HECLA MINING CO/DE/

Consolidated Results of Continuing Operations

Total sales for the three and nine months ended September 30, 2026 and 2025 were as follows:

Environmental remediation services revenue is generated by performing remediation work in the historical Yukon Territory mining district on behalf of the Canadian government. The scope and estimated cost of all work is agreed to in advance by the Canadian government, and the expenses incurred are passed through to the government for reimbursement with minimal operating income generated by us in performing this work.

Total metal sales for the three and nine months ended September 30, 2026 and 2025, and the approximate variances attributed to differences in metals prices, sales volumes, and smelter terms, were as follows:

The fluctuation in sales for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was primarily due to the following:

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Higher average realized prices for all metals for the nine months; for the quarter, all except lead and zinc compared to the same period in 2025. The table below summarizes average spot prices and our average realized prices for the commodities we sell:

Average realized prices typically differ from average market prices primarily because concentrate sales are generally recorded as revenues at the time of shipment at forward prices for the estimated month of settlement, which differ from average market prices. Due to the time elapsed between shipment of concentrates and final settlement with the customers, we must estimate the prices at which sales of our metals will be settled. Previously recorded sales are adjusted to estimated settlement metals prices each period through final settlement. We recorded net negative price adjustments to provisional settlements of $7.1 million and $13.3 million for the three and nine months ended September 30, 2026, respectively, (three and nine months ended September 30, 2025: $10.9 million and $22.0 million positive adjustments, respectively). The price adjustments related to silver, gold, zinc, lead, and copper contained in our concentrate shipments were partially offset by gains and losses on forward contracts and collars for those metals. See Note 8 of Notes to Condensed Consolidated Financial Statements (Unaudited)for more information. The gains and losses on these contracts are included in revenues and impact the realized prices for silver, gold, lead, and zinc. Realized prices are calculated by dividing gross revenues for each metal (which include the price adjustments and gains and losses on the metals derivative contracts discussed below) by the payable quantities of each metal included in concentrate, doré, and carbon material shipped during the period.

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The positive effect of higher metal prices was partially offset by lower sales volumes for silver and gold from continuing operations during the three and nine month periods ended September 30, 2026 compared to the comparable 2025 period. See The Greens Creek Segment, The Lucky Friday Segment, and The Keno Hill Segment sections below for more information on metal production and sales volumes at each of our operating segments. Total metals production and sales volumes for each period are shown in the following table:

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

Sales, costs applicable to sales, depreciation, depletion and amortization, and gross profit at our operating segments, Cash Cost (non-GAAP) and AISC (non-GAAP) at our operating segments and Cash Cost (non-GAAP) and AISC (non-GAAP) for our Greens Creek and Lucky Friday operating segments, in each case for the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except for Cash Cost and AISC):

(1)

(2)

A reconciliation of these non-GAAP measures to costs applicable to sales, the most comparable GAAP measure, can be found below in Reconciliation of Costs Applicable to Sales (GAAP) to Cash Cost, Before By-product Credits (non-GAAP) and Cash Cost (non-GAAP) and All-In Sustaining Cost, Before By-product Credits (non-GAAP) and All-In Sustaining Cost (non-GAAP).

(3)

Total Silver Cash Cost and AISC exclude Keno Hill, which has not yet reached commercial production. The calculation of AISC for our consolidated silver properties includes corporate costs for general and administrative expense and sustaining capital.

(4)

For the three and nine months ended September 30, 2026, Other includes sales of $22.4 million (2025: $16.2 million) and $37.8 million (2025: $29.9 million) and costs applicable to sales of $22.4 million (2025: $16.2 million) and $37.6 million (2025: $29.9 million), respectively, from our environmental remediation services in the Yukon.

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

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

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we have historically presented Greens Creek, Lucky Friday and Keno Hill as primary silver producers, based on the original analyses that justified putting the projects into production. Further we believe that consistency in disclosure is important to our investors regardless of the relationships of metals prices and production from year to year;

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metallurgical treatment maximizes silver recovery;

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the Greens Creek, Lucky Friday, and Keno Hill deposits are massive sulfide deposits containing an unusually high proportion of silver; and

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

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

We periodically review our revenues to ensure that reporting of primary products and by-products is appropriate. Because we consider zinc, lead, gold, and copper at Greens Creek, Lucky Friday, and Keno Hill to be by-products of our silver production, the values of these metals offset operating costs within our calculations of Cash Cost and AISC. We currently do not report Cash Cost and AISC for our Keno Hill operation as it has not met our definition of commercial production. We define an operation as being in commercial production upon achievement of all of the following criteria:

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Completion of operational commissioning of each major mine and mill component;

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Demonstrated ability to mine and mill consistently and without significant interruption, defined as 75% of historical production levels or mill design capacity over a period of 90 days;

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Silver recoveries are at or near expected steady-state production levels;

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All major capital expenditures have been completed; and

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A significant portion of available funding is directed towards operating activities.

