1.90 |  |  | $ | 1.59 |

The decrease in Cash Costs, After By-Product Credits, per Silver Ounce for the first quarter of 2022 compared to 2021 was primarily due to the higher by-product credits, partially offset by higher mining and milling costs. The net impact of these factors was outweighed by higher sustaining capital spending, resulting in the increase in AISC, After By-Product Credits, per Silver Ounce for the first quarter of 2022 compared to 2021.

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Lucky Friday

Dollars are in thousands (except per ounce and per ton amounts) |  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Sales |  | $ | 38,040 |  |  | $ | 29,122 |
Cost of sales and other direct production costs |  |  | (21,232 | ) |  |  | (16,458 | )
Depreciation, depletion and amortization |  |  | (8,032 | ) |  |  | (6,336 | )
Total cost of sales |  |  | (29,264 | ) |  |  | (22,794 | )
Gross profit (loss) |  | $ | 8,776 |  |  | $ | 6,328 |
Tons of ore milled |  |  | 77,725 |  |  |  | 81,071 |
Production: |  |  |  |  |  |  |  |
Silver (ounces) |  |  | 887,858 |  |  |  | 863,901 |
Lead (tons) |  |  | 5,980 |  |  |  | 5,780 |
Zinc (tons) |  |  | 2,452 |  |  |  | 2,753 |
Payable metal quantities sold: |  |  |  |  |  |  |  |
Silver (ounces) |  |  | 899,454 |  |  |  | 763,823 |
Lead (tons) |  |  | 5,991 |  |  |  | 5,023 |
Zinc (tons) |  |  | 1,855 |  |  |  | 1,930 |
Ore grades: |  |  |  |  |  |  |  |
Silver ounces per ton |  |  | 12.04 |  |  |  | 11.18 |
Lead percent |  |  | 8.16 |  |  |  | 7.51 |
Zinc percent |  |  | 3.61 |  |  |  | 3.70 |
Total production cost per ton |  | $ | 247.17 |  |  | $ | 190.54 |
Cash Cost, After By-product Credits, per Silver Ounce (1) |  | $ | 6.57 |  |  | $ | 7.62 |
AISC, After By-product Credits, per Silver Ounce (1) |  | $ | 13.15 |  |  |  | 14.24 |
Capital additions |  | $ | 9,652 |  |  | $ | 5,912 |

| (1) | A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The increase in gross profit in the first quarter of 2022 compared to the first quarter of 2021 was the result of higher sales volume and lead and zinc prices, partially offset by lower average silver prices.

Total production cost per ton increased by approximately 30% in the first quarter of 2022 compared to the first quarter of 2021 primarily due to higher costs for labor, equipment maintenance, contractors and consumables and lower mill throughput.

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The chart below illustrates the factors contributing to Cash Cost, After By-product Credits, per Silver Ounce for the first quarters of 2022 and 2021.

The following table summarizes the components of Cash Cost, After By-product Credits, per Silver Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Cash Cost, Before By-product Credits, per Silver Ounce |  | $ | 26.63 |  |  | $ | 24.43 |
By-product credits |  |  | (20.06 | ) |  |  | (16.81 | )
Cash Cost, After By-product Credits, per Silver Ounce |  | $ | 6.57 |  |  | $ | 7.62 |

The following table summarizes the components of AISC, After By-product Credits, per Silver Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
AISC, Before By-product Credits, per Silver Ounce |  | $ | 33.21 |  |  | $ | 31.05 |
By-product credits |  |  | (20.06 | ) |  |  | (16.81 | )
AISC, After By-product Credits, per Silver Ounce |  | $ | 13.15 |  |  | $ | 14.24 |

The decrease in Cash Cost and AISC, After By-product Credits, per Silver Ounce for the first quarter of 2022 compared to the first quarter of 2021 was due to higher silver production resulting from increased grades, higher by-product credits due to increased lead and zinc prices, and improved quality of concentrates.

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Casa Berardi

Dollars are in thousands (except per ounce and per ton amounts) |  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Sales |  | $ | 62,101 |  |  | $ | 72,911 |
Cost of sales and other direct production costs |  |  | (46,322 | ) |  |  | (36,975 | )
Depreciation, depletion and amortization |  |  | (15,846 | ) |  |  | (22,952 | )
Total cost of sales |  |  | (62,168 | ) |  |  | (59,927 | )
Gross profit (loss) |  | $ | (67 | ) |  | $ | 12,984 |
Tons of ore milled |  |  | 386,150 |  |  |  | 368,403 |
Production: |  |  |  |  |  |  |  |
Gold (ounces) |  |  | 30,240 |  |  |  | 36,190 |
Silver (ounces) |  |  | 7,068 |  |  |  | 10,675 |
Payable metal quantities sold: |  |  |  |  |  |  |  |
Gold (ounces) |  |  | 33,066 |  |  |  | 40,869 |
Silver (ounces) |  |  | 9,054 |  |  |  | 8,715 |
Ore grades: |  |  |  |  |  |  |  |
Gold ounces per ton |  |  | 0.091 |  |  |  | 0.120 |
Silver ounces per ton |  |  | 0.02 |  |  |  | 0.04 |
Total production cost per ton |  | $ | 117.96 |  |  | $ | 99.67 |
Cash Cost, After By-product Credits, per Gold Ounce (1) |  | $ | 1,516 |  |  | $ | 1,027 |
AISC, After By-product Credits, per Gold Ounce (1) |  | $ | 1,810 |  |  | $ | 1,272 |
Capital additions |  | $ | 7,808 |  |  | $ | 13,847 |

| (1) | A reconciliation of these non-GAAP measures to total cost of sales, the most comparable GAAP measure, can be found below in Reconciliation of Total Cost of Sales(GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

Gross profit decreased by $13.1 million for the first quarter of 2022 compared to the first quarter of 2021 primarily due to lower gold production, due to lower ore grades, accompanied by higher mining costs for labor, contractors and consumables. The increase in mining costs is partially attributable to inflation and a higher portion of development costs for the new 160 zone open pit mine being included in expense, as production from the pit commenced in the fourth quarter of 2021.

Total capital additions decreased by $6.0 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to growth capital costs incurred in the 2021 period for development of the 160 zone open pit mine.

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The chart below illustrates the factors contributing to Cash Cost, After By-product Credits, per Gold Ounce for the first quarter of 2022 compared to the first quarter of 2021:

The following table summarizes the components of Cash Cost, After By-product Credits, per Gold Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Cash Cost, Before By-product Credits, per Gold Ounce |  | $ | 1,521 |  |  | $ | 1,035 |
By-product credits |  |  | (5 | ) |  |  | (8 | )
Cash Cost, After By-product Credits, per Gold Ounce |  | $ | 1,516 |  |  | $ | 1,027 |

The following table summarizes the components of AISC, After By-product Credits, per Gold Ounce:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
AISC, Before By-product Credits, per Gold Ounce |  | $ | 1,815 |  |  | $ | 1,280 |
By-product credits |  |  | (5 | ) |  |  | (8 | )
AISC, After By-product Credits, per Gold Ounce |  | $ | 1,810 |  |  | $ | 1,272 |

The increase in Cash Cost and AISC, After By-product Credits, per Gold Ounce for the first quarter of 2022 compared to the first quarter of 2021 was primarily the result of lower gold production and higher mining costs. These factors along with higher exploration spending, partially offset by lower sustaining capital, resulted in the increase in AISC, After By-product Credits, per Gold Ounce.

