HECLA MINING CO/DE/, 10-Q filed on 8/9/2011
Quarterly Report
Document And Entity Information
6 Months Ended
Jun. 30, 2011
Aug. 9, 2011
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
HECLA MINING CO/DE/ 
 
Document Type
10-Q 
 
Current Fiscal Year End Date
--12-31 
 
Entity Common Stock, Shares Outstanding
 
256,360,644 
Amendment Flag
FALSE 
 
Entity Central Index Key
0000719413 
 
Entity Current Reporting Status
Yes 
 
Entity Voluntary Filers
No 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Well-known Seasoned Issuer
Yes 
 
Document Period End Date
Jun. 30, 2011 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q2 
 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 377,436 
$ 283,606 
Investments
 
1,474 
Accounts receivable
45,121 
36,840 
Concentrates, doré, and stockpiled ore
11,517 
8,886 
Materials and supplies
10,470 
10,245 
Current deferred income taxes
75,435 
87,287 
Other current assets
2,336 
3,683 
Total current assets
522,315 
432,021 
Non-current investments
4,161 
1,194 
Non-current restricted cash and investments
926 
10,314 
Properties, plants, equipment and mineral interests, net
855,482 
833,288 
Non-current deferred income taxes
73,851 
100,072 
Other non-current assets and deferred charges
3,654 
5,604 
Total assets
1,460,389 
1,382,493 
Current liabilities:
 
 
Accounts payable and accrued liabilities
44,355 
31,725 
Accrued payroll and related benefits
10,343 
10,789 
Accrued taxes
9,678 
16,042 
Current portion of capital leases
3,045 
2,481 
Current portion of accrued reclamation and closure costs
175,597 
175,484 
Current derivative contract liabilities
10,510 
20,016 
Total current liabilities
253,528 
256,537 
Capital leases
4,473 
3,792 
Accrued reclamation and closure costs
143,026 
143,313 
Other noncurrent liabilities
16,149 
16,598 
Total liabilities
417,176 
420,240 
Preferred stock, 5,000,000 shares authorized:
 
 
Capital surplus
1,180,740 
1,179,751 
Accumulated deficit
(189,179)
(265,577)
Accumulated other comprehensive loss
(15,843)
(15,117)
Less treasury stock, at cost; 2011 – 392,645 and 2010 – 335,957 shares
(2,520)
(2,051)
Total shareholders’ equity
1,043,213 
962,253 
Total liabilities and shareholders’ equity
1,460,389 
1,382,493 
Series B Preferred Stock [Member]
 
 
Preferred stock, 5,000,000 shares authorized:
 
 
Preferred Stock Value
39 
39 
Mandatory Convertible Preferred Stock [Member]
 
 
Preferred stock, 5,000,000 shares authorized:
 
 
Preferred Stock Value
 
504 
Common stock, $0.25 par value, authorized 500,000,000 shares; issued and outstanding 2011 — 279,512,363 shares and 2010 — 258,485,666 shares
$ 69,976 
$ 64,704 
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)
Jun. 30, 2011
Dec. 31, 2010
Preferred Stock Shares Outstanding
2,012,500 
 
Common stock, par value (in Dollars per share)
$ 0.25 
 
Common stock, shares authorized
500,000,000 
 
Common stock, shares issued
279,512,363 
 
Treasury stock, common shares
392,645 
335,957 
Series B Preferred Stock [Member]
 
 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred Stock Par Value (in Dollars per share)
$ 0.25 
$ 0.25 
Preferred Stock Shares Issued
157,816 
157,816 
Preferred Stock Shares Outstanding
157,816 
157,816 
Preferred Stock Liquidation Preference
7,891 
7,891 
Mandatory Convertible Preferred Stock [Member]
 
 
Preferred Stock Par Value (in Dollars per share)
$ 0.25 
$ 0.25 
Preferred Stock Shares Issued
0 
2,012,500 
Preferred Stock Shares Outstanding
0 
2,012,500 
Preferred Stock Liquidation Preference
0 
201,250 
Common stock, par value (in Dollars per share)
$ 0.25 
$ 0.25 
Common stock, shares authorized
500,000,000 
500,000,000 
Common stock, shares issued
279,512,363 
258,485,666 
Common stock, shares outstanding
279,512,363 
258,485,666 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)
In Thousands, except Per Share data
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Sales of products
$ 117,860 
$ 88,631 
$ 254,224 
$ 168,506 
Cost of sales and other direct production costs
38,865 
35,545 
83,394 
71,815 
Depreciation, depletion and amortization
11,204 
15,020 
23,466 
31,089 
[CostOfRevenue]
50,069 
50,565 
106,860 
102,904 
Gross profit
67,791 
38,066 
147,364 
65,602 
Other operating expenses:
 
 
 
 
General and administrative
4,550 
4,664 
9,249 
8,777 
Exploration
5,839 
5,820 
9,140 
9,249 
Other operating expense
2,270 
1,601 
4,087 
2,565 
Provision for closed operations and environmental matters
1,341 
1,389 
2,362 
4,765 
[DiscontinuedOperationGainLossOnDisposalOfDiscontinuedOperationNetOfTax]
14,000 
13,474 
24,838 
25,356 
Income from operations
53,791 
24,592 
122,526 
40,246 
Other income (expense):
 
 
 
 
Gain (loss) on sale or impairment of investments
 
(739)
611 
(151)
Gain (loss) on derivative contracts
559 
1,999 
(1,475)
1,999 
Interest and other income
105 
16 
123 
67 
Interest expense
(1,496)
(529)
(1,973)
(1,207)
[NonoperatingIncomeExpense]
(832)
747 
(2,714)
708 
Income before income taxes
52,959 
25,339 
119,812 
40,954 
Income tax provision
(19,642)
(8,255)
(43,138)
(2,026)
Net income
33,317 
17,084 
76,674 
38,928 
Reclassification of net (gain) loss on sale or impairment of marketable securities included in net income
 
739 
(611)
739 
Unrealized holding losses on investments
(1,082)
(510)
(115)
(1,488)
Comprehensive income
32,235 
17,313 
75,948 
38,179 
Basic income per common share after preferred dividends (in Dollars per share)
$ 0.12 
$ 0.06 
$ 0.27 
$ 0.13 
Diluted income per common share after preferred dividends (in Dollars per share)
$ 0.11 
$ 0.05 
$ 0.26 
$ 0.12 
Weighted average number of common shares outstanding - basic (in Shares)
279,347 
248,549 
278,901 
245,371 
Weighted average number of common shares outstanding - diluted (in Shares)
295,756 
266,374 
296,020 
263,868 
Preferred stock dividends
(138)
(3,409)
(276)
(6,817)
Income applicable to common shareholders
$ 33,179 
$ 13,675 
$ 76,398 
$ 32,111 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands
6 Months Ended
Jun. 30,
2011
2010
Operating activities:
 
 
Net income
$ 76,674 
$ 38,928 
Non-cash elements included in net income:
 
 
Depreciation, depletion and amortization
23,597 
31,177 
Gain on sale of investments
(611)
(588)
Loss on impairment of investments
 
739 
Gain on disposition of properties, plants and equipment
(8)
 
Provision for reclamation and closure costs
556 
2,502 
Stock compensation
920 
2,473 
Deferred income taxes
38,319 
268 
Amortization of loan origination fees
332 
320 
(Gain) loss on derivative contracts
(9,198)
(2,202)
Other non-cash charges, net
391 
328 
Change in assets and liabilities:
 
 
Accounts receivable
(8,282)
4,023 
Inventories
(2,856)
(3,207)
Other current and non-current assets
2,552 
2,517 
Accounts payable and accrued liabilities
12,818 
11,455 
Accrued payroll and related benefits
(445)
(7,332)
Accrued taxes
(6,364)
(1,256)
Accrued reclamation and closure costs and other non-current liabilities
(1,178)
(5,354)
Cash provided by operating activities
127,217 
74,791 
Investing activities:
 
 
Additions to properties, plants, equipment and mineral interests
(40,580)
(27,864)
Proceeds from sale of investments
1,366 
1,138 
Proceeds from disposition of properties, plants and equipment
113 
 
Purchases of investments
(3,200)
 
Changes in restricted cash and investment balances
9,388 
1,476 
Net cash used in investing activities
(32,913)
(25,250)
Financing activities:
 
 
Proceeds from exercise of stock options and warrants
4,838 
45,562 
Acquisition of treasury shares
(469)
(693)
Dividends paid to preferred shareholders
(3,546)
(966)
Repayments of capital leases
(1,297)
(744)
Net cash (used) provided by financing activities
(474)
43,159 
Change in cash and cash equivalents:
 
 
Net increase in cash and cash equivalents
93,830 
92,700 
Cash and cash equivalents at beginning of period
283,606 
104,678 
Cash and cash equivalents at end of period
377,436 
197,378 
Significant non-cash investing and financing activities:
 
 
Addition of capital lease obligations
2,543 
563 
Accounts payable change relating to capital additions
2,773 
(1,437)
Preferred stock dividends paid in common stock
 
$ 19,620 
Note 1. Basis of Preparation of Financial Statements
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1.    Basis of Preparation of Financial Statements

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements and notes to interim condensed consolidated financial statements contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of Hecla Mining Company and its consolidated subsidiaries (“we” or “our” or “us”).  These unaudited interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related footnotes as set forth in our annual report filed on Form 10-K for the year ended December 31, 2010, as it may be amended from time to time.

The results of operations for the periods presented may not be indicative of those which may be expected for a full year.  The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures are adequate to make the information not misleading.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures of contingent liabilities.  Accordingly, ultimate results could differ materially from those estimates.

Note 2. Investments and Restricted Cash
Investments And Restricted Cash
Note 2.    Investments and Restricted Cash

Investments

At December 31, 2010, the fair value of our current investments was $1.5 million, with a cost basis of approximately $0.8 million.  This investment was sold in February 2011 for proceeds of $1.4 million, resulting in a pre-tax gain of approximately $0.6 million.  No current investments were held at June 30, 2011.

