10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2006

Commission file number 1-8491

HECLA MINING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	77–0664171
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6500 Mineral Drive, Suite 200 Coeur d’Alene, Idaho	83815-9408
(Address of principal executive offices)	(Zip Code)

208-769-4100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No o   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o     Accelerated Filer x     Non-accelerated Filer o

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

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

Class	Shares Outstanding November 7, 2006
Common stock, par value $0.25 per share	119,516,124

Hecla Mining Company and Subsidiaries

Form 10-Q

For the Quarter Ended September 30, 2006

I N D E X

		Page
PART I. - Financial Information
Item 1 -	Consolidated Financial Statements (unaudited)	3
	Consolidated Balance Sheets - September 30, 2006 and December 31, 2005	3
	Consolidated Statements of Operations and Comprehensive Income (Loss) - Three Months Ended and Nine Months Ended September 30, 2006 and 2005	4
	Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2006 and 2005	5
	Notes to Interim Consolidated Financial Statements	6
Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4 -	Controls and Procedures	41
PART II. - Other Information
Item 1 -	Legal Proceedings	42
Item 1A -	Risk Factors	42
Item 5 -	Other Information	42
Item 6 -	Exhibits	45
Signatures		46

*Certain items are omitted as they are not applicable.

Part I — Financial Information

Hecla Mining Company and Subsidiaries

Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
(In thousands, except shares)

	September 30, 2006			December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	70,806		$	6,308
Short-term investments and securities held for sale		14,850			40,862
Accounts and notes receivable:
Trade		8,613			5,479
Other		10,234			12,116
Inventories		22,297			25,466
Other current assets		4,653			3,546
Total current assets		131,453			93,777
Investments		4,480			2,233
Restricted cash and investments		21,069			20,340
Properties, plants and equipment, net		130,695			137,932
Other non-current assets		19,934			17,884
Total assets	$	307,631		$	272,166
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities	$	18,535		$	16,684
Dividends payable		138			138
Accrued payroll and related benefits		13,341			10,452
Accrued taxes		3,101			2,529
Current portion of accrued reclamation and closure costs		6,365			6,328
Total current liabilities		41,480			36,131
Long-term debt		—			3,000
Accrued reclamation and closure costs		60,238			62,914
Other non-current liabilities		8,637			8,791
Total liabilities		110,355			110,836
SHAREHOLDERS’ EQUITY
Preferred stock, $0.25 par value, authorized 5,000,000 shares; 157,816 shares issued, liquidation preference - $7,891		39			39
Common stock, $0.25 par value, authorized 400,000,000 shares; issued 2006 – 119,556,457 shares, and issued 2005 – 118,602,135 shares		29,889			29,651
Capital surplus		513,859			508,104
Accumulated deficit		(347,896	)		(396,092	)
Accumulated other comprehensive income		1,816			19,746
Less treasury stock, at cost; 2006 – 57,333 common shares, and 2005 – 8,274 common shares		(431	)		(118	)
Total shareholders’ equity		197,276			161,330
Total liabilities and shareholders’ equity	$	307,631		$	272,166

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

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Hecla Mining Company and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(Dollars and shares in thousands, except for per-share amounts)

	Three Months Ended						Nine Months Ended
	September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Sales of products	$	50,414		$	30,428		$	147,145		$	80,117
Cost of sales and other direct production costs		25,696			22,220			76,322			55,259
Depreciation, depletion and amortization		10,346			5,577			27,017			13,282
		36,042			27,797			103,339			68,541
Gross profit		14,372			2,631			43,806			11,576
Other operating expenses:
General and administrative		2,601			2,652			9,482			7,581
Exploration		6,058			5,100			15,056			12,457
Pre-development expense		2,240			2,534			5,689			6,768
Depreciation and amortization		196			154			743			437
Other operating expenses		1,947			697			3,211			1,881
Gain on sale of properties, plants and equipment		(31	)		—			(4,451	)		—
Provision for closed operations and environmental matters		906			830			2,503			1,517
		13,917			11,967			32,233			30,641
Income (loss) from operations		455			(9,336	)		11,573			(19,065	)
Other income (expense):
Gain on sale of investments		—			—			36,416			—
Interest income		1,117			840			2,808			1,628
Interest expense		(189	)		(31	)		(552	)		(39	)
		928			809			38,672			1,589
Net income (loss) from operations, before income taxes		1,383			(8,527	)		50,245			(17,476	)
Income tax provision		(382	)		(68	)		(1,635	)		(660	)
Net income (loss)		1,001			(8,595	)		48,610			(18,136	)
Preferred stock dividends		(138	)		(138	)		(414	)		(414	)
Income (loss) applicable to common shareholders	$	863		$	(8,733	)	$	48,196		$	(18,550	)
Comprehensive income (loss):
Net income (loss)	$	1,001		$	(8,595	)	$	48,610		$	(18,136	)
Change in derivative contracts		—			—			—			761
Reclassification of gain on sale of marketable securities included in net income		—			—			(36,422	)		—
Unrealized holding gains on investments		1,435			5,425			17,930			6,990
Comprehensive income (loss)	$	2,436		$	(3,170	)	$	30,118		$	(10,385	)
Basic and diluted income (loss) per common share after preferred dividends	$	0.01		$	(0.07	)	$	0.40		$	(0.16	)
Weighted average number of common shares outstanding – basic		119,483			118,484			119,146			118,422
Weighted average number of common shares outstanding – diluted		119,869			118,484			119,561			118,422

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

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Hecla Mining Company and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

	Nine Months Ended
	September 30, 2006			September 30, 2005
Operating activities:
Net income (loss)	$	48,610		$	(18,136	)
Non-cash elements included in net income (loss):
Depreciation, depletion and amortization		27,760			13,719
Gain on sale of investments		(36,416	)		—
Gain on disposition of properties, plants and equipment		(4,451	)		(53	)
Gain on sale of royalty interests		(341	)		(550	)
Provision for inventory obsolescence		1,342			—
Provision for reclamation and closure costs		261			767
Stock compensation		2,202			1,085
Other non-cash charges, net		266			—
Change in assets and liabilities:
Accounts and notes receivable		(4,667	)		(1,454	)
Inventories		1,827			(4,448	)
Other current and non-current assets		15			984
Accounts payable and accrued expenses		1,852			369
Accrued payroll and related benefits		2,984			717
Accrued taxes		572			304
Accrued reclamation and closure costs and other non-current liabilities		(2,158	)		(3,238	)
Net cash provided by (used in) operating activities		39,658			(9,934	)
Investing activities:
Additions to properties, plants and equipment		(20,115	)		(31,452	)
Proceeds from sale of investments		57,441			—
Proceeds from disposition of properties, plants and equipment		4,368			21
Increase in restricted investments		(729	)		(361	)
Purchase of short-term investments and other securities held for sale		(43,060	)		(68,694	)
Maturities of short-term investments and other securities held for sale		28,210			91,128
Net cash provided by (used in) investing activities		26,115			(9,358	)
Financing activities:
Common stock issued under stock option plans		2,452			251
Dividends paid to preferred shareholders		(414	)		(2,899	)
Other financing activities		—			(604	)
Purchase of treasury shares		(313	)		—
Borrowings on debt		4,060			1,000
Repayments on debt		(7,060	)		(1,000	)
Net cash used in financing activities		(1,275	)		(3,252	)
Net increase (decrease) in cash and cash equivalents		64,498			(22,544	)
Cash and cash equivalents at beginning of period		6,308			34,460
Cash and cash equivalents at end of period	$	70,806		$	11,916

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

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Note 1. Basis of Preparation of Financial Statements

In the opinion of management, the accompanying unaudited consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), consolidated statements of cash flows and notes to interim consolidated financial statements contain all adjustments necessary to present fairly, in all material respects, the consolidated financial position of Hecla Mining Company and its subsidiaries (“we” or “our” or “us”). These interim 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, 2005, 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. 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 as permitted by GAAP.

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.

On November 8, 2006, we implemented a holding company structure. For additional information, see Note 13 of Notes to Consolidated Financial Statements.

Note 2. Cash, Short-term Investments, Investments and Restricted Cash

Cash

At September 30, 2006 and December 31, 2005, we held the U.S. dollar equivalent of approximately $14.3 million and $1.1 million, respectively, denominated in Venezuelan bolivares (2,150 bolivares to $1.00). Additionally, we will convert into Venezuelan currency the proceeds of Venezuelan gold production sold outside of the country over the past 180 days, or approximately $31.2 million, through April 2007. Exchanging our cash held in local currency into U. S. dollars can be done through specific Venezuelan governmental programs that have been limited and slow, or through the use of negotiable instruments on which we have incurred and may incur additional foreign currency losses. During the third quarter of 2006, we exchanged the U.S. dollar equivalent of approximately $6.1 million at the official exchange rate of 2,150 bolivares to $1.00 for $4.8 million at the open market rate, incurring a foreign exchange loss for the difference. The foreign exchange loss has been included in other operating expenses on the Consolidated Statement of Operations and Comprehensive Income (Loss). Although we are currently making appropriate applications through the Venezuelan government, our cash balances denominated in the Venezuelan bolivar may continue to grow and any future conversions, or future devaluation of the Venezuelan bolivar, may result in further losses when and if we decide to distribute money outside Venezuela.

Short-term Investments and Securities Held for Sale

Investments at September 30, 2006 and December 31, 2005 consisted of the following (in thousands)

	September 30, 2006		December 31, 2005
Adjustable rate securities	$	14,850	$	—
Marketable equity securities (cost $21,001)		—		40,862
	$	14,850	$	40,862

Adjustable rate securities are carried at amortized cost. However, due to the short-term nature of these investments, the amortized cost approximates fair market value. Marketable equity securities are carried at fair market value.

In January 2006, we sold common stock of Alamos Gold Inc., generating a $36.4 million pre-tax gain and providing $57.4 million of cash proceeds. In late 2004 and early 2005, we acquired our interest in

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Alamos for approximately $21.0 million, which was recorded at fair market value on our consolidated balance sheet at December 31, 2005, under Short-term Investments. The unrealized gain on these securities at December 31, 2005 was $19.9 million and was included as a component of Shareholders’ Equity under Accumulated Other Comprehensive Income.

Non-current Investments

At September 30, 2006 and December 31, 2005, the fair market value of our non-current investments was $4.5 million and $2.2 million, respectively. The cost of these investments was approximately $1.3 million and $0.9 million, respectively.

Restricted Cash and Investments

Various laws and permits 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 bonds of U.S. government agencies. These investments are restricted primarily for reclamation funding or surety bonds and were $21.1 million and $20.3 million at September 30, 2006 and December 31, 2005, respectively, including $8.4 million and $8.1 million, respectively, restricted for reclamation funding for the Greens Creek Joint Venture.

Note 3. Income Taxes

For the three and nine months ended September 30, 2006, we recorded a current tax provision of $0.4 million and $1.6 million, respectively, primarily for U.S. alternative minimum tax and foreign withholding taxes payable. For the three and nine months ended September 30, 2005, we recorded a $0.1 million and $0.7 million tax provision, respectively, for U.S. alternative minimum tax, foreign withholding taxes payable and foreign income taxes payable.

The income tax provision for the third quarter and first nine months in 2006 varies from the amount that would have resulted from applying the statutory income tax rate to our pretax income primarily due to utilization of tax net operating loss carryforwards. The income tax provision for the same periods in 2005 varies from the amount that would have resulted from applying the statutory income tax rate to pretax income primarily due to non-utilization of foreign tax losses partially offset by utilization of U.S. tax net operating loss carryforwards.

Note 4. Inventories

Inventories consist of the following (in thousands):

	September 30, 2006		December 31, 2005
Concentrates, doré, bullion, metals in transit and other products	$	9,515	$	10,964
Materials and supplies (1)		12,782		14,502
	$	22,297	$	25,466

(1) Net of a reserve for inventory obsolescence recorded during the first nine months of 2006 of $1.3 million at the La Camorra unit.

The Central Bank of Venezuela maintains regulations concerning the export of gold from Venezuela, under which we are required by current regulations to sell 15% of our production within the country. Included in sales for the second and third quarters of 2006 are revenues from the sale of Venezuelan production in-country, including 8,900 ounces of gold which was held in product inventory at December 31, 2005.

Note 5. Commitments and Contingencies

Bunker Hill Superfund Site

In 1994, we, as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), entered into a Consent Decree with the

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Environmental Protection Agency (“EPA”) and the State of Idaho concerning environmental remediation obligations at the Bunker Hill Superfund site, a 21-square-mile site located near Kellogg, Idaho (“the Bunker Hill site”). The 1994 Consent Decree (the “Bunker Hill Decree” or “Decree”) settled our response-cost responsibility under CERCLA at the Bunker Hill site. Parties to the Decree included us, Sunshine Mining and Refining Company (“Sunshine”) and ASARCO Incorporated (“ASARCO”). Sunshine subsequently filed bankruptcy and settled all of its obligations under the Bunker Hill Decree.

In response to a request by us and ASARCO, the Federal District Court having jurisdiction over the Bunker Hill Decree issued an order in September 2001 that the Decree should be modified in light of a significant change in factual circumstances not reasonably anticipated by the mining companies at the time they signed the Decree. In its Order, the Court reserved the final ruling on the appropriate modification to the Bunker Hill Decree until after the issuance by the EPA of a Record of Decision (“ROD”) on the Coeur d’Alene River Basin (“Basin”) Remedial Investigation/Feasibility Study. The EPA issued the ROD in September 2002, proposing a $359.0 million Basin-wide clean up plan to be implemented over 30 years. The ROD also establishes a review process at the end of the 30-year period to determine if further remediation would be appropriate. Based on the 2001 Order issued by the Court, in April 2003, we and ASARCO requested that the Court release both parties from future work under the Bunker Hill Decree.

In November 2003, the Federal District Court issued its order on ASARCO’s and our request for final relief on the motion to modify the Bunker Hill Decree. The Court held that we and ASARCO were entitled to a reduction of $7.0 million from the remaining work or costs under the Decree. The parties agreed to credit this $7.0 million reduction against the government’s alleged past costs under the Decree, although historically we had not recorded this credit to offset our estimated future costs. In January 2004, the United States and the State of Idaho appealed the modification to the Decree. In December 2005, the U.S. Ninth Circuit Court of Appeals reversed the Federal District Court’s order, including the $7.0 million reduction from the parties’ obligations under the Decree. Our petition for a rehearing of this matter was denied by the Ninth Circuit Court in April 2006. During July 2006, we filed a petition for a Writ of Certiorari with the U.S. Supreme Court seeking its permission to appeal the Ninth Circuit Court’s decision. On October 16, 2006, the U.S. Supreme Court entered an order denying our petition for a Writ of Certiorari, thereby leaving the Ninth Circuit Court decision final.

Shortly after the Ninth Circuit Court of Appeals ruling in December 2005, we received notice that the EPA allegedly incurred $14.6 million in costs relating to the Bunker Hill site from January 2002 to March 2005. The notice was provided so that we and ASARCO might have an opportunity to review and comment on the EPA’s alleged costs prior to the EPA’s submission of a formal demand for reimbursement, which has not occurred as of the date of this filing. We reviewed the costs submitted by the EPA to determine whether we have any obligation to pay any portion of the EPA’s alleged costs relating to the Bunker Hill site. We were unable to determine what costs, if any, we will be obligated to pay under the Bunker Hill Decree based on the information submitted by the EPA. We requested that the EPA provide additional documentation relating to these costs. In September 2006, we received from the EPA a certified narrative cost summary, and certain documentation said to support that summary, which revised the EPA’s earlier determination to state that it had incurred $15.2 million in response costs. The September notice said that it was not a formal demand and invited us to discuss or comment on the matter. We will assess the materials sent to us and will discuss the matter with the EPA. If we are unable to reach a satisfactory resolution, we anticipate exercising our right under the Bunker Hill Decree to challenge reimbursement of the alleged costs. However, an unsuccessful challenge would likely require us to increase our expenditures and/or accrual relating to the Bunker Hill site.

In 1994, we entered into a cost-sharing agreement with other potentially responsible parties, including ASARCO, relating to required expenditures under the Bunker Hill Decree. ASARCO is in default of its obligations under the cost-sharing agreement and consequently in August 2005, we filed a lawsuit against ASARCO in Idaho State Court seeking amounts due us for work completed under the Decree. Additionally, we have claimed certain amounts due us under a separate agreement related to expert costs incurred to defend both parties with respect to the Basin litigation in Federal District Court, discussed further below. After we filed suit, ASARCO filed for Chapter 11 bankruptcy protection in United States Bankruptcy Court in Texas in August 2005. As a result of this filing, an automatic stay is

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in effect for our claims against ASARCO. We are unable to proceed with the Idaho State Court litigation against ASARCO because of the stay, and will assert our claims in the context of the bankruptcy proceeding.

The accrued liability balance at September 30, 2006 relating to the Bunker Hill site was $1.6 million, which is anticipated to be spent over the next two through thirty years. The liability balance represents our portion of the remaining remediation activities associated with the site, as well as our estimated portion of a long-term institutional controls program required by the Bunker Hill Decree. We have not included any amount in the accrual for government claims for past costs because, in accordance with GAAP, we are currently unable to estimate our liability for these claims. We believe ASARCO’s remaining share of its future obligations will be paid through proceeds from an ASARCO trust created in 2003 for the purpose of funding certain of ASARCO’s environmental obligations, as well as distributions to be determined by the Bankruptcy Court. In the event we are not successful in collecting what is due us from the ASARCO trust or through the bankruptcy proceedings, because the Bunker Hill Decree holds us jointly and severally liable, it is possible our liability balance for the remedial activity at the Bunker Hill site could be $4.9 million, the amount we currently estimate to complete the total remaining obligation under the Decree. In addition, we may be liable for government past costs allegedly incurred by the government at the Bunker Hill site, as discussed above. There can be no assurance as to the ultimate disposition of litigation and environmental liability associated with the Bunker Hill Superfund site, and we believe it possible that a combination of various events, as discussed above, or with other events could be materially adverse to our financial results or financial condition.

Coeur d’Alene River Basin Environmental Claims

Coeur d’Alene Indian Tribe Claims

In July 1991, the Coeur d’Alene Indian Tribe (“Tribe”) brought a lawsuit, under CERCLA, in Federal District Court in Idaho against us, ASARCO and a number of other mining companies asserting claims for damages to natural resources downstream from the Bunker Hill site over which the Tribe alleges some ownership or control. The Tribe’s natural resource damage litigation has been consolidated with the United States’ litigation described below. Because of various bankruptcies and settlements of other defendants, we are the only remaining defendant in the Tribe’s Natural Resource Damages case.

U.S. Government Claims

In March 1996, the United States filed a lawsuit in Federal District Court in Idaho against certain mining companies, including us, that conducted historic mining operations in the Silver Valley of northern Idaho. The lawsuit asserts 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 northern Idaho for which the United States asserts it is the trustee under CERCLA. The lawsuit claims that the defendants’ historic mining activity resulted in releases of hazardous substances and damaged natural resources within the Basin. The suit also seeks declaratory relief that we and other defendants are jointly and severally liable for response costs under CERCLA for historic mining impacts in the Basin outside the Bunker Hill site. We have asserted a number of defenses to the United States’ claims.

As discussed above, in May 1998, the EPA announced that it had commenced a Remedial Investigation/Feasibility Study under CERCLA for the entire Basin, including Lake Coeur d’Alene, as well as the Bunker Hill site, in support of its response cost claims asserted in its March 1996 lawsuit. In October 2001, the EPA issued its proposed clean-up plan for the Basin. The EPA issued the ROD on the Basin in September 2002, proposing a $359.0 million Basin-wide clean-up 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.

During 2000 and 2001, we were involved in settlement negotiations with representatives of the United States, the State of Idaho and the Tribe. These settlement efforts were unsuccessful. However, we may participate in similar settlement negotiations in the future.

Phase I of the trial commenced on the consolidated Tribe’s and the United States’ claims in January 2001, and was concluded in July 2001. Phase I addressed the extent of liability, if any, of the defendants

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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 we have 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 31% share of liability to us for impacts resulting from these releases. The portion of damages, past costs and clean-up costs to which this 31% applies, other cost allocations applicable to us and the Court’s determination of an appropriate clean-up plan is to be addressed in Phase II of the litigation. The Court also left issues on the deference, if any, to be afforded the United States’ clean-up 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. The Court significantly limited the scope of the trustee plaintiffs’ resource trusteeship and will require proof in Phase II of the litigation of the trustees’ percentage of trusteeship in co-managed resources. The United States and the Tribe are re-evaluating their claims for natural resource damages for Phase II; such claims may be in the range of $2.0 billion to $3.4 billion. We believe we have limited liability for natural resource damages because of the actions of the Court described above. Because of a number of factors relating to the quality and uncertainty of the United States and Tribe’s natural resources damage claims, we are currently unable to estimate what, if any, liability or range of liability we may have for these claims.

In expert reports exchanged with the defendants in August and September 2004, the United States claimed to have incurred approximately $87.0 million for past environmental study, remediation and legal costs associated with the Basin for which it is alleging it is entitled to reimbursement in Phase II. In a July 2006 Proof of Claim filed in the ASARCO bankruptcy case, the EPA increased this claim to $104.5 million. A portion of these costs is also included in the work to be done under the ROD. With respect to the United States’ past cost claims, we have determined a potential range of liability to be $5.6 million to $13.6 million, with no amount in the range being more likely than any other amount.

Two of the defendant mining companies, Coeur d’Alene Mines Corporation and Sunshine Mining and Refining Company, settled their liabilities under the litigation during 2001. We and ASARCO (which, as discussed above, filed for bankruptcy in August 2005) are the only defendants remaining in the United States’ litigation. Phase II of the trial was scheduled to commence in January 2006. As a result of ASARCO’s bankruptcy filing as discussed above, the Idaho Federal Court vacated the January 2006 trial date. We anticipate the Court will schedule a status conference to address rescheduling the Phase II trial date once the Bankruptcy Court rules on a motion brought by the United States to declare the bankruptcy stay inapplicable to the Idaho Court proceedings. We do not currently have an opinion as to when the Court might rule.

Although the United States has previously issued its ROD proposing a clean-up plan totaling approximately $359.0 million and its past cost claim is $87.0 million, based upon the Court’s prior orders, including its September 2003 order and other factors and issues to be addressed by the Court in Phase II of the trial, we currently estimate the range of our potential liability for both past costs and remediation (but not natural resource damages as discussed above) in the Basin to be $23.6 million to $72.0 million (including the potential range of liability of $5.6 million to $13.6 million for the United States’ past cost claims as discussed above), with no amount in the range being more likely than any other number at this time. Based upon GAAP, we have accrued the minimum liability within this range, which at September 30, 2006, was $23.6 million. It is possible that our ability to estimate what, if any, additional liability we may have relating to the Basin may change in the future depending on a number of factors, including information obtained or developed by us prior to Phase II of the trial and its outcome, and, any interim court determinations. There can be no assurance as to the outcome of the Coeur d’Alene River Basin environmental claims and we believe it possible that a combination of various events, as discussed above, or with other events could be materially adverse to our financial results or financial condition.

Insurance Coverage Litigation

In 1991, we initiated litigation in the Idaho District Court, County of Kootenai, against a number of insurance companies that provided comprehensive general liability insurance coverage to us and our

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predecessors. We believe the insurance companies have a duty to defend and indemnify us under their policies of insurance for all liabilities and claims asserted against us by the EPA and the Tribe under CERCLA related to the Bunker Hill site and the Basin. In 1992, the Idaho State District Court ruled that the primary insurance companies had a duty to defend us in the Tribe’s lawsuit. During 1995 and 1996, we entered into settlement agreements with a number of the insurance carriers named in the litigation. We have received a total of approximately $7.2 million under the terms of the settlement agreements. Thirty percent of these settlements were paid to the EPA to reimburse the U.S. Government for past costs under the Bunker Hill Decree. Litigation is still pending against one insurer with trial suspended until the underlying environmental claims against us are resolved or settled. The remaining insurer in the litigation, along with a second insurer not named in the litigation, is providing us with a partial defense in all Basin environmental litigation. As of September 30, 2006, we have not recorded a receivable or reduced our accrual for reclamation and closure costs to reflect the receipt of any potential insurance proceeds.

Independence Lead Mines Litigation

In March 2002, Independence Lead Mines Company (“Independence”), notified us of certain alleged defaults by us under a 1968 lease agreement relating to the Gold Hunter area (also known as the DIA properties) of our Lucky Friday unit. Independence alleged that we violated the “prudent operator obligations” implied under the lease by undertaking the Gold Hunter project and violated certain other provisions of the Agreement with respect to milling equipment and calculating net profits and losses. Under the lease agreement, we have the exclusive right to manage, control and operate the DIA properties. Independence holds an 18.52% net profits interest under the lease agreement that is payable after we recoup our investments in the DIA properties.

In June 2002, Independence filed a lawsuit in Idaho State District Court seeking termination of the lease agreement and requesting unspecified damages. Trial of the case occurred in late March 2004. In July 2004, the Court issued a decision that found in our favor on all issues and subsequently awarded us approximately $0.1 million in attorneys’ fees and certain costs, which Independence has paid. In August 2004, Independence filed its Notice of Appeal with the Idaho Supreme Court. Oral arguments were heard by the Idaho Supreme Court in February 2006. In April 2006, the Idaho Supreme Court ruled in our favor on all of Independence’s claims. During May 2006, Independence filed a motion for reconsideration with the Idaho Supreme Court, which was denied in June 2006. We believe that Independence has exhausted the appeals process and that the matter has concluded.

Nevada Litigation – Hollister Development Project

We and our wholly owned subsidiary, Hecla Ventures Corporation, filed a lawsuit in Elko County, Nevada, in April 2005 against our co-participants, Great Basin Gold Ltd. and Rodeo Creek Gold Inc., to resolve contractual disagreements involving our Earn-In Agreement entered into in August 2002 for the Hollister Development Project located in northern Nevada. In March 2006, the parties agreed to modify the Earn-In Agreement to reflect changing conditions at the project, revise certain deadlines and dismiss all litigation. Although there can be no assurance that other disagreements will not arise between the parties, we believe that they will not likely affect progress on the project.

Creede, Colorado, Litigation

In May 2005, the Wason Ranch Corporation filed a complaint in Federal District Court in Denver, Colorado, against us, Barrick Goldstrike Mines Inc., Chevron USA Inc. and Chevron Resources Company (collectively the “defendants”) for alleged violations of the Resource Conservation and Recovery Act (“RCRA”) and the Clean Water Act (“CWA”). During June 2006, Wason Ranch voluntarily dismissed the lawsuit without prejudice. In September 2006, Wason Ranch sent the defendants a Notice of Endangerment and intent to file suit under the RCRA and CWA. The notice alleges that the defendants are past and present owners and operators of mines and associated facilities located in Mineral County near Creede, Colorado, and such operations have released pollutants into the environment in violation of the RCRA and CWA. As of this date a formal complaint has not been filed or served.

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Venezuela Litigation

Our wholly owned subsidiary, Minera Hecla Venezolana, C.A. (“MHV”) is involved in litigation in Venezuela with SENIAT, the Venezuelan tax authority, concerning alleged unpaid tax liabilities that predate our purchase of the La Camorra mine from Monarch Resources Investments Limited (“Monarch”) in 1999. Pursuant to our Purchase Agreement, Monarch has assumed defense of and responsibility for the pending tax case in the Superior Tax Court in Caracas. In April 2004, SENIAT filed with the Third Superior Tax Court in Bolivar City, state of Bolivar, an embargo action against all of MHV’s assets in Venezuela to secure the alleged unpaid tax liabilities. In order to prevent the embargo, in April 2004, MHV made a cash deposit with the Court for the dollar equivalent of approximately $4.3 million, at exchange rates in effect at that time. In June 2004, the Superior Tax Court in Caracas ordered suspension and revocation of the embargo action filed by SENIAT, although the Court has retained the $4.3 million until such tax liabilities are settled.

In October 2005, MHV, Monarch and SENIAT reached a mutual agreement to settle the case, which is awaiting approval by the court. The terms of the agreement provide that MHV will pay approximately $0.8 million in exchange for release of the alleged tax liabilities, which we paid in August 2006. In a separate agreement, Monarch will reimburse MHV for all amounts expended in settling the case, including response costs, through a reduction in MHV’s royalty obligations to Monarch. Although we believe the cash deposit will continue to prevent any further action by SENIAT with respect to the embargo, and that MHV’s settlement efforts will be successful, there can be no assurances as to the outcome of this proceeding until a final settlement is approved by the court. If the tax court in Caracas or an appellate court were to subsequently award SENIAT its entire requested embargo, it could disrupt our operations in Venezuela.

In a separate matter, in February 2005 we were notified by SENIAT that it had completed its audit of our Venezuelan tax returns for the years ended December 31, 2003 and 2002. In the notice, SENIAT alleged that certain expenses are not deductible for income tax purposes and that calculations of tax deductions based upon inflationary adjustments were overstated, and has issued an assessment that is equal to taxes payable of $3.8 million. We reviewed SENIAT’s findings and submitted an appeal. In March 2006, the appeal was resolved in our favor and we were found not liable for the $3.8 million assessment. However, there can be no assurance that there will not be additional assessments in the future, or that SENIAT or other governmental agencies or officials will not take other actions against us, whether or not justified.

La Camorra Shaft Construction Arbitration

We are disputing some of the shaft construction costs relating to the production shaft commissioned at our La Camorra mine during 2005. Pursuant to the construction agreement, we submitted the matter to the American Arbitration Association for arbitration in November 2005. The parties agreed to participate in non-binding mediation but were unable to reach a satisfactory resolution of the matter. We now expect to proceed to arbitration in 2007. The contractor asserts $7.0 million of construction costs that we dispute. We claim approximately $2.9 million in damages against the contractor for various claims and back charges related to the construction of the shaft. There can be no assurance that the matter will be arbitrated in our favor.

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. 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 financial results or condition.

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Note 6. Income (Loss) per Common Share

We are authorized to issue 400.0 million shares of common stock, $0.25 par value per share, of which 119,556,457 shares were issued at September 30, 2006. In May 2006, shareholders approved an amendment to the Certificate of Incorporation to increase the number of authorized shares of common stock from 200.0 million to 400.0 million.

The following tables present reconciliations of the numerators and denominators used in the basic and diluted income (loss) per common share computations. Also shown is the effect that has been given to preferred dividends in arriving at the income (losses) applicable to common shareholders for the three and nine months ended September 30, 2006 and 2005, in computing basic and diluted income (loss) per common share (dollars and shares in thousands, except per-share amounts).

	Three Months Ended September 30,
	2006							2005
	Net Income			Weighted Average Shares		Per-Share Amount		Net Loss			Weighted Average Shares		Per-Share Amount
Income (loss) before preferred stock dividends	$	1,001						$	(8,595	)
Less: Preferred stock dividends		(138	)						(138	)
Basic income (loss) applicable to common shareholders	$	863			119,483	$	0.01	$	(8,733	)		118,484	$	(0.07	)
Effect of dilutive securities		—			386		—		—			—		—
Diluted income (loss) per common share	$	863			119,869	$	0.01	$	(8,733	)		118,484	$	(0.07	)

	Nine Months Ended September 30,
	2006							2005
	Net Income			Weighted Average Shares		Per-Share Amount		Net Loss			Weighted Average Shares		Per-Share Amount
Income (loss) before preferred stock dividends	$	48,610						$	(18,136	)
Less: Preferred stock dividends		(414	)						(414	)
Basic income (loss) applicable to common shareholders	$	48,196			119,146	$	0.40	$	(18,550	)		118,422	$	(0.16	)
Effect of dilutive securities		—			415		—		—			—		—
Diluted income (loss) per common share	$	48,196			119,561	$	0.40	$	(18,550	)		118,422	$	(0.16	)

These calculations of diluted income (loss) per share for the three and nine months ended September 30, 2006 and 2005, exclude the effects of convertible preferred stock (liquidation preference of $7.9 million in 2006 and 2005), as their conversion and exercise would be antidilutive. Restricted stock units outstanding during the 2005 periods, as well as common stock issuable upon the exercise of certain stock options, have also been excluded as their conversion and exercise would be antidilutive as follows:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2005		2006		2005
1995 Stock Incentive Plan
Stock options		1,405,500		3,006,820		1,405,500		3,006,820
2002 Key Employee Deferred Compensation Plan
Stock options		267,300		904,290		267,300		904,290
Stock units		—		80,303		—		80,303
Restricted stock units		—		189,000		—		189,000

Note 7. Business Segments

We are organized and managed by four operating segments, which represent our operating units and various exploration targets: the La Camorra unit and various exploration activities in Venezuela, the San Sebastian unit and various exploration activities in Mexico, the Greens Creek unit and the Lucky Friday unit. Prior to 2005, we were organized according to the geographical areas in which we operated, Venezuela (the La Camorra unit), Mexico (the San Sebastian unit) and the United States (the Greens Creek unit and the Lucky Friday unit).

At December 31, 2005, we changed our reportable segments to better reflect the economic characteristics of our operating properties and have restated the corresponding information for the third quarter and first nine months of 2005 to be comparable to the current presentation. General corporate activities not associated with operating units and their various exploration activities, as well as idle properties, are presented as “other.” We consider interest expense, interest income and income taxes general corporate items and are not allocated to our segments.

The following tables present information about reportable segments for the three and nine months ended September 30, 2006 and 2005 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Sales to unaffiliated customers:
La Camorra	$	21,159		$	8,494		$	67,800		$	27,841
Greens Creek		15,899			9,692			43,809			30,232
Lucky Friday		13,356			5,271			34,581			14,920
San Sebastian		–			6,971			955			7,124
	$	50,414		$	30,428		$	147,145		$	80,117
Income (loss) from operations:
La Camorra	$	(420	)	$	(3,614	)	$	3,845		$	(4,536	)
Greens Creek		7,271			1,601			20,827			7,084
Lucky Friday		4,518			1,127			11,843			2,134
San Sebastian		(2,489	)		(1,408	)		(1,733	)		(5,933	)
Other		(8,425	)		(7,042	)		(23,209	)		(17,814	)
	$	455		$	(9,336	)	$	11,573		$	(19,065	)

The following table presents identifiable assets by reportable segment as of September 30, 2006 and December 31, 2005 (in thousands):

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	September 30, 2006		December 31, 2005
Identifiable assets:
La Camorra	$	105,096	$	104,491
Greens Creek		69,497		64,235
Lucky Friday		28,743		21,457
San Sebastian		5,020		7,208
Other		99,275		74,775
	$	307,631	$	272,166

Note 8. Employee Benefit Plans

We sponsor defined benefit pension plans covering substantially all U.S. employees. Net periodic pension cost (income) for the plans consisted of the following for the three and nine months ended September 30, 2006 and 2005 (in thousands):

	Three Months Ended September 30,
	Pension Benefits						Other Benefits
	2006			2005			2006			2005
Service cost	$	186		$	176		$	4		$	2
Interest cost		757			804			45			20
Expected return on plan assets		(1,334	)		(1,399	)		—			—
Amortization of prior service cost		92			97			(2	)		19
Amortization of net (gain) loss		12			(20	)		(12	)		(5	)
Amortization of transition obligation		—			2			—			—
Net periodic benefit cost (income)	$	(287	)	$	(340	)	$	35		$	36

	Nine Months Ended September 30,
	Pension Benefits						Other Benefits
	2006			2005			2006			2005
Service cost	$	559		$	529		$	13		$	5
Interest cost		2,270			2,410			135			58
Expected return on plan assets		(4,002	)		(4,196	)		—			—
Amortization of prior service cost		275			292			(5	)		57
Amortization of net (gain) loss		34			(59	)		(39	)		(15	)
Amortization of transition obligation		—			4			—			—
Net periodic benefit cost (income)	$	(864	)	$	(1,020	)	$	104		$	105

Note 9. Stock-Based Compensation Plans

At September 30, 2006 and 2005, executives, key employees and non-employee directors had been granted options to purchase our common shares or were credited with common shares under the various stock-based compensation plans described below. The following table presents our various outstanding options and units as of September 30, 2006 and 2005:

	2006		2005
1995 Stock Incentive Plan
Stock options		2,155,570		3,006,820
Deferred Compensation Plan
Stock options		962,393		904,290
Stock units		10,532		80,303
Restricted stock units		147,600		189,000

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In June 2006, 78,704 common stock units that had previously been held under the terms of the deferred compensation plan as compensation for the Chairman of the board of directors were distributed upon the Chairman’s retirement.