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Nevada Operations

Dollars are in thousands (except per ounce and per ton amounts) |  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Sales |  | $ | 268 |  |  | $ | 10,237 |
Cost of sales and other direct production costs |  |  | — |  |  |  | (4,495 | )
Depreciation, depletion and amortization |  |  | — |  |  |  | (2,960 | )
Total cost of sales |  |  | — |  |  |  | (7,455 | )
Gross profit |  | $ | 268 |  |  | $ | 2,782 |
Tons of ore milled |  |  | — |  |  |  | 16,459 |
Production: |  |  |  |  |  |  |  |
Gold (ounces) |  |  | — |  |  |  | 2,548 |
Silver (ounces) |  |  | — |  |  |  | — |
Payable metal quantities sold: |  |  |  |  |  |  |  |
Gold (ounces) |  |  | 65 |  |  |  | 5,823 |
Silver (ounces) |  |  | 6,363 |  |  |  | 6,821 |
Ore grades: |  |  |  |  |  |  |  |
Gold ounces per ton |  |  | — |  |  |  | 0.185 |
Silver ounces per ton |  |  | — |  |  |  | — |
Total production cost per ton |  | $ | — |  |  | $ | 360.72 |
Cash Cost, After By-product Credits, per Gold Ounce (1) |  | $ | — |  |  | $ | 1,416 |
AISC, After By-product Credits, per Gold Ounce (1) |  | $ | — |  |  | $ | 1,461 |
Capital additions |  | $ | 876 |  |  | $ | 89 |

| (1) | A reconciliation of these non-GAAP measures to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found below in Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP).

The decrease in gross profit for the first quarter of 2022 compared to the first quarter of 2021 is a result of sales volume, with the final sale of 2021 production occurring in the first quarter of 2022. Development ceased at Fire Creek in the second quarter of 2019 when the decision was made to limit near-term production to areas of the mine where development was already completed. Mining of non-refractory ore at Fire Creek in areas where development had already been performed was completed in the fourth quarter of 2020. During 2021, production and revenue were generated from processing of the stockpiled non-refractory ore at the Midas mill and third-party processing of refractory ore in a roaster and autoclave facility, respectively. Fire Creek was placed on care-and-maintenance in the second quarter of 2021 after processing of the remaining non-refractory ore stockpile.

Exploration activities and pre-development activities related to the Hatter Graben area at Hollister are ongoing. Care and maintenance costs are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of cost of sales and other direct production costs and depreciation, depletion and amortization, total production costs per ton and Cash Cost and AISC, After By-product Credits, per Gold Ounce.

See Item 1A. Risk Factors - Operation, Development, Exploration and Acquisition Risks in our 2021 Form 10-K for a discussion of certain risks relating to our recent and ongoing analysis of the carrying value of the Nevada assets.

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Corporate Matters

Employee Benefit Plans

Our defined benefit pension plans, while providing a significant benefit to our employees, represent a liability to us. The liability recorded for the underfunded status of our plans was $5.9 million and $6.0 million as of March 31, 2022 and December 31, 2021, respectively. We do not expect to be required to contribute to our defined benefit pension plans in 2022, but we may choose to do so. While the economic variables which will determine future funding requirements are uncertain, we expect contributions to continue to be required in future years under current defined benefit pension plan provisions, and we periodically examine the plans for affordability and competitiveness. See Note 6 of Notes to Consolidated Financial Statements in our 2021 Form 10-K for more information.

Income and Mining Taxes

During the first quarter of 2022, an income and mining tax provision of approximately $5.6 million resulted in an effective tax rate of 57.6% for that period. This compares to an income and mining tax provision of $4.7 million, or an effective tax rate of 18.1%, for the first quarter of 2021. The comparability of our income and mining tax (provision) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates including non-recognition of foreign exchange gains and losses; (v) percentage depletion; and (vi) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. For the period ended March 31, 2022, we used the annual effective tax rate method to calculate the tax provision, a change from the discrete method used for the period ended March 31, 2021, due to reversal of valuation allowance in the fourth quarter of 2021.

Each reporting period we assess our deferred tax balances based on a review of long-range forecasts and quarterly activity. A valuation allowance is provided for deferred tax assets for which it is more likely than not the related tax benefits will not be realized. We analyze our deferred tax assets and, if it is determined that we will not realize all or a portion of our deferred tax assets, we will record or increase a valuation allowance. Conversely, if it is determined we will ultimately more likely than not be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact our ability to realize our deferred tax assets. Valuation allowances are provided on deferred tax assets in our Nevada, Mexico, and certain Canadian jurisdictions. For additional information, please see Item 1A - Risk Factors in our 2021 10-K.

Reconciliation of Total Cost of Sales (GAAP) to Cash Cost, Before By-product Credits and Cash Cost, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits (non-GAAP)

The tables below present reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits for our operations and for the Company for the three-month periods ended March 31, 2022 and 2021.

Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.

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Cash Cost, After By-product Credits, per Ounce is an important operating statistic that we utilize to measure each mine's operating performance. We use AISC, After By-product Credits, per Ounce as a measure of our mines' net cash flow after costs for exploration, pre-development, reclamation, and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes on-site exploration, reclamation, and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce also allow us to benchmark the performance of each of our mines versus those of our competitors. As a silver and gold mining company, we also use these statistics on an aggregate basis - aggregating the Greens Creek and Lucky Friday mines to compare our performance with that of other silver mining companies, and aggregating Casa Berardi and Nevada Operations for comparison with other gold mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.

Cash Cost, Before By-product Credits and AISC, Before By-product Credits include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs and royalties. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation, and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense, and sustaining exploration and capital costs. By-product credits include revenues earned from all metals other than the primary metal produced at each operation. As depicted in the tables below, by-product credits comprise an essential element of our silver operations' cost structure, distinguishing our silver operations due to the polymetallic nature of their orebodies.

In addition to the uses described above, Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce provide management and investors an indication of operating cash flow, after consideration of the average price received from production. We also use these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective.

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The Casa Berardi, Nevada Operations and combined gold properties information below reports Cash Cost, After By-product Credits, per Gold Ounce and AISC, After By-product Credits, per Gold Ounce for the production of gold, their primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi and Nevada Operations. Only costs and ounces produced relating to operations with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce and AISC, After By-product Credits, per Ounce. Thus, the gold produced at Casa Berardi and Nevada Operations is not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce and AISC, After By-product Credits, per Silver Ounce for the total of Greens Creek, Lucky Friday and San Sebastian, our combined silver properties. Similarly, the silver produced at our other two operations is not included as a by-product credit when calculating the gold metrics for Casa Berardi and Nevada Operations.