At June 30, 2011 and December 31, 2010, the fair value of our non-current investments was $4.2 million and $1.2 million, respectively.  Marketable equity securities are carried at fair market value, as they are classified as “available-for-sale.” The cost basis of these non-current investments, representing equity securities, was approximately $3.8 million and $0.2 million at June 30, 2011 and December 31, 2010, respectively, as we acquired additional mining-related investments in the second quarter.

At June 30, 2011, total unrealized gains of $0.6 million for investments held having a net gain position and total unrealized losses of $0.2 million for investments held having a net loss position were included in accumulated other comprehensive income (loss).

Restricted Cash and Investments

Various laws, permits, and covenants require that financial assurances be in place for certain environmental and reclamation obligations and other potential liabilities.  Restricted investments primarily represent investments in money market funds and certificates of deposit.  These restricted investments are to be used primarily for reclamation funding or for funding surety bonds and were $0.9 million at June 30, 2011 and $10.3 million at December 31, 2010. The reduction in restricted investments was due to the release of collateral on bonding requirements.

Note 3. Income Taxes
Income Tax Disclosure [Text Block]
Note 3.   Income Taxes

Major components of our income tax provision for the three months and six months ended June 30, 2011 and 2010 are as follows (in thousands):

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Current:
                       
Federal
  $ 4,111     $ 1,530     $ 4,111     $ 1,359  
State
    478       230       478       169  
Foreign
    115       115       230       230  
                                 
Total current income tax provision
    4,704       1,875       4,819       1,758  
                                 
                                 
Deferred:
                               
Federal and state deferred income tax provision
    14,938       6,380       38,319       7,928  
Discrete benefit for change in valuation allowance attributable to future periods
    -       -       -       (7,660 )
                                 
Total deferred income tax provision
    14,938       6,380       38,319       268  
                                 
Total income tax provision
  $ 19,642     $ 8,255     $ 43,138     $ 2,026  

           Our ability to utilize our deferred tax assets depends on future taxable income generated from operations. For the six months ended June 30, 2011, there were no circumstances that caused us to change our assessment of the ability to generate future taxable income to realize the currently recognized deferred tax assets.  After utilization of $38 million for the first six months of the year, the net deferred tax asset at June 30, 2011 was $149 million. It is possible that the valuation allowance on our deferred tax asset will change in the future as a result of the analysis of our long-range forecasts, with a resulting tax provision.

The current income tax provisions for the three- and six-month periods ended June 30, 2011 and 2010 vary from the amounts that would have resulted from applying the statutory income tax rate to pre-tax income primarily due to the effects of percentage depletion for all periods presented and the change in valuation allowance during the six-month period ended June 30, 2010.

Note 4. Commitments and Contingencies
Commitments and Contingencies Disclosure [Text Block]
Note 4.    Commitments and Contingencies

Bunker Hill Superfund Site and Related Environmental Claims

Recent Developments

On June 13, 2011, a Consent Decree settling environmental litigation and related claims involving Hecla Limited pertaining to historic releases of mining wastes in the Coeur d’Alene Basin was lodged with the U.S. District Court in Idaho.  The Consent Decree among Hecla Limited and certain affiliates and the United States, the Coeur d’Alene Indian Tribe, and the State of Idaho (“Plaintiffs”) contains comprehensive terms of settlement with respect to the Coeur d’Alene Basin environmental litigation and related claims (including under the 1994 Box Consent Decree described below).  The proposed financial terms require that Hecla Limited pay, in the aggregate, $263.4 million to the Plaintiffs over approximately three years.  Further details of the proposed financial terms of settlement are discussed below under “Accrual for Basin Claims.”

The Consent Decree was published in the Federal Register on June 17, 2011, which began a period during which the public was allowed to submit comments relating to the proposed Consent Decree.  On July 26, 2011 the Court issued an Order setting (i) August 24, 2011 as the deadline for motions regarding the Consent Decree and (ii) September 8, 2011 as the date for the hearing on entry of the Consent Decree.  We anticipate that the Plaintiffs will file a motion with the Court seeking entry of the Consent Decree during the third quarter of 2011 in compliance with the Court's Order.

If the Court enters the Consent Decree, Hecla Limited will have resolved all of Plaintiffs’ existing claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) (and certain other statutes) for past response costs, future environmental remediation costs, and natural resource damages related to historic releases of mining wastes in the Coeur d’Alene River Basin, as well as all remaining obligations of Hecla Limited under the 1994 Box Consent Decree.

Hecla is hopeful that the settlement will be completed and effective during the third quarter of 2011, however, there can be no assurance that the Consent Decree will be entered by the Court and thereby become final and binding.

History of Coeur d’Alene River Basin Environmental Claims

In July 1991, the Coeur d’Alene Indian Tribe (“Tribe”) brought a lawsuit under CERCLA in Idaho Federal District Court against our wholly owned subsidiary Hecla Limited, ASARCO Incorporated (“ASARCO”) and a number of other mining companies asserting claims for damages to natural resources downstream from a rectangular 21-square-mile site located near Kellogg, Idaho (the “Box”) within the Bunker Hill Superfund site over which the Tribe alleges some ownership or control. The Tribe’s natural resource damage litigation was consolidated with the United States’ litigation described below. Because of various bankruptcies and settlements of other defendants, Hecla Limited is the only remaining defendant in the Tribe’s natural resource damages case.

In 1994, Hecla Limited, as a potentially responsible party under CERCLA, entered into a Consent Decree with the U.S. Environmental Protection Agency (“EPA”) and the State of Idaho concerning environmental remediation obligations in the Box. The 1994 Consent Decree (the “Box Decree” or “Decree”) settled Hecla Limited’s response-cost responsibility under CERCLA in the Box. Parties to the Decree included Hecla Limited, Sunshine Mining and Refining Company and ASARCO.

In March 1996, the United States filed a lawsuit in Idaho Federal District Court against certain mining companies, including Hecla Limited, that conducted historic mining operations in the Silver Valley of north Idaho. The lawsuit asserted claims under CERCLA and the Clean Water Act, and seeks recovery for alleged damages to, or loss of, natural resources located in the Coeur d’Alene River Basin (“Basin”) in north Idaho for which the United States asserts it is the trustee under CERCLA. The lawsuit claimed that the defendants’ historic mining activity resulted in releases of hazardous substances and damaged natural resources within the Basin. The suit also sought declaratory relief as to the defendants’ joint and several liability for response costs under CERCLA for historic mining impacts in the Basin outside the Box. Hecla Limited has asserted a number of defenses to the United States’ claims.

In May 1998, the EPA announced that it had commenced a Remedial Investigation/Feasibility Study under CERCLA for the Basin, including Lake Coeur d’Alene (but excluding the Box), in support of its response cost claims asserted in the United States’ March 1996 lawsuit. In September 2002, the EPA issued the interim Record of Decision (“ROD”) for the Basin proposing a $359 million Basin-wide remediation plan to be implemented over 30 years and establishing a review process at the end of the 30-year period to determine if further remediation would be appropriate.  In 2009, the EPA commenced a process to adopt certain changes to the ecological remediation plan for the upper portion of the Basin only (in contrast to the 2002 ROD which addressed the entire Basin, including the upper and lower portions).  In February 2010, the EPA issued a draft focused feasibility study report which presents and evaluates alternatives for remediation of the upper portions of the Basin.  On July 12, 2010, the EPA released for public comment its proposed plan for remediation of the upper portion of the Basin.  The public comment period concluded on November 23, 2010.  Although a final remedy has not been selected, the proposed remediation plan was originally estimated to cost, in net present value terms, approximately $1.3 billion, including work in the Box.  However, recently the EPA has made public statements indicating that the proposed remediation plan could have a reduced scope (and cost) from what EPA released in July 2010.

In January 2001, Phase I of the trial on the consolidated Tribe’s and the United States’ claims commenced, and was concluded in July 2001. Phase I addressed the extent of liability, if any, of the defendants and the allocation of liability among the defendants and others, including the United States. In September 2003, the Court issued its Phase I ruling, holding that Hecla Limited has some liability for Basin environmental conditions. The Court refused to hold the defendants jointly and severally liable for historic tailings releases and instead allocated a 22% share of liability to ASARCO and a 31% share of liability to Hecla Limited for impacts resulting from tailings releases. The portion of natural resource damages, past costs and remediation costs to which this 31% applies, other cost allocations applicable to Hecla Limited, and the Court’s determination whether the EPA’s remediation proposals satisfy CERCLA requirements, were to be addressed in Phase II of the litigation (if the case is not settled). The Court also left issues on the deference, if any, to be afforded the EPA’s remediation plan, for Phase II.

The Court found that while certain Basin natural resources had been injured, “there has been an exaggerated overstatement” by the plaintiffs of Basin environmental conditions and the mining impact. As stated in their own filings, the United States’ and the Tribe’s claims for natural resource damages for Phase II may be in the range of $2.0 billion to $3.4 billion. Because of a number of factors relating to the quality and uncertainty of the United States’ and Tribe’s natural resource damage claims, Hecla Limited is currently unable to estimate what, if any, liability or range of liability it may have for these claims in the event the recently negotiated terms of settlement of the Basin environmental litigation and other claims do not become effective in a Consent Decree entered by the court.

Two of the defendant mining companies, Coeur d’Alene Mines Corporation and Sunshine Mining and Refining Company, settled their liabilities in the Basin litigation during 2001. On March 13, 2009, the United States reached agreement with ASARCO concerning ASARCO’s liability in the Basin litigation.  The agreement, among other things, required the payment by ASARCO of approximately $482 million to the United States or certain trusts. That agreement was approved by the Bankruptcy Court – ASARCO had previously filed for Chapter 11 bankruptcy in August 2005 –  and the U.S. Federal District Court in Texas in late 2009.  As a result of approval of ASARCO’s Plan of Reorganization in the bankruptcy proceeding, and the distribution of approximately $482 million, plus interest, to the United States or certain trusts in December 2009, ASARCO was dismissed as a defendant in the Idaho Federal Court litigation in September 2010.  This left Hecla Limited as the only defendant remaining in the Basin litigation. Because of the nature of ASARCO’s settlement and of the bankruptcy proceeding, Hecla Limited does not believe the Basin environmental claims asserted against ASARCO in the bankruptcy proceeding or settlement distribution amounts are necessarily indicative of Hecla Limited’s potential liability in the Basin litigation if the Consent Decree is not entered by the Court.