1995 Stock Incentive Plan

Our 1995 Stock Incentive Plan, as amended in 2004, authorizes the issuance of up to 11.0 million shares of our common stock pursuant to the grant or exercise of awards under the plan. The board of directors committee that administers the 1995 plan has broad authority to fix the terms and conditions of individual agreements with participants, including the duration of the award and any vesting requirements. The 1995 plan will terminate 15 years after the effective date of the plan.

Deferred Compensation Plan

We maintain a deferred compensation plan, as amended November 6, 2006, that allows eligible officers and employees to defer a portion or all of their compensation. A total of 6.0 million shares of common stock are authorized under this plan. Deferred amounts may be allocated to either an investment account or a stock account. The investment account is similar to a cash account and bears interest at the prime rate. In the stock account, quarterly deferred amounts and a 10% matching amount are converted into stock units equal to the average closing price of our common stock over a quarterly period. At the end of each quarterly period, participants are eligible to elect to convert a portion of their investment account into the stock account, with no matching contribution. As a result of the amendment, participants will no longer be permitted to utilize the investment account to purchase discounted stock options. Stock options and units vest and are distributable based upon predetermined dates as elected by the participants or upon a distributable event, such as (1) separation from service; (2) death; (3) unforeseeable emergency; or (4) change in control of the Company.

Directors’ Stock Plan

In 1995, we adopted the Hecla Mining Company Stock Plan for Nonemployee Directors (the “Directors’ Stock Plan”), which may be terminated by our board of directors at any time. A total of 1.0 million shares of common stock are authorized under this plan. On May 30 of each year, each nonemployee director is credited that number of shares determined by dividing $24,000 by the average closing price for our common stock on the New York Stock Exchange for the prior calendar year. All credited shares are held in trust for the benefit of each director until delivery, which occurs upon the earliest of: (1) death or disability; (2) retirement; (3) a cessation of the director’s service for any other reason; (4) a change-in-control; or (5) at anytime upon the election of a director, provided that the delivery under such election shall be limited to that portion of the stock credited to each director for at least 24 months prior to delivery. Further, the shares of our common stock credited to nonemployee directors pursuant to the Directors’ Stock Plan may not be sold until at least six months following the date they are delivered.

Stock-Based Compensation

On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), which requires the measurement of the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Under SFAS No. 123(R), we have chosen to use the modified prospective transition method and our interim consolidated financial statements as of and for the nine months ended September 30, 2006, reflect its impact. Under this method, compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled in the period after adoption. Compensation cost is also recognized for the unvested portion of awards granted prior to adoption.

In accordance with the modified prospective transition method, our interim consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS No. 123(R). Stock-based compensation expense recognized under SFAS No. 123(R) for the three and nine months ended September 30, 2006, was approximately $0.4 million and $2.2 million, respectively, was recorded as general and administrative expenses and to cost of sales and other direct production

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costs. Over the next twelve months, we expect to recognize approximately $0.6 million in additional compensation expense as the remaining options and units vest, as required by SFAS No. 123(R).

Stock Options

Prior to our adoption of SFAS No. 123(R), we measured compensation cost for stock option plans using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”). In addition, we disclosed compensation expense for our stock-based plans based on the fair value at grant dates consistent with the provisions of SFAS No. 123. Our loss and per share loss applicable to common shareholders under the requirements of SFAS No. 123 indicated below (in thousands, except per share amounts):

	Periods ended September 30, 2005
	Three months			Nine months
Loss applicable to common shareholders
As reported	$	(8,733	)	$	(18,550	)
Stock-based employee compensation expense included in reported loss		254			1,085
Total stock-based employee compensation expense determined under fair value based methods for all awards		(457	)		(2,935	)
Pro-forma loss applicable to common shareholders	$	(8,936	)	$	(20,400	)
Loss applicable to common shareholders per share:
As reported	$	(0.07	)	$	(0.16	)
Pro forma	$	(0.08	)	$	(0.17	)

During the third quarter and first nine months of 2005, we recognized charges of $0.3 million and $0.8 million, respectively, for variable plan accounting and accruals under our employee stock option plans, which are no longer required under the provisions of SFAS No. 123(R).

The fair value of the options granted during the third quarters and first nine-month periods of 2006 and 2005 were estimated on the date of grant using the Black-Scholes option-pricing model with the weighted average assumptions given below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Weighted average fair value of options granted	$	1.87		$	1.14		$	2.30		$	1.57
Expected stock price volatility		52.99	%		52.71	%		51.38	%		54.35	%
Estimated forfeiture		4.29	%		2.92	%		0.35	%		2.92	%
Risk-free interest rate		5.00	%		4.09	%		4.93	%		3.58	%
Expected life of options (years)		2.4			2.8			2.7			2.8

We estimate forfeiture and expected volatility using historical information over the expected life of the option. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues over the equivalent life of the option. The expected life of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms and vesting schedules. The Black-Scholes option-pricing model requires the input of highly subjective assumptions, particularly for the expected term and expected stock price volatility.

Transactions concerning stock options pursuant to our stock option plans are summarized as follows:

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	Shares Subject to Options			Weighted Average Exercise Price per Share
Outstanding, December 31, 2005		3,876,225		$	5.08
Granted		701,638			6.26
Exercised		(657,197	)		3.80
Expired		(802,703	)		6.27
Outstanding, September 30, 2006 (1)		3,117,963		$	5.31

The aggregate intrinsic value of options exercised during the third quarters of 2006 and 2005, before applicable income taxes, was approximately $34,000 and $0, respectively, and $1.5 million and $0.2 million during the first nine months of 2006 and 2005, respectively. Additionally, we received cash proceeds of $0.1 million and $0 during the third quarters of 2006 and 2005, respectively, and $2.5 million and $0.3 million during the first nine months of 2006 and 2005.

The following table presents information about the stock options outstanding ⁽¹⁾ and exercisable as of September 30, 2006:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
$2.94 – 3.72		554,726		1.0	$	3.52		554,726	$	3.52
4.06–4.92		827,577		3.2		4.70		794,685		4.71
5.04–5.09		62,860		4.0		5.06		35,614		5.07
5.63–6.00		831,000		2.4		5.91		831,000		5.91
6.16–6.54		841,800		3.7		6.50		821,800		6.51
$2.94 –6.54		3,117,963		2.8	$	5.31		3,037,825	$	5.31

As of September 30, 2006, the majority of options outstanding were fully vested and the 80,137 unvested options will vest within twelve months. The aggregate intrinsic value of options outstanding and exercisable as of September 30, 2006, before applicable income taxes, was $2.1 million, based on our closing stock price of $5.74 per common share as of September 30, 2006.

(1) Included in stock options outstanding at September 30, 2006, were 837,261 discounted stock options purchased by participants under the provisions of our deferred compensation plan that were modified on November 6, 2006, driven by changes in Internal Revenue Service requirements as they pertain to employee deferred compensation arrangements. As a result of the modification, the equivalent positive value of proceeds upon exercise of these stock options will be credited to the employee’s respective investment account, therefore will be considered a liability rather than settled with shares of common stock. During the fourth quarter of 2006, we will record a liability of $3.0 million and additional compensation expense of $1.3 million, based on the closing stock price of $6.85 on November 6, 2006. The liability, with a corresponding adjustment to compensation expense, will be marked-to-market each reporting period until the options are exercised.

Restricted Stock Units

Unvested restricted stock units, granted to employees by the board of directors, are summarized as follows:

	Shares			Weighted Average Grant Date Fair Value per Share
Unvested, January 1, 2006		144,000		$	4.66
Granted		145,600		$	6.26
Distributed		(144,000	)	$	4.66
Expired		—		$	—
Unvested, September 30, 2006		145,600		$	6.26

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From the outstanding balance as of September 30, 2006, all except 15,000 of the units will vest within the next twelve months and will be distributable based upon predetermined dates as elected by the participants. We have recognized approximately $0.4 million in compensation expense since grant date, and will record an additional $0.5 million in compensation expense over the remaining vesting period related to these units.

Approximately 144,000 stock units vested during May 2006 and were distributed as elected by the recipients under the provisions of the deferred compensation plan. We recognized approximately $0.7 million in compensation expense related to these units. Under the terms of the plan and upon vesting, management authorized a net settlement of distributable shares to employees after consideration of individual employee’s tax withholding obligations, at the election of each employee. In May 2006, we repurchased 49,059 shares for $0.3 million, or approximately $6.39 per share.

Note 10. Long-term Debt and Credit Agreement

In September 2005, we entered into a $30.0 million revolving credit agreement for an initial two-year term, with the right to extend the facility for two additional one-year periods, on terms acceptable to us and the lenders. In September 2006, we extended the agreement one year. Amounts borrowed under the credit agreement are available for general corporate purposes. We have pledged our interest in the Greens Creek Joint Venture, which is held by Hecla Alaska LLC, our wholly owned subsidiary, as collateral under the credit agreement. The interest rate on the agreement is either 2.25% above the London InterBank Offered Rate or an alternate base rate plus 1.25%, and includes various covenants and other limitations related to our indebtedness and investments, as well as other information and reporting requirements. We make quarterly commitment fee payments equal to 0.75% per annum on the sum of the average unused portion of the credit agreement. At September 30, 2006, we did not have an outstanding balance under the credit agreement, and were in compliance with our covenants.

On November 8, 2006, we entered into a second amendment to the agreement to take into account our changed organizational structure affected by the Agreement and Plan of Reorganization and Merger, as discussed below in Note 13 of Notes to Consolidated Financial Statements. All terms of the credit agreement will remain materially unchanged, including our covenants. However, the credit agreement was amended and we executed a Parent Guaranty.

Note 11. Asset Retirement Obligations

The following is a reconciliation at September 30, 2006 and December 31, 2005, of the total liability for asset retirement obligations, which are part of our $66.6 million and $69.2 million accrued reclamation and closure costs, respectively (in thousands):

	2006			2005
Balance January 1	$	9,212		$	7,862
Changes in obligation due to changes in reclamation plans		479			1,113
Accretion expense		278			426
Payment of reclamation		(124	)		(189	)
Balance September 30, December 31	$	9,845		$	9,212

Note 12. New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (SFAS) No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158, among other things, will require us to:

• Recognize the funded status of our defined benefit plans in our consolidated financial statements; and

• Recognize as a component of other comprehensive income/(loss) the actuarial gains and losses and the prior service costs and credits that arise during the period but are not immediately recognized as components of net periodic benefit cost.

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We will adopt SFAS No. 158 for the year ending December 31, 2006. At September 30, 2006 and December 31, 2005, the net amounts recognized on our consolidated balance sheet were assets of $15.0 million and $13.9 million, respectively. Based on preliminary actuarial estimates, we estimate an increase to noncurrent assets of approximately $2.0 million, with a corresponding adjustment to other comprehensive income. The adoption will not affect our results of operations.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. We are currently evaluating the potential impact of this statement on our consolidated financial statements.

In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits:

• Fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;

• Clarifies which interest-only strips are not subject to the requirements of SFAS 133;

• Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

• Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and

• Amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

SFAS No. 155 is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Currently, the adoption of SFAS No. 155 is not expected to have a material effect on our consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN No. 48”) “Accounting for Uncertainty in Income Taxes,” which will become effective for us beginning January 2007. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS No. 109 “Accounting for Income Taxes,” prescribing a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. Currently, the adoption of FIN No. 48 is not expected to have a material effect on our consolidated financial statements.

Note 13. Subsequent Events

For the sole purpose of implementing a holding company structure, on November 8, 2006, we filed an Agreement and Plan of Reorganization. Hecla Mining Company, a Delaware corporation organized on August 7, 2006 and formerly named Hecla Holdings Inc., is the successor issuer of our wholly-owned subsidiary, Hecla Limited (“Predecessor”), a Delaware corporation organized on March 21, 1983 and formerly named Hecla Mining Company, as a result of Predecessor adopting a holding company organizational structure.

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

Certain statements contained in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosure About Market Risk are intended to

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be covered by the safe harbor provided for under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

These risks, uncertainties and other factors include, but are not limited to, those set forth under Part II, Item 1A – “Risk Factors” in this report and Item 1 – “Business” and Item 1A – “Risk Factors” in our annual report filed on Form 10-K for the year ended December 31, 2005. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Hecla Mining Company or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Hecla Mining Company

We are a precious metals company originally incorporated in 1891. Our business is to discover, acquire, develop, produce and market mineral resources. In doing so, we intend to manage our business activities in a safe, environmentally responsible and cost-effective manner, with the goal of creating value for our shareholders.

We are engaged in the exploration and development of mineral properties and the mining and processing of silver, gold, lead and zinc. We produce both metal concentrates, which we sell to custom smelters on contract, and unrefined bullion bars (doré), which may be sold as doré or further refined before sale to metals traders. We are organized and managed into four operating segments that represent our operating units and various exploration locations: the La Camorra unit and various exploration activities in Venezuela; the San Sebastian unit and various exploration activities in Mexico; the Greens Creek unit; and the Lucky Friday unit. The maps below show the locations of our operating units and our exploration projects, as well as the Hollister Development Block and our corporate office located in Coeur d’Alene, Idaho.

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Overview

Our current business strategy is to focus our financial and human resources on silver and gold production and expanding our proven and probable reserves and economic potential. Expansion of production will result through a combination of exploration efforts and acquisitions. Currently our exploration and development activities are all on or near existing operating or former operating properties. During 2006, we anticipate production of approximately 6.0 million ounces of silver, 150,000 ounces of gold, 24,000 tons of zinc and 23,000 tons of lead.

We have had a major exploration program underway to expand our proven and probable reserves and economic potential, primarily at properties in Idaho, Alaska, Nevada, Mexico and in Venezuela. We have focused our exploration on our own properties due to their prospectivity, under-exploration and size of our land packages. While we expect to continue this exploration, we anticipate expansion of our exploration program to additional properties in Mexico, and possibly other countries, including the U.S.

We are actively seeking to expand our mineral reserves by acquiring other mining companies or properties. Financially, we believe we can acquire other mining companies or properties because of the following:

• Cash balance of $70.8 million and short-term securities of $14.9 million at September 30, 2006;

• Two effective shelf registration statements with the Securities and Exchange Commission. One allows us to sell up to $275.0 million in common stock, preferred stock, warrants and debt securities in order to raise capital for potential acquisitions and for general corporate purposes. The other allows us to issue up to $175.0 million in common stock and warrants in connection with business combination transactions; and

• A $30.0 million revolving credit agreement, with no amount outstanding at September 30, 2006.

Results of Operations

For the third quarter and first nine months of 2006, we recorded income applicable to common shareholders of $0.9 million and $48.2 million ($0.01 and $0.40 per common share, respectively), compared to losses applicable to common shareholders of $8.7 million and $18.6 million ($0.07 and $0.16

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per common share) during the same periods in 2005, respectively. The improved 2006 results over the comparable periods in 2005 were primarily the result of:

• The sale of our investment in Alamos Gold, Inc. in January 2006, for $57.4 million in cash proceeds, generating a pre-tax gain of $36.4 million.

• Increased gross profit at our Lucky Friday, Greens Creek and La Camorra units (see the Lucky Friday Segment, Greens Creek Segment and La Camorra Segment sections below for further discussion of operating results);

• The sale of our Noche Buena gold exploration property in Mexico during April 2006, generating a $4.4 million pre-tax gain; and

• Increased average prices for all metals produced at our operations, illustrated by the following table comparing the average prices for the three and nine months ended September 30, 2006 and 2005:

	Three months ended September 30,				Nine months ended September 30,
	2006		2005		2006		2005
Silver – London PM Fix ($/ounce)	$	11.70	$	7.07	$	11.22	$	7.06
Gold – London PM Fix ($/ounce)	$	622	$	439	$	601	$	431
Lead – LME Final Cash Buyer ($/pound)	$	0.54	$	0.40	$	0.53	$	0.43
Zinc – LME Final Cash Buyer ($/pound)	$	1.53	$	0.59	$	1.35	$	0.59

Our results of operations during 2006 have also been impacted by the adoption of SFAS No. 123(R) “Share-Based Payment” in January. SFAS No. 123(R) requires us to record an expense for the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. We are using the modified prospective transition method, which has been reflected in our interim consolidated financial statements as of and for the third quarter and first nine months ended September 30, 2006.

In accordance with the modified prospective transition method, our interim consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS No. 123(R). The fair value of the options granted during the third quarter and first nine months of 2006 were estimated on the date of grant using the Black-Scholes option-pricing model, utilizing the same methodologies and assumptions as we have historically used under APB No. 25, as discussed below. As of September 30, 2006, the majority of options outstanding were fully vested, and we recognized stock-based compensation expense under SFAS No. 123(R) of approximately $1.6 million during the first nine months of 2006, which was recorded to general and administrative expenses and cost of sales and other direct production costs. Over the next twelve months, we expect to recognize an additional $0.6 million in compensation expense for unvested awards as required by SFAS No. 123(R).

Prior to our adoption of SFAS No. 123(R), we measured compensation cost for stock option plans using the intrinsic value method of accounting prescribed by APB No. 25 “Accounting for Stock Issued to Employees.” Had compensation expense for our stock-based plans been determined based on market value at grant dates consistent with the provisions of SFAS No. 123(R), our loss and per share loss applicable to common shareholders would have been increased to the pro-forma amounts provided in Note 9 of Notes to Interim Consolidated Financial Statements.

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The La Camorra Segment

The following is a comparison of the operating results and key production statistics of our Venezuelan operations, which include the La Camorra mine, a custom milling business, and Mina Isidora, which commenced limited production in mid-2005 (dollars are in thousands, except per ton and per ounce amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Sales	$	21,159		$	8,494		$	67,800		$	27,841
Cost of sales and other direct production costs		(11,919	)		(6,810	)		(39,490	)		(19,758	)
Depreciation, depletion and amortization		(7,229	)		(2,348	)		(18,686	)		(5,127	)
Gross profit	$	2,011		$	(664	)	$	9,624		$	2,956
Tons of ore processed		57,647			42,235			173,026			141,836
Gold ounces produced		38,636			22,175			114,656			71,056
Gold ounces per ton		0.684			0.569			0.695			0.531
Total cash cost per gold ounce (1)	$	380		$	381		$	359		$	330

(1) A reconciliation of this non-GAAP measure to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found below in Reconciliation of Total Cash Costs (non-GAAP) to Costs of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP).

Sales for the La Camorra unit increased due to higher average gold prices, improved ore grades and increased ore volume from Mina Isidora. Production during the third quarter of 2005 was negatively impacted by a strike at the La Camorra mine. Between the strike and the labor issues afterward, operational output during the second half of 2005 was affected. Additionally, 8,900 ounces of gold held in inventory at the end of 2005 were sold within Venezuela during the second quarter of 2006 ($7.3 million).

However, operating income for the third quarter and first nine months of 2006, compared to the same periods in 2005, were negatively impacted by the following:

• Increased cost of sales due to increased ore volume, rising costs of production from deeper faces in the La Camorra mine, and increased labor, commodity and transportation costs, for haulage of ore mined from Mina Isidora and purchased from small third-party mining operations, to our milling facility located approximately 110 km from Mina Isidora;

• Elimination of foreign exchange gains that decreased cost of sales in 2005 due to changes in currency regulations in Venezuela. In the first nine months of 2005, we recognized foreign exchange gains of $5.9 million that partially reduced our cost of sales. We have recognized no such gains in 2006;

• During the first nine months of 2006, we have recorded a reserve for materials inventory obsolescence at the La Camorra mine that also negatively affected cost of sales;

• Increased depreciation expense as a result of the commissioning of the shaft at the La Camorra mine in 2005, discussed in more detail below; and

• Reduced production from the La Camorra mine due to mining at greater depths, lower productivity, and reduced reserves.

In order to mine more efficiently at the La Camorra mine and potentially develop further proven and probable reserves, in 2003 we made the decision to construct a production shaft based on the long lead-time necessary for its construction. We completed the shaft and placed it into service during the third quarter of 2005. Since 2005, proven and probable ore reserves have continued to decrease as the mine has exhibited lower ore grades and no significant additions to reserves have been returned from drilling in the La Camorra vicinity. Depreciation expense related to the shaft has negatively affected

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operating income for the La Camorra unit since its operation, and we expect it to continue to do so over the next year. Declining proven and probable ore reserves and lower ore grades will have an impact on any decisions for longer-term plans at the La Camorra mine, and we will continue to assess whether remaining ounces can be economically extracted from the mine.

The construction of the production shaft was more costly and took longer than originally anticipated and we are disputing some of the shaft construction costs submitted by the contractor. Pursuant to the construction agreement, we submitted the matter to arbitration in November 2005. The contractor has asserted $7.0 million in construction costs that we dispute. We claim approximately $2.9 million in damages against the contractor for various claims and back charges related to the construction of the shaft. There can be no assurance that any mediation of the matter will be successful, or that the matter will be arbitrated in our favor.

Business Risks in Venezuela

Currency and Related Risks

In February 2003, the Venezuelan government imposed foreign exchange and price controls, and has put into place rules that restrict access of companies and individuals to foreign exchange. At September 30, 2006, the fixed rate was 2,150 bolivares (“Bs.”) to $1.00 ,which is the rate we have used to translate the financial statements for our activities in Venezuela recorded in Bs. to U.S. dollars included in our consolidated financial statements. We cannot predict the extent to which we may be affected by future changes in exchange rates and exchange controls in Venezuela, although the implementation of more stringent exchange control restrictions in that country could have a material adverse effect on the operation of this unit.

In October 2005, the Venezuelan government enacted the Criminal Exchange Law that imposes strict sanctions, criminal and economic, for the exchange of Venezuelan currency with other foreign currency through other than officially designated methods, or for obtaining foreign currency under false pretenses. Approvals for foreign currency exchange are limited and we are evaluating opportunities to minimize our exposure to devaluation. As a consequence, our cash balances denominated in bolivares that are maintained in Venezuela have increased from a U.S. dollar equivalent of approximately $1.1 million at December 31, 2005, to $14.3 million at September 30, 2006. Additionally, we will convert into Venezuelan currency the proceeds of Venezuelan exports made over the past 180 days, or approximately $31.2 million, through April 2007. During the third quarter of 2006, we exchanged the U.S. dollar equivalent of approximately $6.1 million at the official exchange rate of 2,150 bolivares to $1.00 for approximately $4.8 million at an open market exchange rate of 2,690 to $1.00, incurring a foreign exchange loss for the difference. Although we are making appropriate applications through the Venezuelan government, our cash balances denominated in the Venezuelan bolivar may continue to grow and any future conversions or devaluation of the bolivar may result in further losses when and if in the future we decide to distribute money outside Venezuela.

Prior to the enactment of the Criminal Exchange Law, we recognized foreign exchange gains of approximately $5.9 million in the first nine months of 2005, as markets outside of Venezuela have reflected a devaluation of the Venezuelan currency from the fixed rate. During the third quarter and first nine months of 2006, the Criminal Exchange Law has impacted our costs and Venezuelan cash flows. We cannot predict the extent to which we may be affected by future changes in exchange rates and exchange controls in Venezuela, although the Venezuelan exchange control regulations have limited our ability to repatriate cash and receive dividends or other distributions without substantial cost. We believe this will continue into the future, and will continue to impact our profitability of operations compared to previous periods.

SENIAT Litigation

Our wholly owned subsidiary, Minera Hecla Venezolana, C.A. (“MHV”), which owns and operates our La Camorra mine, is involved in litigation with the Venezuelan tax authority (“SENIAT”) concerning alleged unpaid tax liabilities that predate our purchase of La Camorra from Monarch Resources Investments Limited (“Monarch”) in 1999. Pursuant to our purchase agreement, Monarch has assumed

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defense of and responsibility for the pending tax case in the Superior Tax Court in Caracas. In April 2004, SENIAT filed with the Superior Tax Court in Bolivar City, State of Bolivar, an embargo action against all of MHV’s assets in Venezuela to secure the alleged unpaid tax liabilities. In order to prevent the embargo, in April 2004, MHV made a cash deposit with the Court of approximately $4.3 million, at exchange rates in effect at that time. In June 2004, the Superior Tax Court in Caracas ordered suspension and revocation of the embargo action filed by SENIAT, although the Court has maintained the $4.3 million until such tax liabilities are settled.

In October 2005, MHV and SENIAT reached a mutual agreement to settle the case, which is awaiting approval by the court. The terms of the agreement provide that MHV pay approximately $0.8 million in exchange for a release of the alleged tax liabilities and release of the cash deposit, which we paid in August 2006. In a separate agreement, Monarch will reimburse MHV for all amounts in settling the case, including defense costs, through a reduction in MHV’s royalty obligations to them. Although we believe the cash deposit will continue to prevent any further action by SENIAT with respect to the embargo related with this case and that MHV’s settlement efforts will be successful, there can be no assurance as to the outcome of this proceeding until a final settlement is executed and entered by the court. If the tax court in Caracas or an appellate court were to subsequently award SENIAT the previously requested embargo, it could disrupt our Venezuela operations and have a material adverse effect on our financial results or condition.

In a separate matter, in February 2005 we were notified by SENIAT that it had completed its audit of our Venezuelan tax returns for the years ended December 31, 2003 and 2002. In the notice, SENIAT alleged that certain expenses are not deductible for income tax purposes and that calculations of tax deductions based upon inflationary adjustments were overstated, and issued an assessment equal to taxes payable of $3.8 million. We reviewed SENIAT’s findings and submitted an appeal. In March 2006, the appeal was resolved in our favor and we were found not liable for the $3.8 million assessment. However, there can be no assurance that there will not be additional assessments in the future, or that SENIAT or other governmental agencies or officials will not take other actions against us, whether or not justified, which, in each case, could materially disrupt our operations in Venezuela.

Other

Although we believe we will be able to manage and operate the La Camorra unit and related exploration projects successfully, there is a continued uncertainty in Venezuela relating to political, regulatory, legal enforcement, security and economic matters, as well as export and exchange controls. This uncertain state of affairs could affect our operations, including changes in policy or demands of governmental agencies or their officials, litigation, labor stoppages, seizures of assets, relationships with small mining groups in the vicinity of our mining operations, and impacting our supplies of oil, gas and other goods. As a result, there can be no assurance we will be able to operate without interruptions to our operations, and any such occurrences, if significant enough, could have a material adverse effect on our financial results or condition.

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The Greens Creek Segment

The following is a comparison of the operating results and key production statistics of our Greens Creek segment (dollars are in thousands, except for per ton and per ounce amounts, and reflect our 29.73% share):

	Three Months Ended September 30						Nine Months Ended September 30
	2006			2005			2006			2005
Sales	$	15,899		$	9,692		$	43,809		$	30,232
Cost of sales and other direct production costs		(6,218	)		(6,211	)		(16,475	)		(16,678	)
Depreciation, depletion and amortization		(2,120	)		(1,527	)		(5,842	)		(5,354	)
Gross profit	$	7,561		$	1,954		$	21,492		$	8,200
Tons of ore milled		53,116			50,508			156,509			163,996
Silver ounces produced		758,865			555,707			1,893,709			2,212,772
Gold ounces produced		4,704			4,445			13,182			16,595
Zinc tons produced		4,142			4,196			12,369			14,695
Lead tons produced		1,672			1,354			4,483			5,030
Silver ounces per ton		18.05			15.37			15.79			18.25
Gold ounces per ton		0.128			0.137			0.124			0.150
Zinc percent		8.87			9.55			9.08			10.32
Lead percent		3.96			3.57			3.69			4.01
Total cash cost per silver ounce (1)	$	(2.61	)	$	3.05		$	(2.08	)	$	2.09
By-product credits	$	12,842		$	6,106		$	34,185		$	22,037
By-product credit per silver ounce	$	16.92		$	10.99		$	18.05		$	9.96

(1) A reconciliation of this non-GAAP measure to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found below in Reconciliation of Total Cash Costs (non-GAAP) to Costs of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP).

The increases in income from operations during the third quarter and first nine months of 2006, compared to the same 2005 periods, were primarily the result of higher average metal prices, partially offset by the effects of continued mine rehabilitation and development and higher diesel prices. Income from operations for the third quarter of 2006 was positively impacted by silver ore grades that were improved compared to the third quarter of 2005. However, silver grades were lower for the first nine months of 2006, compared to the same 2005 period.

Ground falls in various areas of the mine in the third quarter of 2005 resulted in the allocation of resources to rehabilitation work during the second half of 2005. During the first nine months of 2006, Greens Creek has continued to focus manpower and equipment on mine rehabilitation work relating to ground support reinforcement in the main haulage ways. Underground congestion caused by alternative haulage truck routing, and the lack of available mine ore faces - both results of the focus on rehabilitation work - decreased production during the first six months of 2006. A mining contract company was engaged during the second quarter of 2006 to help maintain production and reduce the effects of the rehabilitation work, and ore production for the third quarter of 2006 was 5% higher compared to the third quarter of 2005 as a result. However, tons of ore milled during the first nine months of 2006 was 5% lower than production levels for the comparable 2005 period. Completion of the rehabilitation work is expected in the fourth quarter of 2006.

Infrastructure has been installed that allows hydroelectric power to be supplied to Greens Creek by Alaska Electric Light and Power Company (“AEL&P”), via a submarine cable from North Douglas Island, near Juneau, to Admiralty Island, where Greens Creek is located. All infrastructure is in place, and use of the system commenced operation in August 2006. AEL&P has agreed to supply its excess power to Greens Creek, which will replace an estimated 20% to 30% of the diesel-generated power through 2008. Completion of a new hydroelectric plant by AEL&P is anticipated by 2009, at which time

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it is estimated they will supply 95% of Greens Creek power. This project is anticipated to reduce production costs at Greens Creek in the future.

The Greens Creek Joint Venture maintains a restricted trust for future reclamation funding. The balance of the restricted cash account was $28.2 million at September 30, 2006, of which our 29.73% portion was $8.4 million, and $27.3 million at December 31, 2005, of which our 29.73% portion was $8.1 million. During the fourth quarter of 2006, the Joint Venture anticipates increasing this trust, our portion of which we estimate to be $1.0 million.

The 186% and 200% improvements in total cash cost per ounce for the third quarter and first nine months of 2006, respectively, compared to 2005, are attributable to increased by-product credits, as 2006 zinc, lead and gold prices have continued to exceed prices during the same 2005 period, partially offset by higher production costs. While value from zinc, lead and gold by-products is significant, we believe that identification of silver as the primary product is appropriate because:

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

• Silver has historically accounted for a higher proportion of revenue than any other metal;

• Metallurgical treatment maximizes silver recovery;

• The Greens Creek deposit is a massive sulfide deposit containing an unusually high proportion of silver; and

• In most of its working areas, Greens Creek utilizes selective mining methods in which silver is the metal targeted for highest recovery.

We periodically review our proven and probable reserves to ensure that reporting of primary products and by-products is appropriate. Within our cost per ounce calculations, because we consider zinc, lead and gold to be by-products of our silver production, the values of these metals offset increases in operating costs due to increased prices.

The Lucky Friday Segment

The following is a comparison of the operating results and key production statistics of our Lucky Friday segment (dollars are in thousands, except for per ounce amounts):

	Three Months Ended September 30						Nine Months Ended September 30
	2006			2005			2006			2005
Sales	$	13,356		$	5,271		$	34,581		$	14,920
Cost of sales and other direct production costs		(7,559	)		(3,848	)		(19,451	)		(12,073	)
Depreciation, depletion and amortization		(997	)		(123	)		(2,489	)		(301	)
Gross profit	$	4,800		$	1,300		$	12,641		$	2,546
Tons of ore milled		72,713			65,076			202,140			163,641
Silver ounces produced		737,450			812,855			2,106,367			1,957,113
Lead tons produced		4,339			4,878			12,025			11,683
Zinc tons produced		2,061			1,294			4,467			3,298
Silver ounces per ton		10.96			13.42			11.41			12.86
Lead percent		6.46			8.00			6.52			7.63
Zinc percent		3.53			3.17			3.28			2.92
Total cash cost per silver ounce (1)	$	3.88		$	4.74		$	4.69		$	4.88
By-product credits	$	8,678		$	3,287		$	20,049		$	9,992
By-product credit per silver ounce	$	11.77		$	4.04		$	9.52		$	5.11

(1) A reconciliation of this non-GAAP measure to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found below in Reconciliation

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of Total Cash Costs (non-GAAP) to Costs of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP).

The $3.5 million and $10.1 million increases in gross profit for the third quarter and first nine months of 2006, compared to the same 2005 periods, respectively, resulted primarily from higher average metals prices and increased production, partially offset by lower silver and lead ore grades and increased costs related to an increase in production and compensation plans driven by prices. Approximately 685,000 and 1,415,000 ounces of silver were mined from the 5900 level expansion area during the third quarter and first nine months of 2006, respectively, with full production levels expected to be reached in the fourth quarter of 2006. The increased production from the 5900 level expansion area resulted in the 12% increase in tons of ore milled, however, a reduction in grade by 18% has yielded lower silver ounces produced for the third quarter of 2006 compared to the same 2005 period, with an offsetting increase in zinc production. We have taken advantage of high zinc prices to mine wider cuts to recover more zinc. The expansion project has resulted in the 24% increase in tons milled and 8% increase in silver ounces produced when comparing September 30, 2006 and 2005 year-to-date results.

The decrease in total cash costs per silver ounce in the third quarter and first nine months of 2006, compared to the same 2005 periods, is due to higher by-product credits resulting from lead and zinc prices, partially offset by higher production costs. While value from lead and zinc is significant, we believe that identification of silver as the primary product, with lead and zinc as by-products, is appropriate because:

• Silver accounts for a higher proportion of revenue than any other metal and is expected to do so in the future;

• The Lucky Friday unit is situated in a mining district long associated with silver production; and

• The Lucky Friday unit utilizes selective mining methods to target silver production.

We periodically review our proven and probable reserves to ensure that reporting of primary products and by-products is appropriate. Because we consider lead and zinc to be by-products of our silver production, the values of these metals have offset increases in operating costs due to the increased average prices.

The San Sebastian Segment

The following is a comparison of the operating results of our San Sebastian segment (dollars are in thousands):

	Three Months Ended September 30					Nine Months Ended September 30
	2006		2005			2006			2005
Sales	$	—	$	6,971		$	955		$	7,124
Cost of sales and other direct production costs		—		(5,351	)		(906	)		(6,750	)
Depreciation, depletion and amortization		—		(1,579	)		—			(2,500	)
Gross profit (loss)	$	—	$	41		$	49		$	(2,126	)

The National Miners Union initiated a strike at our Velardeña mill in October 2004, which prevented production at the San Sebastian unit until it was resolved in June 2005. During the strike, costs related to our mining operations were included in the valuation of our stockpile inventory, while costs related to the idle mill were expensed as incurred. Upon resolution of the strike, mining activities resumed until October 2005, at which time we reached the end of the known mine life on the Francine and Don Sergio veins.

The San Sebastian mine and Velardeña mill are currently on care-and-maintenance status as we continue exploration efforts. Sales reported for the nine months ended September 30, 2006, represent final settlement payments received on prior period doré shipments, and include revenue received from silver and gold contained in material remaining in the mill after operations ceased.