In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2022 |
|  | Greens Creek |  |  | Lucky Friday |  |  | Corporate(2) |  |  | Total Silver |
Total cost of sales |  | $ | 49,638 |  |  | $ | 29,264 |  |  |  |  |  |  | $ | 78,902 |
Depreciation, depletion and amortization |  |  | (11,420 | ) |  |  | (8,032 | ) |  |  |  |  |  |  | (19,452 | )
Treatment costs |  |  | 9,096 |  |  |  | 3,677 |  |  |  |  |  |  |  | 12,773 |
Change in product inventory |  |  | 6,538 |  |  |  | (905 | ) |  |  |  |  |  |  | 5,633 |
Reclamation and other costs |  |  | (850 | ) |  |  | (361 | ) |  |  |  |  |  |  | (1,211 | )
Cash Cost, Before By-product Credits (1) |  |  | 53,002 |  |  |  | 23,643 |  |  |  |  |  |  |  | 76,645 |
Reclamation and other costs |  |  | 705 |  |  |  | 282 |  |  |  |  |  |  |  | 987 |
Exploration |  |  | 165 |  |  |  | — |  |  |  | 716 |  |  |  | 881 |
Sustaining capital |  |  | 5,956 |  |  |  | 5,562 |  |  |  | 48 |  |  |  | 11,566 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 8,294 |  |  |  | 8,294 |
AISC, Before By-product Credits (1) |  |  | 59,828 |  |  |  | 29,487 |  |  |  |  |  |  |  | 98,373 |
By-product credits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zinc |  |  | (28,651 | ) |  |  | (5,977 | ) |  |  |  |  |  |  | (34,628 | )
Gold |  |  | (18,583 | ) |  |  | — |  |  |  |  |  |  |  | (18,583 | )
Lead |  |  | (7,966 | ) |  |  | (11,836 | ) |  |  |  |  |  |  | (19,802 | )
Total By-product credits |  |  | (55,200 | ) |  |  | (17,813 | ) |  |  |  |  |  |  | (73,013 | )
Cash Cost, After By-product Credits |  | $ | (2,198 | ) |  | $ | 5,830 |  |  |  |  |  |  | $ | 3,632 |
AISC, After By-product Credits |  | $ | 4,628 |  |  | $ | 11,674 |  |  |  |  |  |  | $ | 25,360 |
Divided by ounces produced |  |  | 2,430 |  |  |  | 888 |  |  |  |  |  |  |  | 3,318 |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 21.82 |  |  | $ | 26.63 |  |  |  |  |  |  | $ | 23.10 |
By-product credits per ounce |  |  | (22.72 | ) |  |  | (20.06 | ) |  |  |  |  |  |  | (22.01 | )
Cash Cost, After By-product Credits, per Ounce |  | $ | (0.90 | ) |  | $ | 6.57 |  |  |  |  |  |  | $ | 1.09 |
AISC, Before By-product Credits, per Ounce |  | $ | 24.62 |  |  | $ | 33.21 |  |  |  |  |  |  | $ | 29.65 |
By-product credits per ounce |  |  | (22.72 | ) |  |  | (20.06 | ) |  |  |  |  |  |  | (22.01 | )
AISC, After By-product Credits, per Ounce |  | $ | 1.90 |  |  | $ | 13.15 |  |  |  |  |  |  | $ | 7.64 |

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In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2022 |
|  | Casa Berardi |  |  | Total Gold |
Total cost of sales |  | $ | 62,168 |  |  | $ | 62,168 |
Depreciation, depletion and amortization |  |  | (15,846 | ) |  |  | (15,846 | )
Treatment costs |  |  | 458 |  |  |  | 458 |
Change in product inventory |  |  | (563 | ) |  |  | (563 | )
Reclamation and other costs |  |  | (210 | ) |  |  | (210 | )
Cash Cost, Before By-product Credits (1) |  |  | 46,007 |  |  |  | 46,007 |
Reclamation and other costs |  |  | 210 |  |  |  | 210 |
Exploration |  |  | 1,394 |  |  |  | 1,394 |
Sustaining capital |  |  | 7,281 |  |  |  | 7,281 |
General and administrative |  |  |  |  |  |  | — |
AISC, Before By-product Credits (1) |  |  | 54,892 |  |  |  | 54,892 |
By-product credits: |  |  |  |  |  |  |  |
Silver |  |  | (166 | ) |  |  | (166 | )
Total By-product credits |  |  | (166 | ) |  |  | (166 | )
Cash Cost, After By-product Credits |  | $ | 45,841 |  |  | $ | 45,841 |
AISC, After By-product Credits |  | $ | 54,726 |  |  | $ | 54,726 |
Divided by ounces produced |  |  | 30 |  |  |  | 30 |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 1,521 |  |  | $ | 1,521 |
By-product credits per ounce |  |  | (5 | ) |  |  | (5 | )
Cash Cost, After By-product Credits, per Ounce |  | $ | 1,516 |  |  | $ | 1,516 |
AISC, Before By-product Credits, per Ounce |  | $ | 1,815 |  |  | $ | 1,815 |
By-product credits per ounce |  |  | (5 | ) |  |  | (5 | )
AISC, After By-product Credits, per Ounce |  | $ | 1,810 |  |  | $ | 1,810 |

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In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2022 |
|  | Total Silver |  |  | Total Gold |  |  | Total |
Total cost of sales |  | $ | 78,902 |  |  | $ | 62,168 |  |  | $ | 141,070 |
Depreciation, depletion and amortization |  |  | (19,452 | ) |  |  | (15,846 | ) |  |  | (35,298 | )
Treatment costs |  |  | 12,773 |  |  |  | 458 |  |  |  | 13,231 |
Change in product inventory |  |  | 5,633 |  |  |  | (563 | ) |  |  | 5,070 |
Reclamation and other costs |  |  | (1,211 | ) |  |  | (210 | ) |  |  | (1,421 | )
Cash Cost, Before By-product Credits (1) |  |  | 76,645 |  |  |  | 46,007 |  |  |  | 122,652 |
Reclamation and other costs |  |  | 987 |  |  |  | 210 |  |  |  | 1,197 |
Exploration |  |  | 881 |  |  |  | 1,394 |  |  |  | 2,275 |
Sustaining capital |  |  | 11,566 |  |  |  | 7,281 |  |  |  | 18,847 |
General and administrative |  |  | 8,294 |  |  |  | — |  |  |  | 8,294 |
AISC, Before By-product Credits (1) |  |  | 98,373 |  |  |  | 54,892 |  |  |  | 153,265 |
By-product credits: |  |  |  |  |  |  |  |  |  |  |  |
Zinc |  |  | (34,628 | ) |  |  | — |  |  |  | (34,628 | )
Gold |  |  | (18,583 | ) |  |  | — |  |  |  | (18,583 | )
Lead |  |  | (19,802 | ) |  |  | — |  |  |  | (19,802 | )
Silver |  |  |  |  |  |  | (166 | ) |  |  | (166 | )
Total By-product credits |  |  | (73,013 | ) |  |  | (166 | ) |  |  | (73,179 | )
Cash Cost, After By-product Credits |  | $ | 3,632 |  |  | $ | 45,841 |  |  | $ | 49,473 |
AISC, After By-product Credits |  | $ | 25,360 |  |  | $ | 54,726 |  |  | $ | 80,086 |
Divided by ounces produced |  |  | 3,318 |  |  |  | 30 |  |  |  |  |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 23.10 |  |  | $ | 1,521 |  |  |  |  |
By-product credits per ounce |  |  | (22.01 | ) |  |  | (5 | ) |  |  |  |
Cash Cost, After By-product Credits, per Ounce |  | $ | 1.09 |  |  | $ | 1,516 |  |  |  |  |
AISC, Before By-product Credits, per Ounce |  | $ | 29.65 |  |  | $ | 1,815 |  |  |  |  |
By-product credits per ounce |  |  | (22.01 | ) |  |  | (5 | ) |  |  |  |
AISC, After By-product Credits, per Ounce |  | $ | 7.64 |  |  | $ | 1,810 |  |  |  |  |