Phase II of the trial was scheduled to commence in January 2006. However, as a result of ASARCO’s bankruptcy filing, the Idaho Federal Court vacated the January 2006 trial date and stayed the litigation (the stay remains in effect as of the date of this report). Hecla Limited anticipates that in the event the settlement and Consent Decree do not become effective, the Court will schedule a status conference to address lifting the stay and rescheduling the Phase II trial date.

For more than a year Hecla Limited has been involved in settlement negotiations with representatives of the United States, the State of Idaho and the Tribe. Those settlement negotiations culminated in a comprehensive settlement reflected in a Consent Decree lodged with the Court on June 13, 2011.  We believe that the United States is in the process of evaluating any public comments it received on the Consent Decree.  We currently expect the Plaintiffs to seek Court approval and entry of the Consent Decree some time during the third quarter of 2011.  There can be no assurance that the Consent Decree will be entered and become final and binding.

Accrual for Basin Claims

Assuming the Court enters the Consent Decree with the currently proposed financial terms, Hecla Limited would be obligated for the following payments:

 
●
$102 million of cash, $55.5 million of cash or Hecla Mining Company common stock, and approximately $9.5 million in proceeds from series 3 warrants received by Hecla through April 12, 2011 and referred to below, all payable 30 days after entry of the Consent Decree;

 
●
$25 million of cash 30 days after the first anniversary of entry of the Consent Decree;

 
●
$15 million of cash 30 days after the second anniversary of entry of the Consent Decree; and

 
●
Approximately $56.4 million by August 2014, as quarterly payments of the proceeds from the exercise of any outstanding Series 1 and Series 3 warrants (which have an exercise price of between $2.45 and $2.50 per share) during the quarter, with the remaining balance, if any, due in August 2014.

The foregoing payments of $25 million, $15 million, and $56.4 million require third party surety.  Further, between April 15, 2011 and June 13, 2011 (the date the Consent Decree was lodged with the Court), $197.5 million of the foregoing payments accrued interest at the annual rate of 3.25%, totaling $1,069,792 of interest owed by Hecla Limited.  The $25 million and $15 million payments would also accrue interest from the date the Consent Decree is entered by the Court until payment at the Superfund rate (currently 0.69%).

In addition to the foregoing payments, under the terms of the Consent Decree Hecla Limited is obligated to provide a limited amount of land it currently owns to be used as a waste repository site. The interest in the land to be provided was acquired by Hecla Limited in prior periods and requires no further payments of cash.

As a result of the foregoing developments in the Basin litigation settlement discussions, we have accrued a total of $262.2 million for all of Hecla Limited’s environmental obligations in the entire Basin (including the Box) relating to historic mining activities in the Basin.  The $262.2 million represents the net present value of a proposed settlement totaling $263.4 million. The amount of our accrual has increased since September 30, 2010 by $193.2 million, as a result of the negotiations on financial terms of a potential settlement.  This increase in our accrual from prior periods results from several factors impacting the determination of an estimate of Hecla Limited’s Basin liability. These factors, which are addressed in the Consent Decree, include:  (i) as a result of work completed, and information learned by us in the fourth quarter of 2010, we expected the cost of future remediation and past response costs in the upper Basin to increase from previous estimates; (ii) the Consent Decree addresses the entire Basin, including the lower Basin, for which we did not previously know the extent of any future remediation plans, other than the EPA announced that it plans to issue a ROD amendment for the lower Basin in the future, which would include a lower Basin remediation plan for which Hecla Limited may have some further liability absent the entry of the Consent Decree; and (iii) inclusion of natural resource damages in the Consent Decree, for which we were previously unable to estimate any range of liability (however, as stated in their own filings, the United States’ and the Tribe’s claims for natural resource damages ranged in the billions of dollars).

Although we have reached a settlement with the Plaintiffs in the Coeur d’Alene Basin litigation and for related claims, the settlement is not binding unless the Consent Decree is approved and entered by the Court.  There can be no assurance that the Consent Decree will be entered and become final and binding. In the event the Consent Decree is not entered, Hecla Limited’s liability and future accruals would be based on other factors, which would include (1) the EPA’s proposed ROD amendment which includes a remediation plan originally estimated by the EPA to cost $1.3 billion, in net present value terms, (2) yet-to-be determined future remediation in other parts of the Basin, (3) prior orders issued by the Court in Phase I of the Basin litigation, including its September 2003 ruling, and (4) other factors and issues that would be addressed by the Court in Phase II of the trial.

Despite efforts to reasonably estimate Hecla Limited’s potential liability in the Basin, there can be no assurance that we have accurately estimated such liability, or that the accrual actually represents the total amount that the United States has spent in the past and that Hecla Limited will be required to spend in the future as a result of being found to have some liability for Basin environmental conditions.  In addition, billions of dollars of natural resource damages are sought in the Basin litigation.  Thus, if the Consent Decree is not entered by the Court, Hecla Limited may have liability in excess of the current accrual.  Accordingly, in such event, our accrual could change, perhaps rapidly and materially, depending on a number of factors, including, but not limited to, any amendments to the ROD, information obtained or developed by Hecla Limited prior to Phase II of the trial and its outcome, settlement negotiations, and any interim Court determinations.

Failure to fully and finally settle the Basin litigation and other claims through entry of a Consent Decree could be materially adverse to Hecla Limited’s and Hecla Mining Company’s financial results or financial condition.

Insurance Coverage

In 1991, Hecla Limited initiated litigation in the Idaho District Court, County of Kootenai, against a number of insurance companies that provided comprehensive general liability insurance coverage to Hecla Limited and its predecessors. Hecla Limited believes the insurance companies have a duty to defend and indemnify Hecla Limited under their policies of insurance for all liabilities and claims asserted against it by the EPA and the Tribe under CERCLA related to the Box and the Basin. In 1992, the Idaho State District Court ruled that the primary insurance companies had a duty to defend Hecla Limited in the Tribe’s lawsuit. During 1995 and 1996, Hecla Limited entered into settlement agreements with a number of the insurance carriers named in the litigation. Prior to 2009, Hecla Limited has received a total of approximately $7.2 million under the terms of the settlement agreements. Thirty percent (30%) of these settlements were paid to reimburse the U.S. Government for past costs under the Box Decree. Litigation is still pending against one insurer with trial suspended until the underlying environmental claims against Hecla Limited are resolved or settled. The remaining insurer in the litigation, along with a second insurer not named in the litigation, is providing Hecla Limited with a partial defense in all Basin environmental litigation. As of June 30, 2011, Hecla Limited has not recorded a receivable or reduced its accrual for reclamation and closure costs to reflect the receipt of any potential insurance proceeds.

BNSF Railway Company Claim

In early November 2008, BNSF Railway Company (“BNSF”) submitted a contribution claim under CERCLA against Hecla Limited for approximately $52,000 in past costs BNSF incurred in investigation of environmental conditions at the Wallace Yard near Wallace, Idaho. BNSF asserts that a portion of the Wallace Yard site includes the historic Hercules Mill owned and operated by Hercules Mining Company and that Hecla Limited is a successor to Hercules Mining Company. BNSF proposes that we reimburse them for the $52,000 in past costs and agree to pay all future clean up for the Hercules mill portion of the site, estimated to be $291,000, and 12.5% of any other site costs that cannot be apportioned. In April 2010, a settlement among Union Pacific Railroad, BNSF, and the State of Idaho and the United States on behalf of the EPA for cleanup of the Wallace Yard and nearby spur lines was approved in federal court.  We believe construction related to the cleanup occurred in 2010. Hecla Limited requested and received additional information from BNSF regarding the nature of its claim; however, we do not believe that the outcome of this claim will have a material adverse effect on Hecla Limited’s or our results from operations or financial position.  Hecla Limited has not recorded a liability relating to the claim as of June 30, 2011.

Rio Grande Silver Guaranty

On February 21, 2008, our wholly-owned subsidiary, Rio Grande Silver Inc. (“Rio”), entered into an agreement with Emerald Mining & Leasing, LLC (“EML”) and Golden 8 Mining, LLC (“G8”) to acquire the right to earn-in to a 70% interest in the San Juan Silver Joint Venture, which holds a land package in the Creede Mining District of Colorado.  On October 24, 2008, Rio entered into an amendment to the agreement which delays the incurrence of qualifying expenses to be paid by Rio pursuant to the original agreement.  In connection with the amended agreement, we are required to guarantee certain environmental remediation-related obligations of EML to Homestake Mining Company of California (“Homestake”) up to a maximum liability to us of $2.5 million.  As of June 30, 2011, we have not been required to make any payments pursuant to the guaranty.  We may be required to make payments in the future, limited to the $2.5 million maximum liability, should EML fail to meet its obligations to Homestake (which has since been acquired by Barrick Gold Corp.). However, to the extent that any payments are made by us under the guaranty, EML, in addition to other parties named in the amended agreement, have jointly and severally agreed to reimburse and indemnify us for any such payments.  We have not recorded a liability relating to the guaranty as of June 30, 2011.

Lucky Friday Water Permit Exceedances

In late 2008 and during 2009, Hecla Limited experienced a number of alleged water permit exceedances for water discharges at its Lucky Friday unit.  The 2008 alleged violations resulted in Hecla Limited entering into a Consent Agreement and Final Order (“CAFO”) and a Compliance Order with the EPA in April 2009, which included an extended compliance timeline.  In connection with the CAFO, Hecla Limited agreed to pay an administrative penalty to the EPA of $177,500 to settle any liability for such exceedances.  The 2009 alleged violations were the subject of a December 2010 letter from the EPA informing Hecla Limited that EPA is prepared to seek civil penalties for these alleged violations, as well as for alleged unpermitted discharges of waste water in 2010 at the Lucky Friday unit. In the same letter, the EPA invited Hecla Limited to discuss these matters with them prior to filing a complaint. In April 2011, Hecla Limited received an additional request for information from the EPA on the alleged unpermitted discharges in 2010. Hecla Limited disputes the EPA’s assertions, but has begun negotiations with the EPA in an attempt to resolve the matter, which includes additional water quality monitoring to better understand the quality and source of the alleged unpermitted discharge.