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Corporate Matters

Other significant variances affecting our third quarter and first nine months of 2006 results, as compared to the same periods in 2005, were as follows:

• Foreign exchange loss recorded during the third quarter of 2006 upon the conversion of the U.S. dollar equivalent of approximately $6.1 million at the official exchange rate of Venezuelan currency for $4.8 million received in the open market;

• Increased interest income due to higher cash balances and higher interest rates;

• Higher general and administrative expenses in the 2006 period, primarily the result of increased incentive compensation expenses required by the adoption of SFAS 123(R);

• Increase in expenditures for closed operations and environmental matters, as the San Sebastian unit has been placed on care—and—maintenance status;

• Increase in interest expense related to our $30.0 million revolving credit facility, which was entered into in September 2005 and subject to interest on outstanding balances, as well as a quarterly commitment fee on the unused portion of amount available and amortization of original loan fees associated with the facility;

• Overall increase in exploration expenses, offset by lower pre-development costs due to a shift in classification of costs incurred at the Hollister Development Block project in Nevada, where we began underground exploration drilling during the first quarter of 2006;

• Higher income tax provision due to the accrual of U.S. alternative minimum tax expense on the gain from the sale of our stock position in Alamos Gold, Inc.; and

• Increased legal fees related to the La Camorra shaft arbitration.

Reconciliation of Total Cash Costs (non-GAAP) to Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP)

The tables below present reconciliations between non-GAAP total cash costs to cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) for our gold (the La Camorra segment only) and silver operations (the San Sebastian, Greens Creek and Lucky Friday segments), for the quarters and first nine months ended September 30, 2006 and 2005 (in thousands, except costs per ounce).

Total cash costs include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs; third-party refining and marketing expense; on-site general and administrative costs; royalties; and mining production taxes; net of by-product revenues earned from all metals other than the primary metal produced at each unit. Total cash costs provide management and investors an indication of net cash flow, after consideration of the realized price received for production sold. Management also uses this measurement for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. “Total cash cost per ounce” is a measure developed by gold companies in an effort to provide a comparable standard, however, there can be no assurance that our reporting of this non-GAAP measure is similar to that reported by other mining companies.

Cost of sales and other direct production costs and depreciation, depletion and amortization, is the most comparable financial measure calculated in accordance with GAAP to total cash costs. The sum of the cost of sales and other direct production costs and depreciation, depletion and amortization for our silver and gold operating units in the tables below is presented in our Consolidated Statement of Operations and Comprehensive Income (Loss).

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	Combined Silver Properties
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Total cash costs (1)	$	881		$	6,098		$	5,928		$	14,503
Divided by ounces produced		1,496			1,623			4,000			4,423
Total cash cost per ounce produced	$	0.59		$	3.76		$	1.48		$	3.28
Reconciliation to GAAP:
Total cash costs	$	881		$	6,098		$	5,928		$	14,503
Depreciation, depletion and amortization (2)		3,117			3,229			8,331			8,155
Treatment and freight costs		(9,177	)		(5,136	)		(24,193	)		(18,196	)
By-product credits		21,520			13,628			54,234			36,749
Idle facility costs (2)		—			—			—			1,341
Change in product inventory (3)		506			386			718			515
Reclamation and other costs		49			431			146			589
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)	$	16,896		$	18,636		$	45,164		$	43,656

	Lucky Friday Unit
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Total cash costs (1)	$	2,859		$	2,777		$	9,876		$	8,168
Divided by silver ounces produced (4)		737			586			2,106			1,673
Total cash cost per ounce produced	$	3.88		$	4.74		$	4.69		$	4.88
Reconciliation to GAAP:
Total cash costs	$	2,859		$	2,777		$	9,876		$	8,168
Depreciation, depletion and amortization		997			123			2,489			301
Treatment and freight costs		(3,942	)		(1,864	)		(10,220	)		(5,553	)
By-product credits		8,678			3,287			20,049			9,992
Change in product inventory		(39	)		(359	)		(267	)		(545	)
Reclamation and other costs		3			4			14			10
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)	$	8,556		$	3,968		$	21,941		$	12,373

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	Greens Creek Unit
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Total cash costs (1)	$	(1,978	)	$	1,694		$	(3,948	)	$	4,626
Divided by silver ounces produced		759			556			1,894			2,213
Total cash cost per ounce produced	$	(2.61	)	$	3.05		$	(2.08	)	$	2.09
Reconciliation to GAAP:
Total cash costs	$	(1,978	)	$	1,694		$	(3,948	)	$	4,626
Depreciation, depletion and amortization		2,120			1,527			5,842			5,354
Treatment and freight costs		(5,235	)		(3,049	)		(13,973	)		(12,382	)
By-product credits		12,842			6,106			34,185			22,037
Change in product inventory		545			1,420			78			2,275
Reclamation and other costs		46			40			132			123
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)	$	8,340		$	7,738		$	22,316		$	22,033

	La Camorra Unit (5)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Total cash costs (1)	$	14,073		$	7,610		$	39,844		$	22,115
Divided by ounces produced		37			20			111			67
Total cash cost per ounce produced	$	380		$	381		$	359		$	330
Reconciliation to GAAP:
Total cash costs	$	14,073		$	7,610		$	39,844		$	22,115
Depreciation, depletion and amortization		7,229			2,348			18,686			5,127
Treatment and freight costs		(445	)		(594	)		(4,127	)		(1,606	)
By-product credits		555			580			1,980			1,323
Change in product inventory		(2,492	)		(761	)		1,619			(2,074	)
Reclamation and other costs		226			(22	)		173			—
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)	$	19,146		$	9,161		$	58,175		$	24,885

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	Total, All Locations
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Reconciliation to GAAP, All locations
Total cash costs (1)	$	14,954		$	13,708		$	45,772		$	36,618
Depreciation, depletion and amortization (2)		10,346			5,577			27,017			13,282
Treatment and freight costs		(9,622	)		(5,730	)		(28,320	)		(19,802	)
By-product credits		22,075			14,208			56,214			38,072
Idle facility costs (2)		–			—			–			1,341
Change in product inventory (3)		(1,986	)		(375	)		2,337			(1,559	)
Reclamation and other costs		275			409			319			589
Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP)	$	36,042		$	27,797		$	103,339		$	68,541

(1) Includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, net of by-product revenues earned from all metals other than the primary metal produced at each unit.

(2) The mill that processed San Sebastian ore in Mexico was closed for most of the first six months of 2005 (and fourth quarter of 2004) due to a strike by mill workers, making 2005 production statistics not meaningful including total cash costs per ounce produced. Mine and mill operations ceased in October 2005. During the third quarter and first nine months of 2005, cost of sales and other direct production costs of $5.4 million and $6.8 million, respectively, were not included in the determination of total cash costs for silver operations. Additionally during the third quarter and first nine months of 2005, San Sebastian recognized depreciation, depletion and amortization expense of $1.6 million and $2.5 million, respectively, which is reflected in the total for all properties and combined silver properties above.

(3) Includes approximately $907,000 related to San Sebastian cost of sales and other direct production costs during the first quarter of 2006 for prior period doré shipments.

(4) Ounces mined from the 5900 level development project at Lucky Friday are not included in the determination of total cash costs during the third quarter and first nine months of 2005, as commercial production levels from the expansion project had not yet been reached. Approximately 227,000 ounces and 285,000 ounces of silver, respectively, were excluded from the calculation.

(5) Costs per ounce of gold are based on the gold produced by the La Camorra mine and our Block B concessions, including Mina Isidora, only. During the quarters and first nine months ending September 30, 2006 and 2005, a total of 934 and 1,370 ounces, and 3,366 and 3,232 ounces of gold, respectively, were produced from third-party mining operations located near the La Camorra mine and Block B concessions. The revenues from these gold ounces were treated as a by-product credit and included in the calculation of gold costs per ounce. Included in total cash costs for the three and nine months ending September 30, 2006 and 2005, were the costs to purchase the ore of approximately $0.6 million and $0.7 million, respectively, and $2.0 million and $2.0 million, respectively.

Financial Liquidity and Capital Resources

Our liquid assets include (in thousands):

	September 30, 2006		December 31, 2005
Cash and cash equivalents	$	70,806	$	6,308
Adjustable rate securities		14,850		—
Marketable equity securities		—		40,862
Non-current investments		4,480		2,233
Total cash, cash equivalents and investments	$	90,136	$	49,403

The growth in our cash, cash equivalents and investments in the first nine months of the year was due to cash generated by our operations, an increase in the fair market value of our investment in

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common stock of Alamos Gold, Inc., which we sold in February 2006, and sale of our Noche Buena property in April 2006. Over the next twelve months, we believe that cash flow generated from operations, existing cash and investments, potential equity offerings, sale of assets, and our $30.0 million credit facility will be sufficient to finance capital requirements, exploration, general corporate activities, and acquisition or capital improvement opportunities.

Our cash balance at September 30, 2006 included $14.3 million held in local currency in Venezuela (based on the official exchange rate of bolivares (Bs.) 2,150 = $1.00). Approvals for foreign currency exchange continue to be limited and our ability to convert bolivares to U.S. dollars is likewise limited. However, in September 2006 we exchanged the equivalent of $6.1 million at the official exchange rate of Bs. 2,150 to $1 for $4.8 million at the open-market exchange rate of Bs. 2,690 to $1. For a more detailed discussion, see Note 2 of Notes to Interim Consolidated Financial Statements and the La Camorra Segment above.

Cash requirements for the remainder of 2006 are expected to include:

• Capital expenditures of approximately $10.0 million, primarily related to expansion and tailings impoundment projects at Lucky Friday, surface infrastructure at Mina Isidora in Venezuela and development and surface infrastructure at Greens Creek;

• Exploration and pre-development expenditures of approximately $8.0 million, primarily related to:

• Continued pre-development and underground exploration drilling, and a feasibility study at the Hollister Development Block project;

• Surface drilling programs and a pre—feasibility study at the Hugh Zone, along with drilling at other targets at our San Sebastian property in Mexico;

• Exploration on our Block B concessions and near our La Camorra mine in Venezuela; and

• Underground drilling beyond the current proven and probable reserves at our Lucky Friday and Greens Creek mines.

• General funding of operations and corporate general and administrative expenses; and

• Reclamation and other closure costs of approximately $3.0 million.

Operating activities provided $39.7 million cash in the first nine months of 2006, compared to $9.9 million used in the same period of 2005. Net income, adjusted for depreciation, depletion and amortization expense and other non-cash items, grew by $41.5 million due primarily to rising metals prices, increased gold production from Venezuela (partly offset by suspension of production at San Sebastian), and liquidation of product inventory in Venezuela. Countering these positive influences on income, our silver production has declined in 2006 compared to 2005 due to suspension of operations at our San Sebastian mine in Mexico, lower production from Greens Creek, and increased expenditures on exploration in the current year. Working capital changes in the first nine months of 2006 yielded cash, whereas cash was consumed by working capital increases in the same period of 2005. The difference was primarily the result of reductions in gold inventories in Venezuela in 2006 (in contrast to increases in 2005), increased payroll liabilities at Lucky Friday and higher severance accruals in Venezuela that will be paid in future years. Furthermore, we have reduced value-added tax receivables in Venezuela this year, partly as a result of sales of gold into the local market.

Investing activities provided $26.1 million in cash in the first nine months of 2006, due primarily to the sale of our holding in Alamos Gold, Inc. for $57.4 million. Additions to properties, plants and equipment required a cash outlay of $20.1 million in 2006, primarily for expansion of the 5900 level at Lucky Friday, development at Greens Creek, and the development of Mina Isidora in Venezuela. Capital spending in 2006 represents a reduction of 36% over the comparable period in 2005, as the La Camorra shaft project was finished in 2005. Net purchases of short-term investments used $14.9 million cash in the first nine months of 2006, compared to net maturities of $22.4 million during the 2005 period. Investing activities in 2006 also included the sale of our Noche Buena property for $4.4 million.

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Financing activities in the first nine months of 2006 used $1.3 million, which included net repayments on debt of $3.0 million and $0.4 million in dividends paid to preferred shareholders, offset by $2.5 million received from stock issued under employee stock option plans. Dividends in arrears paid to preferred shareholders in 2005, totaling $2.6 million, have not recurred this year.

Contractual Obligations and Contingent Liabilities and Commitments

The table below presents our fixed, non-cancelable contractual obligations and commitments primarily related to our earn-in agreement obligations, outstanding purchase orders and certain capital expenditures and lease arrangements as of September 30, 2006 (in thousands):

	Payments Due By Period
	Less than 1 year		1-3 years		4-5 years		After 5 years		Total
Purchase obligations (1)	$	7,062		—		—		—	$	7,062
Contractual obligations (2)		4,347		—		—		—		4,347
Hollister development block (3)		7,941		—		—		—		7,941
Short-term debt (4)		228		228		—		—		456
Operating lease commitments (5)		1,230		188		—		—		1,418
Total contractual cash obligations	$	20,808	$	416	$	—	$	—	$	21,224

(1) As of September 30, 2006, our 29.73% portion of purchase obligations at Greens Creek included $0.8 million related to capital projects.

(2) As of September 30, 2006, we were committed to approximately $1.1 million for ore and Venezuelan employee transportation and $0.4 million for various capital projects at Greens Creek.

(3) In March 2006, we reached an agreement with Great Basin Gold Ltd. to modify the 2002 earn-in agreement to the Hollister Development Block gold exploration project. The modifications to the earn-in agreement provide that we will complete and fund 100% of remaining stage one activities by March 31, 2007, and will fully fund stage two until we deliver a feasibility study. Total estimated remaining cost to fulfill our commitments under the modified agreement is approximately $7.9 million.

(4) Represents anticipated payment of 0.75% per annum on the sum of the average unused portion of our $30.0 million revolving credit agreement, which had no amounts outstanding at September 30, 2006.

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

We maintain reserves for costs associated with mine closure, land reclamation and other environmental matters. At September 30, 2006, our reserves for these matters totaled $66.6 million, for which no contractual or commitment obligations exist. Future expenditures related to closure, reclamation and environmental expenditures are difficult to estimate, although we anticipate we will make expenditures relating to these obligations over the next thirty years. For additional information relating to our environmental obligations, see Note 5 of Notes to Interim Consolidated Financial Statements.

At September 30, 2006, we had no existing off-balance sheet arrangements, as defined under SEC regulations, that have or are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make a wide variety of estimates and assumptions that affect: (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements; and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgments become even more subjective and complex. Our accounting

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policies are described in Note 1 of Notes to Consolidated Financial Statements in our annual report filed on Form 10-K for the year ended December 31, 2005. We have identified our most critical accounting policies below that are important to the portrayal of our current financial condition and results of operations. Management has discussed the development and selection of these critical accounting policies with the audit committee of our board of directors, and the audit committee has reviewed the disclosures presented below.

Revenue Recognition

Sales of all metals products sold directly to smelters, including by-product metals, are recorded as revenues when title and risk of loss transfer to the smelter at forward prices for the estimated month of settlement. Sales from our Greens Creek and Lucky Friday units include significant value from by-product metals mined along with net values of each unit’s primary metal. Due to the time elapsed from the transfer to the smelter and the final settlement with the smelter, we must estimate the price at which our metals will be sold in reporting our profitability and cash flow. Recorded values are adjusted to month-end metals prices until final settlement. If a significant variance was observed in estimated metals prices or metal content compared to the final actual metals prices or content, our monthly results of operations could be affected. Sales of metals in products tolled, rather than sold to smelters, are recorded at contractual amounts when title and risk of loss transfer to the buyer. Third—party smelting, refinery costs and freight expense are recorded as a reduction of revenue.

Our 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.

Changes in the market price of metals significantly affect our revenues, profitability and cash flow. Metals prices can and often do fluctuate widely and are affected by numerous factors beyond our control, such as political and economic conditions; demand; forward selling by producers; expectations for inflation; central bank sales; custom smelter activities; the relative exchange rate of the U.S. dollar; purchases and lending; investor sentiment; and global mine production levels. The aggregate effect of these factors is impossible to predict. Because our revenue is derived from the sale of silver, gold, lead and zinc, our earnings are directly related to the prices of these metals.

Proven and Probable Ore Reserves

At least annually, management reviews the reserves used to estimate the quantities and grades of ore at our mines which management believes can be recovered and sold economically. Management’s calculations of proven and probable ore reserves are based on in-house engineering and geological estimates using current operating costs and metals prices. Periodically, management obtains external audits of reserves.

Since 2005, proven and probable ore reserves at our La Camorra mine have continued to decrease as the mine has exhibited lower ore grades and no significant additions to reserves have been returned from drilling on the La Camorra veins. Declining proven and probable ore reserves at a lower ore grade will have an impact on any decisions for longer-term plans at the La Camorra mine, and we will continue to assess whether remaining ounces can be economically extracted from the mine.

Reserve estimates will change as existing reserves are depleted through production and as production costs and/or metals prices change. A significant drop in metals prices may reduce reserves by making some portion of such ore uneconomic to develop and produce. Changes in reserves may also reflect that actual grades of ore processed may be different from stated reserve grades because of variation in grades in areas mined, mining dilution and other factors. Estimated reserves, particularly for properties that have not yet commenced production, may require revision based on actual production experience.

Declines in the market prices of metals, increased production or capital costs, reduction in the grade or tonnage of the deposit or an increase in the dilution of the ore or reduced recovery rates may render

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ore reserves uneconomic to exploit unless the utilization of forward sales contracts or other hedging techniques are sufficient to offset such effects. If our realized price for the metals we produce were to decline substantially below the levels set for calculation of reserves for an extended period, there could be material delays in the development of new projects, net losses, reduced cash flow, restatements or reductions in reserves and asset write-downs in the applicable accounting periods. Reserves should not be interpreted as assurances of mine life or of the profitability of current or future operations. No assurance can be given that the estimate of the amount of metal or the indicated level of recovery of these metals will be realized.

Depreciation and Depletion

The mining industry is extremely capital intensive. We capitalize property, plant and equipment, and depreciate these items consistent with industry standards. The cost of property, plant and equipment is charged to depreciation expense based on the estimated useful lives of the assets using straight-line and unit-of-production methods. Depletion is computed using the unit-of-production method. As discussed above, our estimates of proven and probable ore reserves may change, possibly in the near term, resulting in changes to depreciation, depletion and amortization rates in future reporting periods.

Impairment of Long-Lived Assets

Management reviews the net carrying value of all facilities, including idle facilities, on an annual basis or more frequently if conditions or assumptions materially change that could negatively impact any net carrying value. We estimate the net realizable value of each property based on the estimated undiscounted future cash flows that will be generated from operations at each property, the estimated salvage value of the surface plant and equipment and the value associated with property interests. These estimates of undiscounted future cash flows are dependent upon the future metals price estimates over the estimated remaining mine life. If undiscounted cash flows and the asset fair value are less than the carrying value of a property, an impairment loss is recognized.

Management’s estimates of metals prices, recoverable ore reserves and operating, capital and reclamation costs are subject to risks of change and uncertainties affecting the recoverability of our investment in various projects. Although management believes it has made a reasonable estimate of these factors based on current conditions and information, it is reasonably possible that changes could occur in the near term which could adversely affect management’s estimate of net cash flows expected to be generated from our operating properties and the need for asset impairment write-downs. All estimates and assumptions are inherently subjective to some extent and may be impacted by error or changing conventions in the methodology of their determination, or in changing industry conditions.

Environmental Matters

Our operations are subject to extensive federal, state and local environmental laws and regulations. The major environmental laws to which we are subject include, among others, the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA,” also known as the Superfund law). CERCLA can impose joint and several liability for cleanup and investigation costs, without regard to fault or legality of the original conduct, on current and predecessor owners and operators of a site, as well as those who generate, or arrange for the disposal of, hazardous substances. The risk of incurring environmental liability is inherent in the mining industry. We own or operate properties, or have previously owned and operated properties, used for industrial purposes. Use of these properties may subject us to potential material liabilities relating to the investigation and cleanup of contaminants and claims alleging personal injury or property damage as the result of exposures to, or release of, hazardous substances.

At our operating properties, we accrue costs associated with environmental remediation obligations in accordance with Statement of Financial Accounting Standards (SFAS) No. 143 “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires us to record a liability for the present value of our estimated environmental remediation costs and the related asset created with it in the period in which the liability is incurred. The liability will be accreted and the asset will be depreciated over the life of the related asset. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made.

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At our non-operating properties, we accrue costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable from a range of reasonable estimates in accordance with SFAS No. 5 “Accounting for Contingencies” and AICPA Statement of Position 96-1 “Environmental Remediation Liabilities.” Accruals for estimated losses from environmental remediation obligations have historically been recognized no later than completion of the remedial feasibility study for such facility and are charged to provision for closed operations and environmental matters.

We periodically review our accrued liabilities for costs of remediation as evidence becomes available indicating that our remediation liabilities have potentially changed. Such costs are based on management’s then current estimate of amounts expected to be incurred when the remediation work is performed within current laws and regulations. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.

Future closure, reclamation and environment-related expenditures are difficult to estimate in many circumstances due to the early stages of investigation, uncertainties associated with defining the nature and extent of environmental contamination, the uncertainties relating to specific reclamation and remediation methods and costs, application and changing of environmental laws, regulations and interpretations by regulatory authorities and the possible participation of other potentially responsible parties. Reserves for closure costs, reclamation and environmental matters totaled $66.6 million at September 30, 2006, and we anticipate that the majority of these expenditures relating to these reserves will be made over the next 30 years. It is reasonably possible that the ultimate cost of remediation could change in the future and that changes to these estimates could have a material effect on future operating results as new information becomes known. For environmental remediation sites known as of September 30, 2006, if the highest estimate from the range (based upon information currently available) were recorded, the total estimated liability would be increased by approximately $52.4 million. For additional information, see Note 5 of Notes to Interim Consolidated Financial Statements.

By-product Credits

Cash costs per ounce are consistent with how costs per ounce are calculated within the mining industry. Cash costs per ounce of silver include significant credits from by-product metals production, including gold, lead and zinc. Our current view of our proven and probable reserves indicates that our treatment of gold, lead and zinc as by-products at the Greens Creek and Lucky Friday units continues to be appropriate. However, management periodically assesses the relationships between metals produced to ensure that presentation of by-product credits in our calculation of cash costs per ounce remains appropriate.

Significant by-product credits are used in calculation of cash costs per ounce of silver at the Greens Creek and Lucky Friday units. For these operations, we view zinc, lead and gold strictly as by-products because:

• We have historically presented Greens Creek and Lucky Friday as producers primarily of silver, based on the original analysis that justified putting the project into production, and believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;

• Silver has historically represented a higher value than any other metal;

• Silver is the primary object of the cost structures at Greens Creek and Lucky Friday, which utilize selective mining methods for recovery of silver rather than bulk methods for recovery of lower-value base metals; and

• By-products include two other metals for Lucky Friday, and three other metals for Greens Creek.

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The values of all by-products per ounce of silver produced were:

	Three months ended September 30,				Nine months ended September 30,
	2006		2005		2006		2005
Greens Creek	$	16.92	$	10.99	$	18.05	$	9.96
Lucky Friday		11.77		4.04		9.52		5.11

Cash costs per ounce of silver or gold represent measurements that management uses to monitor and evaluate the performance of our mining operations that are not in accordance with GAAP. We believe cash costs per ounce of silver or gold produced provide management and investors an indication of net cash flow, after consideration of the realized price received for production sold. Management also uses this measurement for the comparative monitoring of performance of our mining operations. A reconciliation of this non-GAAP measure to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found under Reconciliation of Total Cash Costs (non-GAAP) to Costs of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP).

Currency and Related Risks in Venezuela

The functional currency for our operations in Venezuela remains the U.S. dollar. Accordingly, we translate our monetary assets and liabilities at the Venezuelan fixed exchange rate of bolivares (Bs.) 2,150 to $1.00, as well as our income and expenses, as the rate has not changed since March 2005. Exchanging our cash held in local currency into U.S. dollars can be done through specific governmental programs which have been limited and slow, or through the use of negotiable instruments on which we have incurred and may incur additional foreign currency losses. As a result, our cash balances denominated in Bs. that are maintained in Venezuela have increased from a U.S. dollar equivalent of approximately $1.1 million at December 31, 2005, to $14.3 million at September 30, 2006. Additionally, we will convert into Venezuelan currency the proceeds of Venezuelan exports made over the past 180 days, or approximately $31.2 million, through April 2007. During the third quarter of 2006, we exchanged the U.S. dollar equivalent of approximately $6.1 million at the official exchange rate of 2,150 Bs. to $1.00 for $4.8 million at the open market rate, incurring a foreign exchange loss for the difference. Although we are currently making appropriate applications through the Venezuelan government, our cash balances denominated in the Venezuelan bolivar may continue to grow and any future conversions may result in further losses when and if we decide to distribute money outside Venezuela.

Venezuela Value-added Taxes on Purchases

Value-added taxes (“VAT”) are assessed in Venezuela on purchases of materials and services. The current portion of outstanding VAT is recorded as an account receivable on our consolidated balance sheet, with a balance of $5.7 million (net of a reserve for anticipated discounts totaling $0.3 million) at September 30, 2006, and $7.7 million at December 31, 2005 (net of a reserve for anticipated discounts of $1.3 million). Classified as a non-current asset on our consolidated balance sheet at September 30, 2006, was $2.0 million in outstanding VAT (net of reserve for anticipated discounts totaling $1.0 million).

As an exporter from Venezuela, we are eligible for refunds from the government for payment of VAT, and we prepare a monthly filing to obtain this refund. Refunds are given by the government in the form of tax certificates, which are marketable in Venezuela. We received our most recent certificate from the Venezuelan government in October 2006, and we are reasonably current on collection of VAT refunds. While we believe that we will receive certificates for all outstanding VAT from the Venezuelan government, issuance of certificates is slow and the likelihood of recovery at our recorded value may diminish over time. We have established a reserve of 13.2% and 15.0% of face value at September 30, 2006 and December 31, 2005, respectively, with reserves established by our analysis of past collections and the likelihood of future collections.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158, among other things, will require us to:

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• Recognize the funded status of our defined benefit plans in our consolidated financial statements; and

• Recognize as a component of other comprehensive income/(loss) the actuarial gains and losses and prior service costs and credits that arise during the period but are not immediately recognized as components of net periodic benefit cost.

We will adopt SFAS No. 158 for the year ending December 31, 2006. At September 30, 2006 and December 31, 2005, the net amounts recognized on our consolidated balance sheet were assets of $15.0 million and $13.9 million, respectively. Based on preliminary actuarial estimates, we estimate an increase to noncurrent assets of approximately $2.0 million, with a corresponding adjustment to other comprehensive income. The adoption will not affect our results of operations.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. We are currently evaluating the potential impact of this statement on our consolidated financial statements.

In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits:

• Fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation;

• Clarifies which interest-only strips are not subject to the requirements of SFAS No. 133;

• Establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

• Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and

• Amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

SFAS No. 155 is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Currently, the adoption of SFAS No. 155 is not expected to have a material effect on our consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN No. 48”) “Accounting for Uncertainty in Income Taxes,” which will become effective for us beginning January 2007. FIN No. 48 clarifies the accounting for uncertainly in income taxes recognized in accordance with SFAS No. 109 “Accounting for Income Taxes,” prescribing a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. Currently, the adoption of FIN No. 48 is not expected to have a material effect on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We believe there has been no material change in our market risk since the end of our last fiscal year, with the exception of currency and related risks in Venezuela. In the normal course of business, we

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also face risks that are either nonfinancial or nonquantifiable (see Part II, Item 1A - “Risk Factors” in this report and Item 1 – “Business” and Item 1A – “Risk Factors” in our Form 10-K for the year ended December 31, 2005).

Cash

Exchange control regulations in Venezuela have limited our ability to repatriate cash and receive dividends or other distributions without substantial cost. At September 30, 2006 and December 31, 2005, we held the U.S. dollar equivalent of approximately $14.3 million and $1.1 million, respectively, denominated in the Venezuelan bolivar (2,150 Bs. to $1.00). Additionally, we will convert into Venezuelan currency the proceeds of Venezuelan exports made over the past 180 days, or approximately $31.2 million, through April 2007. Exchanging our cash held in local currency into U.S. dollars can be done through specific governmental programs, or through the use of negotiable instruments on which we have incurred and may incur additional foreign currency losses. During the third quarter of 2006, we exchanged the U.S. dollar equivalent of approximately $6.1 million at the official exchange rate of 2,150 Bs. to $1.00 for $4.8 million at the open market exchange rate, incurring a foreign exchange loss for the difference. Although we are making appropriate applications through the Venezuelan government, our cash balances denominated in Venezuelan bolivares may continue to grow and any future conversions may result in further losses when and if we decide to distribute money outside Venezuela.

Short-term Investments

Our short-term investments of $14.9 million consist of adjustable rate securities as of September 30, 2006, and were subject to changes in market interest rates and were sensitive to those changes. Our adjustable rate securities were subject to a weighted-average interest rate of 5.31% and mature over the next twelve months.

Other

At times, we 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. We use these instruments to reduce risk by offsetting market exposures.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2006, in ensuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2006, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

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Part II — Other Information
Hecla Mining Company and Subsidiaries

Item 1. Legal Proceedings

For information concerning legal proceedings, refer to Note 5 of Notes to Interim Consolidated Financial Statements, which is incorporated by reference into this Item 1.

Item 1A. Risk Factors

For information concerning Currency and Related Risks in Venezuela, refer to the La Camorra Segment discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference into this Item 1A. There have been no additional material changes to the Risk Factors set forth in Part I, Item 1A in our Form 10-K for the year ended December 31, 2005.

Item 5. Other Information

A. Holding Company Organizational Structure

Hecla Mining Company (“we” or “us”), a Delaware corporation organized on August 7, 2006 and formerly named Hecla Holdings Inc., is the successor issuer toHecla Limited, a Delaware corporation organized on March 21, 1983 and formerly named Hecla Mining Company (“Predecessor”), which is now a wholly-owned subsidiary as a result of Predecessor adopting a holding company organizational structure.

Pursuant to an Agreement and Plan of Reorganization dated November 8, 2006 (the “Merger Agreement”), among us, Predecessor, and Hecla Merger Sub Inc., a Delaware corporation (the “Merger Sub”), Predecessor reorganized into a holding company structure, effective as of the date of the Merger Agreement, whereby we became the holding company for Predecessor. The holding company organizational structure was effected by a merger (the “Merger”) pursuant to Section 251(g) of the Delaware General Corporation Law (the “DGCL”), which provides for the formation of a holding company structure without a vote of stockholders.

Prior to the Merger, we were a direct, wholly-owned subsidiary of Predecessor, and Merger Sub was a direct, wholly-owned subsidiary of us. In the Merger, Merger Sub merged with and into Predecessor, with Predecessor continuing as the surviving corporation. We and Merger Sub were organized for the sole purpose of implementing the holding company structure.

In accordance with the terms of the Merger Agreement, each outstanding share of Predecessor’s common stock, par value $0.25 per share (the “Predecessor Common Stock”), was converted into one share of our common stock, par value $0.25 per share (the “Registrant Common Stock”) and each outstanding share of Predecessor’s preferred stock, par value $0.25 per share (the “Predecessor Preferred Stock”), was converted into one share of our preferred stock, par value $0.25 per share (the “Registrant Preferred Stock”). As a result of the Merger, each stockholder of Predecessor became a holder of Registrant Common Stock and/or Registrant Preferred Stock, evidencing the same proportional interests in us and having the same designations, rights, powers and preferences and qualifications, limitations and restrictions as those securities that such stockholder held in Predecessor.

Immediately after the effectiveness of the Merger, on November 8, 2006, we filed a Certificate of Amendment to our Certificate of Incorporation changing our name from “Hecla Holdings Inc.” to “Hecla Mining Company,” and Predecessor filed a Certificate of Amendment to its Certificate of Incorporation changing its name from “Hecla Mining Company” to “Hecla Limited.” Also on November 8, 2006, we amended our Bylaws to reflect the name change.

Pursuant to an Assignment and Assumption Agreement dated November 8, 2006, between Predecessor as assignor and us as assignee (the “Assignment and Assumption Agreement”), and in connection with the Merger, we assumed Predecessor’s obligations under (i) certain option plans and stock incentive plans and for options and other rights to receive stock granted thereunder, (ii) certain other employee

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benefit plans, and (iii) employment agreements between Predecessor and its officers and certain other employees. The Assignment and Assumption Agreement appears as Exhibit 10.1 hereto and is incorporated herein by this reference. The other liabilities of Predecessor, including contingent liabilities, were not assumed by us in the Merger and therefore continue to be obligations of the Predecessor, and the assets of Predecessor were not transferred to us and therefore continue to be assets of Predecessor. The conversion of the shares of capital stock in the Merger occurred without an exchange of certificates. Accordingly, outstanding certificates formerly evidencing Predecessor Common Stock and Predecessor Preferred Stock are deemed to represent the same number of shares of Registrant Common Stock and Registrant Preferred Stock. Sales of Registrant Common Stock and Registrant Preferred Stock will continue to be reported on the New York Stock Exchange under the symbols “HL and HLPRB,” respectively, without interruption and with the same CUSIP numbers. The Merger constitutes a tax-free transaction to stockholders for federal income tax purposes.

In accordance with Section 251(g) of the DGCL, the provisions of our Certificate of Incorporation, as amended, including, without limitation, those relating to authorized capital stock, and our bylaws, as amended, are identical to those of Predecessor prior to the Merger (except for certain minor changes expressly permitted by the DGCL). Our directors and executive officers are the same individuals who were directors and executive officers of Predecessor prior to the Merger. Under the federal securities laws we (i) succeed as a “successor issuer” to effective registration statements of Predecessor on file with the Securities and Exchange Commission (“SEC”), (ii) remain eligible to use of various forms of registration statements under the Securities Act, including forms S-3, S-4 and S-8, and (iii) are considered a successor issuer to Predecessor with respect to the registration of Registrant Common Stock and Registrant Preferred Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As a result of the above-described reorganization, Predecessor’s executive officers and certain other employees have become our executive officers and employees. In order for the services of these individuals to be available to Predecessor, we and Predecessor have entered into a Management Services Agreement dated as of November 8, 2006, which appears as Exhibit 10.2 hereto and is incorporated herein by this reference. Under the Management Services Agreement, we have agreed to make available to Predecessor certain management services, including payroll, accounting, and legal services by our employees. In exchange, Predecessor will reimburse us for our out of pocket expenses, and will pay to us a fair and reasonable charge for our internal expenses such as overhead and salary that are allocable to the services we provided to Predecessor. Similarly, under the Management Services Agreement, Predecessor has agreed to provide services to us as we may reasonably request, on the same terms for the services we will provided to Predecessor. All payments between the parties to the Management Services Agreement will be settled periodically via intercompany transfer.

As part of the above-described reorganization, we entered into an Indemnification Agreement dated as of November 8, 2006, with our executive officers and the members of our board of directors. The Indemnification Agreement requires us, under the circumstances described therein, to indemnify advance expenses to and provide director’ and officers’ liability insurance to our executive officers and the members of our board of directors to the fullest extent permitted by law. A form of the Indemnification Agreement appears as Exhibit 10.7 hereto and is incorporated herein by this reference.

In connection with the foregoing, copies of the Merger Agreement, the Assignment and Assumption Agreement, our Certificate of Incorporation (as amended to date), and our By-laws (as amended to date), are also filed herewith as exhibits to this Form 10–Q.

B. Credit Facility Amendment

On November 8, 2006, we, along with Predecessor, signed an agreement amending Predecessor’s $30 million revolving credit facility to provide for our change to a holding company structure. As part of this amendment we also guaranteed Predecessor’s obligations under the revolving credit facility.

Pursuant to the terms of the Credit Agreement dated September 12, 2005, as amended on September 18, 2006 and November 8, 2006, by and among Predecessor, us (with respect to the Second Amendment), The Bank of Nova Scotia and NM Rothschild & Sons Limited (the “Credit Agreement”),

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the credit facility extends for a term ending in September 2008, with the right to extend the facility for additional one-year term, on terms acceptable to Predecessor and the lenders. In accordance with the terms of the Credit Agreement, Predecessor has pledged its participating interest in the Greens Creek Joint Venture as collateral to secure its obligations under the Credit Agreement.

A division of The Bank of Nova Scotia is a customer of Predecessor for a portion of Predecessor’s metal sales. During 2004 and 2005, metal sales to The Bank of Nova Scotia represented approximately 15.7% and 32.5%, respectively, of total sales.