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In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2021 |
|  | Greens Creek |  |  | Lucky Friday |  |  | Corporate and other(2) |  |  | Total Silver |
Total cost of sales |  | $ | 53,181 |  |  | $ | 22,794 |  |  | $ | 94 |  |  | $ | 76,069 |
Depreciation, depletion and amortization |  |  | (14,821 | ) |  |  | (6,336 | ) |  |  | — |  |  |  | (21,157 | )
Treatment costs |  |  | 10,541 |  |  |  | 4,978 |  |  |  | — |  |  |  | 15,519 |
Change in product inventory |  |  | 401 |  |  |  | (93 | ) |  |  | — |  |  |  | 308 |
Reclamation and other costs |  |  | (261 | ) |  |  | (233 | ) |  |  | (94 | ) |  |  | (588 | )
Cash Cost, Before By-product Credits (1) |  |  | 49,041 |  |  |  | 21,110 |  |  |  | — |  |  |  | 70,151 |
Reclamation and other costs |  |  | 848 |  |  |  | 264 |  |  |  | — |  |  |  | 1,112 |
Exploration |  |  | 123 |  |  |  | — |  |  |  | 435 |  |  |  | 558 |
Sustaining capital |  |  | 4,892 |  |  |  | 5,454 |  |  |  | — |  |  |  | 10,346 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 8,007 |  |  |  | 8,007 |
AISC, Before By-product Credits (1) |  |  | 54,904 |  |  |  | 26,828 |  |  |  | 8,442 |  |  |  | 90,174 |
By-product credits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zinc |  |  | (22,767 | ) |  |  | (4,753 | ) |  |  | — |  |  |  | (27,520 | )
Gold |  |  | (20,996 | ) |  |  | — |  |  |  | — |  |  |  | (20,996 | )
Lead |  |  | (7,020 | ) |  |  | (9,775 | ) |  |  | — |  |  |  | (16,795 | )
Total By-product credits |  |  | (50,783 | ) |  |  | (14,528 | ) |  |  | — |  |  |  | (65,311 | )
Cash Cost, After By-product Credits |  | $ | (1,742 | ) |  | $ | 6,582 |  |  | $ | — |  |  | $ | 4,840 |
AISC, After By-product Credits |  | $ | 4,121 |  |  | $ | 12,300 |  |  | $ | 8,442 |  |  | $ | 24,863 |
Divided by ounces produced |  |  | 2,585 |  |  |  | 864 |  |  |  |  |  |  |  | 3,449 |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 18.98 |  |  | $ | 24.43 |  |  |  |  |  |  | $ | 20.34 |
By-product credits per ounce |  |  | (19.65 | ) |  |  | (16.81 | ) |  |  |  |  |  |  | (18.94 | )
Cash Cost, After By-product Credits, per Ounce |  | $ | (0.67 | ) |  | $ | 7.62 |  |  |  |  |  |  | $ | 1.40 |
AISC, Before By-product Credits, per Ounce |  | $ | 21.24 |  |  | $ | 31.05 |  |  |  |  |  |  | $ | 26.15 |
By-product credits per ounce |  |  | (19.65 | ) |  |  | (16.81 | ) |  |  |  |  |  |  | (18.94 | )
AISC, After By-product Credits, per Ounce |  | $ | 1.59 |  |  | $ | 14.24 |  |  |  |  |  |  |  | 7.21 |

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In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2021 |
|  | Casa Berardi |  |  | Nevada Operations(3) |  |  | Total Gold |
Total cost of sales |  | $ | 59,927 |  |  | $ | 7,455 |  |  | $ | 67,382 |
Depreciation, depletion and amortization |  |  | (22,952 | ) |  |  | (2,960 | ) |  |  | (25,912 | )
Treatment costs |  |  | 714 |  |  |  | 11 |  |  |  | 725 |
Change in product inventory |  |  | (47 | ) |  |  | (1,084 | ) |  |  | (1,131 | )
Reclamation and other costs |  |  | (208 | ) |  |  | 185 |  |  |  | (23 | )
Cash Cost, Before By-product Credits (1) |  |  | 37,434 |  |  |  | 3,607 |  |  |  | 41,041 |
Reclamation and other costs |  |  | 208 |  |  |  | 27 |  |  |  | 235 |
Exploration |  |  | 907 |  |  |  | — |  |  |  | 907 |
Sustaining capital |  |  | 7,758 |  |  |  | 89 |  |  |  | 7,847 |
AISC, Before By-product Credits (1) |  |  | 46,307 |  |  |  | 3,723 |  |  |  | 50,030 |
By-product credits: |  |  |  |  |  |  |  |  |  |  |  |
Silver |  |  | (278 | ) |  |  | — |  |  |  | (278 | )
Total By-product credits |  |  | (278 | ) |  |  | — |  |  |  | (278 | )
Cash Cost, After By-product Credits |  | $ | 37,156 |  |  | $ | 3,607 |  |  | $ | 40,763 |
AISC, After By-product Credits |  | $ | 46,029 |  |  | $ | 3,723 |  |  | $ | 49,752 |
Divided by ounces produced |  |  | 36 |  |  |  | 3 |  |  |  | 39 |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 1,035 |  |  | $ | 1,416 |  |  | $ | 1,059 |
By-product credits per ounce |  |  | (8 | ) |  |  | — |  |  |  | (7 | )
Cash Cost, After By-product Credits, per Ounce |  | $ | 1,027 |  |  | $ | 1,416 |  |  | $ | 1,052 |
AISC, Before By-product Credits, per Ounce |  | $ | 1,280 |  |  | $ | 1,461 |  |  | $ | 1,291 |
By-product credits per ounce |  |  | (8 | ) |  |  | — |  |  |  | (7 | )
AISC, After By-product Credits, per Ounce |  | $ | 1,272 |  |  | $ | 1,461 |  |  | $ | 1,284 |

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In thousands (except per ounce amounts) |  | Three Months Ended March 31, 2021 |
|  | Total Silver |  |  | Total Gold |  |  | Total |
Total cost of sales |  | $ | 76,069 |  |  | $ | 67,382 |  |  | $ | 143,451 |
Depreciation, depletion and amortization |  |  | (21,157 | ) |  |  | (25,912 | ) |  |  | (47,069 | )
Treatment costs |  |  | 15,519 |  |  |  | 725 |  |  |  | 16,244 |
Change in product inventory |  |  | 308 |  |  |  | (1,131 | ) |  |  | (823 | )
Reclamation and other costs |  |  | (588 | ) |  |  | (23 | ) |  |  | (611 | )
Cash Cost, Before By-product Credits (1) |  |  | 70,151 |  |  |  | 41,041 |  |  |  | 111,192 |
Reclamation and other costs |  |  | 1,112 |  |  |  | 235 |  |  |  | 1,347 |
Exploration |  |  | 558 |  |  |  | 907 |  |  |  | 1,465 |
Sustaining capital |  |  | 10,346 |  |  |  | 7,847 |  |  |  | 18,193 |
General and administrative |  |  | 8,007 |  |  |  | — |  |  |  | 8,007 |
AISC, Before By-product Credits (1) |  |  | 90,174 |  |  |  | 50,030 |  |  |  | 140,204 |
By-product credits: |  |  |  |  |  |  |  |  |  |  |  |
Zinc |  |  | (27,520 | ) |  |  | — |  |  |  | (27,520 | )
Gold |  |  | (20,996 | ) |  |  | — |  |  |  | (20,996 | )
Lead |  |  | (16,795 | ) |  |  | — |  |  |  | (16,795 | )
Silver |  |  | — |  |  |  | (278 | ) |  |  | (278 | )
Total By-product credits |  |  | (65,311 | ) |  |  | (278 | ) |  |  | (65,589 | )
Cash Cost, After By-product Credits |  | $ | 4,840 |  |  | $ | 40,763 |  |  | $ | 45,603 |
AISC, After By-product Credits |  | $ | 24,863 |  |  | $ | 49,752 |  |  | $ | 74,615 |
Divided by ounces produced |  |  | 3,449 |  |  |  | 39 |  |  |  |  |
Cash Cost, Before By-product Credits, per Ounce |  | $ | 20.34 |  |  | $ | 1,059 |  |  |  |  |
By-product credits per ounce |  |  | (18.94 | ) |  |  | (7 | ) |  |  |  |
Cash Cost, After By-product Credits, per Ounce |  | $ | 1.40 |  |  | $ | 1,052 |  |  |  |  |
AISC, Before By-product Credits, per Ounce |  | $ | 26.15 |  |  | $ | 1,291 |  |  |  |  |
By-product credits per ounce |  |  | (18.94 | ) |  |  | (7 | ) |  |  |  |
AISC, After By-product Credits, per Ounce |  | $ | 7.21 |  |  | $ | 1,284 |  |  |  |  |