Hecla Limited has undertaken efforts to bring its water discharges at the Lucky Friday unit into compliance with the permit, but cannot provide assurances that it will be able to fully comply with the permit limits in the future.

States of South Dakota and Colorado Superfund Sites Related to CoCa Mines, Inc.

In 1991, Hecla Limited acquired all of the outstanding common stock of CoCa Mines, Inc. (“CoCa”).

Gilt Edge Mine Superfund Site

In August 2008, the EPA made a formal request to CoCa for information regarding the Gilt Edge Mine Site located in Lawrence County, South Dakota, and asserted that CoCa may be liable for environmental cleanup at the site.  The Gilt Edge Mine Site was explored and/or mined beginning in the 1890s.  In the early 1980s, CoCa was involved in a joint venture that conducted a limited program of exploration work at the site.  This joint venture terminated in 1984, and by 1985 CoCa had divested itself of any interest in the property.

In July 2010 the United States informed CoCa that it intends to pursue CoCa and several other potentially responsible parties on a joint and several basis for liability for past and future response costs at Gilt Edge under CERCLA.  Currently, the United States alleges that CoCa is liable based on participation in the joint venture, and that CoCa has succeeded to the liabilities of its predecessor at the site, Congdon & Carey, which may have held certain property interests at the site.

As of January 2010, the EPA had allegedly incurred approximately $91 million in response costs to implement remedial measures at the Gilt Edge site, and estimates future response costs will total $72 million.  Hecla Limited did not acquire CoCa until 1991, well after CoCa discontinued its involvement with the Gilt Edge site.  In addition, CoCa is and always has been a separate corporate entity from Hecla Limited.  Therefore, we believe that Hecla Limited is not liable for any cleanup, and if CoCa might be liable, it has limited assets with which to satisfy any such liability. In August 2010, CoCa initiated negotiations with the United States in order to reach a settlement of its liabilities at the site that accounts for CoCa’s limited financial resources.  In late September 2010, in connection with these negotiations, CoCa received a request from the Department of Justice for additional information regarding its finances.  CoCa provided written responses and additional information in January 2011.

In April 2011, CoCa, and its parent Hecla Limited, received additional information requests related to Gilt Edge, and both entities are in the process of responding to the EPA.

Nelson Tunnel/Commodore Waste Rock Pile Superfund Site

In August 2009, the EPA made a formal request to CoCa for information regarding the Nelson Tunnel/Commodore Waste Rock Pile Superfund Site in Creede, Colorado.  A timely response was provided and the EPA later arranged to copy additional documents.  CoCa was involved in exploration and mining activities in Creede during the 1970s and the 1980s.  No formal claim for response costs under CERCLA has been made against CoCa for this site.  Hecla Limited did not acquire CoCa until 1991, well after CoCa discontinued its historical activities in the vicinity of the site. In addition, CoCa is and always has been a separate corporate entity from Hecla Limited. Therefore, we believe that Hecla Limited is not liable for any cleanup, and if CoCa might be liable, it has limited assets with which to satisfy any such liability.

ASARCO, LLC Contribution Claim

In April 2011, Hecla Mining Company was informed that a complaint was filed against us and several other mining companies in Federal District Court in Montana by ASARCO, LLC, seeking contribution and cost recovery relating to the alleged payment by ASARCO of approximately $9 million to the State of Montana and the United States in connection with ASARCO’s CERCLA liabilities in the Block P Mine and Mill Site, which is part of the Barker Hughesville Mining District, which is a Superfund site in Montana.  Although we have not yet investigated the basis for ASARCO’s claims, we do not believe that the outcome of this claim will have a material adverse effect on our results from operations or financial position.  We have not recorded a liability relating to the claim as of June 30, 2011.

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

In May 2011, the EPA made a formal request to Hecla Mining Company for information regarding the Johnny M Mine Area near San Mateo, McKinley County, New Mexico, and asserted that Hecla Mining Company may be responsible under CERCLA for environmental cleanup at the site and costs the EPA has incurred at the site.  Mining at the Johnny M was conducted for a limited period of time by Ranchers Exploration and Development Corporation, a predecessor of our subsidiary, Hecla Limited.  In June, Hecla Limited responded to the EPA’s request. While we believe it is probable that Hecla Limited will have some amount of liability relating to the Johnny M Site, we cannot with any degree of certainty estimate the amount of such liability.  Estimating the amount of such liability is not possible at this point in time for several reasons, including (but not limited to) that neither the EPA nor Hecla Limited have completed investigations of the site, the amount and type of remediation required have not yet been determined, and the existence of other potentially responsible parties (PRPs) has not yet been determined.

Carpenter Snow Creek Site, Cascade County, Montana

In July 2010, the EPA made a formal request to Hecla Mining Company 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, among several other viable companies, 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 June 2011 letter that it has incurred approximately $4.5 million in response costs and estimated that total remediation costs may exceed $100 million.  Because we have not completed investigating the basis for the EPA’s statements, we have not yet determined what, if any, potential liability Hecla Limited may have with respect to this site. However, because of our limited activities at the site, we do not believe that the outcome of the claim will have a material adverse effect on our results from operations or financial position. We have not recorded a liability relating to the site as of June 30, 2011.

Other Commitments

Our contractual obligations as of June 30, 2011 included approximately $5.5 million for commitments relating to capital items, along with $1.3 million for various non-capital costs, at Lucky Friday and Greens Creek.  In addition, our commitments relating to open purchase orders at June 30, 2011 included approximately $5.3 million and $2.2 million, respectively, for various capital items at the Greens Creek and Lucky Friday units, and approximately $0.9 million and $0.1 million, respectively, for various non-capital costs.  We also have total commitments of approximately $8.1 million relating to scheduled payments on capital leases, including interest, for equipment at our Greens Creek and Lucky Friday units (see Note 9 for more information).

We had letters of credit for approximately $0.6 million outstanding as of June 30, 2011 for reclamation and workers’ compensation insurance bonding.

Other Contingencies

We are subject to other legal proceedings and claims not disclosed above which have arisen in the ordinary course of our business and have not been finally adjudicated. These can include, but are not limited to, legal proceedings and/or claims pertaining to environmental or safety matters.  For example, in April 2011, a fatal accident occurred at the Lucky Friday Mine which is currently being investigated by Hecla and the Mine Safety Health Administration (“MSHA”).  As a result of the MSHA investigation (the results of which have not yet been provided to us as of the date of this report), Hecla Limited may be issued enforcement actions as well as penalties (including monetary) from MSHA or other governmental agencies.  Although there can be no assurance as to the ultimate disposition of these other matters, we believe the outcome of these other proceedings will not have a material adverse effect on our results from operations or financial position.

Note 5. Earnings Per Common Share
Earnings Per Share [Text Block]
Note 5.    Earnings Per Common Share

We are authorized to issue 500,000,000 shares of common stock, $0.25 par value per share, of which 279,512,363 shares were issued and outstanding at June 30, 2011.

The following table reconciles weighted average common shares used in the computations of basic and diluted earnings per share for the three-month and six-month periods ended June 30, 2011 and 2010 (thousands, except per-share amounts):

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Numerator
                   
 
 
Net income
  $ 33,317     $ 17,084     $ 76,674     $ 38,928  
Preferred stock dividends
    (138 )     (3,409 )     (276 )     (6,817 )
Net income applicable to common shares for basic and diluted earnings per share
  $ 33,179     $ 13,675     $ 76,398     $ 32,111  
                                 
Denominator
                               
Basic weighted average common shares
    279,347       248,549       278,901       245,371  
Dilutive stock options and restricted stock
    16,409       17,825       17,119       18,497  
Diluted weighted average common shares
    295,756       266,374       296,020       263,868  
                                 
Basic earnings per common share
                               
Net income applicable to common shares
  $ 0.12     $ 0.06     $ 0.27     $ 0.13  
                                 
Diluted earnings per common share
                               
Net income applicable to common shares
  $ 0.11     $ 0.05     $ 0.26     $ 0.12  

Diluted income per share for the three and six months ended June 30, 2011 and 2010 exclude the potential effects of outstanding shares of our convertible preferred stock, as their conversion and exercise would have no effect on the calculation of dilutive shares.

Options to purchase 552,388 and 333,388 shares of our common stock were excluded from the computation of diluted earnings per share for the three-month and six-month periods ended June 30, 2011, respectively.  For the three-month and six-month periods ended June 30, 2010, options to purchase 876,240 shares of our common stock were excluded from the computation of diluted earnings per share.  The exercise price of the options not included in the computations of diluted earnings per share exceeded the average price of our stock during those periods and therefore would not affect the calculation of earnings per share.

Note 6. Business Segments
Segment Reporting Disclosure [Text Block]
Note 6.    Business Segments

We are currently organized and managed by two reporting segments: the Greens Creek unit and the Lucky Friday unit.