The Credit Agreement and the First Amendment to Credit Agreement are each incorporated herein by reference as Exhibit 10.9 and Exhibit 10.10, respectively, and the Second Amendment to the Credit Agreement (“Second Amendment”) and the Parent Guaranty (“Guaranty”) are attached hereto as Exhibits 10.11 and 10.12, respectively, and each is incorporated herein by reference.

The Credit Agreement, First Amendment, Second Amendment, and Guaranty have been included to provide you with information regarding their terms. They are not intended to provide any other factual information about us. Such information can be found elsewhere in other public filings we have made with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

The Credit Agreement, First Amendment, Second Amendment and Guaranty contain representations and warranties we made to the lenders. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that we have exchanged in connection with signing the Credit Agreement, the First Amendment, the Second Amendment and the Guaranty. While we do not believe that they contain information securities laws require us to publicly disclose other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Credit Agreement, First Amendment, Second Amendment and Guaranty. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in important part by the underlying disclosure schedules. These disclosure schedules contain information that has been included in our general prior public disclosures, as well as potential additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Credit Agreement, First Amendment, Second Amendment, and/or Guaranty, which subsequent information may or may not be fully reflected in public disclosures.

C. New Executive Officer

On November 6, 2006, Predecessor’s Board of Directors (the “Board”), who are now also our Board of Directors, appointed Mr. Jay S. Layman as Vice President – Corporate Development. Mr. Layman has 13 years of experience in project evaluation and development. Since September 2004, he has been President for Tactical & Strategic Advisory Services LLC in Littleton, Colorado. Prior to that, Mr. Layman worked for Quadrem in Perth, Australia, where he was Regional Vice President Australasia from January 2003 to August 2004 and Regional Vice President Asia from October 2001 to January 2003. Prior to that, Mr. Layman worked for Newmont Gold Company as a Project Manager from January 1997 to July 1998 and as a Senior Manager of Strategic Planning from July 1998 to October 2001. Mr. Layman holds a Bachelor of Science in Mechanical Engineering and Bachelor of Arts in Business Administration from Washington State University and an MBA in Finance from Eastern Washington University. In February 2005 and August 2005, Mr. Layman provided consulting services on business development matters to us. In connection with such services, we paid $17,000 to Mr. Layman. Neither Quadrem nor Newmont Gold Company are related to us.

The Board also approved a Change-in-Control Agreement (“Employment Agreement”) and Indemnification Agreement with Mr. Layman effective November 6, 2006. Mr. Layman’s Employment Agreement and Indemnification Agreement are substantially identical to prior employment agreements and indemnification agreements entered into with our other executive officers. As part of Mr. Layman’s employment, he will receive a base salary of $160,000 and is eligible for an annual bonus with a target of 40% of his base salary, with the opportunity to receive an additional bonus depending on our performance. Mr. Layman will also be eligible to participate in our Long-Term Incentive Plan, on terms

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approved by the Board, and other employee benefit plans. The material terms of the Employment Agreement are set forth in Exhibit 10.2 to our Quarterly Report on Form 10-Q, filed with the SEC for the period ended June 30, 2003, and is hereby incorporated by reference. The material terms of the Indemnification Agreement are set forth in Exhibit 10.4 of our Annual Report on Form 10-K, filed with the SEC for the period ended December 31, 2004, and is hereby incorporated by reference.

In connection with his appointment, Mr. Layman will receive 10,000 shares of restricted common stock under the terms of our Key Employee Deferred Compensation Plan. The first 5,000 shares will vest on November 6, 2007, and the remainder will vest on November 6, 2008. However, should Mr. Layman be terminated by the Company for any reason other than cause before October 1, 2007, the restricted stock shares will vest immediately. Under our 1995 Stock Incentive Plan, Mr. Layman will also receive nonqualified stock options to purchase up to 20,000 shares of our common stock at an exercise price to be determined on November 6, 2006, by taking the mean between the highest and lowest reported sales prices of our common stock on the New York Stock Exchange on November 6, 2006. The first 10,000 nonqualified stock options will vest on May 6, 2007, and the remainder will vest on November 6, 2007.

D. Executive Officer Title Changes

On November 6, 2006, the Board appointed Ronald W. Clayton to the position of Senior Vice President — Operations. Mr. Clayton has been our Vice President — North American Operations since 2002, and has been with us for 17 years. The Board also appointed Philip C. Wolf as Senior Vice President and General Counsel. Mr. Wolf joined us early in 2006 as Vice President and General Counsel. In addition, Michael H. Callahan, our Vice President — Corporate Development, will retain the presidency of our Venezuelan operations and in addition will serve as Vice President with oversight of our growth initiatives in north Idaho’s Silver Valley. Mr. Callahan was originally appointed Vice President in 2002 and has been with us for 15 years.

Item 6. Exhibits

See the Exhibit Index to this Form 10-Q for the list of exhibits.

Items 2, 3 and 4 of Part II are not applicable and are omitted from this report.

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Hecla Mining Company and Subsidiaries

SIGNATURES

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

		HECLA MINING COMPANY (Registrant)
Dated: November 9, 2006	By:	/s/ Phillips S. Baker, Jr.
		Phillips S. Baker, Jr., President and Chief Executive Officer
Dated: November 9, 2006	By:	/s/ Lewis E. Walde
		Lewis E. Walde, Vice President and Chief Financial Officer

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Hecla Mining Company and Wholly Owned Subsidiaries

Form 10-Q – September 30, 2006

Index to Exhibits

2.1	Agreement and Plan of Reorganization dated November 8, 2006, among Hecla Mining Company, Hecla Holdings Inc. and Hecla Merger Sub Inc.*
3.1(a)	Certificate of Incorporation of the Registrant.*
3.1(b)	Certificate of Amendment to Certificate of Incorporation of Registrant.*
3.2(a)	Bylaws of the Registrant.*
3.2(b)	Amended and Restated Bylaws of Registrant.*
4.1(a)	Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock of the Registrant.*
4.1(b)	Certificate of Designations, Preferences and Rights of Series B Cumulative Convertible Preferred Stock of the Registrant.*
10.1	Assignment and Assumption Agreement dated November 8, 2006, between Hecla Mining Company and Hecla Holdings Inc.*
10.2	Management Services Agreement dated November 8, 2006, between Registrant and Hecla Limited (formerly known as Hecla Mining Company).*
10.3	Employment Agreement dated September 1, 2006, between Hecla Limited (formerly known as Hecla Mining Company) and Mr. Dean McDonald, incorporated by reference herein to exhibit 10.2 to Registrant’s Quarterly Report on Form 10–Q for the quarter ended June 30, 2003 (File No. 1–8491). (1)
10.4	Indemnification Agreement dated September 1, 2006, between Hecla Limited (formerly known as Hecla Mining Company) and Mr. Dean McDonald, incorporated by reference herein to exhibit 10.4 to Registrant’s Annual Report on Form 10–K for the period ended December 31, 2004 (File No. 1–8491). (1)
10.5	Employment Agreement dated November 6, 2006, between Hecla Limited (formerly known as Hecla Mining Company) and Mr. Jay S. Layman, incorporated by reference herein to exhibit 10.2 to Registrant’s Quarterly Report on Form 10–Q for the quarter ended June 30, 2003 (File No. 1–8491). (1)
10.6	Indemnification Agreement dated September 1, 2006, between Hecla Limited (formerly known as Hecla Mining Company) and Mr. Jay S. Layman,, incorporated by reference herein to exhibit 10.4 to Registrant’s Annual Report on Form 10–K for the period ended December 31, 2004 (File No. 1–8491). (1)
10.7	Form of Indemnification Agreement dated November 8, 2006, between Registrant and Phillips S. Baker, Jr., Philip C. Wolf, Ronald W. Clayton, Lewis E. Walde, Michael H. Callahan, Dean McDonald, Jay S. Layman, Vicki Veltkamp, Ted Crumley, John H. Bowles, David J. Christensen, Charles L. McAlpine, George R. Nethercutt, Jr., Jorge E. Ordonez C. and Anthony P. Taylor. (1)*
10.8	Form of Waiver and Consent dated November 8, 2006, between Hecla Limited (formerly known as Hecla Mining Company) and Phillips S. Baker, Jr., Philip C. Wolf, Ronald W. Clayton, Lewis E. Walde, Michael H. Callahan, Dean McDonald, Jay S. Layman and Vicki Veltkamp. (1)*
10.9	Credit Agreement dated September 12, 2005, by and among Hecla Limited (formerly known as Hecla Mining Company), as Borrower, and The Bank of Nova Scotia, as the Administrative Agent for the Lenders and NM Rothschild & Sons Limited, as the Technical Agent for the Lenders. Filed as exhibit 10.1 to Registrant’s Current Report on Form 8–K filed on September 14, 2005 (File No. 1–8491), and incorporated herein by reference.

10.10	First Amendment to Credit Agreement dated September 18, 2006, by and between Hecla Limited (formerly known as Hecla Mining Company), as Borrower, and The Bank of Nova Scotia, as the Administrative Agent for the Lenders. Filed as exhibit 10.2 to Registarant’s Current Report on Form 8–K filed on September 19, 2006 (File No. 1–8491), and incorporated herein by reference.
10.11	Second Amendment to Credit Agreement dated November 8, 2006, by and among Registrant, Hecla Limited (formerly known as Hecla Mining Company), as Borrower and The Bank of Nova Scotia, as the Administrative Agent for the Lenders.*
10.12	Parent Guaranty dated November 8, 2006, from the Registrant in favor of The Bank of Nova Scotia, as the Administrative Agent for the Lenders.*
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

(1) Indicates a management contract or compensatory plan or arrangement.

* Filed herewith

EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION (“Agreement”), dated as of November 6, 2006, is among Hecla Mining Company, a Delaware corporation (the “Company”), Hecla Holdings Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Holdings”), and Hecla Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Holdings (“Merger Sub”).

RECITALS

WHEREAS, as of the close of business on November 3, 2006, the authorized capital stock of the Company consisted of (i) 400,000,000 shares of common stock, par value $0.25 per share (“Company Common Stock”), of which 119,516,124 shares were issued and outstanding, 3,096,963 shares were reserved for issuance under the Option Plans (as defined below) and upon exercise of outstanding Options (as defined below), and 57,333 shares were held in treasury, and (ii) 5,000,000 shares of preferred stock, par value $0.25 per share (“Company Preferred Stock”), of which 157,816 shares were issued and outstanding.

WHEREAS, as of the date hereof, the authorized capital stock of Holdings consists of (i) 400,000,000 shares of common stock, par value $0.25 per share (the “Holdings Common Stock”), of which 1,000 shares are issued and outstanding and no shares are held in treasury, and (ii) 5,000,000 shares of preferred stock, par value $0.25 per share (the “Holdings Preferred Stock”), of which no shares are issued and outstanding.

WHEREAS, as of the date hereof, the authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.25 per share (“Merger Sub Common Stock”), of which 1,000 shares are issued and outstanding and no shares are held in treasury.

WHEREAS, the designations, rights, powers and preferences, and the qualifications, limitations and restrictions thereof, of the Holdings Preferred Stock and the Holdings Common Stock are the same as those of the Company Preferred Stock and the Company Common Stock, respectively.

WHEREAS, the Certificate of Incorporation and the Bylaws of Holdings immediately after the Effective Time (as hereinafter defined) will contain provisions identical to the Certificate of Incorporation and the Bylaws of the Company immediately before the Effective Time (other than with respect to matters excepted by Section 251(g) of the General Corporation Law of the State of Delaware (the “DGCL”)).

WHEREAS, the directors of the Company immediately prior to the Merger (as hereinafter defined) will be the directors of Holdings as of the Effective Time.

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WHEREAS, the officers of the Company immediately prior to the Merger will be the officers of Holdings as of the Effective Time.

WHEREAS, Holdings and Merger Sub are newly formed Delaware corporations organized for the purpose of participating in the transactions herein contemplated.

WHEREAS, the Company desires to create a new holding company structure by merging Merger Sub with and into the Company with the Company being the surviving corporation and converting each outstanding share of Company Common Stock into one share of Holdings Common Stock, and each outstanding share of Company Preferred Stock into one share of Holdings Preferred Stock, all in accordance with the terms of this Agreement.

WHEREAS, the Boards of Directors of Holdings, Merger Sub and the Company have approved this Agreement and the merger of Merger Sub with and into the Company upon the terms and subject to the conditions set forth in this Agreement (the “Merger”).

WHEREAS, pursuant to authority granted by the Board of Directors of the Company, the Company will, immediately prior to the Effective Time, contribute to the capital of Holdings any shares of Company Common Stock then held by the Company in its treasury.

WHEREAS, the parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”), and to cause the Merger to qualify as a reorganization under the provisions of Section 368(a) of the Code.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Company, Holdings and Merger Sub hereby agree as follows:

ARTICLE I.

THE MERGER

Section 1.1The Merger. In accordance with Section 251(g) of the DGCL and subject to and upon the terms and conditions of this Agreement, Merger Sub shall, at the Effective Time, be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation. The Company as the surviving corporation after the Merger is hereinafter sometimes referred to as the “Surviving Corporation.” At the Effective Time, the effect of the Merger shall be as provided in Section 259 of the DGCL.

Section 1.2Effective Time. The Merger shall become effective upon the filing of a copy of this Agreement or a Certificate of Merger relating hereto with the Secretary of State of the State of Delaware (the time of such filing being referred to herein as the “Effective Time”).

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Section 1.3Amended Certificate of Incorporation of the Surviving Corporation. From and after the Effective Time, the Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended as set forth below, and as so amended, shall thereafter continue in full force and effect as the certificate of incorporation of the Surviving Corporation until thereafter amended as provided by law, and as so amended, shall constitute the Amended Certificate of Incorporation of the Surviving Corporation.

(a) Article I shall be amended in its entirety to read as follows:

“The name of the Corporation shall be HECLA LIMITED”.

(b) Article IV thereof shall be amended so that the first paragraph reads in its entirety as follows:

“The aggregate number of all classes of shares which the Corporation shall have the authority to issue is one thousand (1,000) shares of common stock, par value $0.25 per share (the “Common Stock”).”

(c) Article XI shall be restated so as to read in its entirety as follows:

“Any act or transaction by or involving the Corporation, other than the election or removal of directors of the Corporation, that requires for its adoption under the General Corporation Law of the State of Delaware or this certificate of incorporation the approval of the stockholders of the Corporation shall, pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, require, in addition, the approval of the stockholders of Hecla Holdings Inc., a Delaware corporation, or any successor thereto by merger, by the same vote that is required by the General Corporation Law of the State of Delaware and/or this certificate of incorporation.”

Section 1.4Bylaws. From and after the Effective Time, the Bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable law.

Section 1.5Directors. The directors of the Company immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and will hold office from the Effective Time until their successors are duly elected or appointed and qualified in the manner provided in the Certificate of Incorporation and the Bylaws of the Surviving Corporation or as otherwise provided by law.

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Section 1.6Officers. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and will hold office from the Effective Time until their successors are duly elected or appointed and qualified in the manner provided in the Certificate of Incorporation and the Bylaws of the Surviving Corporation or as otherwise provided by law.

Section 1.7Additional Actions. Subject to the terms of this Agreement, the parties hereto shall take all such reasonable and lawful action as may be necessary or appropriate in order to effectuate the Merger and to comply with the requirements of Section 251(g) of the DGCL. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of Merger Sub or the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of each of Merger Sub and the Company, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of Merger Sub and the Company or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

Section 1.8Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Holdings, Merger Sub, the Company or the holder of any of the following securities:

(a)Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly issued, fully paid and nonassessable share of Holdings Common Stock.

(b)Each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly issued, fully paid and nonassessable share of Holdings Preferred Stock.

(c)Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and thereafter represent one duly issued, fully paid and nonassessable share of common stock, par value $0.25 per share, of the Surviving Corporation.

(d)Each share of Holdings Common Stock owned by the Company immediately prior to the Merger shall automatically be canceled and retired and shall cease to exist.

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(e)From and after the Effective Time, holders of certificates formerly evidencing Company Common Stock and Company Preferred Stock shall cease to have any rights as stockholders of the Company, except as provided by law; provided, however, that such holders shall have the rights set forth in Section 1.9 herein.

Section 1.9No Surrender of Certificates; Stock Transfer Books. At the Effective Time, the designations, rights, powers and preferences, and qualifications, limitations and restrictions thereof, of the capital stock of Holdings will, in each case, be identical with those of the Company immediately prior to the Effective Time. Accordingly, until thereafter surrendered for transfer or exchange in the ordinary course, each outstanding certificate that, immediately prior to the Effective Time, evidenced Company Common Stock and Company Preferred Stock shall, from the Effective Time, be deemed and treated for all corporate purposes to evidence the ownership of the same number of shares of Holdings Common Stock and Holdings Preferred Stock, respectively.

Section 1.10Plan of Reorganization. This Agreement is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g). Each party hereto shall use its commercially reasonable efforts to cause the Merger to qualify, and will not knowingly take any actions or cause any actions to be taken which could reasonably be expected to prevent the Merger from qualifying, as a reorganization within the meaning of Section 368(a) of the Code.

ARTICLE II.

ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER

Section 2.1Assumption of Options. At the Effective Time, all unexercised and unexpired options to purchase Company Common Stock (“Options”) then outstanding, under the Hecla Mining Company 1995 Stock Incentive Plan (the “1995 Plan”) and Hecla Mining Company Key Employee Deferred Compensation Plan (the “2002 Plan” and, together with the 1995 Plan, the “Option Plans”), and any other plans of the Company in existence as of the Effective Time, which allows the purchase or grant of Company Common Stock, whether or not then exercisable, will be assumed by Holdings. Each Option so assumed by Holdings under this Agreement will continue to have, and be subject to, the same terms and conditions as set forth in the applicable Option Plan and any agreements thereunder immediately prior to the Effective Time (including, without limitation, the vesting schedule (without acceleration thereof by virtue of the Merger and the transactions contemplated hereby) and per share exercise price, except that each Option will be exercisable (or will become exercisable in accordance with its terms) for that number of shares of Holdings Common Stock equal to the number of shares of Company Common Stock that were subject to such Option immediately prior to the Effective Time. The conversion of any Options which are “incentive stock options” within the meaning of Section 422 of the Code into options to purchase Holdings Common Stock shall be made in a manner consistent with Section 424(a) of the Code so as not to constitute a “modification” of such Options within the meaning of Section 424 of the Code.

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Section 2.2Assumption of Option Plans, Stock Incentive Plans and Other Agreements. Holdings and the Company hereby agree that they will, at or promptly following the Effective Time, execute, acknowledge and deliver an assignment and assumption agreement (the “Assignment and Assumption Agreement”) pursuant to which, from and after the Effective Time, the Company will assign to Holdings, and Holdings will assume and agree to perform, all obligations of the Company pursuant to: (i) Option Plans; (ii) any other employee and executive compensation plans pursuant to which the Company is obligated to, or may issue equity securities to its directors, officers, or employees (collectively, all such plans are listed on Schedule A hereto and are referred to as “Stock Incentive Plans”); (iii) each stock option agreement and/or similar agreement entered into pursuant to the Option Plans or the Stock Incentive Plans, and each outstanding Option granted thereunder; and (iv) the other agreements (the “Other Agreements”) listed on Schedule A hereto. At the Effective Time, the Option Plans, Stock Incentive Plans and the Other Agreements shall each be automatically amended as necessary to provide that references to the Company in such agreements shall be read to refer to Holdings.

Section 2.3Reservation of Shares. On or prior to the Effective Time, Holdings will reserve sufficient shares of Holdings Common Stock to provide for the issuance of Holdings Common Stock under the Option Plans and the Stock Incentive Plans, including upon exercise of the Options outstanding under the Option Plans.

ARTICLE III.

CONDITIONS OF MERGER

Section 3.1Conditions Precedent. The obligations of the parties to this Agreement to consummate the Merger and the transactions contemplated by this Agreement shall be subject to fulfillment or waiver by the parties hereto at or prior to the Effective Time of each of the following conditions:

(a)        No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order that is in effect shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits or makes illegal the consummation of the Merger or the transactions contemplated hereby.

(b)        The Board of Directors of the Company shall have received evidence in form and substance reasonably satisfactory to it indicating that holders of Company Common Stock and Company Preferred Stock will not recognize gain or loss for United States federal income tax purposes as a result of the merger.

(c)        All third party consents and approvals required, or deemed by the Board of Directors of the Company advisable, to be obtained under any note, bond, mortgage, deed of trust, security interest, indenture, lease, license, contract, agreement, exchange membership, exchange allocation, plan or instrument or obligation to which the Company or any subsidiary or affiliate of the Company is a party, or by which the Company or any subsidiary or affiliate of the Company, or any property of the Company or any subsidiary or affiliate of the Company may be bound, in connection with the Merger and the transactions contemplated thereby, shall have been obtained by the Company or its subsidiary or affiliate, as the case may be.

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ARTICLE IV.

COVENANTS

Section 4.1Election of Directors. Effective as of the Effective Time, the Company, in its capacity as the sole stockholder of Holdings, will, if necessary to comply with Section 251(g) of the DGCL, cause the board of directors of the Holdings to effect such amendments to the bylaws of Holdings as are necessary to increase the number of directors of Holdings to equal the number of directors of the Company immediately prior to the Effective Time, remove each of the then directors of Holdings, and elect each person who is then a member of the board of directors of the Company as a director of Holdings, each of whom shall serve until his successor shall have been elected and qualified in accordance with the Certificate of Incorporation of Holdings.

Section 4.2The Option Plans and the Stock Incentive Plans. The Company and Holdings will take or cause to be taken all actions necessary or desirable in order for Holdings to assume the Option Plans and the Stock Incentive Plans, each stock option or similar agreement entered into pursuant thereto, and each Option granted thereunder, all to the extent deemed appropriate by the Company and Holdings and permitted under applicable law.

Section 4.3Insurance. Holdings shall procure insurance or cause the execution of the insurance policies of the Company such that, upon consummation of the Merger, Holdings shall have insurance coverage that is substantially identical to the insurance coverage held by the Company immediately prior to the Merger.

Section 4.4Assumption of Agreements. The Company and Holdings will take or cause to be taken all actions necessary or desirable in order for Holdings to assume and perform the obligations of the Company under the Other Agreements, all to the extent deemed appropriate by the Company and Holdings and permitted under applicable law.

Section 4.5Contribution of Treasury Stock. Immediately prior to the Effective Time, the Company will contribute to the capital of Holdings any shares of Company Common Stock then held in the treasury of the Company.

ARTICLE V.

TERMINATION AND AMENDMENT

Section 5.1Termination. This Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time prior to the Effective Time by action of the Board of Directors of the Company or the Board of Directors of Merger Sub if such Board of Directors should determine that for any reason the completion of the transactions provided for herein would be inadvisable or not in the best interest of such corporation or its stockholders. In the event of such termination and abandonment, this Agreement shall become void and neither the Company nor Merger Sub nor their respective stockholders, directors or officers shall have any liability with respect to such termination and abandonment.

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Section 5.2Amendment. At any time prior to the Effective Time, this Agreement may, to the extent permitted by the DGCL, be supplemented, amended or modified by the mutual consent of the Boards of Directors of the parties to this Agreement.

ARTICLE VI.

MISCELLANEOUS PROVISIONS

Section 6.1            Governing Law. This Agreement shall be governed by and construed and enforced under the laws of the State of Delaware.

Section 6.2           Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement.

Section 6.3           Entire Agreement. This Agreement, including the Schedules attached hereto, together with the Assignment and Assumption Agreement constitute the entire agreement and supersede all other agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement may not be amended or supplemented except by a written document executed by the parties to this Agreement.

Section 6.4           Severability. The provisions of this Agreement are severable, and in the event any provision hereof is determined to be invalid or unenforceable, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof.

IN WITNESS WHEREOF, the Company, Holdings and Merger Sub have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

HECLA MINING COMPANY
By:	/s/ Phillips S. Baker, Jr.
	Phillips S. Baker, Jr. President and CEO

HECLA HOLDINGS INC.
By:	/s/ Philip C. Wolf
	Philip C. Wolf Vice President

HECLA MERGER SUB INC.
By:	/s/ Lewis E. Walde
	Lewis E. Walde Vice President

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CERTIFICATE OF THE SECRETARY

OF

HECLA MERGER SUB INC.

I, Philip C. Wolf, the Secretary of Hecla Merger Sub Inc., a Delaware corporation (the “Corporation”), hereby certify that the Agreement and Plan of Reorganization (the “Agreement”) to which this certificate is attached, after having been duly approved by the Board of Directors of the Corporation, was then submitted to the sole stockholder of the Corporation, which stockholder adopted and approved the Agreement by its written consent thereto given in accordance with Section 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the 6^th day of November 2006.

HECLA MERGER SUB INC.
By:	/s/ Philip C. Wolf
	Philip C. Wolf Secretary

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CERTIFICATE OF THE SECRETARY

OF

HECLA MINING COMPANY

I, Philip C. Wolf, the Secretary of Hecla Mining Company, a Delaware corporation (the “Corporation”), hereby certify that the Agreement and Plan of Reorganization to which this certificate is attached has been adopted by the Board of Directors of the Corporation pursuant to Section 251(g) of the General Corporation Law of the State of Delaware and that the conditions specified in the first sentence of such subsection have been satisfied.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the 6^th day of November 2006.

HECLA MINING COMPANY
By:	/s/ Philip C. Wolf
	Philip C. Wolf Secretary

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SCHEDULE A

Agreements to be Assumed by Hecla Holdings Inc.

Stock and Stock Incentive Plans

Hecla Mining Company Key Employee Deferred Compensation Plan

Non-Qualified Stock Option Agreement (under the Key Employee Deferred Compensation Plan)

Hecla Mining Company 1995 Stock Incentive Plan

Hecla Mining Company Stock Plan for Nonemployee Directors

Other Agreements

Hecla Mining Company Retirement Plan

Hecla Mining Company Capital Accumulation Plan (401(k) Plan)

Employment Agreements with the following individuals:

a. Phillips S. Baker, Jr.

b. Ronald W. Clayton

c. Vicki Veltkamp

d. Lewis E. Walde

e. Michael H. Callahan

f. Philip C. Wolf

g. Dean McDonald

h. Jay S. Layman

i. Scott Hartman

j. Michael D. Dexter

k. Don Gray

l. Rich Appling

m. George Lytle

Performance Pay Compensation Plan (Short-Term Plan)

Executive and Senior Management Long-Term Performance Incentive Plan

Supplemental Excess Retirement Plan

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EX-3.1

Exhibit 3.1

CERTIFICATE OF INCORPORATION

OF HECLA HOLDINGS INC.

ARTICLE I.

Name

The name of the Corporation shall be HECLA HOLDINGS INC.

ARTICLE II.

Registered Office

The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III.

Purpose

The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE IV.

Capital Stock

Section 1. Authorized Capital Stock. The Corporation shall be authorized to issue two classes of shares of Capital Stock to be designated, respectively, “Preferred Stock” and “Common Stock”; the total number of shares of capital stock which the Corporation shall have authority to issue is 405,000,000; the total number of shares of Preferred Stock shall be 5,000,000, and each such share shall have a par value of $0.25; the total number of shares of Common Stock shall be 400,000,000, and each such share shall have a par value of $0.25.

Section 2. Issuance of Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (hereinafter referred to in this Certificate of Incorporation as the “Board”) is hereby authorized to fix the voting rights, if any, designations, powers, preferences and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any unissued series of Preferred Stock; and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding).

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Section 3. No Preemptive Rights. Without limiting the power of the Corporation to grant such rights by private contract, no holders of stock of the Corporation shall be entitled as such, as a matter of right, to the preemptive right to purchase or subscribe for any stock which the Corporation may issue or sell, whether or not exchangeable for any stock of the Corporation and whether out of unissued shares authorized by this Certificate of Incorporation as originally filed, or by any amendment hereof, or out of shares of stock of the Corporation acquired by it after the issuance thereof, and whether issued for cash, labor performed, personal property of any kind, including securities of other corporations, real property or interest therein, nor shall any holder of any shares of the capital stock of the Corporation be entitled as such, as a matter of right, to purchase or subscribe for any obligation which the Corporation may issue or sell which shall be attached or appurtenant to any warrant or warrants or any other instrument or instruments that shall confer upon the holder or holders of such obligation the right to subscribe for or purchase from the Corporation any shares of its capital stock.

Section 4. Voting Rights. Except as otherwise provided by law or by the resolution or resolutions adopted by the Board designating the rights, powers and preferences of any series of Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share held. Whenever this Certificate of Incorporation or the By-Laws of the Corporation shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (such capital stock is hereinafter referred to in this Certificate of Incorporation as “Voting Stock”), voting together as a single class, for the taking of corporate action: (i) such affirmative vote shall be in addition to any other affirmative vote required by law or by the resolution or resolutions designating the rights, powers and preferences of any outstanding series of Preferred Stock; and (ii) each outstanding share of Common Stock shall be entitled to one vote and each outstanding share of each series of Preferred Stock which is Voting Stock shall be entitled to the number of votes to which it is generally entitled, pursuant to the resolution or resolutions designating the rights, powers and preferences of such series of Preferred Stock, in the election of directors.

ARTICLE V

By-Laws

In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the By-Laws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board; provided, however that, notwithstanding anything contained in this Certificate of Incorporation or the By-Laws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the By-Laws which is substantially identical to and/or implements the last sentence of Article IV, or Articles VI, VII or VIII, of this Certificate of Incorporation or (ii) alter, amend or repeal any provision of this proviso to Article V.

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ARTICLE VI.

Board of Directors

Section 1. Number, Election and Terms. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which, subject to any right of the holders of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances shall consist of not less than five nor more than nine persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board pursuant to a resolution adopted by a majority of the entire Board. The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Shareholders, the term of office of the second class to expire at the 1985 Annual Meeting of Shareholders and the term of office of the third class to expire at the 1986 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after their election.

Section 2. Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director.

Section 3. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of the Voting Stock, voting together as a single class.

Section 4. Amendment, Repeal, etc. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VI.

ARTICLE VII.

Actions by Shareholders

Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board. Notwithstanding anything contained in this Certificate of Incorporate to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII.

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ARTICLE VIII.

Certain Business Combinations

Section 1. Vote Required for Certain Business Combinations.

A.   Higher Vote for Certain Business Combinations. Except as otherwise expressly provided in Section 2 of this Article VIII:

(i)any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (a) any Interested Shareholder (as hereinafter defined) or (b) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Shareholder; or

(ii)any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as herein defined) of $1,000,000 or more; or

(iii)the issuance or transfer by the Corporation of any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any subsidiary to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more; or

(iv)the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Shareholder or any Affiliate of any Interested Shareholder; or

(v)any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Shareholder or any affiliate of any Interested Shareholder;

shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise.

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B.   Definition of “Business Combination”. The term “Business Combination” as used in this Article VIII shall mean any transaction which is referred to in any one or more of clauses (i) through (v) of paragraph A of this Section 1.

Section 2. When Higher Vote is Not Required. The provisions of Section 1 of this Article VIII shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any resolution or resolutions designating the rights, powers and preferences of any outstanding series of Preferred Stock, if all of the conditions specified in either of the following paragraphs A and B are met (it being intended that in the case of a Business Combination not involving any cash or consideration other than cash to be received by the holders of each class or series of outstanding Voting Stock (other than Institutional Voting Stock, as hereinafter defined), the provisions of such Section 1 shall not be applicable only if the condition specified in the following paragraph A is met)”

A.   Approval by Continuing Directors. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined).

B.   Price and Procedure Requirements. All of the following conditions shall have been met:

(i)The aggregate amount of the cash and the Fair Market Value (as hereinafter defined) as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest of the following:

(a)  (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of Common Stock acquired by it (1) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or (2) in the transaction in which it became an Interested Shareholder, whichever is higher;

(b)  the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Shareholder became an Interested Shareholder (such latter date is referred to in this Article VIII as the “Determination Date”), whichever is higher; and

(c)  (if applicable) the price per share equal to the Fair Market Value per share of Common Stock on the Announcement Date or the Determination Date, whichever is higher, multiplied by the ratio of (1) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of Common Stock acquired by it within the two-year period immediately prior to the Announcement Date to (2) the Fair Market Value per share of Common Stock on the first day in such two-year period upon which the Interested Shareholder acquired any shares of Common Stock.

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(ii)The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any other series of outstanding Voting Stock (other than Institutional Voting Stock, as hereinafter defined) shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph B (ii) shall be required to be met with respect to every series of outstanding Voting Stock (other than Institutional Voting Stock), whether or not the Interested Shareholder has previously acquired any shares of a particular series of Voting Stock):

(a)  (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of such series of Voting Stock acquired by it (1) within the two-year period immediately prior to the Announcement Date or (2) in the transaction in which it became an Interested Shareholder, whichever is higher;

(b)  (if applicable) the highest preferential amount per share to which the holders of shares of such series of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(c)  the Fair Market Value per share of such series of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and

(d)  (if applicable) the price per share equal to the Fair Market Value per share of such series of Voting Stock on the Announcement Date or the Determination Date, whichever is higher, multiplied by the ratio of (1) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder for any shares of such series of Voting Stock acquired by it within the two-year period immediately prior to the Announcement Date to (2) the Fair Market Value per share of such series of Voting Stock on the first day in such two-year period upon which the Interested Shareholder acquired any shares of such series of Voting Stock.

(iii)The consideration to be received by holders of a particular class (in the case of Common Stock) or series (in the case of Preferred Stock of outstanding Voting Stock shall be in cash or in the same form as the Interested Shareholder has previously paid for shares of such class or series of Voting Stock. If the Interested Shareholder has paid for shares of any class or series of Voting Stock with varying forms of consideration, the form of consideration for such class or series of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class or series of Voting Stock previously acquired by it.

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(iv)After such Interested Shareholder has become an Interested Shareholder and prior to the consummation of such Business Combinations: (a) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefore any full quarterly dividends (whether or not cumulative) on the outstanding Preferred Stock; (b) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (c) such Interested Shareholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Shareholder becoming an Interested Shareholder.

(v)After such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder shall not have received the benefit directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

(vi)A proxy or information statement describing the proposed business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public shareholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).

Section 3. Certain Definitions. For the purposes of this Article VIII:

A.   A “Person” shall mean any individual, firm, corporation or other entity.

B.“Interested Shareholder” shall mean any person (other than the Corporation or any Subsidiary) who or which:

(i)is the beneficial owner, directly or indirectly, of more than 12 ½% of the voting power of the outstanding Voting Stock; or

(ii)if an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 12 ½% or more of the voting power of the then outstanding Voting Stock; or

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(iii) if an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.

C. A person shall be a “beneficial owner” of any Voting Stock:

(i)which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or

(ii)which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or

(iii)which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring holding, voting or disposing of any shares of Voting Stock.

D.   For the purpose of determining whether a person is an Interested Shareholder pursuant to paragraph B of this Section 3, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of paragraph C of this Section 3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

E.   “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on March 1, 1983.

F.“Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Shareholder set forth in paragraph B of this Section 3, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned directly or indirectly, by the Corporation.

G.“Continuing Director” means any member of the Board who is unaffiliated with the Interested Shareholder and was a member of the Board prior to the time that the Interested Shareholder became an Interested Shareholder, and any successor of a Continuing Director who is unaffiliated with the Interested Shareholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board.

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H.“Fair Market Value” means: (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange – Listed Stock, or, if such stock is not quoted on the Composite Tape, on the New York Stock exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board in good faith; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board in good faith.

I.“Institutional Voting Stock” shall mean any series of Voting Stock which was issued to and continues to be held solely by one or more insurance companies, pension funds, commercial banks, savings banks or similar financial institutions or institutional investors.

J. In the event of any Business Combination in which the Corporation survives, the phrase “consideration other than cash to be received” as used in Section 2 of this Article VIII shall include the shares of Common Stock and/or the shares of any series of outstanding Voting Stock retained by the holders of such shares.