(1) | Includes all direct and indirect operating costs related to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs and royalties, before by-product revenues earned from all metals other than the primary metal produced at each operation. AISC, Before By-product Credits also includes on-site exploration, reclamation, and sustaining capital costs.

(2) | AISC, Before By-product Credits for our consolidated silver properties includes corporate costs for general and administrative expense, exploration and sustaining capital.

(3) | Production was suspended at the Hollister mine in the third quarter of 2019 and at the Midas mine and Aurora mill in late 2019, and at the Midas mill and Fire Creek mine in mid-2021. Care and maintenance costs at Nevada Operations totaling $5.7 million and $3.6 million for the first quarters of 2022 and 2021, respectively, are reported in a separate line item on our consolidated statements of operations and excluded from the calculations of total cost of sales, Cash Cost, Before By-product Credits, Cash Cost, After By-product Credits, AISC, Before By-product Credits, and AISC, After By-product Credits.

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Reconciliation of Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)

The non-GAAP measure of free cash flow is calculated as net cash provided by operating activities (GAAP) less additions to properties, plants, equipment and mineral interests (GAAP). Management believes that, when presented in conjunction with comparable GAAP measures, free cash flow is useful to investors in evaluating our operating performance. The following table reconciles net cash provided by operating activities to free cash flow:

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
Net cash provided by operating activities (GAAP) |  | $ | 37,909 |  |  | $ | 37,936 |
Less: Additions to properties, plants, equipment and mineral interests (GAAP) |  |  | (21,478 | ) |  |  | (21,413 | )
Free cash flow |  | $ | 16,431 |  |  | $ | 16,523 |

Financial Liquidity and Capital Resources

Liquidity Overview

We have a disciplined cash management strategy of maintaining financial flexibility to execute our capital priorities and provide long-term value to our shareholders. Consistent with that strategy, we aim to maintain an acceptable level of net debt and sufficient liquidity to fund debt service costs, operations, capital development and exploration projects, while returning cash to stockholders through dividends and potential share repurchases.

At March 31, 2022, we had $212.0 million in cash and cash equivalents, of which $23.4 million was held in foreign subsidiaries' local currency that we anticipate utilizing for near-term operating, exploration or capital costs by those foreign subsidiaries. We also have USD cash and cash equivalent balances held by our foreign subsidiaries that, if repatriated, may be subject to withholding taxes. We expect that there would be no additional tax burden upon repatriation after considering the cash cost associated with the withholding taxes. We believe that our liquidity and capital resources from our U.S. operations are adequate to fund our U.S. operations and corporate activities.

As discussed in Overview above, we continue to address the COVID-19 outbreak and face uncertainty related to the potential additional impacts it could have on our operations. The impacts of COVID-19 and increasing or prolonged restrictions, if required, on our operations could require access to additional sources of liquidity, which may not be available to us.

Pursuant to our common stock dividend policy described in Note 12 of Notes to Consolidated Financial Statements in our 2021 10-K, our board of directors declared and paid dividends on common stock totaling $3.4 million in the first quarter of 2022 and $4.7 million in the first quarter of 2021. Our dividend policy has a silver-linked component which ties the amount of declared common stock dividends to our realized silver price for the preceding quarter. Another component of our common stock dividend policy anticipates paying an annual minimum dividend. For illustrative purposes only, the table below summarizes potential dividend amounts under our dividend policy.

Quarterly Average Realized Silver Price ($ per ounce) |  |  | Quarterly Silver- Linked Dividend ($ per share) |  |  | Annualized Silver-Linked Dividend ($ per share) |  |  | Annualized Minimum Dividend ($ per share) |  |  | Annualized Dividends per Share: Silver- Linked and Minimum ($ per share) |
$ | 20 |  |  | $ | 0.0025 |  |  | $ | 0.01 |  |  | $ | 0.015 |  |  | $ | 0.025 |
$ | 25 |  |  | $ | 0.0100 |  |  | $ | 0.04 |  |  | $ | 0.015 |  |  | $ | 0.055 |
$ | 30 |  |  | $ | 0.0150 |  |  | $ | 0.06 |  |  | $ | 0.015 |  |  | $ | 0.075 |
$ | 35 |  |  | $ | 0.0250 |  |  | $ | 0.10 |  |  | $ | 0.015 |  |  | $ | 0.115 |
$ | 40 |  |  | $ | 0.0350 |  |  | $ | 0.14 |  |  | $ | 0.015 |  |  | $ | 0.155 |
$ | 45 |  |  | $ | 0.0450 |  |  | $ | 0.18 |  |  | $ | 0.015 |  |  | $ | 0.195 |
$ | 50 |  |  | $ | 0.0550 |  |  | $ | 0.22 |  |  | $ | 0.015 |  |  | $ | 0.235 |

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The declaration and payment of dividends on common stock is at the sole discretion of our board of directors, and there can be no assurance that we will continue to declare and pay common stock dividends in the future.

Pursuant to our stock repurchase program described in Note 12 of Notes to Consolidated Financial Statements in our 2021 10-K, we are authorized to repurchase up to 20 million shares of our outstanding common stock from time to time in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. The repurchase program may be modified, suspended or discontinued by us at any time. As of March 31, 2022 and December 31, 2021, 934,100 shares had been purchased in prior periods at an average price of $3.99 per share, leaving 19.1 million shares that may yet be purchased under the program. We have not repurchased any shares since June 2014. The closing price of our common stock at May 5, 2022, was $5.08 per share.

Pursuant to our at-the-market equity distribution agreement (“ATM”) described in Note 12 of Notes to Consolidated Financial Statements in our 2021 10-K, we may offer and sell up to 60 million shares of our common stock from time to time to or through sales agents. Sales of the shares, if any, will be made by means of ordinary brokers transactions or as otherwise agreed between the Company and the agents as principals. Whether or not we engage in sales from time to time may depend on a variety of factors, including our share price and cash resources, customary black-out restrictions, and whether we have any material inside information. The agreement can be terminated by us at any time. Any shares issued under the equity distribution agreement are registered under the Securities Act of 1933, as amended, pursuant to a shelf registration statement on Form S-3. No shares have been sold under the agreement as of March 31, 2022.