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

The following tables present information about reportable segments for the three and six months ended June 30, 2011 and 2010 (in thousands):

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Net sales from operations to customers:
                       
Greens Creek
  $ 81,816     $ 66,941     $ 183,618     $ 123,482  
Lucky Friday
    36,044       21,690       70,606       45,024  
                                 
    $ 117,860     $ 88,631     $ 254,224     $ 168,506  
                                 
                                 
Income (loss) from operations:
                               
Greens Creek
  $ 45,054     $ 27,662     $ 103,563     $ 43,786  
Lucky Friday
    20,596       8,625       40,508       18,306  
Other
    (11,859 )     (11,695 )     (21,545 )     (21,846 )
                                 
    $ 53,791     $ 24,592     $ 122,526     $ 40,246  

The following table presents identifiable assets by reportable segment as of June 30, 2011 and December 31, 2010 (in thousands):

   
June 30,
   
December 31,
 
   
2011
   
2010
 
Identifiable assets:
           
   Greens Creek
  $ 753,190     $ 740,573  
   Lucky Friday
    195,773       170,928  
   Other
    511,426       470,992  
                 
    $ 1,460,389     $ 1,382,493  

Note 7. Employee Benefit Plans
Pension and Other Postretirement Benefits Disclosure [Text Block]
Note 7.   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 and six months ended June 30, 2011 and 2010 (in thousands):

   
Three Months Ended
 
   
June 30,
 
   
Pension Benefits
   
Other Benefits
 
   
2011
   
2010
   
2011
   
2010
 
                         
Service cost
  $ 970     $ 550     $ 13     $ 12  
Interest cost
    1,029       931       20       19  
Expected return on plan assets
    (1,371 )     (1,260 )     22       --  
Amortization of prior service cost
    100       150       (33 )     13  
Amortization of net (gain) loss
    220       217       11       (12 )
Net periodic benefit cost
  $ 948     $ 588     $ 33     $ 32  

   
Six Months Ended
 
   
June 30,
 
   
Pension Benefits
   
Other Benefits
 
   
2011
   
2010
   
2011
   
2010
 
                         
Service cost
  $ 1,939     $ 1,101     $ 27     $ 23  
Interest cost
    2,057       1,862       39       37  
Expected return on plan assets
    (2,741 )     (2,520 )     22       --  
Amortization of prior service cost
    201       301       (22 )     26  
Amortization of net (gain) loss
    440       433       --       (23 )
Net periodic benefit cost
  $ 1,896     $ 1,177     $ 66     $ 63  

The increased service costs in 2011 versus 2010 were driven primarily by higher staffing and compensation levels.

We do not expect to contribute to the pension plans during the year of 2011.

Note 8. Shareholders’ Equity
Stockholders' Equity Note Disclosure [Text Block]
Note 8.    Shareholders’ Equity

Share-based Compensation Plans

We periodically grant stock options, restricted stock unit awards, and/or shares of common stock to our employees and directors.  We measure the fair value of compensation cost for stock options issued pursuant to our equity compensation plans using the Black-Scholes options pricing model.  Stock option grants generally vest immediately. However, grants to individual executives upon hiring or retention vest over a defined service period, with cost amortized over that period. We measure compensation cost for restricted stock units and stock grants at the closing price of our stock at the time of grant, net of estimated forfeiture.  Restricted stock unit grants vest after a named period, usually one year, with compensation cost amortized over that period.

As the result of June 9, 2011 awards granted by the board of directors, 7,968 shares of common stock were distributed to employees in June 2011, with the total $0.1 million expense related to these awards recognized in the second quarter of 2011.  On June 24, 2011 the board of directors granted 256,927 stock units that vest in June 2012 and 163,649 restricted stock units that vest in March 2014, with none of the expense related to these awards recognized as of June 30, 2011, as the expense will be recognized over the vesting periods.  The $1.9 million in expense related to the unit awards vesting in 2012 will be recognized on a straight-line basis over the next twelve months, while the $1.2 million in expense related to the awards vesting in 2014 will be recognized on a straight-line basis over the next thirty-three months.

In the second quarter of 2011, a total of 42,636 common shares were issued to nonemployee directors.  We issued a total of 48,825 common shares to nonemployee directors in the second quarter of 2010.

Share-based compensation expense for stock option and restricted stock unit grants recorded in the first six months of 2011 totaled $0.9 million, compared to $2.5 million in the same period last year.

Under the terms of our equity compensation plans, we have permitted our employees’ withholding tax obligations with respect to shares awarded thereunder which have vested, to be satisfied by net share settlement.  As a result, in the first half of 2011, we repurchased 56,688 shares for $0.5 million, or approximately $8.29 per share.

Cash received for the exercise of stock options during the first six months of 2011 and 2010 totaled $0.5 million and $0.2 million, respectively.

Preferred Stock Dividends Paid in Common Stock

In January 2010, $16.3 million in dividends declared and unpaid for the fourth quarter of 2008 and the year ended December 31, 2009 on our 6.5% Mandatory Convertible Preferred Stock were paid in 2,649,231 shares of our common stock (with cash for fractional shares).  The number of shares of common stock issued as dividends was calculated based on 97% of the average of the closing prices of our common stock over the five consecutive trading day period ending on the second day immediately preceding the dividend payment date.

On April 1, 2010, the declared regular quarterly dividend on the outstanding shares of our 6.5% Mandatory Convertible Preferred Stock of approximately $3.3 million was paid in 631,334 shares of our common stock (with cash for fractional shares).  On July 1, 2010, the declared regular quarterly dividend on the outstanding shares of our 6.5% Mandatory Convertible Preferred Stock of approximately $3.3 million was paid in 604,637 shares of our common stock (with cash for fractional shares).  In each case, the number of shares of common stock issued as dividends was calculated based on 97% of the average of the closing prices of our common stock over the five consecutive trading day period ending on the second day immediately preceding the dividend payment date.

Conversion of 6.5% Mandatory Convertible Preferred Stock to Common Stock

On January 1, 2011, all 2,012,500 outstanding shares of our 6.5% Mandatory Convertible Preferred Stock were automatically converted to shares of our common stock at a conversion rate of 9.3773 shares of Common Stock for each share of 6.5% Mandatory Convertible Preferred Stock.  We issued approximately 18.9 million shares of common stock in connection with the mandatory conversion.  The final $3.3 million quarterly dividend on the 6.5% Mandatory Convertible Preferred Stock for the quarter ended December 31, 2010 was paid in cash in January 2011.

Warrants

The following table summarizes certain information about our stock purchase warrants at June 30, 2011:

Warrants Outstanding
 
Warrants
   
Exercise Price
 
Expiration Date
Series 1 warrants
    5,231,708     $ 2.45  
June 2014
Series 1 warrants
    460,976       2.56  
June 2014
Series 3 warrants
    17,021,817       2.50  
August 2014
Total warrants outstanding
    22,714,501            

In the first quarter of 2011, warrants to purchase approximately 1.8 million shares of our common stock were exercised, resulting in net proceeds to us of approximately $4.4 million.  Under the proposed financial terms of the potential settlement of the Coeur d’Alene Basin litigation and other claims with the Plaintiffs, the amount of proceeds from the exercise of our outstanding warrants would be paid to the Plaintiffs within 30 days after the end of the quarter when exercised.  Proceeds from Series 1 and Series 3 warrant exercises prior to April 12, 2011, totaling approximately $9.5 million, would also be paid over to the Plaintiffs within 30 days of entry of the Consent Decree (see Note 4 for more information).

Note 9. Credit Facilities and Capital Leases
Debt Disclosure [Text Block]
Note 9.    Credit Facilities and Capital Leases

Credit Facilities

In October 2009 we entered into an amended $60 million senior secured revolving credit agreement.  The agreement was amended in December 2010 to extend the term of the agreement, reduce the commitment fee rate and interest rate spreads, allow the issuance of secured and unsecured debt and investments to governmental authorities as payment of obligations owed to such authorities, and to allow the release of certain liens and security interests granted to the lenders to secure the credit facility. The facility is collateralized by our Greens Creek assets, including the shares of common stock owned by us in the wholly-owned subsidiaries that hold the equity interest in the joint venture that owns the Greens Creek mine.  Amounts borrowed under the credit agreement are available for general corporate purposes.  The interest rate on outstanding loans under the agreement is between 2.75% and 3.5% above the LIBOR or an alternative base rate plus an applicable margin of between 1.75% and 2.5%.  We are required to pay a standby fee of between 0.825% and 1.05% per annum on undrawn amounts under the revolving credit agreement.  The credit facility is effective until January 31, 2014. We incurred $0.3 million in interest expense in the first half of 2011 for the amortization of loan origination fees and $0.2 million in interest expense for commitment fees relating to the credit agreement.  The credit agreement includes various covenants and other limitations related to our various financial ratios and indebtedness and investments, as well as other information and reporting requirements, including the following limitations:

 
●
Leverage ratio (calculated as total debt divided by EBITDA) of not more than 3.0:1.

 
●
Interest coverage ratio (calculated as EBITDA divided by interest expense) of not less than 3.0:1.

 
●
Current ratio (calculated as current assets divided by current liabilities) of not less than 1.10:1.

 
●
Tangible net worth of greater than $500 million.

We were in compliance with all covenants under the credit agreement as of June 30, 2011.  We have not drawn funds on the current revolving credit facility as of the filing date of the Form 10-Q.

Capital Leases

We entered into two 48-month lease agreements in 2011 and five 48-month lease agreements in 2010 and 2009 for equipment at our Greens Creek and Lucky Friday units, which we have determined to be capital leases.  We have a total liability balance of $7.5 million at June 30, 2011 relating to the lease obligations, with $3.0 million of the liability classified as current and the remaining $4.5 million classified as non-current. At December 31, 2010, the total liability balance associated with capital leases was $6.3 million, with $2.5 million of the liability classified as current and $3.8 million classified as non-current. The total obligation for future minimum lease payments was $8.1 million at June 30, 2011, with $0.6 million attributed to interest.

At June 30, 2011, the annual maturities of capital lease commitments, including interest, are (in thousands):

Twelve-month period ending June 30,
       
 
2012
 
$
3,413
 
 
2013
 
1,723
 
 
2014
 
2,178
 
 
2015
 
795
 
 
Total
   
8,109
 
 
Less:  imputed interest
   
(591
)
 
Net capital lease obligation
 
$
7,518
 

Note 10. Developments in Accounting Pronouncements
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]
Note 10.    Developments in Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, which, among other things, amended Subtopic 220 with respect to the presentation of other comprehensive income and its components in the financial statements.  The update amended Subtopic 220 so that a Securities and Exchange Commission filer may present other comprehensive income either in a single continuous statement or in two separate but consecutive statements.  The filer is also required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented.  All of the amendments in this update apply to both annual and interim periods beginning after December 15, 2011.  Adoption of this guidance is not anticipated to have a material impact on our consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, which amends Subtopic 820 to clarify the application of existing common fair value measurement and disclosure requirements.   ASU 2011-04 provides clarification for the following:

1. the application of the highest and best use of valuation premise concepts;

2. measuring the fair value of an instrument classified in shareholders’ equity; and

3. disclosures about fair value measurements.

The amendments in this update become effective for interim and annual periods beginning after December 15, 2011.  Adoption of this guidance is not anticipated to have a material impact on our consolidated financial statements.