Section 4. Powers of the Board of Directors. A majority of the directors of the Corporation shall have the power and duty to determine for the purposes of this Article VIII, on the basis of information known to them after reasonable inquiry (A) whether a person is an Interested Shareholder, (B) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another (D) whether a series of Voting Stock is Institutional Voting Stock and (E) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more.

Section 5. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article VIII shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law.

Section 6. Amendment, Repeal, etc. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VIII.

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ARTICLE IX.

Limitation of Liability and Indemnification

Section 1. Limitation of Liability. A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the shareholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. This paragraph shall not eliminate or limit the liability of a director for any act or omission which occurred prior to the effective date of its adoption. Any repeal or modification of this paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

Section 2. Indemnification and Insurance.

A.   Right to Indemnification of Directors, Officers and Employees. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer or employee and shall inure to the benefit of the indemnitees heirs, executors and administrators; provided, however, that except as provided in paragraph B hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expense incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

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B.   Right of Indemnitee to Bring Suit. If a claim under paragraph A of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its shareholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses under this Section or otherwise shall be on the Corporation.

C.   Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this Certificate of Incorporation, By-Law, agreement, vote of shareholders or disinterested directors or otherwise. The Corporation is authorized to enter into contracts of indemnification.

D.   Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

E.   Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the advancement of expenses to any agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation.

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ARTICLE X.

Amendment of Certificate of Incorporation

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on shareholders herein are granted subject to this reservation. Notwithstanding the foregoing the provisions set forth in the last sentence of Article IV, and in Articles VI, VII and VIII may not be altered, amended or repealed in any respect unless such alteration, amendment or repeal is approved as specified in each thereof.

ARTICLE XI.

Incorporator

The name and mailing address of the incorporator of the Corporation is:

Tami D. Hansen

6500 N. Mineral Drive, Suite 200

Coeur d’Alene, ID 83815-9408

THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation to do business both within and without the State of Delaware and in pursuance of the Delaware General Corporation Law, does make and file this Certificate of Incorporation, hereby declaring and certifying that the facts herein stated are true, and accordingly has hereunto set his hand this 7^th day of August 2006.

/s/ Tami D. Hansen

Tami D. Hansen

Incorporator

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EX-3.1B

Exhibit 3.1(b)

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

HECLA HOLDINGS INC.

Pursuant to Section 242(b)(1) of the General Corporation Law of Delaware, the undersigned duly authorized officers of Hecla Holdings Inc., a Delaware corporation (the “Corporation”), do hereby depose, certify and say that the following amendment to the Certificate of Incorporation of Hecla Holdings Inc. has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of Delaware:

ARTICLE I.

Name

The name of the Corporation shall be HECLA MINING COMPANY.

In accordance with Section 222 of the General Corporation Law, notice of a special meeting was sent to the sole shareholder of the Corporation on October 23, 2006. The sole shareholder of the Corporation waived notice of a special meeting and voted in favor of the amendment.

This amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Hecla Holdings Inc. has caused this Certificate of Amendment to be executed, acknowledged, filed and recorded with the Secretary of State in the State of Delaware.

/s/   Philip C. Wolf	November 8, 2006
Philip C. Wolf Vice President	Date

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STATE OF IDAHO )

) ss.

County of Kootenai )

On this 8^th day of November 2006, before me, the undersigned, a Notary Public in and for the state of Idaho, personally appeared Philip C. Wolf, known or identified to me to be the Vice President of Hecla Holdings Inc., the officer who executed the instrument on behalf of said corporation, and acknowledged to me that such corporation executed the same.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written.

Tami D. Hansen

Notary Public in and for the state of Idaho

Residing at Otis Orchards, Washington

My Commission Expires: 9/12/2009

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EX-3.2

Exhibit 3.2

BYLAWS

of

HECLA HOLDINGS INC.

(a Delaware corporation)

(Adopted August 8, 2006)

ARTICLE I.

Offices

Section 1. Registered Office. The registered office of the Corporation shall be established and maintained at the office of The Corporation Trust Company, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and said corporation shall be the registered agent of the Corporation in charge thereof.

Section 2. Other Offices. The Corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the Corporation may require.

ARTICLE II.

Meetings of Shareholders

Section 1. Annual Meetings. Annual meetings of shareholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of shareholders shall be held at the principal executive office of the Corporation at 10:00 a.m. on the first Wednesday in May. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. The annual meeting may be adjourned by the chairman of the meeting from time to time and place to place. At any adjourned annual meeting the Corporation may transact any business which might have been transacted at the original annual meeting. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.

Section 2. Voting. Each shareholder who is entitled to vote pursuant to the terms of the Certificate of Incorporation and these By-Laws, or who is entitled to vote pursuant to the laws of the State of Delaware, shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors and all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation, these By-Laws or the laws of the State of Delaware.

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A complete list of the shareholders entitled to vote at any meeting of shareholders at which directors are to be elected, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present.

The Chief Executive Officer shall appoint three Inspectors of Election prior to each meeting of shareholders. Upon his appointment, each such Inspector shall take and sign an oath faithfully to execute the duties of Inspector at such meeting with strict impartiality and to the best of his ability. Such Inspectors shall determine the number of shares outstanding, the voting power of each such share, the number of shares present at the meeting and whether a quorum is present at such meeting. The Inspectors shall receive votes and ballots and shall determine all challenges and questions as to the right to vote and shall thereafter count and tabulate all votes and ballots and determine the result. Such Inspectors shall do such further acts as are proper to conduct the elections of directors and the vote on other matters with fairness to all shareholders. The Inspectors shall make a certificate of the results of the elections of directors and the vote on other matters. No Inspector shall be a candidate for election as a director of the Corporation nor shall any such candidate be appointed an Inspector.

Section 3. Quorum. Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of shareholders holding a majority of the voting power of the outstanding stock of the Corporation shall constitute a quorum at all meetings of the shareholders. In case a quorum shall not be present at any meeting, a majority in interest of the shareholders entitled to vote thereat, present in person or by proxy or the chairman of the meeting, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present; provided, however, that if such adjournment is for more than thirty days, or if after such adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at such adjourned meeting. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof unless the Board of Directors shall have fixed a new record date for such adjournment or adjournments pursuant to Section 4 of Article V of these By-Laws.

Section 4. Special Meetings. Special meetings of shareholders may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. Special meetings of shareholders may be held at such place, either within or without the State of Delaware, and at such time and date as shall be stated in the notice of the meeting. The special meeting may be adjourned by the chairman of the special meeting from time to time and place to place. At any adjourned special meeting the Corporation may transact any business which might have been transacted at the original special meeting. The Board of Directors acting by resolution approved by a majority of the entire Board of Directors may postpone and reschedule any previously scheduled special meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.

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Section 5. Notice of Meetings. Written notice, stating the place, date and time of any annual or special meeting of shareholders, and the general nature of the business to be considered thereat, shall be given to each shareholder entitled to vote at such meeting at his address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting.

Section 6. Shareholder Action. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.

Section 7. Chairman of a Meeting. At each meeting of the shareholders the Chairman of the Board, or if he shall be absent therefrom, the President, or if he shall be absent therefrom, another officer of the Corporation chosen by the Board of Directors, shall act as chairman of the meeting or preside thereat.

Section 8.

(A) Annual Meetings of Shareholders.

(1)           Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this By-Law.

(2)          For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or the 10^th day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf of the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

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(3)Notwithstanding anything in the second sentence of paragraph (A)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10^th day following the day on which such public announcement is first made by the Corporation.

(B) Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice required by paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120^th day prior to such special meeting and not later than the close of business on the later of the 90^th day prior to such special meeting or the 10^th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.

(C) General.

(1)Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. The Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal shall be disregarded.

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(2)For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(3)Notwithstanding the foregoing provision of this By-Law, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights of (i) shareholders to request inclusion of the proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of Preferred Stock to elect directors under specified circumstances.

ARTICLE III.

Directors

Section 1. Number, Election and Terms. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which, subject to any right of the holders of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances, shall consist of not less than five nor more than nine persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Shareholders, the term of office of the second class to expire at the 1985 Annual Meeting of Shareholders and the term of office of the third class to expire at the 1986 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after their election.

Section 2. Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote for the election of directors.

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Section 4. Qualifications. Directors need not be shareholders of the Corporation. No person shall be eligible for election or reelection as a Director, or for appointment to fill a newly created directorship or a vacancy on the Board, who has attained the age of 72 at the time of such election or appointment.

Section 5. Resignations. Any director, member of a committee or officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

Section 6. Powers. The Board of Directors shall exercise all of the powers of the Corporation except such as are by law, or by the Certificate of Incorporation or by these By-Laws, conferred upon or reserved to the shareholders.

Section 7. Standing Committees.

(A)The Board of Directors may, by resolution adopted by a majority of the Board, elect two or more of the directors to constitute an Executive Committee. The Chief Executive Officer shall be a member of and Chairman of the Executive Committee. The Board of Directors shall designate a Secretary who may, but need not, be a member of the Executive Committee or of the Board of Directors. The Executive Committee, to the extent provided in such resolution, shall have and exercise, when the Board of Directors is not in session, the authority of the Board of Directors in the management of the business of the Corporation, except that it shall not have the authority to:

(i) Declare dividends;

(ii) Approve, or recommend or submit to shareholders, mergers, consolidations, dissolution or any other transactions requiring shareholder approval;

(iii) Adopt, amend or repeal the By-Laws;

(iv) Elect directors to fill vacancies on the Board of Directors or any committee thereof;

(v) Elect, appoint or discharge committees of the Board;

(vi) Authorize the issuance of additional shares;

(vii) Fix compensation of directors for serving on the Board or any committee; or

(viii) Amend or repeal any resolution of the Board which by its terms may not be amended or repealed.

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(B)There shall be an Audit Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders. The Audit Committee shall consist of not less than three members selected from the members of the Board of Directors, none of whom shall be officers or employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman of the Audit Committee and a Secretary who may, but need not, be a member of the Audit Committee or of the Board of Directors. The members of the Audit Committee shall hold office until the next annual meeting of the Board of Directors, or until their successors are elected. The Audit Committee shall meet with the Corporation’s independent auditors and review the financial statements of the Corporation contained in the annual report, and the notes thereto, to be sent to shareholders prior to the date such annual report is mailed to shareholders and a draft of such auditors’ proposed certificate relating to such financial statements and notes. Each member of the Audit Committee shall be supplied a copy of the auditors’ comments and suggestions made to management and a copy of management’s reply thereto. The Audit Committee shall report to the Board of Directors on the matters referred to in the preceding two sentences. The Secretary of the Corporation shall advise the Corporation’s auditors of the names of the members of the Audit Committee promptly after their election and the auditors shall have the right to appear before and be heard at any meeting of the Audit Committee and, upon the request of the auditors, the Audit Committee shall convene a meeting to consider any matters which the auditors believe should be brought to the attention of the shareholders and directors of the Corporation. The Secretary shall advise the Corporation’s auditors of the foregoing.

(C)         There shall be a Corporate Governance and Directors Nominating Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders to hold office until the next annual meeting of shareholders. The Corporate Governance and Directors Nominating Committee shall consist of not less than three nor more than five members, the majority of whom shall not be officers or employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman from among the members of the Corporate Governance and Directors Nominating Committee and a Secretary who may, but need not, be a member of the Corporate Governance and Directors Nominating Committee or of the Board of Directors. The Corporate Governance and Directors Nominating Committee shall develop general criteria for selection of directors and officers of the Corporation. It shall aid the Board in identifying and attracting qualified candidates to stand for election to such positions. The Committee shall recommend to the Board a slate of nominees to be proposed for election as directors by the shareholders at the next annual meeting of shareholders. The Corporate Governance and Directors Nominating Committee shall also develop and recommend to the Board corporate governance issues and practices and monitor corporate compliance with any corporate governance policies and practices.

(D) There shall be a Compensation Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders to hold office until the next annual meeting of shareholders. The Compensation Committee shall consist of not less than three members, none of whom shall be officers or employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman from among the members of the Compensation Committee and a Secretary who may, but need not, be a member of the Compensation Committee or of the Board of Directors. The Chief Executive Officer shall submit to the Compensation Committee recommendations with respect to compensation of directors and executive corporate officers of the rank of Vice President or higher, such recommendations to include past salary history and such other information deemed pertinent to consideration of executive salaries, in any event, at least once each year and at a time not less than one month prior to the last regularly scheduled quarterly meeting of the Board of Directors held each calendar year. Based on the foregoing, the Compensation Committee shall also make recommendations to the Board of Directors concerning the salaries of executive corporate officers of the rank of Vice President or higher. The Compensation Committee shall have such responsibilities in the administration of the Corporation’s stock option plans as may be set forth in such plans and as the Board of Directors, pursuant to such plans, may determine.

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Section 8. Other Committees. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more additional committees, each such committee to consist of two or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

Any such committee, to the extent provided in the resolution of the Board of Directors designating such committee, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it.

Section 9. Meetings. The annual meeting of the Board of Directors shall be held immediately after the annual meeting of the shareholders.

Regular meetings of the Board of Directors shall be held quarterly in the months of February, May (immediately after the annual meeting of shareholders), August and November, or at such other times as the Board of Directors may from time to time by resolution determine.

Special meetings of the Board of Directors may be called by the Chief Executive Officer or by a majority of the Board of Directors whenever he or they may deem it necessary or expedient.

Meetings of the Board of Directors, annual, regular or special, or of any committee thereof, may be held either within or without the State of Delaware.

Except as set forth below with respect to telephonic participation in meetings, and except for the annual meeting and regular quarterly meetings, all meetings of the Board of Directors shall be called by at least forty-eight hours’ notice from time of dispatch, duly made by mail, telegram or telephone by the Chief Executive Officer or Secretary to each director, which notice shall in each case specify the time and date of such meeting, the place where such meeting will be held and the purpose or purposes thereof; provided, however, that attendance at the meeting shall constitute a waiver of such notice. Any or all members of the Board of Directors may also participate in a meeting of the Board or of any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. In the case of members of the Board of Directors participating by telephonic means, the notice for the meeting, specifying the time and date of the meeting and the purpose or purposes for which the meeting is to be held, shall be given at least six hours prior to the meeting by telegram or telephone by the Chief Executive Officer or Secretary to each such director.

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Section 10. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation or these By-Laws shall require the vote of a greater number.

Section 11. Compensation. The directors shall receive such fee and/or retainer for their services as a director as may be fixed by resolution of the Board and, in addition, by resolution of the Board, a fixed sum and expense of attendance at each regular or special meeting of the Board, provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of any Standing Committee or any other committees which may be appointed by the Board of Directors may be allowed such compensation as the directors may determine.

Section 12. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent in writing to such action and such written consent is filed with the minutes of proceedings of the Board or such committee.

ARTICLE IV.

Officers

Section 1. Officers. The officers of the Corporation shall be a Chief Executive Officer, a President, a Treasurer and a Secretary, all of whom shall be elected by the Board of Directors at the annual meeting of the Board of Directors and shall hold office until the next following annual meeting of the Board of Directors and until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the Corporation, other than the Chairman of the Board of Directors, the Chief Executive Officer and the President, need be directors. The officers shall be elected at the annual meeting of the Board of Directors. More than two offices may be held by the same person.

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Section 2. Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

Section 3. Chairman of the Board. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.

Section 4. Chief Executive Officer. The Board of Directors shall elect either the President or the Chairman of the Board, if one be elected, to be the Chief Executive Officer of the Corporation, who shall preside at all meetings of the shareholders and the Executive Committee. He shall, subject to the direction of the Board, exercise the powers and perform the duties usually vested in the Chief Executive Officer of a corporation, including, without limitation, the power to sign all certificates of stock, to execute bonds, mortgages and other contracts on behalf of the Corporation, and to cause the seal of the Corporation to be affixed to any instrument requiring it, such seal when so affixed to be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. In addition, he shall see that all orders and resolutions of the Board are carried out in accordance with the terms of such orders and resolutions. The Chief Executive Officer or a proxy appointed by him shall vote as proxy and representative of the Corporation and in its name, place and stead, and as its corporate deed and act, all the shares of the capital stock of any other corporation which the Corporation is entitled to vote, and shall so vote upon any and all matters, questions and resolutions that may come before such meetings or any adjournment or adjournments thereof with full power of substitution and revocation.

Section 5. President. The President shall have such powers and shall perform such duties as from time to time shall be assigned to him by the Chief Executive Officer or by the Board of Directors. In the absence of the Chairman of the Board, if one be elected, the President shall preside at all meetings of the Board of Directors.

Section 6. Vice Presidents. The Vice Presidents, if any be elected, shall have such powers and shall perform such duties as from time to time shall be assigned to them by the Chief Executive Officer or the Board of Directors, the Executive Committee or the President.

Section 7. Treasurer. It shall be the duty of the Treasurer to keep safely all moneys belonging to the Corporation, and to disburse the same under the direction of the Board of Directors. At each annual meeting of the shareholders, or so often as the Chief Executive Officer or the Board of Directors may direct, the Treasurer shall submit a statement of his accounts for the past year or for the period for which such statement is requested.

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Section 8. Assistant Treasurers. The Assistant Treasurers, if any be elected, shall perform such duties in connection with the duties of the treasurer as the Treasurer may from time to time prescribe.

Section 9. Secretary. It shall be the duty of the Secretary to keep a record of the meetings of the Board of Directors and of the shareholders. The Secretary shall sign all certificates of stock issued. The Secretary shall keep a book or record, containing the names of all persons, alphabetically arranged, who at the time are shareholders of the Corporation, and showing the number of shares held by them respectively, and the time when they became the owners of such shares.

Section 10. Assistant Secretaries. The Assistant Secretaries, if any be elected, shall perform such duties in connection with the duties of the Secretary as the Secretary may from time to time prescribe.

Section 11. Other Powers and Duties. The officers of the Corporation shall also have such other powers and duties as may, from time to time, be conferred upon them by the Board of Directors.

Section 12. Removal. Any officer elected, or agent appointed, by the Board of Directors may be removed by the affirmative vote of a majority of the Whole Board whenever, in their judgment, the best interests of the Corporation would be served thereby. Any officer or agent appointed by the Chairman of the Board or the President may be removed by him whenever, in his judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

Section 13. Vacancies. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. Any vacancy in an office appointed by the Chairman of the Board or the President because of death, resignation, or removal may be filled by the Chairman of the Board or the President.

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ARTICLE V.

Miscellaneous

Section 1. Certificates of Stock. Certificates of stock shall be in such form as the Board of Directors may direct. The certificates shall be signed by the President and also by the Secretary or an Assistant Secretary with the seal of the Corporation affixed thereto. Any or all the signatures on the certificate may be in facsimile and the seal of the Corporation attached to said certificates may be in facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used upon, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates are issued by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation with the same effect as if the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, were such officer or officers of the Corporation at the date of issue. All certificates shall be consecutively numbered. The name of the person owning the shares represented thereby with the number of such shares and the date of issue shall be entered upon the Corporation’s books.

Section 2. Lost Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of satisfactory evidence of such loss, theft or destruction, and upon delivery to the Corporation of a bond of indemnity, or other security, in such an amount and upon such terms as the Board of Directors in its discretion may require; provided, however, that the President and the Secretary may issue or cause to be issued a new certificate in place of a lost, stolen or destroyed certificate without approval by the Board of Directors when such lost, stolen or destroyed certificate is supported by an open penalty lost certificate bond, in which the owner of the lost certificate and the surety bind themselves to indemnify and save harmless the Corporation and its duly appointed transfer agent and registrar against any action which might be brought if such alleged lost, stolen or destroyed certificate should be presented for transfer by some person having or claiming title thereto; and provided further, that in the situation where a certificate is lost in the mails after dispatch of the certificate to the shareholder who is entitled to the same by the transfer agent, broker or banker who intervenes in the transaction or by the Corporation itself, a sole obligor open penalty lost certificate bond signed by the surety alone will be acceptable.

Section 3. Transfer of Shares. The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer, the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.

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Section 4. Shareholders Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be less than ten nor more than sixty days before the date of such meeting, nor more than sixty days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment or adjournments of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 5. Dividends. Subject to the provisions of applicable law and of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the Corporation as and when they deem expedient. Before declaring any dividend, there may be set apart out of any funds of the Corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for such other purposes as the directors shall deem conducive to the interests of the Corporation.

Section 6. Seal. The corporate seal shall be determined by resolution of the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 7. Fiscal Year. The fiscal year of the Corporation shall end with the calendar year.

Section 8. Checks. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation, and in such manner, as shall be determined from time to time by resolution of the Board of Directors.

Section 9. Notice and Waiver of Notice. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the Corporation and such notice shall be deemed to have been given on the day of such mailing. Shareholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by law or the Certificate of Incorporation.

Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the Corporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

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ARTICLE VI.

Amendments

These By-laws may be altered or repealed and By-Laws may be made at any annual meeting of the shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Laws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These By-Laws may also be altered or repealed and By-Laws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or By-Law or By-Laws to be made, be contained in the notice of such special meeting.

Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4 or 6 of Article II, or Section 1, 2 or 3 of Article III, of these By-Laws.

ARTICLE VII.

Limitation of Liability and Indemnification

Section 1. Limitation of Liability. A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the shareholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. This paragraph shall not eliminate or limit the liability of a director for any act or omission which occurred prior to the effective date of its adoption. Any repeal or modification of this paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

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Section 2. Indemnification and Insurance.

(A)         Right to Indemnification of Directors, Officers and Employees. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer or employee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

(B)         Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its shareholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section or otherwise shall be on the Corporation.

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(C)Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this Certificate of Incorporation, By-Law, agreement, vote of shareholders or disinterested directors or otherwise. The Corporation is authorized to enter into contracts of indemnification.

(D)Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

(E)Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation.

(F)If any provision or provisions of this By-Law shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this By-Law (including, without limitation, each portion of any paragraph of this By-Law containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this By-Law (including, without limitation, each such portion of any paragraph of this By-Law containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

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ARTICLE VIII.

Possession of By-Laws

These By-Laws shall remain in the possession of the Secretary of the Corporation.

Philip C. Wolf

Corporate Secretary

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EX-3.2B

Exhibit 3.2(b)

BYLAWS

of

HECLA MINING COMPANY

(a Delaware corporation)

(Adopted August 8, 2006; Amended November 8, 2006)

ARTICLE I.

Offices

Section 1. Registered Office. The registered office of the Corporation shall be established and maintained at the office of The Corporation Trust Company, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and said corporation shall be the registered agent of the Corporation in charge thereof.

Section 2. Other Offices. The Corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the Corporation may require.

ARTICLE II.

Meetings of Shareholders

Section 1. Annual Meetings. Annual meetings of shareholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of shareholders shall be held at the principal executive office of the Corporation at 10:00 a.m. on the first Wednesday in May. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. The annual meeting may be adjourned by the chairman of the meeting from time to time and place to place. At any adjourned annual meeting the Corporation may transact any business which might have been transacted at the original annual meeting. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.

Section 2. Voting. Each shareholder who is entitled to vote pursuant to the terms of the Certificate of Incorporation and these Bylaws, or who is entitled to vote pursuant to the laws of the State of Delaware, shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors and all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation, these Bylaws or the laws of the State of Delaware.

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A complete list of the shareholders entitled to vote at any meeting of shareholders at which directors are to be elected, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present.

The Chief Executive Officer shall appoint three Inspectors of Election prior to each meeting of shareholders. Upon his appointment, each such Inspector shall take and sign an oath faithfully to execute the duties of Inspector at such meeting with strict impartiality and to the best of his ability. Such Inspectors shall determine the number of shares outstanding, the voting power of each such share, the number of shares present at the meeting and whether a quorum is present at such meeting. The Inspectors shall receive votes and ballots and shall determine all challenges and questions as to the right to vote and shall thereafter count and tabulate all votes and ballots and determine the result. Such Inspectors shall do such further acts as are proper to conduct the elections of directors and the vote on other matters with fairness to all shareholders. The Inspectors shall make a certificate of the results of the elections of directors and the vote on other matters. No Inspector shall be a candidate for election as a director of the Corporation nor shall any such candidate be appointed an Inspector.

Section 3. Quorum. Except as otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the presence, in person or by proxy, of shareholders holding a majority of the voting power of the outstanding stock of the Corporation shall constitute a quorum at all meetings of the shareholders. In case a quorum shall not be present at any meeting, a majority in interest of the shareholders entitled to vote thereat, present in person or by proxy or the chairman of the meeting, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present; provided, however, that if such adjournment is for more than thirty days, or if after such adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at such adjourned meeting. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof unless the Board of Directors shall have fixed a new record date for such adjournment or adjournments pursuant to Section 4 of Article V of these Bylaws.

Section 4. Special Meetings. Special meetings of shareholders may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. Special meetings of shareholders may be held at such place, either within or without the State of Delaware, and at such time and date as shall be stated in the notice of the meeting. The special meeting may be adjourned by the chairman of the special meeting from time to time and place to place. At any adjourned special meeting the Corporation may transact any business which might have been transacted at the original special meeting. The Board of Directors acting by resolution approved by a majority of the entire Board of Directors may postpone and reschedule any previously scheduled special meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.

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Section 5. Notice of Meetings. Written notice, stating the place, date and time of any annual or special meeting of shareholders, and the general nature of the business to be considered thereat, shall be given to each shareholder entitled to vote at such meeting at his address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting.

Section 6. Shareholder Action. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.

Section 7. Chairman of a Meeting. At each meeting of the shareholders the Chairman of the Board, or if he shall be absent therefrom, the President, or if he shall be absent therefrom, another officer of the Corporation chosen by the Board of Directors, shall act as chairman of the meeting or preside thereat.

Section 8.

(A) Annual Meetings of Shareholders.

(1)Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this By-Law.

(2)For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or the 10^th day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in

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solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf of the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

(3)Notwithstanding anything in the second sentence of paragraph (A)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10^th day following the day on which such public announcement is first made by the Corporation.

(B)Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice required by paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120^th day prior to such special meeting and not later than the close of business on the later of the 90^th day prior to such special meeting or the 10^th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.

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(C) General.

(1)Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. The Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal shall be disregarded.

(2)For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(3)Notwithstanding the foregoing provision of this By-Law, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights of (i) shareholders to request inclusion of the proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of Preferred Stock to elect directors under specified circumstances.

ARTICLE III.

Directors

Section 1. Number, Election and Terms. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which, subject to any right of the holders of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances, shall consist of not less than five nor more than nine persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Shareholders, the term of office of the second class to expire at the 1985 Annual Meeting of Shareholders and the term of office of the third class to expire at the 1986 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after their election.

Section 2. Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

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Section 3. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote for the election of directors.

Section 4. Qualifications. Directors need not be shareholders of the Corporation. No person shall be eligible for election or reelection as a Director, or for appointment to fill a newly created directorship or a vacancy on the Board, who has attained the age of 72 at the time of such election or appointment.

Section 5. Resignations. Any director, member of a committee or officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

Section 6. Powers. The Board of Directors shall exercise all of the powers of the Corporation except such as are by law, or by the Certificate of Incorporation or by these Bylaws, conferred upon or reserved to the shareholders.

Section 7.  Standing Committees.

(A)The Board of Directors may, by resolution adopted by a majority of the Board, elect two or more of the directors to constitute an Executive Committee. The Chief Executive Officer shall be a member of and Chairman of the Executive Committee. The Board of Directors shall designate a Secretary who may, but need not, be a member of the Executive Committee or of the Board of Directors. The Executive Committee, to the extent provided in such resolution, shall have and exercise, when the Board of Directors is not in session, the authority of the Board of Directors in the management of the business of the Corporation, except that it shall not have the authority to:

(i) Declare dividends;

(ii) Approve, or recommend or submit to shareholders, mergers, consolidations, dissolution or any other transactions requiring shareholder approval;

(iii) Adopt, amend or repeal the Bylaws;

(iv) Elect directors to fill vacancies on the Board of Directors or any committee thereof;

(v) Elect, appoint or discharge committees of the Board;

(vi) Authorize the issuance of additional shares;

(vii) Fix compensation of directors for serving on the Board or any committee; or

(viii) Amend or repeal any resolution of the Board which by its terms may not be amended or repealed.

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(B)There shall be an Audit Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders. The Audit Committee shall consist of not less than three members selected from the members of the Board of Directors, none of whom shall be officers or employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman of the Audit Committee and a Secretary who may, but need not, be a member of the Audit Committee or of the Board of Directors. The members of the Audit Committee shall hold office until the next annual meeting of the Board of Directors, or until their successors are elected. The Audit Committee shall meet with the Corporation’s independent auditors and review the financial statements of the Corporation contained in the annual report, and the notes thereto, to be sent to shareholders prior to the date such annual report is mailed to shareholders and a draft of such auditors’ proposed certificate relating to such financial statements and notes. Each member of the Audit Committee shall be supplied a copy of the auditors’ comments and suggestions made to management and a copy of management’s reply thereto. The Audit Committee shall report to the Board of Directors on the matters referred to in the preceding two sentences. The Secretary of the Corporation shall advise the Corporation’s auditors of the names of the members of the Audit Committee promptly after their election and the auditors shall have the right to appear before and be heard at any meeting of the Audit Committee and, upon the request of the auditors, the Audit Committee shall convene a meeting to consider any matters which the auditors believe should be brought to the attention of the shareholders and directors of the Corporation. The Secretary shall advise the Corporation’s auditors of the foregoing.

(C)There shall be a Corporate Governance and Directors Nominating Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders to hold office until the next annual meeting of shareholders. The Corporate Governance and Directors Nominating Committee shall consist of not less than three nor more than five members, the majority of whom shall not be officers or employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman from among the members of the Corporate Governance and Directors Nominating Committee and a Secretary who may, but need not, be a member of the Corporate Governance and Directors Nominating Committee or of the Board of Directors. The Corporate Governance and Directors Nominating Committee shall develop general criteria for selection of directors and officers of the Corporation. It shall aid the Board in identifying and attracting qualified candidates to stand for election to such positions. The Committee shall recommend to the Board a slate of nominees to be proposed for election as directors by the shareholders at the next annual meeting of shareholders. The Corporate Governance and Directors Nominating Committee shall also develop and recommend to the Board corporate governance issues and practices and monitor corporate compliance with any corporate governance policies and practices.

(D)There shall be a Compensation Committee of the Board of Directors elected annually at the first meeting of the Board of Directors following the annual meeting of shareholders to hold office until the next annual meeting of shareholders. The Compensation Committee shall consist of not less than three members, none of whom shall be officers or

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employees of the Corporation or any of its subsidiaries. The Board of Directors shall designate a Chairman from among the members of the Compensation Committee and a Secretary who may, but need not, be a member of the Compensation Committee or of the Board of Directors. The Chief Executive Officer shall submit to the Compensation Committee recommendations with respect to compensation of directors and executive corporate officers of the rank of Vice President or higher, such recommendations to include past salary history and such other information deemed pertinent to consideration of executive salaries, in any event, at least once each year and at a time not less than one month prior to the last regularly scheduled quarterly meeting of the Board of Directors held each calendar year. Based on the foregoing, the Compensation Committee shall also make recommendations to the Board of Directors concerning the salaries of executive corporate officers of the rank of Vice President or higher. The Compensation Committee shall have such responsibilities in the administration of the Corporation’s stock option plans as may be set forth in such plans and as the Board of Directors, pursuant to such plans, may determine.

Section 8. Other Committees. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more additional committees, each such committee to consist of two or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

Any such committee, to the extent provided in the resolution of the Board of Directors designating such committee, or in these Bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it.

Section 9. Meetings. The annual meeting of the Board of Directors shall be held immediately after the annual meeting of the shareholders.

Regular meetings of the Board of Directors shall be held quarterly in the months of February, May (immediately after the annual meeting of shareholders), August and November, or at such other times as the Board of Directors may from time to time by resolution determine.

Special meetings of the Board of Directors may be called by the Chief Executive Officer or by a majority of the Board of Directors whenever he or they may deem it necessary or expedient.

Meetings of the Board of Directors, annual, regular or special, or of any committee thereof, may be held either within or without the State of Delaware.

Except as set forth below with respect to telephonic participation in meetings, and except for the annual meeting and regular quarterly meetings, all meetings of the Board of Directors shall be called by at least forty-eight hours’ notice from time of dispatch, duly made by mail, telegram or telephone by the Chief Executive Officer or Secretary to each director, which notice shall in each case specify the time and date of such meeting, the place where such meeting will be held and the purpose or purposes thereof; provided, however, that attendance at the meeting shall constitute a waiver of such notice. Any or all members of the Board of Directors may also

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participate in a meeting of the Board or of any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. In the case of members of the Board of Directors participating by telephonic means, the notice for the meeting, specifying the time and date of the meeting and the purpose or purposes for which the meeting is to be held, shall be given at least six hours prior to the meeting by telegram or telephone by the Chief Executive Officer or Secretary to each such director.

Section 10. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation or these Bylaws shall require the vote of a greater number.

Section 11. Compensation. The directors shall receive such fee and/or retainer for their services as a director as may be fixed by resolution of the Board and, in addition, by resolution of the Board, a fixed sum and expense of attendance at each regular or special meeting of the Board, provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of any Standing Committee or any other committees which may be appointed by the Board of Directors may be allowed such compensation as the directors may determine.

Section 12. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent in writing to such action and such written consent is filed with the minutes of proceedings of the Board or such committee.

ARTICLE IV.

Officers

Section 1. Officers. The officers of the Corporation shall be a Chief Executive Officer, a President, a Treasurer and a Secretary, all of whom shall be elected by the Board of Directors at the annual meeting of the Board of Directors and shall hold office until the next following annual meeting of the Board of Directors and until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the Corporation, other than the Chairman of the Board of Directors, the Chief Executive Officer and the President, need be directors. The officers shall be elected at the annual meeting of the Board of Directors. More than two offices may be held by the same person.

Section 2. Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

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Section 3. Chairman of the Board. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.

Section 4. Chief Executive Officer. The Board of Directors shall elect either the President or the Chairman of the Board, if one be elected, to be the Chief Executive Officer of the Corporation, who shall preside at all meetings of the shareholders and the Executive Committee. He shall, subject to the direction of the Board, exercise the powers and perform the duties usually vested in the Chief Executive Officer of a corporation, including, without limitation, the power to sign all certificates of stock, to execute bonds, mortgages and other contracts on behalf of the Corporation, and to cause the seal of the Corporation to be affixed to any instrument requiring it, such seal when so affixed to be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. In addition, he shall see that all orders and resolutions of the Board are carried out in accordance with the terms of such orders and resolutions. The Chief Executive Officer or a proxy appointed by him shall vote as proxy and representative of the Corporation and in its name, place and stead, and as its corporate deed and act, all the shares of the capital stock of any other corporation which the Corporation is entitled to vote, and shall so vote upon any and all matters, questions and resolutions that may come before such meetings or any adjournment or adjournments thereof with full power of substitution and revocation.

Section 5. President. The President shall have such powers and shall perform such duties as from time to time shall be assigned to him by the Chief Executive Officer or by the Board of Directors. In the absence of the Chairman of the Board, if one be elected, the President shall preside at all meetings of the Board of Directors.

Section 6. Vice Presidents. The Vice Presidents, if any be elected, shall have such powers and shall perform such duties as from time to time shall be assigned to them by the Chief Executive Officer or the Board of Directors, the Executive Committee or the President.

Section 7. Treasurer. It shall be the duty of the Treasurer to keep safely all moneys belonging to the Corporation, and to disburse the same under the direction of the Board of Directors. At each annual meeting of the shareholders, or so often as the Chief Executive Officer or the Board of Directors may direct, the Treasurer shall submit a statement of his accounts for the past year or for the period for which such statement is requested.

Section 8. Assistant Treasurers. The Assistant Treasurers, if any be elected, shall perform such duties in connection with the duties of the treasurer as the Treasurer may from time to time prescribe.