We believe as a result of our cash balances, the performance of our current and expected operations, current metals prices, proceeds from potential at-the-market sales of common stock, and availability of our revolving credit facility, we will be able to meet our obligations and other potential cash requirements during the next 12 months from the date of this report. Our obligations and other uses of cash may include, but are not limited to: debt service obligations related to the Senior Notes, IQ Notes and revolving credit facility (if amounts are drawn); care-and-maintenance and other costs related to addressing the impact of COVID-19 on our operations; capital expenditures at our operations; potential acquisitions of other mining companies or properties; regulatory matters; litigation; potential repurchases of our common stock under the program described above; and payment of dividends on common stock, if declared by our board of directors. We currently estimate that a total of approximately $135 million will be spent in 2022 on capital expenditures, primarily for equipment, infrastructure, and development at our mines, including $21.5 million already incurred as of March 31, 2022. We also estimate that exploration and pre-development expenditures will total approximately $45 million in 2022, including $12.8 million already incurred as of March 31, 2022. Our expenditures for these items and our related plans for 2022 may change based upon our financial position, metals prices, and other considerations. Our ability to fund the activities described above will depend on our operating performance, metals prices, our ability to estimate revenues and costs, sources of liquidity available to us, including the revolving credit facility, and other factors. A sustained downturn in metals prices, significant increase in operational or capital costs or other uses of cash, our inability to access the credit facility or the sources of liquidity discussed above, or other factors beyond our control could impact our plans. In our 2021 10-K, see Item 1A. Risk Factors - An extended decline in metals prices, an increase in operating or capital costs, mine accidents or closures, increasing regulatory obligations, or our inability to convert resources or exploration targets to reserves may cause us to record write-downs, which could negatively impact our results of operations and We have a substantial amount of debt that could impair our financial health and prevent us from fulfilling our obligations under our existing and future indebtedness.

We may defer some capital expenditures and/or exploration and pre-development activities, engage in asset sales or secure additional capital if necessary to maintain liquidity. We also may pursue additional acquisition opportunities, which could require additional equity issuances or other forms of financing. We cannot assure you that such financing will be available to us.

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Our liquid assets include (in millions):

|  | March 31, 2022 |  |  | December 31, 2021 |
Cash and cash equivalents held in U.S. dollars |  | $ | 188.6 |  |  | $ | 196.2 |
Cash and cash equivalents held in foreign currency |  |  | 23.4 |  |  |  | 13.8 |
Total cash and cash equivalents |  |  | 212.0 |  |  |  | 210.0 |
Marketable equity securities, current and non-current |  |  | 29.2 |  |  |  | 14.4 |
Total cash, cash equivalents and investments |  | $ | 241.2 |  |  | $ | 224.4 |

Cash and cash equivalents increased by $2.0 million in the first three months of 2022 as a result of operational performance. Cash held in foreign currencies represents balances in CAD and MXN, with a $9.6 million increase in the first quarter of 2022 resulting from an increase in CAD held. The value of marketable equity securities increased by $14.8 million due to acquisitions of $10.9 million and stock price appreciation during the quarter.

|  | Three Months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
Cash provided by operating activities (in millions) |  | $ | 37.9 |  |  | $ | 37.9 |

Cash provided by operating activities in the first quarter of 2022 was substantially unchanged compared to the first quarter of 2021, with lower income adjusted for non-cash items offset by the impact of working capital changes.

|  | Three Months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
Cash used in investing activities (in millions) |  | $ | (29.2 | ) |  | $ | (21.4 | )

During the first quarter of 2022 we invested $21.5 million in capital expenditures compared to $21.4 million in the first quarter of 2021, with higher capital spending at Greens Creek and Lucky Friday offset by lower spending at Casa Berardi. In the first quarter of 2022 we acquired investments in other mining companies for a total cost of $10.9 million and recognized $2.5 million in proceeds on the sale of investments, with no such activity in the first quarter of 2021.

|  | Three Months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
Cash used in financing activities (in millions) |  | $ | (7.2 | ) |  | $ | (6.8 | )

We paid total cash dividends on our common and preferred stock of $3.5 million and $4.8 million in the first quarter of 2022 and 2021, respectively. We made repayments on our capital leases of $1.7 million and $1.9 million in the first quarter of 2022 and 2021, respectively.

Exchange rate fluctuations between the U.S. dollar and the Canadian dollar and Mexican peso resulted in a $0.5 million increase in cash and cash equivalents in the first quarter of 2022 compared to an increase of $0.2 million in the first quarter of 2021.

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Contractual Obligations, Contingent Liabilities and Commitments

The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our Senior Notes, IQ Notes, credit facility, outstanding purchase orders and certain capital expenditures and lease arrangements as of March 31, 2022 (in thousands):

|  | Payments Due By Period |
|  | Less than 1 year |  |  | 1-3 years |  |  | 4-5 years |  |  | More than 5 years |  |  | Total |
Purchase and contractual obligations (1) |  | $ | 22,645 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 22,645 |
Commitment fees (2) |  |  | 1,496 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,496 |
Finance lease commitments (3) |  |  | 6,365 |  |  |  | 8,194 |  |  |  | 943 |  |  |  | — |  |  |  | 15,502 |
Operating lease commitments (4) |  |  | 3,057 |  |  |  | 3,607 |  |  |  | 2,100 |  |  |  | 6,174 |  |  |  | 14,938 |
Senior Notes (5) |  |  | 34,438 |  |  |  | 68,875 |  |  |  | 68,875 |  |  |  | 505,132 |  |  |  | 677,320 |
IQ Notes (6) |  |  | 2,515 |  |  |  | 5,030 |  |  |  | 39,295 |  |  |  | — |  |  |  | 46,840 |
Total contractual cash obligations |  | $ | 70,516 |  |  | $ | 85,706 |  |  | $ | 111,213 |  |  | $ | 511,306 |  |  | $ | 778,741 |

| (1) | Consists of open purchase orders and contractual obligations of approximately $7.7 million at Greens Creek, $10.1 million at Lucky Friday, $0.2 million at Casa Berardi and $4.6 million at the Nevada Operations.

| (2) | We have a $250 million revolving credit agreement which is currently undrawn. We had $17.3 million in letters of credit outstanding as of March 31, 2022. The amounts in the table above assume no additional amounts will be drawn in future periods, and include only the standby fee on the current undrawn balance. For more information on our credit facility, see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited).

| (3) | Includes scheduled finance lease payments of $13.9 million and $1.6 million (including interest) for equipment at Greens Creek and Casa Berardi, respectively.

| (4) | We enter into operating leases in the normal course of business. Substantially all lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease arrangements.

| (5) | On February 19, 2020, we completed an offering of $475 million in aggregate principal amount of our Senior Notes due February 15, 2028. The Senior Notes bear interest at a rate of 7.25% per year, with interest payable on February 15 and August 15 of each year, commencing August 15, 2020. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

| (6) | On July 9, 2020, we entered into a note purchase agreement pursuant to which we issued our IQ Notes for CAD$50 million (approximately USD$36.8 million at the time of the transaction) in aggregate principal amount. The IQ Notes bear interest on amounts outstanding at a rate of 6.515% per year, payable on January 9 and July 9 of each year, commencing January 9, 2021. See Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information.

We record liabilities for estimated costs associated with mine closure, reclamation of land and other environmental matters. At March 31, 2022, our liabilities for these matters totaled $114.2 million. Future expenditures related to closure, reclamation and environmental expenditures at our sites are difficult to estimate, although we anticipate we will incur expenditures relating to these obligations over the next 30 years. For additional information relating to our environmental obligations, see Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited).