Note 11. Derivative Instruments
Derivative Instruments and Hedging Activities Disclosure [Text Block]
Note 11.    Derivative Instruments

We may use commodity forward sales commitments, commodity swap contracts and commodity put and call option contracts to manage our exposure to fluctuation in the prices of certain metals which we produce. Contract positions are designed to ensure that we will receive a defined minimum price for certain quantities of our production, thereby partially offsetting our exposure to fluctuations in the market. These instruments do, however, expose us to (i) credit risk in the event of non-performance by counterparties for contracts in which the contract price exceeds the spot price of a commodity and (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production contained under contract positions.

In April 2010, we began utilizing financially-settled forward contracts to sell lead and zinc at fixed prices for settlement at approximately the same time that our unsettled concentrate sales contracts will settle.  The settlement of each concentrate lot is based on the average spot price of the metal during the month of settlement, which may differ from the prices used to record the sale when the sale takes place.  The objective of the contracts is to manage the exposure to changes in prices of zinc and lead contained in our concentrate shipments between the time of sale and final settlement.  These contracts do not qualify for hedge accounting and are marked-to-market through earnings each period, and net gains and losses on the contracts are included in sales of products.  The net gains and losses recognized on the contracts offsets price adjustments on our provisional concentrate sales related to changes to lead and zinc prices between the time of sale and final settlement.

In addition, in May 2010, we also began utilizing financially-settled forward contracts to manage the exposure of changes in prices of zinc and lead contained in our forecasted future concentrate shipments.  These contracts also do not qualify for hedge accounting and are marked-to-market through earnings each period.  The net gains and losses on these contracts (see the table below) are included as a separate line item under other income (expense), as they relate to forecasted future shipments, as opposed to sales that have already taken place, but remain subject to final pricing.  The losses recognized during the first half of 2011 are the result of increasing lead prices, partially offset by gains resulting from a reduction in zinc prices, during the quarter.  However, this program is designed to mitigate the impact of potential future declines in lead and zinc prices from the price levels established in the contracts (see average price information below).

The following table summarizes the fair value liability balances related to the contracts outstanding under the two programs discussed above (in thousands):

   
June 30,
   
December 31,
 
   
2011
   
2010
 
             
Current derivative contract liabilities
  $ 10,510     $ 20,016  
Other non-current liabilities
    1,087       779  

We recognized gains and losses related to the forward contracts under the two programs as follows (in thousands):

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Sales of products
  $ 49     $ 6,351     $ 703     $ 6,351  
Gain (loss) on derivatives contracts
    558       1,999       (1,475 )     1,999  

The following table summarizes the quantities of base metals committed under forward sales contracts at June 30, 2011:

   
Metric tonnes under contract
   
Average price per pound
 
   
Zinc
   
Lead
   
Zinc
   
Lead
 
Contracts on provisional sales
                       
   2011 settlements
    8,100       4,500     $ 1.02     $ 1.17  
                                 
Contracts on forecasted sales
                               
   2011 settlements
    7,350       6,175     $ 0.96     $ 1.01  
   2012 settlements
    26,650       18,000     $ 1.11     $ 1.11  
   2013 settlements
    4,700       8,300     $ 1.16     $ 1.16  

Our concentrate sales are based on a provisional sales price containing an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the concentrates at the forward price at the time of the sale. The embedded derivative, which does not qualify for hedge accounting, is adjusted to market through earnings each period prior to final settlement.

Note 12. Fair Value Measurement
Fair Value Disclosures [Text Block]
Note 12.    Fair Value Measurement

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 
June 30, 2011
   
Balance at
December 31,2010
 
Input
Hierarchy Level
Assets:
             
Cash and cash equivalents:
             
   Money market funds and other bank deposits
  $ 377,436     $ 283,606     Level 1
Available for sale securities:
                 
   Equity securities – mining industry
    4,161       2,668  
Level 1
Trade accounts receivable:
                 
   Receivables from provisional concentrate sales
    43,430       36,295  
Level 2
Restricted cash balances:
                 
   Certificates of deposit and other bank deposits
    926       10,314  
Level 1
                   
Total assets
  $ 425,953     $ 322,883    
                   
Liabilities:
                 
                   
Derivative contracts:
                 
   Base metal forward contracts
  $ 11,597     $ 20,794     Level 2

Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value.

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

Our current and non-current investments consist of marketable equity securities which are valued using quoted market prices for each security.

Trade accounts receivable include amounts due to us for shipments of concentrates and doré sold to smelters and refiners.  Revenues and the corresponding accounts receivable for sales of metals products are recorded when title and risk of loss transfer to the customer (generally at the time of shipment).  Sales of concentrates are recorded using estimated forward prices for the anticipated month of settlement applied to our estimate of payable metal quantities contained in each shipment.  Sales are recorded net of estimated treatment and refining charges, which are also impacted by changes in metals prices and quantities of contained metals.  We estimate the prices at which sales of our concentrates will be settled due to the time elapsed between shipment and final settlement with the smelter.  Receivables for previously recorded concentrate sales are adjusted to reflect estimated settlement metals prices at the end of each period until final settlement by the smelter.  We obtain the forward metals prices used each period from a pricing service.  Changes in metal prices between shipment and final settlement result in changes to revenues previously recorded upon shipment.  The embedded derivative contained in our concentrate sales is adjusted to fair market value through earnings each period prior to final settlement.

During the second quarter of 2010, we began utilizing financially-settled forward contracts to manage the exposure of changes in prices of zinc and lead contained in our concentrate shipments that have not reached final settlement.  We also began utilizing financially-settled forward contracts in the second quarter of 2010 to manage the exposure of changes in prices of zinc and lead contained in our forecasted future concentrate shipments (see Note 11 for more information).  These contracts do not qualify for hedge accounting, and are marked-to-market through earnings each period.  The fair value of each 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.

Note 3. Income Taxes (Tables)
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Current:
                       
Federal
  $ 4,111     $ 1,530     $ 4,111     $ 1,359  
State
    478       230       478       169  
Foreign
    115       115       230       230  
                                 
Total current income tax provision
    4,704       1,875       4,819       1,758  
                                 
                                 
Deferred:
                               
Federal and state deferred income tax provision
    14,938       6,380       38,319       7,928  
Discrete benefit for change in valuation allowance attributable to future periods
    -       -       -       (7,660 )
                                 
Total deferred income tax provision
    14,938       6,380       38,319       268  
                                 
Total income tax provision
  $ 19,642     $ 8,255     $ 43,138     $ 2,026  
Note 5. Earnings Per Common Share (Tables)
Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block]
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Numerator
                   
 
 
Net income
  $ 33,317     $ 17,084     $ 76,674     $ 38,928  
Preferred stock dividends
    (138 )     (3,409 )     (276 )     (6,817 )
Net income applicable to common shares for basic and diluted earnings per share
  $ 33,179     $ 13,675     $ 76,398     $ 32,111  
                                 
Denominator
                               
Basic weighted average common shares
    279,347       248,549       278,901       245,371  
Dilutive stock options and restricted stock
    16,409       17,825       17,119       18,497  
Diluted weighted average common shares
    295,756       266,374       296,020       263,868  
                                 
Basic earnings per common share
                               
Net income applicable to common shares
  $ 0.12     $ 0.06     $ 0.27     $ 0.13  
                                 
Diluted earnings per common share
                               
Net income applicable to common shares
  $ 0.11     $ 0.05     $ 0.26     $ 0.12  
Note 6. Business Segments (Tables)
Schedule of Segment Reporting Information, by Segment [Table Text Block] 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Net sales from operations to customers:
                       
Greens Creek
  $ 81,816     $ 66,941     $ 183,618     $ 123,482  
Lucky Friday
    36,044       21,690       70,606       45,024  
                                 
    $ 117,860     $ 88,631     $ 254,224     $ 168,506  
                                 
                                 
Income (loss) from operations:
                               
Greens Creek
  $ 45,054     $ 27,662     $ 103,563     $ 43,786  
Lucky Friday
    20,596       8,625       40,508       18,306  
Other
    (11,859 )     (11,695 )     (21,545 )     (21,846 )
                                 
    $ 53,791     $ 24,592     $ 122,526     $ 40,246  
Identifiable Assets By Reportable Segment 
   
June 30,
   
December 31,
 
   
2011
   
2010
 
Identifiable assets:
           
   Greens Creek
  $ 753,190     $ 740,573  
   Lucky Friday
    195,773       170,928  
   Other
    511,426       470,992  
                 
    $ 1,460,389     $ 1,382,493  
Note 7. Employee Benefit Plans (Tables)
Schedule of Defined Benefit Plans Disclosures [Table Text Block]
   
Three Months Ended
 
   
June 30,
 
   
Pension Benefits
   
Other Benefits
 
   
2011
   
2010
   
2011
   
2010
 
                         
Service cost
  $ 970     $ 550     $ 13     $ 12  
Interest cost
    1,029       931       20       19  
Expected return on plan assets
    (1,371 )     (1,260 )     22       --  
Amortization of prior service cost
    100       150       (33 )     13  
Amortization of net (gain) loss
    220       217       11       (12 )
Net periodic benefit cost
  $ 948     $ 588     $ 33     $ 32  
   
Six Months Ended
 
   
June 30,
 
   
Pension Benefits
   
Other Benefits
 
   
2011
   
2010
   
2011
   
2010
 
                         
Service cost
  $ 1,939     $ 1,101     $ 27     $ 23  
Interest cost
    2,057       1,862       39       37  
Expected return on plan assets
    (2,741 )     (2,520 )     22       --  
Amortization of prior service cost
    201       301       (22 )     26  
Amortization of net (gain) loss
    440       433       --       (23 )
Net periodic benefit cost
  $ 1,896     $ 1,177     $ 66     $ 63  
Note 8. Shareholders’ Equity (Tables)
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
Warrants Outstanding
 
Warrants
   
Exercise Price
 
Expiration Date
Series 1 warrants
    5,231,708     $ 2.45  
June 2014
Series 1 warrants
    460,976       2.56  
June 2014
Series 3 warrants
    17,021,817       2.50  
August 2014
Total warrants outstanding
    22,714,501            
Note 9. Credit Facilities and Capital Leases (Tables)
Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]
Twelve-month period ending June 30,
       