Section 9. Secretary. It shall be the duty of the Secretary to keep a record of the meetings of the Board of Directors and of the shareholders. The Secretary shall sign all certificates of stock issued. The Secretary shall keep a book or record, containing the names of all persons, alphabetically arranged, who at the time are shareholders of the Corporation, and showing the number of shares held by them respectively, and the time when they became the owners of such shares.

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Section 10. Assistant Secretaries. The Assistant Secretaries, if any be elected, shall perform such duties in connection with the duties of the Secretary as the Secretary may from time to time prescribe.

Section 11. Other Powers and Duties. The officers of the Corporation shall also have such other powers and duties as may, from time to time, be conferred upon them by the Board of Directors.

Section 12. Removal. Any officer elected, or agent appointed, by the Board of Directors may be removed by the affirmative vote of a majority of the Whole Board whenever, in their judgment, the best interests of the Corporation would be served thereby. Any officer or agent appointed by the Chairman of the Board or the President may be removed by him whenever, in his judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

Section 13. Vacancies. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. Any vacancy in an office appointed by the Chairman of the Board or the President because of death, resignation, or removal may be filled by the Chairman of the Board or the President.

ARTICLE V.

Miscellaneous

Section 1. Certificates of Stock. Certificates of stock shall be in such form as the Board of Directors may direct. The certificates shall be signed by the President and also by the Secretary or an Assistant Secretary with the seal of the Corporation affixed thereto. Any or all the signatures on the certificate may be in facsimile and the seal of the Corporation attached to said certificates may be in facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used upon, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates are issued by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation with the same effect as if the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, were such officer or officers of the Corporation at the date of issue. All certificates shall be consecutively numbered. The name of the person owning the shares represented thereby with the number of such shares and the date of issue shall be entered upon the Corporation’s books.

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Section 2. Lost Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of satisfactory evidence of such loss, theft or destruction, and upon delivery to the Corporation of a bond of indemnity, or other security, in such an amount and upon such terms as the Board of Directors in its discretion may require; provided, however, that the President and the Secretary may issue or cause to be issued a new certificate in place of a lost, stolen or destroyed certificate without approval by the Board of Directors when such lost, stolen or destroyed certificate is supported by an open penalty lost certificate bond, in which the owner of the lost certificate and the surety bind themselves to indemnify and save harmless the Corporation and its duly appointed transfer agent and registrar against any action which might be brought if such alleged lost, stolen or destroyed certificate should be presented for transfer by some person having or claiming title thereto; and provided further, that in the situation where a certificate is lost in the mails after dispatch of the certificate to the shareholder who is entitled to the same by the transfer agent, broker or banker who intervenes in the transaction or by the Corporation itself, a sole obligor open penalty lost certificate bond signed by the surety alone will be acceptable.

Section 3. Transfer of Shares. The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer, the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.

Section 4. Shareholders Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be less than ten nor more than sixty days before the date of such meeting, nor more than sixty days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment or adjournments of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 5. Dividends. Subject to the provisions of applicable law and of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the Corporation as and when they deem expedient. Before declaring any dividend, there may be set apart out of any funds of the Corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for such other purposes as the directors shall deem conducive to the interests of the Corporation.

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Section 6. Seal. The corporate seal shall be determined by resolution of the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 7. Fiscal Year. The fiscal year of the Corporation shall end with the calendar year.

Section 8. Checks. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation, and in such manner, as shall be determined from time to time by resolution of the Board of Directors.

Section 9. Notice and Waiver of Notice. Whenever any notice is required by these Bylaws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the Corporation and such notice shall be deemed to have been given on the day of such mailing. Shareholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by law or the Certificate of Incorporation.

Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the Corporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE VI.

Amendments

These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of the shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These Bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or By-Law or Bylaws to be made, be contained in the notice of such special meeting.

Notwithstanding anything contained in these Bylaws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4 or 6 of Article II, or Section 1, 2 or 3 of Article III, of these Bylaws.

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ARTICLE VII.

Limitation of Liability and Indemnification

Section 1. Limitation of Liability. A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the shareholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. This paragraph shall not eliminate or limit the liability of a director for any act or omission which occurred prior to the effective date of its adoption. Any repeal or modification of this paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

Section 2. Indemnification and Insurance.

(A)Right to Indemnification of Directors, Officers and Employees. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer or employee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

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(B)Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its shareholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section or otherwise shall be on the Corporation.

(C)Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this Certificate of Incorporation, By-Law, agreement, vote of shareholders or disinterested directors or otherwise. The Corporation is authorized to enter into contracts of indemnification.

(D)Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

(E)Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation.

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(F)If any provision or provisions of this By-Law shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this By-Law (including, without limitation, each portion of any paragraph of this By-Law containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this By-Law (including, without limitation, each such portion of any paragraph of this By-Law containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE VIII.

Possession of Bylaws

These Bylaws shall remain in the possession of the Secretary of the Corporation.

Philip C. Wolf
Corporate Secretary

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EX-4.1A

Exhibit 4.1(a)

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES A JUNIOR

PARTICIPATING PREFERRED STOCK

Of

HECLA HOLDINGS INC.

Pursuant to Section 151(g) of the General Corporation law of the State of Delaware:

We, Phillips S Baker, Jr., President and Chief Executive Officer and Philip C. Wolf, Vice President and General Counsel and Secretary, of Hecla Holdings Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof,

DO HEREBY CERTIFY:

That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the said Corporation, the said Board of Directors on August 8, 2006, adopted the following resolution creating a series of 273,000 shares of Preferred Stock designated as Series A Junior Participating Preferred Stock;

RESOLVED that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:

I. Designation and Amount. The shares of this series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting such series shall be 273,000. Such number of shares may be increased or decreased by resolution of the board of directors; provided, that no decrease shall reduce the number of shares of Series a Preferred Stock to a number less than that of the shares then outstanding.

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II. Dividends and Distributions.

(A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of C9ommon Stock and of any other junior stock, shall be entitled to receive, when as and if declared by the board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing o the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of common Stock, par value $0.25 per share, of the Corporation (the “Common Stock”) or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series a Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any quarterly Dividend Payment Date and the net subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series a preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

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(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the quarterly Dividend Payment Date net preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue form the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such quarterly Dividend Payment Date, in either of which event such dividends shall begin to accrue and be cumulative from such quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

III. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of common Stock outstanding immediately after such event and the denominator of which is the number of shares of common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(C) Except as set forth herein holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

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IV. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section II are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) with the Series A preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section IV purchase or otherwise acquire such shares at such time and in such manner.

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V. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

VI. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock), into a greater or lesser number of shares of Common Stock then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the provision in clause (i) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

VII. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares or Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which I the number of shares of common Stock that were outstanding immediately prior to such event.

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VIII. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

IX. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at leas two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single series.

IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 8th day of August 2006.

HECLA HOLDINGS INC.
By:	/s/ Phillips S. Baker, Jr.
	Phillips S. Baker, Jr. President and CEO

[Corporate Seal]

ATTEST:

/s/ Philip C. Wolf

Philip C. Wolf

Vice President, General Counsel

And Secretary

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EX-4.1B

Exhibit 4.1(b)

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Par Value $0.25 Per Share)

of

HECLA HOLDINGS INC.

Pursuant to Section 151 of the General Corporation Law

of the State of Delaware

The undersigned, Philips S. Baker, Jr., President and Chief Executive Officer of HECLA HOLDINGS INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

That in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware and pursuant to Article IV of the Certificate of Incorporation of the Corporation, the Board of Directors of the Corporation is authorized to issue from time to time shares of Preferred Stock, par value $0.25 per share, in one or more series and has authorized the creation of the series of Preferred Stock hereinafter provided for and has established the voting rights thereof and authorized, in accordance with Section 141(c) of the General Corporation Law of the State of Delaware and Article III, Section 7 of the By-Laws, an Executive Committee of the Board of Directors to adopt, and said Executive Committee has adopted, the following resolution (which includes the voting powers of such series as authorized by the Board of Directors) creating a series of 2,300,000 shares of Preferred Stock, par value $0.25 per share, designated as Series B Cumulative Convertible Preferred Stock, as follows:

RESOLVED that pursuant to the authority expressly vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Corporation, par value $0.25 per share, be and it hereby is, created, and that the designation and amount thereof and the voting powers preferences and relative, participating, operational and other special rights of the shares of such series, and the qualifications, limitation or restrictions thereof are as follows:

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Section 1.  Number of Shares and Designation. Two million three hundred thousand (2,300,000) shares of the Preferred Stock, par value $0.25 per share, of the Corporation are hereby constituted as a series of the Preferred Stock designated as Series B Cumulative Convertible Preferred Stock (the “Convertible Preferred Stock”).

Section 2.  Definitions. For purposes of the Convertible Preferred Stock, the following terms shall have the meanings indicated:

“Board of Directors” shall mean the board of directors of the Corporation or any committee authorized by such board of directors to perform any of its responsibilities with respect to the Convertible Preferred Stock.

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

“Common Stock” shall mean the Common Stock of the Corporation, par value $0.25 per share.

“Constituent Person” shall have the meaning set forth in paragraph (E) of Section 7 hereof.

“Conversion Price” shall mean the conversion price per share of Common tock for which the Convertible Preferred Stock is convertible; as such Conversion Price may be adjusted pursuant to Section 7 hereof. The initial Conversion Price will be $15.55.

“Current Market Price” of publicly traded shares of Common Stock or any other class of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange Composite tape or, if such security is not listed or admitted for trading on the New York Stock Exchange (“NYSE”), on the principal national securities exchange on which such security is listed or admitted for trading or, if not listed or admitted for trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of directors.

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“Dividend Payment Date” shall mean October 1, January 1, April 1 and July 1 in each year, commencing on October 1, 1993; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date.

“Dividend Periods” shall mean quarterly dividend periods commencing on October 1, January 1, April 1 and July 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include October 1, 1993).

“Fair Market Value” shall mean the average of the daily Current Market Prices of a share of Common Stock during the five (5) consecutive Trading Days selected by the Corporation commencing not more than 20 Trading Days before, and ending not later than, the earlier of the day in question and the day before the “ex” date with respect to the issuance or distribution requiring such computation. The term “‘ex’ date”, when used with respect to any issuance or distribution, means the first day on which the Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day’s Current Market Price.

“Issue Date” shall mean the first date on which shares of Convertible Preferred Stock are issued and sold.

“Junior Stock” shall mean the Common Stock, the Series A Preferred Shares and any other class or series of stock of the Corporation over which the Convertible Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

“Liquidation Preference” shall have the meaning set forth in paragraph (A) of Section 4 hereof.

“LYONS” shall mean the Corporation’s outstanding Liquid Yield Option Notes due 2004.

“non-electing share” shall have the meaning set forth in paragraph (E) of Section 7 hereof.

“Parity Stock” shall mean any other class or series of stock of the Corporation which ranks on a parity with the Convertible Preferred Stock as to payment of dividends or in the distribution of the assets on any liquidation, dissolution or winding up of the Corporation.

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“Person” shall mean any individual, firm, partnership, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity.

“Preferred Director” shall mean a director elected pursuant to paragraph (C) of Section 9 hereof.

“Redemption Date” shall have the meaning set forth in paragraph (C) of Section 5 hereof.

“Rights” shall mean the rights of the Corporation which are issuable under the Corporation’s Rights Agreement dated as of May 19, 1986, a amended from time to time, or rights to purchase any capital stock of the Corporation under any successor shareholder rights plan or plans adopted in replacement of the Corporation’s Rights Agreement.

“Securities” shall have the meaning set forth in paragraph (D) (iii) of Section 7 hereof.

“Series A Preferred Shares” shall mean the preferred stock of the Corporation, par value $0.25 per share, designated Series A Junior Participating Preferred Shares in the Certificate of Incorporation of the Corporation.

“set apart for payment” shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any parity stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then during the period that any such funds remain in such account or with such agent, “set apart for payment” with respect to the Convertible Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

“Stated Value” shall have the meaning set forth in paragraph (A) of Section 4 hereof.

“Trading Day” shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading in any national securities exchange, on the National Market System of the NASDAQ, or if such securities are not quoted on such National Market System, in the applicable securities market in which the securities are traded.

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“Transaction” shall have the meaning set forth in paragraph (E) of Section 7 hereof.

“Transfer Agent” shall mean American Stock Transfer & Trust Company or such other agent or agents of the Corporation as may be designated by the Board of Directors as the transfer agent for the Convertible Preferred Stock.

Section 3.   Dividends.

(A)  The holders of shares of the Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for that purpose, dividends payable in cash at the rate per annum of $3.50 per share of Convertible Preferred Stock. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Dividend Periods there shall be assets of the corporation legally available for the payment of such dividends, and shall be payable quarterly, when, as and if declared by the Board of Directors, in arrears on Dividend Payment Dates, commencing on October 1, 1993. Each such dividend shall be payable in arrears to the holders of record and shares of the Convertible Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, which shall not be more than 60 days nor less than 10 days preceding the payment dates thereof, as shall be fixed by the Board of Directors. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors.

(B)  The amount of dividends payable for each full Dividend Period for the Convertible Preferred Stock shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial dividend Period, or any other period shorter or longer than a full dividend Period, on the Convertible Preferred Stock shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of shares of Convertible Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Convertible Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Convertible Preferred Stock that may be in arrears.

(C)  So long as any shares of the Convertible Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any Parity Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Convertible Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the Convertible Preferred Stock and all dividends declared upon any parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Convertible Preferred Stock and accumulated and unpaid on such Parity Stock.

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(D)  So long as any shares of the Convertible Preferred Stock are outstanding, no dividends (other than (i) the Rights and (ii) dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Stock, nor shall any Junior Stock or any Parity Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Stock), unless in each case all accrued and unpaid dividends on all outstanding shares of the Convertible Preferred Stock and any Parity Stock shall have been paid or funds have been set apart for payment of such dividends for all past Dividend Periods with respect to the Convertible Preferred Stock and all past Dividend Periods with respect to such Parity Stock.

Section 4. Payments upon Liquidation.

(A)  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of the shares of Convertible Preferred Stock shall be entitled to receive fifty dollars ($50) per share of Convertible Preferred Stock (the “Stated Value”) plus an amount per share of Convertible Preferred Stock equal to all dividends (whether) or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders (the “Liquidation Preference”); but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Convertible Preferred Stock shall be insufficient to pay in full and Liquidation Preference and the Liquidation Preference on all other shares of any parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Convertible Preferred Stock and any such other Parity Stock ratably in accordance with the respective amounts that would be payable on such shares of Convertible Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation, merger or business combination of the corporation with or into one or more corporations, or (ii) a sale or transfer of all or substantially all of the Corporation’s assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

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(B)  Subject to the rights of the holders of Parity Stock, after payment shall have been made to the holders of the Convertible Preferred Stock, and to the fullest extent provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Convertible Preferred Stock shall not be entitled to share therein.

Section 5. Redemption at the Option of the Corporation.

(A)  The shares of Convertible Preferred Stock shall be redeemable at the option of the Corporation, in whole, or, from time to time, in part, out of funds legally available for such purpose, at any time or after July 1, 1996, at the following redemption prices per share, if redeemed during the twelve-month period beginning July 1 of the year indicated below, plus, in each case, an amount equal to all dividends accrued and unpaid on the shares of Convertible Preferred Stock up to the date fixed for the redemption, upon giving notice as provided herein below:

Year	Redemption Price Per Share
1996	$	52.45
1997		52.10
1998		51.75
1999		51.40
2000		51.05
2001		50.70
2002		50.35
2003 and thereafter		50.00

(B)  If fewer than all of the outstanding shares of Convertible Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be determined pro rata or by lot or in such other manner and subject to such regulations as the Board of Directors in its sole discretion shall prescribe.

(C)  At least 30 days, but not more than 60 days, prior to the date fixed for the redemption of shares of Convertible Preferred Stock, a written notice shall be mailed in postage prepaid envelope to each holder of record of the shares of Convertible Preferred Stock to be redeemed, addressed to such holder at his or her post office address as shown on the records of the Corporation, notifying such holder of the election of the Corporation to redeem such shares, stating the date fixed for redemption thereof (the “Redemption Date”), and calling upon such holder to surrender to the Corporation, on the Redemption Date at the place designated in such notice, his or her certificate or certificates representing the number of shares specified in such notice of redemption. On or after the Redemption Date, such holder of shares of Convertible Preferred Stock to be redeemed shall present and surrender his or her certificate or certificates for such shares to the Corporation at the place designated in such notice and thereupon the redemption price of such shares shall be paid to the order of the person whose name appears on such certificate or certificates as the owner thereof and such surrendered certificate shall be cancelled. In case less than all the shares represented by any such certificates are redeemed, a new certificate shall be issued representing the unredeemed shares.

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From and after the Redemption Date (unless the Corporation defaults in payment of the redemption price), all dividends on the shares of Convertible Preferred Stock designated for redemption in such notice shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price of such shares (including an amount equal to all accrued and unpaid dividends up to the Redemption Date) upon the surrender of certificates representing the same, shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the corporation) on the books of the corporation, and such shares shall not be deemed to be outstanding for any purpose whatsoever; providedhowever, in the case of the Redemption Date falling after a dividend payment record date and prior to the related Dividend Payment Date, the holders of Convertible Preferred Stock at the close of business on such record date will be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date, notwithstanding the redemption of such shares following such dividend payment record date.

At its election, the Corporation, prior to the Redemption Date, may deposit the redemption price (including an amount equal to all accrued and unpaid dividends up to the Redemption Date) of the shares of Convertible Preferred Stock so called for redemption in trust for the holders thereof with a bank or trust company having a capital surplus and undivided profits aggregating not less than $50,000,000) in the borough of Manhattan, city and state of New York, or in any other city in which the corporation at the time shall maintain a transfer agency with respect to such shares, in which case the aforesaid notice to holders of shares of Convertible Preferred Stock to be redeemed shall (i) state the date of such deposit, (ii) shall specify the office of such bank or trust company as the place of payment of the redemption price and (iii) shall call upon such holders to surrender the certificates representing such shares at such place on or after the date fixed in such redemption notice (which shall not be later than the Redemption Date) against payment of the redemption price (including an amount equal to all accrued and unpaid dividends up to the Redemption Date). Any interest accrued on such funds shall be paid to the corporation from time to time. Any moneys so deposited which shall remain unclaimed by the holders of such shares of Convertible Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation.

If a notice of redemption has been given pursuant to this section 5 and any holder of shares of Convertible Preferred Stock shall, prior to the close of business on the day preceding the Redemption Date, given written notice to the corporation pursuant to Section 7 below of the conversion of any or all of the shares to be redeemed held by such holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation, and any necessary transfer tax payment, as required by Section 7 below), then such redemption shall not become effective as to such shares to be converted, such conversion shall become effective as provided in Section 7 below, and any moneys set aside by the Corporation for the redemption of such shares of converted Convertible Preferred Stock shall revert to the general funds of the Corporation.

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Section 6.  Shares to Be Retired. All shares of Convertible Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (excluding, until the corporation elects to retire them, shares which are held as treasury shares) shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series.

Section 7.  Conversion. Holders of shares of Convertible Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock, as follows:

(A)  Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Convertible Preferred Stock shall have the right, at his or her option, at any time after the Issue Date, to convert such shares into the number of fully paid and nonassessable shares of Common Stock obtained by dividing the aggregate Stated Value of such shares by the Conversion Price (as in effect on the date provided for in the last paragraph of paragraph (B) of this Section 7) by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (B) of this Section 7; provided, however, that the right to convert shares called for redemption pursuant to Section 5 shall terminate at the close of business on the date preceding the Redemption Date, unless the corporation shall default in making payment of the cash payable upon such redemption under Section 5 hereof. Certificates will be issued for the remaining shares of Convertible Preferred Stock in any case in which fewer than all of the shares of Convertible Preferred Stock represented by a certificate are converted.

(B)  In order to exercise the conversion right, the holder of shares of Convertible Preferred Stock to be converted shall surrender the certificate or certificates representing such shares, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent in the Borough of Manhattan, City of New York, accompanied by written notice to the Corporation that the holder thereof elects to convert Convertible Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Convertible Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in the form satisfactory to the Corporation, duly executed by the holder or such holder’s duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid).

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Holders of shares of Convertible Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. However, shares of Convertible Preferred Stock surrendered for conversion during the period between the close of business one any dividend payment record date and the opening of business on the corresponding Dividend Payment Date (except shares converted after the issuance of a notice of redemption with respect to a Redemption Date during such period, which shall be entitled to the benefit of such dividend on the Dividend Payment Date) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of shares of Convertible Preferred Stock on a dividend payment record date who (or whose transferee) tenders any such shares for conversion into shares of Common Stock on such Dividend Payment Date will receive the dividend payable by the Corporation on such shares of Convertible Preferred Stock on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of shares of Convertible Preferred Stock for conversion. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon such conversion.

As promptly as practicable after the surrender of certificates for shares of Convertible Preferred Stock as aforesaid, the Corporation shall issue and deliver at such office to such holder, or on his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this Section 7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (C) of this Section 7.

Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Convertible Preferred Stock shall have been surrendered and such notice (and if applicable payment of an amount equal to the dividend payable on such shares) received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation.

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(C)  No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Convertible Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Convertible Preferred Stock so surrendered.

(D)  The Conversion Price shall be adjusted from time to time as follows:

(i)  If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of its Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares, (C) combine its outstanding Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its Common Stock, the Conversion Price in effect at the opening of business on the day next following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Convertible Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the opening of business on the day next following the record date (except as provided in paragraph (H) below) in the case of a dividend or distribution and shall become effective on the day next following the effective date in the case of a subdivision, combination or reclassification.

(ii)  If the Corporation shall issue after the Issue Date rights or warrants (in each case, other than the Rights) to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Stock or Securities which are convertible into Common Stock at a price per share less than the Fair Market Value per share of Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the opening of business on the day next following the date fixed for such determination by (II) a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (B) the number of shares that the aggregate proceeds to the Corporation from the exercise of such rights or warrants for Common Stock would purchase at such Fair Market Value, and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (B) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (H) below). In determining whether any rights or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights or warrants, the value of such consideration, if other than cash, to be determined by valuation of the Board of Directors.

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(iii)  If the Corporation shall distribute to all holders of its Common Stock any shares of capital stock of the Corporation (other than Common Stock) or evidence of its indebtedness or assets (excluding any cash dividends or distributions paid from profits or surplus of the Corporation or referred to in subparagraph (i) above or any stock, securities or other property received pursuant to paragraph 7(E) below) or rights or warrants (in each case, other than the Rights) to subscribe for or purchase any of its securities (excluding those rights and warrants issued to all holders of Common Stock entitling them for a period expiring within 45 days after the record date referred to in subparagraph (ii) above to subscribe for or purchase Common Stock, which rights and warrants are referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the “Securities”), then in each such case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (I) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by (II) a fraction, the numerator of which shall be the Fair Market Value per share of the Common Stock on the record date mentioned below less the then Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of the Common Stock on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in paragraph (H) below) the record date for the determination of shareholders entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the Common Stock on the date fixed for the determination of stockholders entitled to such distribution of such Security, but also is distributed to the holders of the Convertible Preferred Stock (assuming for purposes of this subparagraph (iii) that such shares of Convertible Preferred Stock have been converted) or reserved for distribution with each share of Common Stock delivered to a person converting a share of Convertible Preferred Stock after such determination date, shall not require an adjustment of the Conversion Price pursuant to this subparagraph (iii); provided that on the date, if any, on which a Person converting a share of Convertible Preferred Stock would no longer be entitled to receive such Security with a share of Common Stock (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Price shall be adjusted as provided in this subparagraph (iii) (and such day shall be deemed to be “the date fixed for the determination of the stockholders entitled to receive such distribution” and “the record date” within the meaning of the two preceding sentences).

(iv)  No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this subparagraph (iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subparagraph (iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends in securities of the Corporation. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest 1/10 of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (D) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (D), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable.

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(v)  Anything in this paragraph (D) to the contrary not withstanding, no adjustment in the Conversion Price shall be required upon the issuance of any shares of Common Stock to holders of the LYONs, upon the conversion or redemption thereof, if any, in the case of any adjustment in the conversion rate for the LYONs, or in the case of any exchange of shares of Common Stock for LYONs.

(E)  If the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, sale of all or substantially all of the Corporation’s assets or recapitalization of the Common Stock and excluding any transaction as to which subparagraph (D) (i) of this Section 7 applies) (each of the foregoing being referred to herein as a “Transaction”), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Convertible Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of shares or fraction thereof of Common Stock into which one share of Convertible Preferred Stock was convertible immediately prior to such Transaction, assuming such holder of Common Stock (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be (“Constituent Person”), or an affiliate of a Constituent Person and (ii) failed to exercise his or her rights of election, if any, as to the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction is not the same for each share of Common Stock of the Corporation held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (“non-electing share”), than for the purpose of this paragraph (E) the kind and amount of stock, securities and other property (including cash) receivable upon such Transaction by each non-electing share shall be deemed to be the kind and amount so receivable per share by the plurality of the non-electing shares). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (E) and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Convertible Preferred Stock that will contain provisions enabling the holders of the Convertible Preferred Stock that remains outstanding after such Transaction to convert into the consideration received by holders of Common Stock at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (E) shall similarly apply to successive Transactions.

(F)  If:

(i)  the Corporation shall declare a dividend (or any other distribution) on the Common Stock (other than in cash out of profits or surplus and other than the Rights); or

(ii)  the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants (other than the Rights) to subscribe for or purchase any shares of any class or any other rights or warrants (other than the Rights); or

(iii)  there shall be any reclassification of the Common Stock (other than an event to which subparagraph (D) (i) of this Section 7 applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or

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(iv)  there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation,

then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of shares of the Convertible Preferred Stock at their address as shown on the stock records of the Corporation, as promptly as possible, but at least 15 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date on which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding p is expected to become effective, and the date on which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.

(G)  Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer’s certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be prima facie evidence of the correctness of such adjustment. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date of such adjustment and shall mail such notice of such adjustment of the Conversion Price to the holder of each share of Convertible Preferred Stock at such holder’s last address as shown on the stock records of the Corporation.

(H)  In any case in which paragraph (D) of this Section 7 provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Convertible Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraph (C) of this Section 7.

(I)  For purposes of this Section 7, the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation.

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(J)  There shall be no adjustment of the Conversion Price in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 7, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value to the holders of Convertible Preferred Stock as determined by the Board of Directors.

(K)  If the Corporation shall take any action affecting the Common Stock, other then action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the shares of Convertible Preferred Stock, the Conversion Price for the Convertible Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances.

(L)  The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the Convertible Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock not theretofore converted. For purposes of this paragraph (L), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

The Corporation covenants that any shares of Common Stock issued upon conversion of the Convertible Preferred Stock shall be validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment reducing the Conversion Price below the then-par value of the shares of Common Stock deliverable upon conversion of the Convertible Preferred Stock, the Corporation will take any corporate action that in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price.

The Corporation shall endeavor to list the shares of Common Stock required to be delivered upon conversion of the Convertible Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Convertible Preferred Stock, the Corporation shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

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(M)  The Corporation will pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the Convertible Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the Convertible Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting any issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid.

Section 8.  Ranking. Any class or series of stock of the Corporation shall be deemed to rank:

(A)  prior to the Convertible Preferred Stock, as to the payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributed upon liquidation, dissolution or winding up in preference or priority to the holders of Convertible Preferred Stock;

(B)  on a parity with the Convertible Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Convertible Preferred Stock if the holders of such class of stock or series and the Convertible Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or Liquidation Preferences, without preference or priority one over the other; and

(C)  junior to the Convertible Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or Series A Preferred Shares or if the holders of Convertible Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such stock or series.

Section 9.  Voting. (A) Unless the affirmative vote of the holders of a greater number of shares shall then be required by law, the affirmative vote of the holders of at least 66-2/3% of all of the outstanding shares of Convertible Preferred Stock, given in person or by proxy, by a vote at a meeting called for the purpose voting separately as a class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal of any of the provisions of the Certificate of Incorporation or of any certificate amendatory thereof or supplement thereto (including any Certificate of Designations, Preferences and rights or any similar document relating to any series of Preferred Stock) which would materially adversely affect the preferences, rights, powers or privileges of the Convertible Preferred Stock; provided, however, that the amendment of the provisions of the Certificate of Incorporation so as to authorize or create, or to increase the authorized amount of, any Junior Stock or Parity Stock shall not be deemed to materially adversely affect the preferences, rights, powers or privileges of Convertible Preferred Stock.

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(B)  Unless the affirmative vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66-2/3% of all of the outstanding shares of Convertible Preferred Stock and all other series of Parity Stock upon which such voting power shall have been conferred, given in person or by proxy, by a vote at a meeting called for the purpose at which the holders of shares of Convertible Preferred Stock and such Parity Stock shall vote together as a single class without regard to series, shall be necessary for authorizing, effecting or validating the creation, authorization or issue of any shares of any class of Preferred Stock as to dividends or upon liquidation, dissolution or winding up, or the reclassification of any authorized stock of the Corporation into any such prior shares, or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any such prior shares.

(C)  If at the time of any annual meeting of stockholders for the election of directors the Corporation shall be in default on preference dividends (as defined below) on the Convertible Preferred Stock and any other Parity Stock, the number of directors constituting the Board of Directors of the Corporation shall be increased by two, and the holders of the Convertible Preferred Stock together with the holders of such other Parity Stock upon which such voting power shall have been conferred shall have the right at such meeting (and any subsequent meeting if such default shall continue to exist), voting together as a single class without regard to series, to the exclusion of the holders of Common Stock, to elect two additional directors (the “Preferred Directors”) of the Corporation to fill such newly created directorships. Such right shall continue until there are no dividends in arrears upon the Convertible Preferred Stock. Any Preferred Director may be removed without cause by, and shall not be removed without cause except by, the vote of the holders of record of the outstanding shares of Convertible Preferred Stock and Parity Stock with respect to which such a default shall exist, voting together as a single class without regard to series, at a meeting of the stockholders, or of the holders of shares of such stock as to which a default exists, called for the purpose. So long as a default in any preference dividends on such stock shall exist, (a) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (b)) pursuant to an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (b) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding shares of Convertible Preferred Stock and Parity Stock with respect to which such a default shall exist, voting together as a single class without regard to series, at the same meeting at which such removal shall be voted. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred director. Whenever a default in preference dividends shall no longer exist, the term of office of each Preferred Director shall terminate forthwith and the number of directors constituting the Board of Directors of the Corporation shall be reduced by two. For the purposes hereof, a “default on preference dividends” on the Convertible Preferred Stock or Parity Stock shall be deemed to exist whenever the equivalent of six quarterly dividends have not been declared and paid or set apart for payment, whether or not consecutive, and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all accrued dividends on all shares of Convertible Preferred Stock or Parity Stock of each and every series then outstanding shall have been declared and paid or set apart for payment to the end of the last preceding dividend period.

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(D)  For purposes of the foregoing provisions of this Section 9, each share of Convertible Preferred Stock shall have one (1) vote per share. Except as otherwise required by applicable law or as set forth herein, the shares of Convertible Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

Section 10.  Determinations by the Board of Directors. Any determinations made in good faith by the Board of Directors of the Corporation under any provision of this Certificate of Designations, Preferences and Rights shall be final and binding on all stockholders (including holders of shares of Convertible Preferred Stock) of the Corporation.

Section 11.  Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Convertible Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be made under the seal of the Corporation and signed and attested by its duly authorized officers this 8^th day of August 2006.

HECLA HOLDINGS INC.
By:	/s/ Phillips S. Baker, Jr.
	Phillips S. Baker, Jr. President and CEO

(Corporate Seal)

Attest:

By:	/s/ Philip C. Wolf
	Philip C. Wolf Corporate Secretary

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EX-10.1

Exhibit 10.1

ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Agreement”) is made as of November 8, 2006, by and between HECLA MINING COMPANY, a Delaware corporation (“Assignor”) and HECLA HOLDINGS INC., a Delaware corporation (“Assignee”).

RECITALS

Pursuant to the Agreement and Plan of Reorganization dated as the date hereof, among Assignor, Assignee, and Hecla Merger Sub Inc. (the “Merger Agreement”), Assignor will create a new holding company structure by merging Hecla Merger Sub Inc. with and into Assignor with Assignor being the surviving corporation and converting the capital stock of Assignor into the capital stock of Assignee (the “Merger”). In connection with the Merger, Assignor has agreed to assign to Assignee, and Assignee has agreed to assume from Assignor, all of the Option Plans, the Stock Incentive Plans and the Other Agreements (collectively, the “Assumed Agreements”).

AGREEMENT

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the receipt and sufficiency of which is acknowledged by the parties hereto, the parties intending to be legally bound, agree as follows:

1.Defined Terms. Capitalized terms used in this Agreement and not otherwise defined shall have the respective meanings assigned to them in the Merger Agreement.

2.Assignment. Assignor hereby assigns to Assignee all of its rights and obligations under the Assumed Agreements listed on Exhibit A hereto.

3.Assumption. Assignee hereby assumes all of the rights and obligations of Assignor under the Assumed Agreements, and agrees to abide by and perform all terms, covenants and conditions of Assignor under such Assumed Agreements. In consideration of the assumption by Assignee of all of the rights and obligations of Assignor under the Assumed Agreements, Assignor agrees to pay (i) all expenses incurred by Assignee in connection with the assumption of the Assumed Agreements pursuant to this Agreement and (ii) all expenses incurred by Assignee in connection with the registration on Form S-8 of shares of common stock of Assignee to the extent required in connection with the Option Plans and the Stock Incentive Plans, including, without limitation, registration fees imposed by the Securities and Exchange Commission.

4.Further Assurances. Subject to the terms of this Agreement, the parties hereto shall take all reasonable and lawful action as may be necessary or appropriate to cause the intent of this Agreement to be carried out, including, without limitation, entering into amendments to the Assumed Agreements and notifying other parties thereto of such assignment and assumption.

5.Successors and Assigns. This Agreement shall be binding upon Assignor and Assignee, and their respective successors and assigns. The terms and conditions of this Agreement shall survive the consummation of the transfers provided for herein.

6.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to conflicts of law principles.

7.Entire Agreement. This Agreement, including Exhibit A attached hereto, together with the Merger Agreement, constitute the entire agreement and supersede all other agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement may not be modified or amended except by a writing executed by the parties hereto.

8.Severability. The provisions of this Agreement are severable, and in the event any provision hereof is determined to be invalid or unenforceable, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof.

9.Third Party Beneficiaries. The parties to the various stock option or similar agreements entered into pursuant to the Option Plans and the Stock Incentive Plans and who are granted Options or other rights to receive securities thereunder, and the parties to the Other Agreements, are intended to be third party beneficiaries to this Agreement.

10.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original.

This Assignment and Assumption Agreement is signed as of the date first written above.

Assignor HECLA MINING COMPANY
By:
	Phillips S. Baker, Jr. President and CEO

Assignee HECLA HOLDINGS INC.
By:
	Philip C. Wolf Vice President

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Exhibit A

Assumed Agreements

Stock and Stock Incentive Plans

Hecla Mining Company Key Employee Deferred Compensation Plan

Hecla Mining Company 1995 Stock Incentive Plan

Hecla Mining Company Stock Plan for Nonemployee Directors

Other Agreements

Hecla Mining Company Retirement Plan

Hecla Mining Company Capital Accumulation Plan (401(k) Plan)

Employment Agreements with the following individuals:

a. Phillips S. Baker, Jr.

b. Ronald W. Clayton

c. Vicki Veltkamp

d. Lewis E. Walde

e. Michael H. Callahan

f. Philip C. Wolf

g. Dean McDonald

h. Jay S. Layman

i. Scott Hartman

j. Michael D. Dexter

k. Don Gray

l. Rich Appling

m. George Lytle

Performance Pay Compensation Plan (Short-Term Plan)

Executive and Senior Management Long-Term Performance Incentive Plan

Supplemental Excess Retirement Plan

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EX-10.2

Exhibit 10.2

MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is made as of the 8^th day of November 2006 by and among Hecla Mining Company, a Delaware corporation (“HMC”) and the parties listed in Schedule I, as it may be amended from time to time (singularly “Subsidiary” and collectively “Subsidiaries”).