Critical Accounting Estimates

There have been no significant changes to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K.

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Guarantor Subsidiaries

Presented below are Hecla’s unaudited interim condensed consolidating financial statements as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended, resulting from the guarantees by certain of Hecla's subsidiaries of the Senior Notes and IQ Notes (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for more information). The Guarantors consist of the following of Hecla's 100%-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Montana, Inc.; Revett Silver Company; RC Resources, Inc.; Troy Mine Inc.; Revett Exploration, Inc.; Revett Holdings, Inc.; Mines Management, Inc.; Newhi, Inc.; Montanore Minerals Corp.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; Hecla Juneau Mining Company; Klondex Holdings Inc.; Klondex Gold & Silver Mining Co.; Klondex Midas Holdings Limited; Klondex Aurora Mine Inc.; Klondex Hollister Mine Inc; and Hecla Quebec, Inc. We completed the offering of the Senior Notes on February 19, 2020 under our shelf registration statement previously filed with the SEC. We issued the IQ Notes in four equal tranches between July and October 2020.

The unaudited interim condensed consolidating financial statements below have been prepared from our financial information on the same basis of accounting as the unaudited interim condensed consolidated financial statements set forth elsewhere in this report. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate Hecla, the Guarantors, and our non-guarantor subsidiaries are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Hecla and its subsidiaries and among the subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do not represent business activity with third-party customers, vendors, and other parties. Examples of such eliminations include the following:

| • | Investments in subsidiaries. The acquisition of a company results in an investment in debt or equity capital on the records of the parent company and a contribution to debt or equity capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.

| • | Capital contributions. Certain of Hecla's subsidiaries do not generate cash flow, either at all or that is sufficient to meet their capital needs, and their cash requirements are routinely met with inter-company advances from their parent companies. Generally on an annual basis, when not otherwise intended as debt, the boards of directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parents' investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.

| • | Debt. At times, inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense (if any) and income activity (if any), and payments of principal and accrued interest amounts (if any) by the subsidiary companies to their parents are eliminated in consolidation.

| • | Dividends. Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On at least an annual basis, the boards of directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.

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| • | Deferred taxes. Our ability to realize deferred tax assets and liabilities is considered for two consolidated tax groups of subsidiaries within the United States: The Nevada U.S. Group and the Hecla U.S. Group. Within each tax group, all subsidiaries' estimated future taxable income contributes to the ability of their tax group to realize all such assets and liabilities. However, when Hecla's subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the unaudited interim financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.

Separate financial statements of the Guarantors are not presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (1) the sale or disposal of all or substantially all of the assets of the Guarantor; (2) the sale or other disposition of the capital stock of the Guarantor; (3) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (4) Hecla ceases to be a borrower as defined in the indenture; and (5) upon legal or covenant defeasance or satisfaction and discharge of the indenture.

Unaudited Interim Condensed Consolidating Balance Sheets

|  | As of March 31, 2022 |
|  | Parent |  |  | Guarantors |  |  | Non- Guarantors |  |  | Eliminations |  |  | Consolidated |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 164,037 |  |  | $ | 29,638 |  |  | $ | 18,354 |  |  | $ | — |  |  | $ | 212,029 |
Other current assets |  |  | 4,798 |  |  |  | 125,786 |  |  |  | 1,343 |  |  |  | — |  |  |  | 131,927 |
Properties, plants, equipment and mineral interests - net |  |  | 1,913 |  |  |  | 2,288,710 |  |  |  | 8,235 |  |  |  | — |  |  |  | 2,298,858 |
Intercompany receivable (payable) |  |  | (222,013 | ) |  |  | (219,670 | ) |  |  | 214,657 |  |  |  | 227,026 |  |  |  | — |
Investments in subsidiaries |  |  | 1,566,919 |  |  |  | — |  |  |  | — |  |  |  | (1,566,919 | ) |  |  | — |
Other non-current assets |  |  | 360,176 |  |  |  | 32,607 |  |  |  | (116,294 | ) |  |  | (180,404 | ) |  |  | 96,085 |
Total assets |  | $ | 1,875,830 |  |  | $ | 2,257,071 |  |  | $ | 126,295 |  |  | $ | (1,520,297 | ) |  | $ | 2,738,899 |
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  | $ | (410,590 | ) |  | $ | 251,290 |  |  | $ | 1,714 |  |  | $ | 345,826 |  |  | $ | 188,240 |
Long-term debt |  |  | 508,852 |  |  |  | 17,878 |  |  |  | 507 |  |  |  | — |  |  |  | 527,237 |
Non-current portion of accrued reclamation |  |  | — |  |  |  | 99,899 |  |  |  | 3,713 |  |  |  | — |  |  |  | 103,612 |
Non-current deferred tax liability |  |  | 2,937 |  |  |  | 437,077 |  |  |  | — |  |  |  | (299,204 | ) |  |  | 140,810 |
Other non-current liabilities |  |  | 46,088 |  |  |  | 3,661 |  |  |  | 708 |  |  |  | — |  |  |  | 50,457 |
Stockholders' equity |  |  | 1,728,543 |  |  |  | 1,447,266 |  |  |  | 119,653 |  |  |  | (1,566,919 | ) |  |  | 1,728,543 |
Total liabilities and stockholders' equity |  | $ | 1,875,830 |  |  | $ | 2,257,071 |  |  | $ | 126,295 |  |  | $ | (1,520,297 | ) |  | $ | 2,738,899 |

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Unaudited Interim Condensed Consolidating Statements of Operations

|  | Three Months Ended March 31, 2022 |
|  | Parent |  |  | Guarantors |  |  | Non- Guarantors |  |  | Eliminations |  |  | Consolidated |
|  | (in thousands) |
Sales |  | $ | (4,770 | ) |  | $ | 191,269 |  |  | $ | — |  |  | $ | — |  |  | $ | 186,499 |
Cost of sales |  |  | 1,050 |  |  |  | (106,822 | ) |  |  | — |  |  |  | — |  |  |  | (105,772 | )
Depreciation, depletion and amortization |  |  | — |  |  |  | (35,298 | ) |  |  | — |  |  |  | — |  |  |  | (35,298 | )
General and administrative |  |  | (4,393 | ) |  |  | (3,764 | ) |  |  | (137 | ) |  |  | — |  |  |  | (8,294 | )
Exploration and pre-development |  |  | (146 | ) |  |  | (10,646 | ) |  |  | (2,016 | ) |  |  | — |  |  |  | (12,808 | )
Fair value adjustments, net |  |  | 256 |  |  |  | 1,939 |  |  |  | 3,770 |  |  |  | — |  |  |  | 5,965 |
Equity in earnings of subsidiaries |  |  | 4,212 |  |  |  | — |  |  |  | — |  |  |  | (4,212 | ) |  |  | — |
Other income (expense) |  |  | 11,351 |  |  |  | (21,886 | ) |  |  | 798 |  |  |  | (10,771 | ) |  |  | (20,508 | )
Income (loss) before income and mining taxes |  |  | 7,560 |  |  |  | 14,792 |  |  |  | 2,415 |  |  |  | (14,983 | ) |  |  | 9,784 |
Income and mining tax (provision) benefit |  |  | (3,407 | ) |  |  | (13,006 | ) |  |  | 11 |  |  |  | 10,771 |  |  |  | (5,631 | )
Net income (loss) |  |  | 4,153 |  |  |  | 1,786 |  |  |  | 2,426 |  |  |  | (4,212 | ) |  |  | 4,153 |
Preferred stock dividends |  |  | (138 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (138 | )
Income (loss) applicable to common stockholders |  |  | 4,015 |  |  |  | 1,786 |  |  |  | 2,426 |  |  |  | (4,212 | ) |  |  | 4,015 |
Net income (loss) |  |  | 4,153 |  |  |  | 1,786 |  |  |  | 2,426 |  |  |  | (4,212 | ) |  |  | 4,153 |
Changes in comprehensive loss |  |  | (33,165 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (33,165 | )
Comprehensive (loss) income |  | $ | (29,012 | ) |  | $ | 1,786 |  |  | $ | 2,426 |  |  | $ | (4,212 | ) |  | $ | (29,012 | )