 
2012
 
$
3,413
 
 
2013
 
1,723
 
 
2014
 
2,178
 
 
2015
 
795
 
 
Total
   
8,109
 
 
Less:  imputed interest
   
(591
)
 
Net capital lease obligation
 
$
7,518
 
Note 11. Derivative Instruments (Tables)
Schedule of Derivative Liabilities at Fair Value [Table Text Block] 
   
June 30,
   
December 31,
 
   
2011
   
2010
 
             
Current derivative contract liabilities
  $ 10,510     $ 20,016  
Other non-current liabilities
    1,087       779  
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block] 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Sales of products
  $ 49     $ 6,351     $ 703     $ 6,351  
Gain (loss) on derivatives contracts
    558       1,999       (1,475 )     1,999  
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] 
   
Metric tonnes under contract
   
Average price per pound
 
   
Zinc
   
Lead
   
Zinc
   
Lead
 
Contracts on provisional sales
                       
   2011 settlements
    8,100       4,500     $ 1.02     $ 1.17  
                                 
Contracts on forecasted sales
                               
   2011 settlements
    7,350       6,175     $ 0.96     $ 1.01  
   2012 settlements
    26,650       18,000     $ 1.11     $ 1.11  
   2013 settlements
    4,700       8,300     $ 1.16     $ 1.16  
Note 12. Fair Value Measurement (Tables)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Table Text Block]
Description
 
Balance at 
June 30, 2011
   
Balance at
December 31,2010
 
Input
Hierarchy Level
Assets:
             
Cash and cash equivalents:
             
   Money market funds and other bank deposits
  $ 377,436     $ 283,606     Level 1
Available for sale securities:
                 
   Equity securities – mining industry
    4,161       2,668  
Level 1
Trade accounts receivable:
                 
   Receivables from provisional concentrate sales
    43,430       36,295  
Level 2
Restricted cash balances:
                 
   Certificates of deposit and other bank deposits
    926       10,314  
Level 1
                   
Total assets
  $ 425,953     $ 322,883    
                   
Liabilities:
                 
                   
Derivative contracts:
                 
   Base metal forward contracts
  $ 11,597     $ 20,794     Level 2
Note 2. Investments and Restricted Cash (Detail) (USD $)
6 Months Ended
Jun. 30,
1 Months Ended
Feb. 28, 2011
Jun. 30, 2011
Dec. 31, 2010
2011
Unrealized Gains [Member]
2011
Unrealized Losses [Member]
Dec. 31, 2010
Short Term Cost Basis [Member]
Jun. 30, 2011
Long Term Cost Basis [Member]
Short-term Investments
 
 
$ 1,474,000 
 
 
$ 800,000 
 
Proceeds from Sale of Short-term Investments
1,400,000 
 
 
 
 
 
 
Gain (Loss) on Sale of Investments
600,000 
 
 
 
 
 
 
Long-term Investments
 
4,200,000 
1,200,000 
 
 
 
 
Tax Basis of Investments, Cost for Income Tax Purposes
 
200,000 
 
 
 
 
3,800,000 
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, before Tax
 
 
 
600,000 
200,000 
 
 
Restricted Cash and Cash Equivalents, Noncurrent
 
$ 926,000 
$ 10,314,000 
 
 
 
 
Note 3. Income Taxes (Detail) (USD $)
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Deferred Federal Income Tax Expense (Benefit)
$ 14,938,000 
$ 6,380,000 
$ 38,319,000 
$ 7,928,000 
Deferred Tax Assets, Gross
$ 149,000,000 
 
$ 149,000,000 
 
Note 3. Income Taxes (Detail) - Major components of income tax provision (USD $)
In Thousands
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Current:
 
 
 
 
Federal
$ 4,111 
$ 1,530 
$ 4,111 
$ 1,359 
State
478 
230 
478 
169 
Foreign
115 
115 
230 
230 
Total current income tax provision
4,704 
1,875 
4,819 
1,758 
Deferred:
 
 
 
 
Federal and state deferred income tax provision
14,938 
6,380 
38,319 
7,928 
Discrete benefit for change in valuation allowance attributable to future periods
 
 
 
(7,660)
Total deferred income tax provision
14,938 
6,380 
38,319 
268 
Total income tax provision
$ 19,642 
$ 8,255 
$ 43,138 
$ 2,026 
Note 4. Commitments and Contingencies (Detail) (USD $)
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,		 4 Months Ended
May 12,		 43 Months Ended
Aug. 1,
1 Months Ended
Jan. 31, 2010
1 Months Ended
Dec. 31, 2009
1 Months Ended
Apr. 30, 2009
2011
2010
3 Months Ended
Nov. 30, 2008
6 Months Ended
Jun. 13, 2011
2011
2010
9 Months Ended
Jun. 30, 2011
12 Months Ended
Dec. 31, 2007
Feb. 1, 2010
Sep. 30, 2002
Jun. 30, 2011
Greens Creek [Member]
6 Months Ended
Jun. 30, 2011
Greens Creek [Member]
Jun. 30, 2011
Lucky Friday [Member]
6 Months Ended
Jun. 30, 2011
Lucky Friday [Member]
4 Months Ended
May 12, 2011
Accrual For Basin Claims Cash [Member]
16 Months Ended
May 12, 2012
Accrual For Basin Claims Cash [Member]
28 Months Ended
May 12, 2013
Accrual For Basin Claims Cash [Member]
2011
Accrua For Basin Claims Cash OrCommon Stock [Member]
2011
Accrual For Basin Claims Proceeds From Warrants [Member]
2014
Accrual For Basin Claims Proceeds From Warrants [Member]
2014
Warrants Minimum Exercise Price [Member]
2014
Warrants Maximum Exercise Price [Member]
1 Months Ended
Jun. 13, 2011
Foregone Payments [Member]
6 Months Ended
Jun. 30, 2011
Accrualfor Basin Claims [Member]
Payments for Legal Settlements
 
 
 
 
 
 
$ 263,400,000 
 
 
 
 
 
 
 
 
 
 
$ 102,000,000 
$ 25,000,000 
$ 15,000,000 
$ 55,500,000 
$ 9,500,000 
$ 56,400,000 
 
 
$ 197.5 
 
Future Clean Up Costs
 
 
 
 
 
 
 
 
 
 
 
1,300,000,000 
359,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Claims For Natural Resource Damages, Lower Range
 
 
 
 
 
 
 
 
 
 
 
2,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Claims For Natural Resource Damages, Upper Range
 
 
 
 
 
 
 
 
 
 
 
3,400,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from (Repayments of) Other Debt
 
482,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Warrants, Exercise Price (in Dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2.45 
$ 2.50 
 
 
Legal Settlement Interest Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.25% 
 
Legal Settlement Accrued Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,069,792 
 
Superfund Rate
 
 
 
0.69% 
 
 
 
0.69% 
 
0.69% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Environmental Expense and Liabilities
 
 
 
 
 
 
 
556,000 
2,502,000 
193,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
262,200,000 
Proceeds from Insurance Settlement, Operating Activities
 
 
 
 
 
 
 
 
 
 
7,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Past Environmental Remediation Costs
 
 
 
 
 
52,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EstimatedFutureCleanUpCost
 
 
 
 
 
291,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PercentOtherCost
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum Environmental Remediation Obligation
 
 
 
 
 
 
 
2,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AdministrativePenalty
 
 
177,500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IncurredResponseCosts
91,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EstimatedFutureResponseCost
72,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase Commitment, Remaining Minimum Amount Committed
 
 
 
5,500,000 
 
 
 
5,500,000 
 
5,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NonCapitalCostPurchaseOrders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts Payable, Other
 
 
 
 
 
 
 
 
 
 
 
 
 
5,300,000 
 
2,200,000 
 
 
 
 
 
 
 
 
 
 
 
Other Cost and Expense, Operating
 
 
 
2,270,000 
1,601,000 
 
 
4,087,000 
2,565,000 
 
 
 
 
 
900,000 
 
100,000 
 
 
 
 
 
 
 
 
 
 
ApproximateCapitalLeaseObligationIncludingInterest
 
 
 
8,100,000 
 
 
 
8,100,000 
 
8,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of Credit Outstanding, Amount
 
 
 
$ 600,000 
 
 
 
$ 600,000 
 
$ 600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 5. Earnings Per Common Share (Detail) (USD $)
3 Months Ended
Jun. 30, 2011
6 Months Ended
Jun. 30, 2011
Common Stock, Shares Authorized
500,000,000 
500,000,000 
Common Stock, Par or Stated Value Per Share (in Dollars per share)
0.25 
0.25 
Common Stock, Shares, Issued
279,512,363 
279,512,363 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
 
876,240 
Stock Options [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
552,388 
333,388 
Note 5. Earnings Per Common Share (Detail) - Weighted Average Common Shares (USD $)
In Thousands, except Per Share data
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Net income
$ 33,317 
$ 17,084 
$ 76,674 
$ 38,928 
Preferred stock dividends
(138)
(3,409)
(276)
(6,817)
Net income applicable to common shares for basic and diluted earnings per share
33,179 
13,675 
76,398 
32,111 
Basic weighted average common shares (in Shares)
279,347 
248,549 
278,901 
245,371 
Dilutive stock options and restricted stock
$ 16,409 
$ 17,825 
$ 17,119 
$ 18,497 
Diluted weighted average common shares (in Shares)
295,756 
266,374 
296,020 
263,868 
Net income applicable to common shares (in Dollars per share)
$ 0.12 
$ 0.06 
$ 0.27 
$ 0.13 
Net income applicable to common shares (in Dollars per share)
$ 0.11 
$ 0.05 
$ 0.26 
$ 0.12 
Note 6. Business Segments (Detail) - Information About Reportable Segments (USD $)
In Thousands
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Net sales from operations to customers:
 
 
 
 
Net sales from operations to customers
$ 49 
$ 6,351 
$ 703 
$ 6,351 
Income (loss) from operations:
 
 
 
 
Income (loss) from operations
53,791 
24,592 
122,526 
40,246 
Greens Creek [Member]
 
 
 
 
Net sales from operations to customers:
 