RECITALS

WHEREAS, HMC has certain processes, systems, equipment, and personnel capable of supporting certain business operations of its own and other businesses;

WHEREAS, the Subsidiaries have need of the types of business support services that HMC can provide and the Subsidiaries wish to avail themselves of services HMC can provide;

WHEREAS, the Subsidiaries have certain processes, systems, equipment, and personnel capable of supporting certain business operations of their own and other businesses;

WHEREAS, HMC has need of the types of business support services that the Subsidiaries can provide and HMC wishes to avail itself of services the Subsidiaries can provide; and

WHEREAS, HMC and the Subsidiaries desire in this Agreement to evidence the terms upon which the parties hereto shall provide mutually agreed services.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Services. The rights and services described in Sections 1(a)-(c) below are referred to herein as “Services”.

(a)Mutual Services. Subject to Section 1(g) below, each of HMC on the one hand, and the Subsidiaries on the other, agrees to provide such rights and services to the other as may be reasonably requested, including but not limited to:

(i)assistance by management and employees of HMC to the Subsidiaries, and assistance by management and employees of the Subsidiaries to HMC;

(ii)use by the Subsidiaries of such office space, administrative and support facilities, and other rights and services as the Subsidiaries may reasonably request, and use by HMC of such office space, administrative and support facilities, and other rights and services as HMC may reasonably request; and

(iii)all other services as agreed to by the parties from time to time.

(b)HMC Services. Without limiting the generality of Section 1(a) above, HMC agrees to provide to the Subsidiaries the rights and services set forth on Exhibit A hereto.

(c)Subsidiaries Services. Without limiting the generality of Section 1(a) above, the Subsidiaries agree to provide to HMC the rights and services set forth on Exhibit A hereto.

(d)Use of Third Parties. HMC and the Subsidiaries shall have the option of using any other person or entity to provide Services, including any other Subsidiary; provided, however, HMC and the Subsidiaries shall remain responsible for the performance of all of their obligations hereunder. To the extent that HMC or a Subsidiary uses third parties to provide Services, HMC and such Subsidiary shall use commercially reasonable efforts (i) to obtain any goods and services at rates competitive with those otherwise generally available in the area in which services or materials are to be furnished, and (ii) to obtain from such third parties such customary warranties and guarantees as may be reasonably required with respect to the goods and services so furnished.

(e)Standard of Care. Each of HMC on the one hand, and the Subsidiaries on the other, shall perform the Services in an honest and good faith manner, with that degree of care, diligence and skill that a reasonably prudent advisor and manager would exercise in comparable circumstances, and in compliance with applicable laws, regulations, contracts, leases, orders, security instruments and other agreements to which HMC or the Subsidiaries, respectively, are a party or by which HMC or the Subsidiaries, respectively, or any of their properties are bound.

(f)Subsidiary to Subsidiary Services. Any Subsidiary may provide Services to another Subsidiary as agreed to by such Subsidiaries from time to time. In such event, the Subsidiary that requests Services shall have the same rights as HMC has hereunder, and the Subsidiary providing Services shall have the same obligations hereunder as it has if providing Services to HMC.

(g)Prohibited Services. No party hereto shall provide any Services to another party relating to day-to-day operational or environmental matters.

2.Term.The term of this Agreement shall commence on the date hereof and shall continue for a period of one (1) year, subject to earlier termination only upon the mutual consent of the parties hereto or at the election of one of the parties upon default by the other in performance of its obligations hereunder. Thereafter, this Agreement shall automatically renew for an unlimited number of successive additional terms of one (1) year each; provided, however, that HMC may terminate this Agreement at any time for its own convenience upon providing the Subsidiaries with at least thirty (30) days prior written notice; further provided, that any Subsidiary may terminate this Agreement solely with respect to its obligations to HMC and HMC’s obligations to such Subsidiary, with at least thirty (30) days prior written notice to HMC.

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3.Payments.

(a)Out-of-Pocket Expenses. (i) HMC shall periodically, but no more frequently than quarterly, and no less frequently than annually, bill the Subsidiaries for any out-of-pocket expenses incurred by HMC in the performance of Services (“HMC Expenses”), including with respect to services or goods purchased from third parties, including but not limited to, legal and accounting fees, insurance premiums, facility costs, printing costs, costs of consulting services furnished by independent contractors, and taxes. The HMC Expenses shall be charged to each Subsidiary without markup, interest, or other profit to HMC or its affiliates. Notwithstanding the first sentence of this clause, the parties may arrange for each Subsidiary to pay any third party directly the HMC Expenses.

(ii)Each Subsidiary shall periodically, but no more frequently than quarterly, and no less frequently than annually, bill HMC for any out-of-pocket expenses incurred by the Subsidiary in the performance of Services (“Subsidiary Expenses”), including with respect to services or goods purchased from third parties. The Subsidiary Expenses shall be charged to HMC without markup, interest, or other profit to the Subsidiary or its affiliates. Notwithstanding the first sentence of this clause, the parties may arrange for HMC to pay any third party directly the Subsidiary Expenses.

(iii)HMC Expenses and Subsidiary Expenses not directly paid to third parties by the party receiving the relevant Services shall be settled via intercompany transfer.

(b)Internal Expenses. For each calendar year HMC and the Subsidiaries shall estimate the amount and cost of non-third party expenses (“Internal Expenses”), including, but not limited to the general, administrative, and similar allocable overhead expenses, wages, salaries, payroll taxes, and other labor expenses, that will be incurred in connection with Services to be performed in such year. Such estimates will be adjusted periodically, but no more frequently than quarterly, and no less frequently than annually, to reflect Services actually rendered. Internal Expenses shall be settled via intercompany transfer.

(c)Taxes. Each Subsidiary shall be responsible for all applicable taxes levied on items, goods, or services that are sold, purchased, or obtained in connection with Services provided by HMC to such Subsidiary hereunder. HMC shall be responsible for all applicable taxes levied on items, goods, or services that are sold, purchased, or obtained in connection with Services provided by the Subsidiaries to HMC hereunder.

(d)Cooperation. During the term of this Agreement, HMC on the one hand, and each Subsidiary on the other, will afford to the other reasonable access and duplicating rights to their books and records. Such access shall be limited to books and records (including but not limited to contracts, instruments, computer data, and other data and information) that are reasonably necessary for one or more of the following purposes: (i) to verify the calculation of expenses charged pursuant to this Agreement; (ii) to perform Services; (iii) to prepare or review financial statements, tax returns, or other required disclosure or reporting obligations; and (iv) to conduct or defend litigation or similar controversies, internal or external audits, or similar inquiries. Upon conclusion of any review performed pursuant to clause (i) above, prompt adjustment shall be made by the proper party to compensate the other party for any errors or omissions in the calculation of expenses charged pursuant to this Agreement disclosed by such review. Any such review shall be conducted jointly with the party that provided the Services being reviewed, and all costs and expenses associated with conducting such review shall be split equally.

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4.Confidential Information. For purposes of this Agreement, “Confidential Information” shall mean information disclosed to any party to this Agreement or known by such party or any of its officers, directors, stockholders, agents, or employees as a consequence of or through the performance by any other party of this Agreement, which is not generally known in any industry in which the party to which the information relates is engaged, about such party’s products, processes and services, including information relating to research, development, inventions, manufacturing, purchasing, accounting, engineering, marketing, and selling. Except as may be required by law or as required in the fulfillment of its duties under this Agreement, each party hereto will not, directly or indirectly, use, disseminate or disclose any Confidential Information, and each party shall take all steps reasonably necessary to prevent the dissemination or disclosure of Confidential Information by any of its agents or employees. Upon termination of this Agreement, the Subsidiaries will return to HMC, and HMC will return to each Subsidiary, all documents, records, notebooks and similar repositories of such Confidential Information, including copies thereof, then in such party’s possession, whether prepared by such party, its agents, employees, or others.

5.Indemnity. (a) Each Subsidiary shall indemnify and hold harmless HMC and its other Subsidiaries and each of their directors, officers, employees, affiliates, and agents (“HMC Indemnitees”) from and against any and all claims that may be made against any of them arising from this Agreement except due to any HMC Indemnitee’s gross negligence or willful misconduct. Notwithstanding anything to the contrary herein, in no case will any Subsidiary indemnify or hold harmless any HMC Indemnitee for any Environmental, Health, and Safety Liability.

(b)HMC shall indemnify and hold harmless each Subsidiary and its directors, officers, employees, affiliates, and agents (“Subsidiary Indemnitees”) from and against any and all claims that may be made against any of them arising from this Agreement except due to any Subsidiary Indemnitee’s gross negligence or willful misconduct. Notwithstanding anything to the contrary herein, in no case will HMC indemnify or hold harmless any Subsidiary Indemnitee for any Environmental, Health, and Safety Liability.

(c)(i) As used herein, “Environmental, Health, and Safety Liability” shall mean: any cost, damages, expense, liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law and consisting of or relating to: (w)any environmental, health, or safety matters or conditions resulting in liability (including on-site or off-site contamination, occupational safety and health, and the regulation of chemical substances or products); (x) fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health Law; (y) financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions (“Cleanup”) required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any governmental body or any other person or entity) and for any natural resource damages; or (z)any other compliance, corrective, investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law. The terms “removal,” “remedial,” and “response action,” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., as amended.

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(ii)As used herein, “Environmental Law” shall mean any Legal Requirement that relates to public health and safety and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, reduction, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials, substances, wastes or pollutants, as such requirements are enacted and in effect on, prior to, or after the date of this Agreement.

(iii)As used herein, “Occupational Safety and Health Law” shall mean any Legal Requirement issued by a governmental body having jurisdiction over such matters which is designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including, but not limited to the Federal Mine Safety Act and any similar Legal Requirement.

(iv)As used herein, “Legal Requirement(s)” shall mean any order, constitution, law, ordinance, principle of common law, regulation, rule or statute of any governmental body.

6.Exclusion of Damages; Disclaimers. (a) NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR EXEMPLARY, PUNITIVE, CONSEQUENTIAL, SPECIAL, INDIRECT OR INCIDENTAL DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE FORM IN WHICH ANY ACTION IS BROUGHT.

(b)EACH PARTY HERETO DISCLAIMS ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF, OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER SUCH PARTY KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING.

(c)The provisions of this Section 6, and Sections 4, 5, 8, and 16 shall survive the termination of this Agreement.

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7.Notices. All notices, demands, requests or other communications required or that may be given under this Agreement shall be in writing and shall be given to the other party by personal delivery, overnight air courier or facsimile or electronic transmissions (with confirmation of transmission) sent to the appropriate address set forth on the signature page hereto.

8.Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts of law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each party hereby submits to the non-exclusive jurisdiction of the federal courts in the State of Idaho and to venue in Boise, Idaho.

9.Further Assurances. Each of the parties to this Agreement agrees to execute and deliver such other documents and to take such other action as may be necessary or convenient to consummate the purposes and subject matter of this Agreement.

10.Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the transactions contemplated herein and supersedes all previous written or oral negotiations, commitments, and writings with respect to such transactions.

11.Amendment or Modification. Neither this Agreement nor any term hereof may be changed, amended, modified, waived, discharged, or terminated other than by an agreement in writing signed by the parties hereto, and the waiver of any provision of this Agreement shall not constitute a general waiver or a waiver of any other provision hereof.

12.Assignment. This Agreement may not be assigned by any party without the prior written consent of the other parties. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns.

13.Severability. In the event any provision of this Agreement is declared to be invalid or unenforceable the remainder of this Agreement shall be considered valid and enforceable in accordance with its terms, and the parties shall endeavor to replace the invalid or unenforceable provision with a new provision as close as possible to the original that is valid and enforceable.

14.No Third-Party Beneficiaries. Nothing in this Agreement (except as specifically provided in Section 6 (Indemnification) shall provide any benefit to any third party or entitle any third party to any claim, cause of action, remedy or right of any kind, it being the intent of the parties that this Agreement shall not be construed as a third-party beneficiary contract.

15.Independent Contractor Status. (a) The parties hereto acknowledge that their relationship shall be that of an independent contractor rather than that of employee, agent, partnership, or a joint venture. As an independent contractor, HMC shall have no authority, express or implied, to commit or obligate any Subsidiary in any manner whatsoever, except as specifically authorized from time to time in writing by an authorized representative of the relevant Subsidiary, which authorization may be general or specific. As an independent contractor, each Subsidiary shall have no authority, express or implied, to commit or obligate HMC in any manner whatsoever, except as specifically authorized from time to time in writing by an authorized representative of HMC, which authorization may be general or specific.

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(b)Each party shall retain full control, authority and discretion at all times, with regard to the hiring, firing, and working conditions of the parties’ respective employees or other personnel, subject only to the provisions of this Agreement.

(c)Each party shall remain solely responsible and liable for compliance with all local, state and federal laws and regulations, and any contractual obligations related to the employment of such parties’ respective employees or other personnel.

(d)Each party shall remain solely responsible and liable for the payment of all wages, fringe benefits, payroll related taxes and premiums, and expense reimbursement related to the employment of such party’s respective employees or other personnel.

(e)Notwithstanding anything herein to the contrary, nothing in this Agreement shall prohibit or limit the rights of HMC as a stockholder of any Subsidiary.

16.No Recourse Against Officers, Directors, Managers or Employees. For the avoidance of doubt, the provisions of this Agreement shall not give rise to any right of recourse against any officer, director, stockholder, manager, or employee of HMC, or against any officer, director, non-HMC stockholder, manager, or employee of Subsidiary.

17.Jointly Drafted. This Agreement, and all the provisions of this Agreement, shall be deemed drafted by all of the parties hereto, and shall not be construed against any party on the basis of that party’s role in drafting this Agreement.

18.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

19.License. Each party hereto (“Licensor”) grants a limited, royalty-free, fully paid, non-exclusive, non-transferable, non-sublicensable, worldwide license to the other parties hereto (“Licensees”) to the intellectual property of Licensor, including, but not limited to, any trademark, copyright, patent, computer software, and trade secret, necessary or useful for the Licensees to provide Services hereunder. The license granted under this Section 19 shall automatically and immediately terminate upon termination of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

HECLA LIMITED HECLA MINING COMPANY

By:	/s/ Philip C. Wolf	By:	/s/ Lewis E. Walde
	Philip C. Wolf Vice President Date:  November 8, 2006		Lewis E. Walde Vice President and CFO Date:  November 8, 2006

Address: 6500 N. Mineral Drive, Suite 200 Coeur d'Alene, Idaho 83815-9408 Fax:  (208) 292-5525 Address: 6500 N. Mineral Drive, Suite 200 Coeur d'Alene, Idaho 83815-9408 Fax:  (208) 292-7612

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Exhibit A

Services

HMC Services:

HMC shall provide each Subsidiary with financial analysis and support, accounting and audit service and support, accounts payable, payroll services, employee benefits, treasury services, and technical services.

HMC shall provide each Subsidiary with legal advice through its in-house counsel, and supervision of matters referred to outside counsel, including assistance with respect to the preparation and review of SEC reports, general corporate and securities matters, corporate governance issues, issues relating to compliance with the Sarbanes-Oxley Act, claims, litigation, the preparation and review of contracts and other matters.

HMC shall assist each Subsidiary to comply with federal, state and local laws, rules and regulations applicable to each Subsidiary’s activities, including the preparation and filing of tax returns, reports and other documents required of each Subsidiary by any public authority or agency.

HMC shall provide each Subsidiary with executive management support to assist each Subsidiary with business performance and development.

HMC shall assist each Subsidiary with such other general and administrative services as are necessary to enable each Subsidiary to function in the ordinary course of business.

Subsidiaries Services:

The Subsidiaries will provide such services as shall be reasonably requested by HMC.

Schedule I

Hecla Limited, a Delaware corporation

EX-10.7

Exhibit 10.7

INDEMNIFICATION AGREEMENT

DIRECTORS AND OFFICERS

THIS AGREEMENT made and entered into this 8^th day of November 2006, by and between HECLA MINING COMPANY, a Delaware corporation (the “Corporation”), and _______________________ (the “Indemnitee”).

WHEREAS, it is essential for the Corporation to attract and retain competent and experienced persons as directors or officers of publicly held corporations, which is difficult to do unless they are provided with adequate protection against claims and actions against them for their activities on behalf of such corporations, generally through insurance and indemnification; and

WHEREAS, uncertainties in the interpretation of the statutes, regulations, case law and public policies relating to indemnification of corporate directors and officers are such as to make adequate, reliable assessment of the risks to which directors and officers of publicly held corporations may be exposed difficult, particularly in light of the proliferation of lawsuits against directors and officers; and

WHEREAS, the adoption of new statutes, such as the Sarbanes-Oxley Act and related rules of the New York Stock Exchange have imposed new duties on corporate directors and officers of public companies; and

WHEREAS, both the Corporation and the Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today’s environment; and

WHEREAS, basic protection against undue risk of personal liability of directors and officers heretofore has been provided through insurance coverage and the Indemnitee has relied on the availability of such coverage; but as a result of substantial changes in the marketplace for such insurance, it has become increasingly more difficult to obtain such insurance on terms providing reasonable protection at reasonable cost; and

WHEREAS, the Certificate of Incorporation and By-laws of the Corporation require the Corporation to indemnify and advance expenses to its directors and officers to the fullest extent permitted by the Delaware General Corporation Law and authorizes the Corporation to enter into contracts of indemnification, and the Indemnitee has been serving and is willing to continue to serve as a director or officer, or both, of the Corporation in part in reliance thereon; and

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WHEREAS, in recognition of the Indemnitee’s need for substantial protection against personal liability in order to enhance the Indemnitee’s continued service to the Corporation in an effective manner and any inadequacy of the Corporation’s director and officer liability insurance coverage, and to provide the Indemnitee with the additional assurance resulting from a specific indemnification contract as authorized by the Certificate of Incorporation and

By-laws (including the additional assurance that the promised protection will be available to the Indemnitee regardless of, among other things, any change in the composition of the Corporation’s Board of Directors or any acquisition transaction relating to the Corporation), the Corporation wishes to provide in this Agreement specific provisions for the indemnification of, and the advancing of expenses to, the Indemnitee to the full extent permitted by law and as set forth in this Agreement and, to the extent insurance is maintained, for the continued coverage of the Indemnitee under the Corporation’s directors’ and officers’ liability insurance policies;

NOW, THEREFORE, in consideration of the premises and of the Indemnitee’s continuing to serve the Corporation directly, or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Certain Definitions:

(a)        Change in Control: shall be deemed to have occurred if: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or a corporation, owned directly or indirectly, by the shareholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, or securities of the Corporation representing 20% or more of the combined voting power of the Corporation’s then outstanding Voting Securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Corporation and any new director whose election by the Board of Directors or nomination for election by the Corporation’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority thereof; or (iii) the shareholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the combined voting power of the Voting Securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation’s assets.

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(b)Claim: any threatened, pending, or completed action, suit, or proceeding or any inquiry or investigation, whether conducted by the Corporation or any other party, that the Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal administrative, investigative, or other.

(c)Expenses: include attorneys’ fees and all other costs, expenses, and obligations paid or incurred in connection with investigating, defending, being a witness in, or participating in (including on appeal) or preparing to defend, or participate in, any Claim relating to any Indemnifiable Event.

(d)Indemnifiable Event: any event or occurrence related to the fact that the Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, trustee, agent, or fiduciary of another corporation, company, partnership, joint venture, employee benefit plan, trust, or other enterprise or by reason of anything done or not done by the Indemnitee in any such capacity.

(e)Potential Change in Control: shall be deemed to have occurred if (i) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Corporation) publicly announces an intention to take or to consider taking actions, which if consummated, would constitute a Change in Control; (iii) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or a corporation owned, directly or indirectly, by the shareholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation, who is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 9.5% or more of the combined voting power of the Corporation’s then outstanding Voting Securities increases his or her beneficial ownership of such securities by 5% or more over the percentage so owned by such person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(f)Reviewing Party: any appropriate person or body consisting of a member or members of the Corporation’s Board of Directors or any other person or body appointed by the Board (including the special, independent counsel referred to in Section 3) who is not a party to the particular Claim for which the Indemnitee is seeking indemnification.

(g)Voting Securities: any securities of the Corporation which vote generally in the election of directors.

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2. Basic Indemnification Arrangement.

(a)In the event the Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Corporation shall indemnify the Indemnitee to the fullest extent permitted by law as soon as practicable, but in any event no later than 30 days after written demand is presented to the Corporation, against any and all Expenses, judgments, fines, penalties, and amounts paid in settlement (including all interest, assessments, and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties, or amounts paid in settlement) of such Claim. Notwithstanding anything in this Agreement to the contrary, prior to a Change in Control, the Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by the Indemnitee against the Corporation or any director or officer of the Corporation unless the Corporation has joined in or consented to the initiation of such Claim. If so requested by the Indemnitee, the Corporation shall advance (within two business days of such request) any and all Expenses to the Indemnitee (an “Expense Advance”).

(b)        Notwithstanding the foregoing, (i) the obligations of the Corporation under Section 2(a) hereof shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the special, independent counsel referred to in Section 3 hereof is involved) that the Indemnitee would not be permitted to be indemnified under applicable law; and (ii) the obligation of the Corporation to make an Expense Advance pursuant to Section 2(a) hereof shall be subject to the condition that, if, when, and to the extent that the Reviewing Party determines that the Indemnitee would not be permitted to be so indemnified under applicable law, the Corporation shall be entitled to be reimbursed by the Indemnitee (who hereby agrees to reimburse the Corporation) for all such amounts theretofore paid, provided, however, that if the Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that the Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that the Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and the Indemnitee shall not be required to reimburse the Corporation for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed); provided, however, that the entry of a guilty plea by an Indemnitee shall be deemed to be a final judicial determination, regardless of whether a sentence has been imposed. If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the special, independent counsel referred to in Section 3 hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that the Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, the Indemnitee shall have the right to commence litigation in any court in the states of Idaho or Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Corporation hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Corporation and the Indemnitee.

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3. Change in Control. The Corporation agrees that if there is a Change in Control of the Corporation (other than a Change in Control which has been approved by a majority of the Corporation’s Board of Directors who were directors immediately prior to such Change in Control), then with respect to all matters thereafter rising concerning the rights of the Indemnitee to indemnity payments and Expense Advances under this agreement or any other agreement or Corporation By-Law now or hereafter in effect relating to Claims for Indemnifiable Events, the Corporation shall seek legal advice only from special, independent counsel selected by the Indemnitee and approved by the Corporation (which approval shall not be unreasonably withheld) (“Approved Counsel”). The Approved Counsel shall (i) be located in Chicago, Illinois or New York City; (ii) consist of 100 or more attorneys; (iii) be rated “a v” by Martindale-Hubbell Law Directory; and (iv) shall not otherwise have performed services for the Corporation within the last ten years (other than in connection with such matters) or the Indemnitee. The Approved Counsel may consult with counsel admitted to the bar in the state of Delaware in connection with all matters arising hereunder. Such Approved Counsel, among other things, shall render its written opinion to the Corporation and the Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Corporation agrees to pay the reasonable fees of the Approved Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

4. Establishment of Trust. In the event of a Potential Change in Control, the Corporation shall, upon written request by the Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of the Indemnitee shall fund such Trust to the extent permitted by law in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, and defending any Claim relating to an Indemnifiable Event, and any and all judgments, fines, penalties, and settlement amounts of any and all Claims relating to an Indemnifiable Event from time to time actually paid or claimed, reasonably anticipated, or proposed to be paid. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party in any case in which the special, independent counsel referred to above is involved. The terms of such Trust shall provide that upon a Change in Control (i) the Trust shall not be revoked or the principal thereof invaded, without written consent of the Indemnitee; (ii) the Trustee shall advance, within two business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Corporation under Section 2(b) hereof); (iii) the Trust shall continue to be funded by the Corporation in accordance with the funding obligation set forth above; (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such Trust shall revert to the Corporation upon a final determination by the Reviewing Party or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 4 shall relieve the Corporation of any of its obligations under this Agreement.

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5. Indemnification for Additional Expenses. The Corporation shall indemnify the Indemnitee against any and all expenses (including attorneys’ fees) and, if requested by the Indemnitee, shall (within two business days of such request) advance such expenses to the Indemnitee, which are incurred by the Indemnitee in connection with any claim asserted against or action brought by the Indemnitee for (i) indemnification or advance payment of Expenses by the Corporation under this Agreement or any other agreement or Corporation By-Law now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors’ and officers’ liability insurance policies maintained by the Corporation, regardless of whether the Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment, or insurance recovery, as the case may be; provided, however, that the Corporation shall have no obligation to indemnify the Indemnitee with respect to a claim or action under subsections (i) or (ii) hereof if such claim or action relates to a proceeding to which the Indemnitee has entered a guilty plea.

6. Partial Indemnity, Etc. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of the Expenses, judgments, fines, penalties, and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Corporation shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any Claim relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, the Indemnitee shall be indemnified against all Expenses incurred in connection therewith. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Corporation to establish that the Indemnitee is not so entitled.

7. No Presumption. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), or upon a plea of nolo contendere or its equivalent, shall not create a presumption that the Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. Notwithstanding the foregoing, the entry by the Indemnitee of a plea of guilty shall indicate that the Indemnitee did not meet the standard of conduct entitling the Indemnitee to indemnification hereunder.

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8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights the Indemnitee may have under the Corporation’s Certificate of Incorporation or By-Laws or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Corporation’s Certificate of Incorporation or By-Laws of this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.

9. Liability Insurance. To the extent the Corporation maintains an insurance policy or policies providing directors’ and officer’s liability insurance, the Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Corporation director or officer.

10. Period of Limitations. No legal action shall be brought, and no cause of action shall be asserted by or on behalf of the Corporation or any affiliate of the Corporation against the Indemnitee, the Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Corporation or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period, provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

11. Amendments, Etc. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

12. Subrogation. In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee against any third party and the Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation effectively to bring suit to enforce such rights.

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13. No Duplication of Payments. The Corporation shall not be liable under this Agreement to make any payment in connection with any claim made against the Indemnitee to the extent the Indemnitee has otherwise actually received payment (under any insurance policy, By-Law, or otherwise) of the amounts otherwise indemnifiable hereunder.

14. Binding Effect, Etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Corporation, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as an officer or director of the Corporation or of any other enterprise at the Corporation’s request.

15. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereto (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.

16. Notice to the Corporation by Indemnitee. The Indemnitee agrees to promptly notify the Corporation in writing upon being served with any citation, complaint, indictment or other document covered hereunder, either civil or criminal.

17. Notices. All notices, requests, demand and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or if (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to the Indemnitee:

(b) If to the Corporation:

Hecla Mining Company

6500 N. Mineral Drive, Suite 200

Coeur d’Alene, Idaho 83815-9408

Attn: Corporate Secretary

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18. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws.

19. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supercedes all prior agreements, whether written or oral, regarding the subject matter hereof. Any prior written agreement is hereby cancelled and terminated.

ENTERED into as of the day and year first above written.

INDEMNITEE:	HECLA MINING COMPANY
	Phillips S. Baker, Jr. President and CEO

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EX-10.8

Exhibit 10.8

WAIVER AND CONSENT

_______________ (“Employee”) and Hecla Mining Company (the “Company”) are parties to that certain Employment Agreement dated ____________ (the “Employment Agreement”); and

WHEREAS, among other things, the Employment Agreement provides that the Effective Date occurs upon a Change of Control (as defined therein); and

WHEREAS, the Company intends to create a holding company structure pursuant to the provisions of Section 251(g) of the Delaware Corporation Law; and

WHEREAS, the Employment Agreement may become applicable to successors or assigns of the Company pursuant to the terms thereof; and

WHEREAS, the company which will become the parent corporation of the Company pursuant to the formation of the holding company structure has agreed to assume and perform the Company’s obligations under the Employment Agreement after the consummation of the holding company transaction; and

WHEREAS, the parties to the Employment Agreement wish there to be no confusion or ambiguity as to the consequences of the holding company transaction and the succession of the parent corporation to the obligations of the Company thereunder;

NOW THEREFORE, the parties to the Employment Agreement acknowledge and agree that the creation of a holding company structure was not intended to be a Change of Control within the meaning of the Employment Agreement and that the correct interpretation of the language of the Employment Agreement is that such creation of a holding company structure and the consequences thereof do not constitute a Change of Control within the meaning of the Employment Agreement, and that the Effective Date will not occur by reason thereof; and

Furthermore, Employee consents to the assignment of the Employment Agreement by the Company to the parent corporation of the Company following the consummation of the holding company transaction pursuant to Section 251(g) of the Delaware Corporation Law (currently named Hecla Holdings Inc., but to be renamed Hecla Mining Company upon the consummation of the Section 251(g) transaction).

DATED this 8^th day of November 2006.

EXECUTIVE	HECLA MINING COMPANY
___________________________	By: _____________________________
Name:	Name:
Title:	Title:

EX-10.11

Exhibit 10.11

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of November 8, 2006 (this “Amendment”), to the Existing Credit Agreement (as defined below) is made by HECLA MINING COMPANY (to be known as Hecla Limited following the Reorganization (as defined below)), a Delaware corporation (the “Borrower”), the Lenders (such capitalized term and other capitalized terms used in this preamble and the recitals below to have the meanings set forth in, or are defined by reference in, Article I below) and The Bank of Nova Scotia, as the administrative agent (in such capacity, the “Administrative Agent”) for the Lenders, and is acknowledged and accepted by HECLA HOLDINGS INC. (to be known as Hecla Mining Company following the Reorganization (as defined below)), a Delaware corporation (“Holdings”).

WITNESSETH:

WHEREAS, the Borrower, the Lenders, the Administrative Agent, and N M Rothschild & Sons Limited, as Technical Agent, are all parties to the Credit Agreement, dated as of September 12, 2005 (as amended or otherwise modified prior to the date hereof, the “Existing Credit Agreement”, and as amended by this Amendment and as the same may be further amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, the Borrower has proposed a restructuring (the “Proposed Restructuring”) of the capital structure of its subsidiaries, whereby (i) the Borrower has created, and owns 100% of the issued and outstanding Capital Securities of, Holdings, (ii) Holdings has created, and owns 100% of the issued and outstanding Capital Securities of, Hecla Merger Sub Inc., a Delaware corporation and a newly formed, wholly owned Subsidiary of Holdings (“Merger Sub”), (iii) pursuant to the Agreement and Plan of Reorganization dated as of the date hereof (the “Reorganization Agreement”), among the Borrower, Holdings and Merger Sub, the Borrower will merge with and into Merger Sub, with the Borrower being the surviving corporation and converting its capital stock into the capital stock of Holdings (collectively, the “Reorganization”), and as a result of the Reorganization, the Borrower will become a Subsidiary of Holdings, (iv) the Borrower will assign to Holdings, and Holdings will assume, the employee benefit plans of the Borrower pursuant to an Assignment and Assumption Agreement, dated as of the date hereof (the “Assignment Agreement”), by and between the Borrower and Holdings, in form and substance satisfactory to the Administrative Agent, and (v) Holdings will guarantee the Obligations; and

WHEREAS, the Borrower has requested that the Lenders amend certain provisions of the Existing Credit Agreement such that the Reorganization does not result in a Change in Control and amend certain other provisions of the Existing Credit Agreement, including amendments relating to the Proposed Restructuring, and the Lenders are willing, on the terms and subject to the conditions hereinafter set forth, to modify the Existing Credit Agreement as set forth below;

NOW, THEREFORE, the parties hereto hereby covenant and agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Definitions. The following terms when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

“Administrative Agent” is defined in the preamble.

“Amendment” is defined in the preamble.

“Amendment Effective Date” is defined in Article III.

“Assignment Agreement” is defined in the second recital.

“Borrower” is defined in the preamble.

“Credit Agreement” is defined in the first recital.

“Existing Credit Agreement” is defined in the first recital.

“Holdings” is defined in the second recital.

“Merger Sub” is defined in the second recital.

“Parent Guaranty” means the Parent Guaranty executed and delivered by an Authorized Officer of Holdings pursuant to the terms of this Amendment, in form and substance satisfactory to the Administrative Agent, as amended, supplemented, amended and restated or otherwise modified from time to time.

“Proposed Restructuring” is defined in the second recital.

“Reorganization” is defined in the second recital.

“Reorganization Agreement” is defined in the second recital.

SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Existing Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings.

ARTICLE II

AMENDMENTS TO CREDIT AGREEMENT

Effective on (and subject to the occurrence of) the Amendment Effective Date, the provisions of the Existing Credit Agreement referred to below are hereby amended in accordance with this Article II.

SECTION 2.1. Amendments to Article I. Article I of the Existing Credit Agreement is hereby amended as follows:

SECTION 2.1.1. Amendments to Section 1.1. Section 1.1 of the Existing Credit Agreement is hereby amended by

(a)replacing each reference to “the Borrower” with “Holdings” or “the Borrower’s” with “Holdings’”, as the case may be, appearing in each of the following definitions: “Adjusted EBITDA”, “Capital Expenditures”, “Compliance Certificate”, “Current Liabilities”, “Designated Preferred Stock”, “EBITDA”, “Immaterial Subsidiary”, “Interest Expense”, “Lender’s Environmental Liability”, “Material Subsidiary”, “Multiemployer Plan”, “Net Income”, “Net Worth”, “Pension Plan”, “Permitted Acquisition”, “Redeemable Capital Securities”, “Restricted Payment”, “Series B Preferred Stock”, “Small Lot Repurchase Agreement”, and “Subsidiary”; and

(b)by inserting the following definitions in the appropriate alphabetical order in Section 1.1:

“Holdings” means Hecla Holdings Inc. (to be known as Hecla Mining Company following the Second Amendment Effective Date), a Delaware corporation.

“Parent Guaranty” means the Parent Guaranty dated as of the Second Amendment Effective Date, executed and delivered by an Authorized Officer of Holdings, as amended, supplemented, amended and restated or otherwise modified from time to time.

“Second Amendment Effective Date” means November 8, 2006.

SECTION 2.1.2. Further Amendments to Section 1.1. Section 1.1 of the Existing Credit Agreement is hereby further amended as follows:

(a)The following definitions are hereby amended and restated in their entirety to read as follows:

“Change in Control” means

(a)the failure of Holdings at any time to directly own beneficially and of record on a fully diluted basis 100% of the outstanding Capital Securities of the Borrower, such Capital Securities to be held free and clear of all Liens (other than Liens permitted pursuant to clause (a) of Section 7.2.3); or

(b)the failure of the Borrower at any time to directly own beneficially and of record on a fully diluted basis 100% of the outstanding Capital Securities of the Subsidiary Guarantor, such Capital Securities to be held free and clear of all Liens (other than Liens permitted pursuant to clause (a) of Section 7.2.3); or

(c)at any time any Person, or Persons acting in concert, shall become the “beneficial holder” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of Voting Securities of Holdings representing more than 50% of the issued and outstanding Voting Securities of Holdings; or

(d)during any period of 24 consecutive months commencing on or after the Effective Date, individuals who at the beginning of such period constituted the Board of Directors of Holdings (together with any new directors whose election to such Board or whose nomination for election by the stockholders of Holdings was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Holdings then in office; or

(e)the occurrence of any “Change of Control” (or similar term) under (and as defined in) any Subordinated Debt Document or Designated Preferred Stock Document.

“Current Assets” means the total assets which would properly be classified in accordance with Section 1.4 as consolidated current assets of Holdings and its Subsidiaries.