Unaudited Interim Condensed Consolidating Statements of Cash Flows

|  | Three Months Ended March 31, 2022 |
|  | Parent |  |  | Guarantors |  |  | Non- Guarantors |  |  | Eliminations |  |  | Consolidated |
|  | (in thousands) |
Cash flows from operating activities |  | $ | 1,891 |  |  | $ | 30,240 |  |  | $ | 18,489 |  |  | $ | (12,711 | ) |  | $ | 37,909 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additions to properties, plants, equipment and mineral interests |  |  | — |  |  |  | (21,476 | ) |  |  | (2 | ) |  |  |  |  |  |  | (21,478 | )
Other investing activities, net |  |  | (4,213 | ) |  |  | (2,173 | ) |  |  | (5,591 | ) |  |  | 4,213 |  |  |  | (7,764 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividends paid to stockholders |  |  | (3,509 | ) |  |  | — |  |  |  | — |  |  |  |  |  |  |  | (3,509 | )
Payments on debt |  |  | — |  |  |  | (1,695 | ) |  |  | — |  |  |  |  |  |  |  | (1,695 | )
Other financing activity |  |  | (5,240 | ) |  |  | 10,139 |  |  |  | (15,372 | ) |  |  | 8,498 |  |  |  | (1,975 | )
Effect of exchange rate changes on cash |  |  | — |  |  |  | 509 |  |  |  | 10 |  |  |  | — |  |  |  | 519 |
Changes in cash, cash equivalents and restricted cash and cash equivalents |  |  | (11,071 | ) |  |  | 15,544 |  |  |  | (2,466 | ) |  |  | — |  |  |  | 2,007 |
Beginning cash, cash equivalents and restricted cash and cash equivalents |  |  | 175,108 |  |  |  | 15,135 |  |  |  | 20,820 |  |  |  | — |  |  |  | 211,063 |
Ending cash, cash equivalents and restricted cash and cash equivalents |  | $ | 164,037 |  |  | $ | 30,679 |  |  | $ | 18,354 |  |  | $ | — |  |  | $ | 213,070 |

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discussion about our exposure to market risks and risk management activities includes forward-looking statements that involve risks and uncertainties, as well as summarizes the financial instruments held by us at March 31, 2022, which are sensitive to changes in commodity prices and foreign exchange rates and are not held for trading purposes. Actual results could differ materially from those projected in the forward-looking statements. In the normal course of business, we also face risks that are either non-financial or non-quantifiable (See Item 1A. – Risk Factors of our 2021 Form 10-K).

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Metals Prices

Changes in the market prices of silver, gold, lead and zinc can significantly affect our profitability and cash flow. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us in our 2021 Form 10-K ). We utilize financially-settled forward contracts to manage our exposure to changes in prices for silver, gold, zinc and lead.

Provisional Sales

Sales of all metals products sold directly to customers, including by-product metals, are recorded as revenues when all performance obligations have been completed and the transaction price can be determined or reasonably estimated. For concentrate sales, revenues are generally recorded at the time of shipment at forward prices for the estimated month of settlement. Due to the time elapsed between shipment to the customer and the final settlement with the customer we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices until final settlement by the customer. Changes in metals prices between shipment and final settlement will result in changes to revenues previously recorded upon shipment. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control (see Item 1A – Risk Factors – A substantial or extended decline in metals prices would have a material adverse effect on us in our 2021 Form 10-K). At March 31, 2022, metals contained in concentrate sales and exposed to future price changes totaled 2.1 million ounces of silver, 5,476 ounces of gold, 10,798 tons of zinc, and 5,940 tons of lead. If the price for each metal were to change by 10%, the change in the total value of the concentrates sold would be approximately $11.7 million. As discussed in Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited), we utilize a program designed and intended to mitigate the risk of negative price adjustments with limited mark-to-market financially-settled forward contracts for our silver, gold, zinc and lead sales.

Commodity-Price Risk Management

See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) and Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2021 Form 10-K for a description of our commodity-price risk management program.

Foreign Currency Risk Management

We operate or have mining interests in Canada and Mexico, which exposes us to risks associated with fluctuations in the exchange rates between the USD and the CAD and MXN, respectively. We have determined the functional currency for our Canadian and Mexican operations is the USD. As such, foreign exchange gains and losses associated with the re-measurement of monetary assets and liabilities from CAD and MXN to USD are recorded to earnings each period. For the three months ended March 31, 2022 and 2021, we recognized net foreign exchange loss of $2.0 million and $2.1 million, respectively. Foreign currency exchange rates are influenced by a number of factors beyond our control. A 10% change in the exchange rate between the USD and CAD from the rate at March 31, 2022 would have resulted in a change of approximately $10.1 million in our net foreign exchange gain or loss. A 10% change in the exchange rate between the USD and MXN from the rate at March 31, 2022 would have resulted in a change of approximately $0.1 million in our net foreign exchange gain or loss.

See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited) and Note 11 of Notes to Consolidated Financial Statements in our 2021 Form 10-K for a description of our foreign currency risk management.

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Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of March 31, 2022, in assuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

Part II - Other Information

Hecla Mining Company and Subsidiaries

Item 1. Legal Proceedings

For information concerning certain legal proceedings, refer to Note 10 of Notes to Condensed Consolidated Financial Statements (Unaudited), which is incorporated by reference into this Item 1.

Item 1A. Risk Factors

Item 1A - Risk Factors of our annual report filed on Form 10-K for the year ended December 31, 2021 sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this Quarterly Report.

Item 6. Exhibits

Hecla Mining Company and Wholly Owned Subsidiaries

Form 10-Q - March 31, 2022

Index to Exhibits

31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

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95 | Mine safety information listed in Section 1503 of the Dodd-Frank Act. *
101.INS | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. **
101.SCH | Inline XBRL Taxonomy Extension Schema.**
101.CAL | Inline XBRL Taxonomy Extension Calculation.**
101.DEF | Inline XBRL Taxonomy Extension Definition.**
101.LAB | Inline XBRL Taxonomy Extension Labels.**
101.PRE | Inline XBRL Taxonomy Extension Presentation.**
104 | Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________________

* Filed herewith.

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Items 2, 3 and 5 of Part II are not applicable and are omitted from this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | HECLA MINING COMPANY
|  | (Registrant)
Date: | May 10, 2022 | By: | /s/ Phillips S. Baker, Jr.
|  |  | Phillips S. Baker, Jr., President,
|  |  | Chief Executive Officer and Director
Date: | May 10, 2022 | By: | /s/ Russell D. Lawlar
|  |  | Russell D. Lawlar, Senior Vice President,
|  |  | Chief Financial Officer

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