 
 
 
Net sales from operations to customers
81,816 
66,941 
183,618 
123,482 
Income (loss) from operations:
 
 
 
 
Income (loss) from operations
45,054 
27,662 
103,563 
43,786 
Lucky Friday [Member]
 
 
 
 
Net sales from operations to customers:
 
 
 
 
Net sales from operations to customers
36,044 
21,690 
70,606 
45,024 
Income (loss) from operations:
 
 
 
 
Income (loss) from operations
20,596 
8,625 
40,508 
18,306 
Business Segments Total [Member]
 
 
 
 
Net sales from operations to customers:
 
 
 
 
Net sales from operations to customers
117,860 
88,631 
254,224 
168,506 
Income (loss) from operations:
 
 
 
 
Income (loss) from operations
53,791 
24,592 
122,526 
40,246 
Other Segment Income Loss [Member]
 
 
 
 
Income (loss) from operations:
 
 
 
 
Income (loss) from operations
$ (11,859)
$ (11,695)
$ (21,545)
$ (21,846)
Note 6. Business Segments (Detail) - Identifiable Assets By Reportable Segment (USD $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Identifiable assets:
 
 
Identifiable assets
$ 1,460,389 
$ 1,382,493 
Greens Creek [Member]
 
 
Identifiable assets:
 
 
Identifiable assets
753,190 
740,573 
Lucky Friday [Member]
 
 
Identifiable assets:
 
 
Identifiable assets
195,773 
170,928 
Other Segment [Member]
 
 
Identifiable assets:
 
 
Identifiable assets
$ 511,426 
$ 470,992 
Note 7. Employee Benefit Plans (Detail) - Net Periodic Pension Cost (Income) Three Months Ended September 30 (USD $)
In Thousands
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Pension Benefits [Member]
 
 
 
 
Service cost
$ 970 
$ 550 
$ 1,939 
$ 1,101 
Interest cost
1,029 
931 
2,057 
1,862 
Expected return on plan assets
(1,371)
(1,260)
(2,741)
(2,520)
Amortization of prior service cost
100 
150 
201 
301 
Amortization of net (gain) loss
220 
217 
440 
433 
Net periodic benefit cost
948 
588 
1,896 
1,177 
Other Benefits [Member]
 
 
 
 
Service cost
13 
12 
27 
23 
Interest cost
20 
19 
39 
37 
Expected return on plan assets
22 
 
22 
 
Amortization of prior service cost
(33)
13 
(22)
26 
Amortization of net (gain) loss
11 
(12)
 
(23)
Net periodic benefit cost
$ 33 
$ 32 
$ 66 
$ 63 
Note 8. Shareholders’ Equity (Detail) (USD $)
9 Months Ended
Sep. 30,		 6 Months Ended
Jun. 30,
1 Months Ended
Jan. 31, 2011
1 Months Ended
May 31, 2010
1 Months Ended
May 30, 2009
3 Months Ended
Dec. 31, 2010
3 Months Ended
Jun. 30, 2010
3 Months Ended
Apr. 30, 2010
6 Months Ended
Jun. 30, 2011
6 Months Ended
Jul. 1, 2010
6 Months Ended
Jun. 30, 2010
2010
2009
18 Months Ended
Jun. 30, 2011
Apr. 12, 2011
Mar. 31, 2011
Jul. 31, 2010
Jan. 31, 2010
2011
Share Based Compensation Plans [Member]
2010
Share Based Compensation Plans [Member]
5 Months Ended
Jun. 9, 2011
Vest June2011 [Member]
6 Months Ended
Jun. 30, 2012
Vest June2012 [Member]
Jun. 24, 2011
Vest June2012 [Member]
3 Months Ended
Mar. 31, 2014
Vest March2014 [Member]
Jun. 24, 2011
Vest March2014 [Member]
GrantOfRestrictedShares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 7,968 
 
$ 256,927 
 
$ 163,649 
Stock Granted During Period, Value, Share-based Compensation, Gross
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
1,900,000 
 
1,200,000 
 
Stock Issued During Period, Shares, New Issues (in Shares)
 
48,825 
42,636 
 
 
3.3 
 
604,637 
 
 
 
18.9 
 
 
 
 
 
 
 
 
 
 
 
Employee Benefits and Share-based Compensation
 
 
 
 
 
 
 
 
 
900,000 
2,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchased During Period, Shares (in Shares)
 
 
 
 
56,688 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchased During Period, Value
 
 
 
 
500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury Stock Acquired, Average Cost Per Share (in Dollars per share)
 
 
 
 
$ 8.29 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from Stock Options Exercised
 
 
 
 
 
 
4,838,000 
 
45,562,000 
 
 
 
 
 
 
 
500,000 
200,000 
 
 
 
 
 
Preferred Stock Dividends Paid During The Period
16,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CommonStockIssuedAsDividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
97.00% 
97.00% 
 
 
 
 
 
 
 
Mandatory Convertible Preferred Stock Dividend
 
 
 
3,300,000 
 
3,300,000 
 
631,334,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock, Shares Outstanding (in Shares)
 
 
 
 
 
 
2,012,500 
 
 
 
 
2,012,500 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Convertible, Conversion Ratio
 
 
 
 
 
 
 
 
 
 
 
9.3773 
 
 
 
 
 
 
 
 
 
 
 
Common Stock, Other Shares, Outstanding (in Shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
1,800,000 
 
 
 
 
 
 
 
 
 
Warrants Exercised
 
 
 
 
 
 
 
 
 
 
 
 
$ 9,500,000 
$ 4,400,000 
 
 
 
 
 
 
 
 
 
Note 8. Shareholders’ Equity (Detail) - Stock Purchase Warrants (USD $)
Jun. 30, 2011
Total warrants outstanding (in Dollars)
$ 22,714,501 
Series1 Warrants2_45 [Member]
 
Warrants (in Shares)
5,231,708 
Exercise Price
2.45 
Series1 Warrants2_56 [Member]
 
Warrants (in Shares)
460,976 
Exercise Price
2.56 
Series3 Warrants [Member]
 
Warrants (in Shares)
17,021,817 
Exercise Price
2.50 
Note 9. Credit Facilities and Capital Leases (Detail) (USD $)
6 Months Ended
Jun. 30, 2011
Dec. 31, 2010
Oct. 31, 2009
Long-term Line of Credit
 
 
$ 60,000,000 
Debt Instrument, Interest Rate Terms
The interest rate on outstanding loans under the agreement is between 2.75% and 3.5% above the LIBOR or an alternative base rate plus an applicable margin of between 1.75% and 2.5%. 
 
 
Debt Instrument, Fee
We are required to pay a standby fee of between 0.825% and 1.05% per annum on undrawn amounts under the revolving credit agreement. 
 
 
Amortization of Deferred Charges
300,000 
 
 
Interest Expense, Debt
200,000 
 
 
Capital Lease Obligations
7,500,000 
6,300,000 
 
Capital Lease Obligations, Current
3,045,000 
2,481,000 
 
Capital Lease Obligations, Noncurrent
4,473,000 
3,792,000 
 
Capital Leases, Future Minimum Payments Due
 
8,100,000 
 
Capital Leases, Future Minimum Payments, Interest Included in Payments
 
$ 600,000 
 
Note 11. Derivative Instruments (Detail) - Fair Value Liability Balances (USD $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Other non-current liabilities
$ 16,149 
$ 16,598 
Fair Value Liability Balances [Member]
 
 
Current derivative contract liabilities
10,510 
20,016 
Other non-current liabilities
$ 1,087 
$ 779 
Note 11. Derivative Instruments (Detail) - Gains and Losses Related to Forward Contracts (USD $)
In Thousands
3 Months Ended
Jun. 30,		 6 Months Ended
Jun. 30,
2011
2010
2011
2010
Sales of products
$ 49 
$ 6,351 
$ 703 
$ 6,351 
Gain (loss) on derivatives contracts
$ 558 
$ 1,999 
$ (1,475)
$ 1,999 
Note 11. Derivative Instruments (Detail) - Summary Of Forward Sales Contracts (USD $)
6 Months Ended
Jun. 30, 2011
Zinc [Member] |
Settlements2011 [Member]
 
Contracts on provisional sales
 
2011 settlements
8,100 
Zinc [Member] |
Settlements2011 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
7,350 
Zinc [Member] |
Settlements2012 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
26,650 
Zinc [Member] |
Settlements2013 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
4,700 
Zinc [Member] |
Settlements2011 [Member]
 
Contracts on provisional sales
 
2011 settlements
$ 1.02 
Zinc [Member] |
Settlements2011 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
0.96 
Zinc [Member] |
Settlements2012 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
1.11 
Zinc [Member] |
Settlements2013 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
1.16 
Lead [Member] |
Settlements2011 [Member]
 
Contracts on provisional sales
 
2011 settlements
4,500 
Lead [Member] |
Settlements2011 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
6,175 
Lead [Member] |
Settlements2012 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
18,000 
Lead [Member] |
Settlements2013 [Member]
 
Contracts on forecasted sales
 
Metric tonnes under contract - forecasted sales
8,300 
Lead [Member] |
Settlements2011 [Member]
 
Contracts on provisional sales
 
2011 settlements
1.17 
Lead [Member] |
Settlements2011 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
1.01 
Lead [Member] |
Settlements2012 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
1.11 
Lead [Member] |
Settlements2013 [Member]
 
Contracts on forecasted sales
 
Average price per pound - forecasted sales
$ 1.16 
Note 12. Fair Value Measurement (Detail) - Assets And Liabilities Accounted For At Fair Value (USD $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Restricted cash balances:
 
 
Total assets
$ 425,953 
$ 322,883 
Level1 [Member]
 
 
Cash and cash equivalents:
 
 
Money market funds and other bank deposits
377,436 
283,606 
Equity securities – mining industry
4,161 
2,668 
Restricted cash balances:
 
 
Certificates of deposit and other bank deposits
926 
10,314 
Level2 [Member]
 
 
Trade accounts receivable:
 
 
Receivables from provisional concentrate sales
43,430 
36,295 
Derivative contracts:
 
 
Base metal forward contracts
$ 11,597 
$ 20,794