“Fixed Charge Coverage Ratio” means, at any time, the ratio of:

(a) the sum, without duplication, of (i) Unrestricted Cash of Holdings and its wholly-owned Subsidiaries as of the first day of the period consisting of the most recently completed Fiscal Quarter and the three immediately preceding Fiscal Quarters (e.g., in determining the Fixed Charge Coverage Ratio as of December 31, 2006, Unrestricted Cash of Holdings and its wholly-owned Subsidiaries as of January 1, 2006 would be included to this clause (a)(i)), (ii) the portion of the Loan Commitment Amount not utilized as of the later of (A) such first day or (B) the date of this Agreement, (iii) EBITDA for such period, (iv) interest income paid in cash to Holdings and its wholly-owned Subsidiaries during such period and (v) Net Equity/Subordinated Debt Proceeds received by Holdings or the Borrower during such period (provided that the aggregate amount of assets held by the Borrower in Venezuela or by Subsidiaries of the Borrower organized or operating in Venezuela that would otherwise be included in this clause (a) shall not exceed $4,000,000 (it being understood that the amount of EBITDA added pursuant to subclause (a)(iii) shall not be subject to such limitation)),

to

(b) the sum, without duplication, of (i) Interest Expense for such period, (ii) scheduled principal repayments of Indebtedness made during such period (including, and together with, payments of Earn-Out Obligations during such period (other than payments made with Capital Securities (other than Redeemable Capital Securities) of Holdings), (iii) Capital Expenditures made during such period, (iv) idle property expenditures for such period (including, and together with, the aggregate amount expended by Holdings and its Subsidiaries during such period with respect to any litigation, labor controversy, arbitration or governmental investigation or proceeding, including in respect of any judgment or settlement relating thereto, less the amount of cash reserves set forth on the December 31, 2004 consolidated balance sheet of the Borrower and its Subsidiaries with respect to such expenditures), less any such expenditures that were subtracted in the determination of EBITDA for such period pursuant to clause (d) of the definition thereof, (v) Restricted Payments made during such period (whether or not permitted hereunder, but excluding Restricted Payments permitted pursuant to clause (f) of Section 7.2.6) and (vi) the aggregate amount expended by the Borrower and its Subsidiaries in cash during such period in respect of Permitted Acquisitions (less the net cash proceeds of Capital Securities or Indebtedness issued in substantially concurrent transactions during such period for the purpose of financing such Permitted Acquisitions).

“Net Equity/Subordinated Debt Proceeds” means, with respect to (a) the sale or issuance after the Effective Date by the Borrower (and after the Second Amendment Effective Date by Holdings) of any of its Capital Securities or warrants or options to acquire such Capital Securities or the exercise of any such warrants or options or the contribution to the capital of the Borrower after the Effective Date (and of Holdings after the Second Amendment Effective Date) or (b) the issuance after the Effective Date by the Borrower of Subordinated Debt (and after the Second Amendment Effective Date by Holdings), in each case to the extent permitted hereunder, the excess of: (i) the gross cash proceeds received by the Borrower (or Holdings as the case may be) from such sale, exercise, issuance or contribution, over (ii) all reasonable and customary underwriting commissions and legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements actually incurred in connection with such sale, issuance, exercise or contribution which have not been paid to Affiliates of the Borrower (or Holdings as the case may be) in connection therewith.

“Senior Debt” means, at any time, the outstanding principal amount of all Indebtedness of Holdings and its Subsidiaries of the type referred to in clause (a), clause (b), clause (c), clause (f) (other than Earn-out Obligations (A) that have not been reduced to a fixed amount or (B) to the extent such obligations may, in accordance with their terms, be satisfied at the sole option of the obligor thereof at any time regardless of the happening of any event by the delivery of Capital Securities (other than Redeemable Capital Securities) of Holdings), clause (g) and clause (h), in each case of the definition of “Indebtedness” (exclusive of (i) Indebtedness secured on a first-priority basis by any restricted cash deposit in an amount not exceeding the amount of such restricted cash deposit, (ii) Subordinated Debt and (iii) to the extent constituting Indebtedness, Designated Preferred Stock, and any Contingent Liability in respect of any of the foregoing.

“wholly owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person all of the outstanding Capital Securities of which (other than any director’s qualifying shares or investments by foreign nationals mandated by applicable laws) is owned directly or indirectly by such Person.

(b)The definitions of “Commitment Termination Event” is hereby amended by deleting the words “with respect to the Borrower” appearing in clause (a) thereof.

(c)The definition of “Controlled Group” is hereby amended by replacing the words “the Borrower” appearing in each case therein with the words “Holdings and the Borrower”.

(d)The definition of “Immaterial Subsidiary” is hereby amended by amending and restating the last sentence thereof in its entirety to read “In no event shall the Borrower or the Subsidiary Guarantor be an Immaterial Subsidiary.”

(e)The definition of “Impermissible Qualification” is hereby amended by inserting the words “Holdings or” or “Holdings’ or” immediately preceding the words “the Borrower” or “the Borrower’s”, respectively, appearing in each instance therein other than in clause (d)(ii).

(f)The definition of “Loan Documents” is hereby amended by inserting the words “the Parent Guaranty,” immediately after the words “each Security Agreement,” appearing therein.

(g)Each of the definitions of “Material Adverse Effect” and “Subordinated Debt” are hereby amended by replacing the words “the Borrower” appearing therein with the words “Holdings or the Borrower”.

(h)The definition of “Obligor” is hereby amended by inserting the word “Holdings,” immediately preceding the words “the Borrower” appearing therein.

SECTION 2.1.3. Amendments to Section 1.4. Section 1.4 of the Existing Credit Agreement is hereby amended by (i) replacing the words “the Borrower” appearing in clause (a) thereof with the word “Holdings” and (ii) replacing the phrase “then the Borrower’s compliance” appearing therein with the phrase “then Holdings’ compliance”.

SECTION 2.2. Amendments to Article II. Section 2.2.2 of the Existing Credit Agreement is hereby amended by replacing the words “The Borrower shall” appearing in the first sentence thereof with the phrase “Each of Holdings and the Borrower shall”.

SECTION 2.3. Amendments to Article VI. Article VI of the Existing Credit Agreement is hereby amended by

(a)replacing each reference in such Article to “the Borrower” with “Holdings”, other than

(i)those references to the Borrower in Article VI as they relate to the Greens Creek Joint Venture and its properties,

(ii)those references to the Borrower in (A) Section 6.6, (B) Section 6.8, (C) Section 6.16 and (D) Section 6.20, and

(iii) as otherwise set forth in this Section 2.3.

(b)replacing the words “the Borrower” appearing in the lead-in sentence to Article VI with the words “each of Holdings and the Borrower”;

(c)amending Section 6.8 by replacing the words “Effective Date” appearing therein with “Second Amendment Effective Date”; and

(d)amending Section 6.13 by replacing the phrase “filings made by the Borrower with the SEC” appearing therein with the phrase “filings made (a) by the Borrower on or prior to the Second Amendment Effective Date and (b) by Holdings following the Second Amendment Effective Date”.

SECTION 2.4. Amendments to Article VII. Article VII of the Existing Credit Agreement is hereby amended as follows:

SECTION 2.4.1. Amendments to Section 7.1. Section 7.1 of the Existing Credit Agreement is amended by

(a)replacing each reference in Section 7.1 thereof to “the Borrower” with “Holdings”, other than

(i)those references to the Borrower in Section 7.1 as they relate to the Greens Creek Joint Venture and its properties,

(ii)those references to the Borrower in (A) clauses (c)(iii) and (c)(iv), (j) and (k) of Section 7.1.1, (B) the last sentence of clause (a) of Section 7.1.5, (C) clause (b) of Section 7.1.5, (D) Section 7.1.7, (E) Section 7.1.8, (F) Section 7.1.9, (G) Section 7.1.10 and (H) Section 7.1.13,

(iii)those references to the Borrower in the parenthetical appearing in the lead-in sentence of each such Section, and

(iv)as otherwise set forth in this Section 2.4.1.

(b)replacing the words “the Borrower” appearing in each instance in the lead-in sentence to Section 7.1 with the words “each of Holdings and the Borrower”; and

(c)amending Sections 7.1.12 by inserting the words “Each of Holdings and” at the beginning of such Section.

SECTION 2.4.2. Amendments to Section 7.2. Section 7.2 of the Existing Credit Agreement is amended by

(a)replacing each reference in Section 7.2 thereof to “the Borrower” with “Holdings”, other than

(i)those references to the Borrower in Section 7.2 as they relate to the Greens Creek Joint Venture and its properties,

(ii)those references to the Borrower in (A) clauses (d), (i) and (j) of Section 7.2.2, (B) clause (l) of Section 7.2.5, (C) clauses (d) and (e) of Section 7.2.11 and (D) clauses (a) and (b) of Section 7.2.15, and

(iii)as otherwise set forth in this Section 2.4.2.

(b)replacing the words “the Borrower” with the words “each of Holdings and the Borrower” appearing in (i) each instance in the lead-in sentence to Section 7.2, (ii) the proviso of Section 7.2.12 and (iii) each instance in the lead-in paragraph of Section 7.2.15;

(c)replacing the words “the Borrower” appearing in clause (b) of Section 7.2.1 with the words “Holdings or the Borrower, as the case may be,”;

(d)replacing the words “the Borrower” with “Holdings or the Borrower” appearing in (i) clauses (f) and (g) of Section 7.2.2, (ii) clause (a) of Section 7.2.6, (iii) clause (i) of Section 7.2.8, (iv) clause (c) of Section 7.2.13;

(e)amending and restating clause (h) of Section 7.2.2 in its entirety to read as follows:

Indebtedness of a Subsidiary (including a Subsidiary acquired pursuant to a Permitted Acquisition) of Holdings, other than the Borrower, provided that no Obligor is providing any credit support for, or a guarantee of, any such Indebtedness, and such Indebtedness is for all purposes non-recourse to the Obligors and their respective assets;

(f)amending and restating clause (m) of Section 7.2.2 in its entirety to read “[Intentionally omitted]”;

(g)amending and restating clause (k) of Section 7.2.3 in its entirety to read “[Intentionally omitted]; and”;

(h) inserting the following sentence at the end of Section 7.2.3:

For the avoidance of doubt, notwithstanding anything herein to the contrary, Holdings will not create, incur, assume or permit to exist any Lien upon the Capital Securities of the Borrower or any Lien on any Indebtedness or accounts receivables owed by the Borrower to Holdings.

(i)amending and restating clause (f) of Section 7.2.5 in its entirety to read as follows:

(i) Investments by way of contributions to capital by Holdings in any Subsidiary and (ii) Investments by way of contributions to capital or purchases of Capital Securities (i) by the Borrower in any Subsidiaries or by any Subsidiary in other Subsidiaries or (ii) by any Subsidiary in Holdings or the Borrower;

(j)amending and restating clause (a) of Section 7.2.9 in its entirety to read as follows:

(i) any U.S. Subsidiary (other than the Subsidiary Guarantor) may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any other U.S. Subsidiary (other than the Subsidiary Guarantor), (ii) any Foreign Subsidiary may liquidate or dissolve voluntarily into, and may merge with or into, any other Subsidiary (other than the Borrower or the Subsidiary Guarantor), and (iii) the assets or Capital Securities of any Subsidiary (other than the Borrower or the Subsidiary Guarantor) may be purchased or otherwise acquired by the Borrower or any other Subsidiary (other than the Subsidiary Guarantor); provided that (A) no Default has occurred and is continuing or would occur after giving effect thereto, (B) such transaction will not affect the Borrower’s ability to repay the Loans and interest thereon when due, (C) such transaction will not affect the security interest granted under the Loan Documents in favor of the Secured Parties and (D) following such transaction, the Borrower will promptly deliver to the Administrative Agent an update of Item 6.8 of the Disclosure Schedule reflecting the new corporate structure of Holdings and its Subsidiaries; and

(k)amending and restating the last paragraph in Section 7.2.13 in its entirety to read as follows:

The foregoing prohibitions shall not apply to restrictions contained (i) in any Loan Document, (ii) in the case of clause (a), any agreement governing (A) any secured Indebtedness permitted by clause (c) of Section 7.2.2 as to the cash and Cash Equivalent Investments securing such Indebtedness or (B) any Indebtedness permitted by clause (d) of Section 7.2.2 as to the assets financed with the proceeds of such Indebtedness, or (iii) in the case of clauses (a) and (c), any agreement of a Subsidiary governing Indebtedness permitted by Section 7.2.2 (provided that such restrictions are ordinary and customary with respect to the type of Indebtedness being incurred and would not reasonably be expected to adversely affect Holdings’ or the Borrower’s ability to make payments hereunder).

SECTION 2.5. Amendments to Article VIII. Article VIII of the Existing Credit Agreement is hereby amended as follows:

(a)Section 8.1.1 is hereby amended by inserting the words “or any other Obligor” immediately following the words “the Borrower” appearing therein;

(b)Section 8.1.3 is hereby amended by (i) inserting the words “or Parent Guaranty” at the end of each of clauses (a)(i) and (a)(ii) thereof and (ii) replacing the words “the Borrower” appearing in clause (b) thereof with the words “Holdings or the Borrower, as the case may be,”

(c)Each reference to “the Borrower” shall be replaced with “Holdings” in each of Sections 8.1.5, 8.1.6, 8.1.7 and 8.1.9.

SECTION 2.6. Amendments to Article IX. Article IX of the Existing Credit Agreement is hereby amended as follows:

(a)Section 9.6 is hereby amended by inserting the word “Holdings and” immediately preceding the words “the Borrower” appearing therein;

(b)Section 9.9 is hereby amended by inserting the word “, Holdings” immediately preceding the words “or the Borrower” appearing therein; and

(c)Clause (c) of Section 9.11 is hereby amended by replacing the words “the Borrower” appearing therein with the word “Holdings”.

SECTION 2.7. Amendments to Article X. Article X of the Existing Credit Agreement is hereby amended as follows:

(a)Section 10.1 is hereby amended by replacing the words “the Borrower” appearing in the lead-in sentence of such Section with the phrase “the Obligor or Obligors party to such Loan Document”;

(b)Clause (f) of Section 10.1 is hereby amended and restated in its entirety to read as follows:

except as otherwise expressly provided in a Loan Document, release (i) any Obligor from its Obligations under the Loan Documents to which such Obligor is a party or (ii) all or substantially all of the collateral under the Loan Documents, in each case without the consent of all Lenders; or

(c)Section 10.2 is hereby amended by inserting the word “Holdings, “ immediately preceding the words “the Borrower” appearing therein; and

(d)Section 10.10 is hereby amended by inserting the words “Holdings and” immediately preceding the words “the Borrower” appearing therein.

SECTION 2.8. Amendment to Schedule I. Schedule I to the Credit Agreement is hereby amended by amending and restating Item 1.1, Item 6.7, Item 6.8 and Item 6.12 of the Disclosure Schedule in their entirety and replacing them with Item 1.1, Item 6.7, Item 6.8 and Item 6.12, respectively, of Annex I hereto.

ARTICLE III

CONDITIONS TO EFFECTIVENESS

This Amendment and the amendments contained herein shall become effective on the date (the “Amendment Effective Date”) when each of the conditions set forth in this Article III shall have been fulfilled to the satisfaction of the Administrative Agent.

SECTION 3.1. Counterparts. The Administrative Agent shall have received counterparts hereof executed on behalf of the Borrower, Holdings and the Lenders.

SECTION 3.2. Resolutions, etc. The Administrative Agent shall have received from each of the Borrower and Holdings (i) a copy of a good standing certificate, dated a date reasonably close to the Amendment Effective Date, for each such Person and (ii) a certificate, dated the Amendment Effective Date, duly executed and delivered by such Person’s Secretary or Assistant Secretary as to

(a) resolutions of each such Person’s Board of Directors then in full force and effect authorizing, to the extent relevant, the Proposed Restructuring, the Reorganization, the execution, delivery and performance of the Reorganization Agreement, the Assignment Agreement and each Loan Document to be executed by such Person and the transactions contemplated hereby and thereby;

(b) the incumbency and signatures of those of its officers authorized to act with respect to this Amendment and each other Loan Document to be executed by such Person; and

(c) the full force and validity of each Organic Document of such Person and copies thereof;

upon which certificates each Secured Party may conclusively rely until it shall have received a further certificate of the Secretary or Assistant Secretary of any such Person canceling or amending its prior certificates, if any.

SECTION 3.3. Amendment Effective Date Certificate. The Administrative Agent shall have received the Amendment Effective Date Certificate, dated the Amendment Effective Date and duly executed and delivered by an Authorized Officer of Holdings and the Borrower, in which certificate each of Holdings and the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of Holdings and the Borrower as of such date, and, at the time each such certificate is delivered, such statements shall in fact be true and correct. All documents and agreements required to be appended to the Amendment Effective Date Certificate shall be in form and substance satisfactory to the Administrative Agent, shall have been executed and delivered by the requisite parties, and shall be in full force and effect.

SECTION 3.4. Solvency, etc. The Administrative Agent shall have received, with counterparts for each Lender, a certificate as to the Solvency of Holdings, duly executed and delivered by the chief financial or accounting Authorized Officer of Holdings, dated as of the Amendment Effective Date, in form and substance satisfactory to the Administrative Agent.

SECTION 3.5. Parent Guaranty. The Administrative Agent shall have received, with counterparts for each Lender, the Parent Guaranty, duly executed and delivered by an Authorized Officer of Holdings.

SECTION 3.6. Affirmation and Consent. The Administrative Agent shall have received, with counterparts for each Lender, a duly executed copy of an Affirmation and Consent, dated as of the Amendment Effective Date, in form and substance satisfactory to the Administrative Agent, duly executed and delivered by the Subsidiary Guarantor.

SECTION 3.7. Opinion of Counsel. The Administrative Agent shall have received an opinion, dated the Amendment Effective Date and addressed to the Administrative Agent and all Lenders, from Bell, Boyd & Lloyd LLC, counsel to the Obligors, in form and substance satisfactory to the Administrative Agent.

SECTION 3.8. Asset Transfer; Assignment Agreement; Approvals. The Administrative Agent shall have received evidence satisfactory to it that the transfer of employee benefit plans pursuant to the Assignment Agreement shall have been consummated, and shall have received a copy of the Assignment Agreement (as well as all other documentation, if any, executed or delivered in connection therewith) executed and delivered by the Borrower and Holdings, which shall be in full force and effect, and copies of all approvals or evidence of other actions required by any Governmental Authority in connection with the Proposed Restructuring, including, without limitation, the Reorganization and the transfer of the employee benefit plans, and the execution and delivery by the relevant Obligors of the Reorganization Agreement, the Assignment Agreement, this Amendment or any other Loan Document (in each case, if any).

SECTION 3.9. Costs and Expenses, etc. The Administrative Agent shall have received for the account of each Lender, all fees, costs and expenses due and payable pursuant to Sections 2.8, 3.3 and 10.3 (if then invoiced) of the Credit Agreement.

SECTION 3.10. Satisfactory Legal Form. The Administrative Agent and its counsel shall have received all information, and such counterpart originals or such certified or other copies of such materials, as the Administrative Agent or its counsel may reasonably request, and all legal matters incident to the effectiveness of this Amendment shall be satisfactory to the Administrative Agent and its counsel. All documents executed or submitted pursuant hereto or in connection herewith shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders and the Administrative Agent to enter into this Amendment, the Borrower and Holdings hereby represent and warrant to each Lender and the Administrative Agent, as of the Amendment Effective Date, as set forth below.

(a)The representations and warranties set forth in Article VI of the Credit Agreement and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date).

(b)No Default exists or has occurred and is continuing.

(c)This Amendment and each other Loan Document, agreement or instrument to be executed and delivered by the Borrower and Holdings in connection herewith have been duly authorized, executed and delivered by all necessary action on the part of each of the Borrower and Holdings and constitute a legal, valid and binding obligation of each such Person, enforceable against it in accordance with its terms (except, in any case, as such enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

(d)The execution, delivery and performance by each Obligor of this Amendment and each other Loan Document executed or to be executed by any of them in connection herewith and the consummation of the transactions permitted or contemplated hereby (including the Proposed Restructuring and the Reorganization) are within each such Obligor’s powers, have been duly authorized by all necessary action, and do not (i) contravene any such Obligor’s Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting any such Obligor or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under (A) the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties and (B) the Liens permitted under Section 7.2.3 of the Credit Agreement)) on any of such Obligor’s properties.

(e)None of the factual information heretofore or contemporaneously furnished by the Borrower or Holdings in writing to the Administrative Agent or any Lender for purposes of or in connection with this Amendment or any transaction contemplated hereby (including the Proposed Restructuring and the Reorganization) contains any untrue statement of a material fact, or omits to state any material fact necessary to make any information not misleading.

ARTICLE V

MISCELLANEOUS

SECTION 5.1. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified, to such Article or Section of this Amendment.

SECTION 5.2. Loan Document Pursuant to Existing Credit Agreement. This Amendment is a Loan Document executed pursuant to the Existing Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with all of the terms and provisions of the Existing Credit Agreement, as amended hereby, including Article X thereof.

SECTION 5.3. Notices. All notices and other communications to Holdings provided for under any Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to Holdings at the address or facsimile number set forth on its signature page hereto, or at such other address or facsimile number as may be designated by Holdings in a notice to the other party to such Loan Document. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre paid courier service, shall be deemed given when received; any such notice, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter.

SECTION 5.4. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 5.5. Counterparts. This Amendment may be executed by the parties hereto in several counterparts, each of which when executed and delivered shall be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

SECTION 5.6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEWYORK.

SECTION 5.7. Full Force and Effect; Limited Amendment. Except as expressly amended hereby, all of the representations, warranties, terms, covenants, conditions and other provisions of the Existing Credit Agreement and the Loan Documents shall remain unchanged and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Existing Credit Agreement or any other Loan Document or of any transaction or further or future action on the part of any Obligor which would require the consent of the Lenders under the Existing Credit Agreement or any of the Loan Documents.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.

BORROWER:
HECLA MINING COMPANY (to be known as Hecla Limited)
By:
	Name: Lewis E. Walde Title: Chief Financial Officer

By executing this Amendment, the undersigned hereby acknowledges and agrees to assume the rights and obligations under, and be bound by the terms of, the Credit Agreement, this Amendment and each other Loan Document to be executed by the undersigned as of the date first above written.

HOLDINGS:
HECLA HOLDINGS INC. (to be known as Hecla Mining Company)
By:
	Name: Title:

Address:	6500 Mineral Drive Suite 200 Coeur d’Alene, Idaho 83815
Facsimile No.: Attention:	(208) 292-5509 Lewis E. Walde

THE BANK OF NOVA SCOTIA,    as Administrative Agent
By:
	Title:

LENDERS:
THE BANK OF NOVA SCOTIA
By:
	Title:

N M ROTHSCHILD & SONS LIMITED
By:
	Title:

By:
	Title:

EX-10.12

Exhibit 10.12

PARENT GUARANTY

This PARENT GUARANTY (as amended, supplemented, amended and restated or otherwise modified from time to time, this “Guaranty”), dated as of November 8, 2006, is made by HECLA HOLDINGS INC. (to be known as Hecla Mining Company), a Delaware corporation (the “Guarantor”) in favor of THE BANK OF NOVA SCOTIA (“Scotia Capital”), as administrative agent (together with its successor(s) thereto in such capacity, the “Administrative Agent”) for each of the Secured Parties (capitalized terms used herein have the meanings set forth in or incorporated by reference in Article I).

WITNESSETH:

WHEREAS, pursuant to a Credit Agreement, dated as of September 12, 2005 (as amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the “Existing Credit Agreement”), among Hecla Mining Company (to be known as Hecla Limited), a Delaware corporation (the “Borrower”), the Lenders, the Administrative Agent, N M Rothschild & Sons Limited (“Rothschild”), as Technical Agent, and Scotia Capital and Rothschild, as Arrangers, the Lenders and the Issuer have extended Commitments to make Credit Extensions to the Borrower;

WHEREAS, pursuant to a Second Amendment to Credit Agreement, dated as of November 8, 2006 (the “Second Amendment”; the Existing Credit Agreement, as amended by the Second Amendment is hereinafter referred to as the “Credit Agreement”), among the Borrower, the Lenders and the Administrative Agent, and acknowledged and accepted by the Guarantor, the Guarantor has agreed to be bound by the terms of, the Credit Agreement and each other Loan Document to be executed by the Guarantor;

WHEREAS, as a condition precedent to the effectiveness of the Second Amendment, the Guarantor is required to execute and deliver this Guaranty; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor agrees, for the benefit of each Secured Party, as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Guaranty, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Administrative Agent” is defined in the preamble.

“Borrower” is defined in the first recital.

“Credit Agreement” is defined in the first recital.

“Existing Credit Agreement” is defined in the second recital.

“Guarantor” is defined in the preamble.

“Guaranty” is defined in the preamble.

“Rothschild” is defined in the first recital.

“Scotia Capital” is defined in the first recital.

“Second Amendment” is defined in the second recital.

SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have the meanings provided in the Credit Agreement.

ARTICLE II

GUARANTY PROVISIONS

SECTION 2.1. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably

(a) guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations of each Obligor now or hereafter existing, whether for principal, interest (including interest accruing at the then applicable rate provided in the Credit Agreement after the occurrence of any Default set forth in Section 8.1.9 of the Credit Agreement, whether or not a claim for post-filing or post-petition interest is allowed under applicable law following the institution of a proceeding under bankruptcy, insolvency or similar laws), fees, Reimbursement Obligations or expenses (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)); and

(b) indemnifies and holds harmless each Secured Party for any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by such Secured Party in enforcing any rights under this Guaranty;

provided, however, that the Guarantor shall only be liable under this Guaranty for the maximum amount of such liability that can be hereby incurred without rendering this Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and the Guarantor specifically agrees that it shall not be necessary or required that any Secured Party exercise any right, assert any claim or demand or enforce any remedy whatsoever

against any Obligor or any other Person before or as a condition to the obligations of the Guarantor hereunder.

SECTION 2.2. Reinstatement, etc. The Guarantor hereby agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is invalidated, declared to be fraudulent or preferential, set aside, rescinded or must otherwise be restored by any Secured Party, including upon the occurrence of any Default set forth in Section 8.1.9 of the Credit Agreement or otherwise, all as though such payment had not been made.

SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until the Termination Date has occurred. The Guarantor guarantees that the Obligations will be paid strictly in accordance with the terms of each Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of:

(a) any lack of validity, legality or enforceability of any Loan Document;

(b) the failure of any Secured Party

(i) to assert any claim or demand or to enforce any right or remedy against any Obligor or any other Person (including any other guarantor) under the provisions of any Loan Document or otherwise, or

(ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations;

(c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligation;

(d) any reduction, limitation, impairment or termination of any Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and the Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations or otherwise;

(e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Loan Document;

(f) any addition, exchange or release of any collateral or of any Person that is (or will become) a guarantor of the Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or

departure from, any other guaranty held by any Secured Party securing any of the Obligations; or

(g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Obligor, any surety or any guarantor.

SECTION 2.4. Setoff. The Guarantor hereby irrevocably authorizes the Administrative Agent and each other Secured Party, without the requirement that any notice be given to the Guarantor (such notice being expressly waived by the Guarantor), upon the occurrence and during the continuance of any Default described in Section 8.1.9 of the Credit Agreement or, with the consent of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, to set-off and appropriate and apply to the payment of the Obligations (whether or not then due, and whether or not any Secured Party has made any demand for payment of the Obligations), any and all balances, credits, deposits, accounts or moneys of the Guarantor then or thereafter maintained with such Secured Party; provided, however, that any such appropriation and application shall be subject to the provisions of Section 4.8 of the Credit Agreement. Each Secured Party agrees to notify the Guarantor and the Administrative Agent after any such setoff and application made by such Secured Party; providedfurther, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Secured Party under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Secured Party may have.

SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Guaranty and any requirement that any Secured Party secure, perfect or insure any Lien, or any property subject thereto, or exhaust any right or take any action against any Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Obligations, as the case may be.

SECTION 2.6. Postponement of Subrogation, etc. The Guarantor agrees that it will not exercise any rights which it may acquire by way of rights of subrogation under any Loan Document to which it is a party, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from any Obligor, in respect of any payment made under any Loan Document or otherwise, until following the Termination Date. Any amount paid to the Guarantor on account of any such subrogation rights prior to the Termination Date shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Administrative Agent for the benefit of the Secured Parties in the exact form received by the Guarantor (duly endorsed in favor of the Administrative Agent, if required), to be credited and applied against the Obligations, whether matured or unmatured, in accordance with Section 2.7; provided, however, that if the Guarantor has made payment to the Secured Parties of all or any part of the Obligations and the Termination Date has occurred, then at the Guarantor’s request, the Administrative Agent (on behalf of the Secured Parties) will, at the expense of the Guarantor, execute and deliver to the Guarantor appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Obligations resulting from such payment. In furtherance of the foregoing, at all times prior to the Termination Date, the Guarantor shall refrain from taking any action or

commencing any proceeding against any Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under this Guaranty to any Secured Party.

SECTION 2.7. Payments; Application. The Guarantor hereby agrees with each Secured Party that

(a) all payments made by the Guarantor hereunder will be made in Dollars to the Administrative Agent, without set-off, counterclaim or other defense and in accordance with Sections 4.6 and 4.7 of the Credit Agreement, free and clear of and without deduction for any Taxes, the Guarantor hereby agreeing to comply with and be bound by the provisions of Sections 4.6 and 4.7 of the Credit Agreement in respect of all payments made by it hereunder and the provisions of which Sections are hereby incorporated into and made a part of this Guaranty by this reference as if set forth herein; provided, that references to the “Borrower” in such Sections shall be deemed to be references to the Guarantor, and references to “this Agreement” in such Sections shall be deemed to be references to this Guaranty; and

(b) all payments made hereunder shall be applied upon receipt as set forth in Section 4.7 of the Credit Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to continue to make Credit Extensions under the Credit Agreement, the Guarantor represents and warrants to each Secured Party as set forth below.

SECTION 3.1. Credit Agreement Representations and Warranties. The representations and warranties contained in Article VI of the Credit Agreement (as of the dates required to be made under the Credit Agreement), insofar as the representations and warranties contained therein are applicable to the Guarantor and its properties, are true and correct in all material respects, each such representation and warranty set forth in such Article (insofar as applicable as aforesaid) and all other terms of the Credit Agreement to which reference is made therein, together with all related definitions and ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Article.

SECTION 3.2. Financial Condition, etc. The Guarantor has knowledge of each other Obligor’s financial condition and affairs and that it has adequate means to obtain from each such Obligor on an ongoing basis information relating thereto and to such Obligor’s ability to pay and perform the Obligations, and agrees to assume the responsibility for keeping, and to keep, so informed for so long as this Guaranty is in effect. The Guarantor acknowledges and agrees that the Secured Parties shall have no obligation to investigate the financial condition or affairs of any Obligor for the benefit of the Guarantor nor to advise the Guarantor of any fact respecting, or any change in, the financial condition or affairs of any other Obligor that might become known to any Secured Party at any time, whether or not such Secured Party knows or believes or has

reason to know or believe that any such fact or change is unknown to the Guarantor, or might (or does) materially increase the risk of the Guarantor as guarantor, or might (or would) affect the willingness of the Guarantor to continue as a guarantor of the Obligations.

SECTION 3.3. Best Interests. It is in the best interests of the Guarantor to execute this Guaranty inasmuch as the Guarantor will derive substantial direct and indirect benefits from the Credit Extensions made from time to time to the Borrower by the Lenders and the Issuers pursuant to the Credit Agreement, and the Guarantor agrees that the Secured Parties are relying on this representation in agreeing to make Credit Extensions to the Borrower.

ARTICLE IV

COVENANTS, ETC.

The Guarantor covenants and agrees that, at all times prior to the Termination Date, it will perform, comply with and be bound by all of the agreements, covenants and obligations contained in the Credit Agreement (including Article VII and Section 8.1.9 of the Credit Agreement) which are applicable to the Guarantor or its properties, each such agreement, covenant and obligation contained in the Credit Agreement and all other terms of the Credit Agreement to which reference is made in this Article, together with all related definitions and ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Article.

ARTICLE V

MISCELLANEOUS PROVISIONS

SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article X thereof.

SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment. This Guaranty shall remain in full force and effect until the Termination Date has occurred, shall be binding upon the Guarantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided, however, that the Guarantor may not (unless otherwise permitted under the terms of the Credit Agreement) assign any of its obligations hereunder without the prior written consent of all Lenders.

SECTION 5.3. Amendments, etc. No amendment to or waiver of any provision of this Guaranty, nor consent to any departure by the Guarantor from its obligations under this Guaranty, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on behalf of the Lenders or the Required Lenders, as the case may be, pursuant to Section 10.1 of the Credit Agreement) and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 5.4. Notices. All notices and other communications provided for hereunder shall be in writing or by facsimile and addressed, delivered or transmitted to the appropriate party at the address or facsimile number of such party specified in the Credit Agreement, or set forth on the signature pages hereto, or at such other address or facsimile number as may be designated by such party in a notice to the other party. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter.

SECTION 5.5. Release of Guarantor. Upon the occurrence of the Termination Date, this Guaranty and all obligations of the Guarantor hereunder shall terminate, without delivery of any instrument or performance of any act by any party.

SECTION 5.6. No Waiver; Remedies. In addition to, and not in limitation of, Sections 2.3 and 2.5, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 5.7. Section Captions. Section captions used in this Guaranty are for convenience of reference only, and shall not affect the construction of this Guaranty.

SECTION 5.8. Severability. Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty.

SECTION 5.9. Governing Law, Entire Agreement, etc. THIS GUARANTY WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Guaranty and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter thereof and supersede any prior agreements, written or oral, with respect thereto.

SECTION 5.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUER OR THE GUARANTOR IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE

ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED FOR THE GUARANTOR ON ITS SIGNATURE PAGE HERETO. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.

SECTION 5.11. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT (ON BEHALF OF ITSELF AND EACH OTHER SECURED PARTY) AND THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER, THE ISSUER OR THE GUARANTOR IN CONNECTION THEREWITH. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT, EACH LENDER AND THE ISSUER ENTERING INTO THE LOAN DOCUMENTS.

SECTION 5.12. Counterparts. This Guaranty may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Guaranty by facsimile shall be effective as delivery of an original executed counterpart of this Guaranty.

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its Authorized Officer as of the date first above written.

HECLA HOLDINGS INC. (to be known as Hecla Mining Company)

By:_________________________________

Name:

Title:

Address: 6500 Mineral Drive

Suite 200

Coeur d’Alene, Idaho 83815

Facsimile No.:      (208) 292-5509

Attention: Lewis E. Walde

ACCEPTED AND AGREED FOR ITSELF

AND ON BEHALF OF THE SECURED PARTIES:

THE BANK OF NOVA SCOTIA,

as Administrative Agent

By:_________________________________

Title:

EX-31.1

Exhibit 31.1

Hecla Mining Company and Subsidiaries

CERTIFICATIONS

I, Phillips S. Baker, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hecla Mining Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 9, 2006
	/s/Phillips S. Baker, Jr.
	Phillips S. Baker, Jr. President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Hecla Mining Company and Subsidiaries

CERTIFICATIONS

I, Lewis E. Walde, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hecla Mining Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 9, 2006
	/s/Lewis E. Walde
	Lewis E. Walde Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Hecla Mining Company and Subsidiaries

CERTIFICATIONS

I, Phillips S. Baker, Jr., President and Chief Executive Officer of Hecla Mining Company (“Hecla”), certify that to my knowledge:

1.	This quarterly report of Hecla on Form 10-Q (“report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Hecla.

Date:	November 9, 2006
	/s/Phillips S. Baker, Jr.
	Phillips S. Baker, Jr. President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to Hecla Mining Company and will be retained by Hecla and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished in accordance with Securities and Exchange Commission Release No. 34-47551 and shall not be considered filed as part of the Form 10-Q.

EX-32.2

Exhibit 32.2

Hecla Mining Company and Subsidiaries

CERTIFICATIONS

I, Lewis E. Walde, Vice President and Chief Financial Officer of Hecla Mining Company (“Hecla”), certify that to my knowledge:

1.	This quarterly report of Hecla on Form 10-Q (“report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Hecla.

Date:	November 9, 2006
	/s/Lewis E. Walde
	Lewis E. Walde Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to Hecla Mining Company and will be retained by Hecla and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished in accordance with Securities and Exchange Commission Release No. 34-47551 and shall not be considered filed as part of the Form 10-Q.