Determination of when these criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies. Currently Keno Hill meets two of the above criteria - silver recoveries are at expected steady-state production levels, and a significant portion of available funding allocated to Keno Hill is directed to operating activities.

As Keno Hill has not yet been determined to be in commercial production, its costs and by-product credits are excluded from our consolidated Cash Cost and AISC because (i) by definition it has not reached the sustaining stage and (ii) including its costs and by-product credits we believe would distort consolidated Cash Cost and AISC of our operating silver mines that are in commercial production and operating as designed, and would not facilitate a meaningful comparison of our performance versus that of our peers who do not report such metrics for mines that are not in commercial production.

For the three months ended September 30, 2026 we reported income from continuing operations of $149.6 million (2025: $89.4 million) and net income applicable to common stockholders of $149.5 million (2025: $100.6 million). The following were the significant drivers of the increase in income from continuing operations:

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Variances in gross profit at our operations as illustrated in the table above. See The Greens Creek Segment, The Lucky Friday Segment, and The Keno Hill Segment sections below for a discussion on the key drivers by operation.

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Interest expense decreased by $12.6 million primarily due to lower total debt levels compared to the same period of 2025 following redemption of $263 million and $212 million of Senior Notes in April 2026 and August 2025, respectively.

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Other income increased by $5.2 million primarily due to higher interest earned on the increased cash position and accretion income on our deferred cash consideration received as part of the consideration for the Hecla Quebec sale.

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Fair value adjustments, net increased by $6.9 million primarily due to $3.5 million of gains on our marketable securities portfolio.

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Income and mining tax expense increased by $9.5 million primarily due to higher taxable income generated primarily by our US operations.

The positive movements mentioned above were partly offset by:

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General and administrative expense increased by $1.7 million due to increased headcount.

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Exploration and pre-development expense increased by $7.7 million due to increased activity across our exploration portfolio.

For the nine months ended September 30, 2026 we reported income from continuing operations of $432.1 million (2025: $148.0 million) and net income applicable to common stockholders of $248.1 million (2025: $186.9 million). Net income applicable to common stockholders is lower than income from continuing operations, due to the recognition of a loss from discontinued operations of $183.7 million, primarily due to the loss of $192.5 million on the sale of Hecla Quebec. The following were the significant drivers of the increase in income from continuing operations:

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Variances in gross profit at our operations as illustrated in the table above. See The Greens Creek Segment, The Lucky Friday Segment, and The Keno Hill Segment sections below for a discussion on the key drivers by operation.

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Interest expense decreased by $26.9 million primarily due to lower total debt levels compared to the same period of 2025 following redemption of $263 million and $212 million of Senior Notes in April 2026 and August 2025, respectively.

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Other income increased by $13.5 million primarily due to higher interest earned on the increased cash position and accretion income on our deferred cash consideration received as part of the consideration for the Hecla Quebec sale.

The positive movements mentioned above were partly offset by:

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Fair value adjustments, net decreased by $16.2 million primarily due to $22.3 million of net losses on derivative contracts.

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General and administrative expenses increased by $8.1 million primarily due to higher incentive compensation payments driven by improved financial and operational performance and an increase in Corporate headcount.

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Exploration and pre-development expense increased by $10.9 million due to increased activity across our exploration portfolio.

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Other operating expense, net increased by $5.5 million primarily due to a loss on disposal of Minera Hecla of $2.4 million which we sold for cash proceeds of $5.2 million, and losses on other property, plant and equipment disposals.

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Income and mining tax expense increased by $48.8 million due to higher taxable income generated primarily by our US operations, partly offset by the release of a historical valuation allowance related to our Nevada subsidiary.

Greens Creek

(1)

Excludes depreciation, depletion and amortization.

(2)

A reconciliation of these non-GAAP measures to costs applicable to sales, the most comparable GAAP measure, can be found below in Reconciliation of Costs Applicable to Sales (GAAP) to Cash Cost, Before By-product Credits (non-GAAP) and Cash Cost (non-GAAP) and All-In Sustaining Cost, Before By-product Credits (non-GAAP) and All-In Sustaining Cost (non-GAAP).

The $34.0 million increase in gross profit for the three months ended September 30, 2026, compared to the same period in 2025 was primarily due to higher realized sales prices for all metals, except lead and zinc, partly offset by lower sales volumes, reflecting lower grades and tons milled, except lead and copper.

Capital investments in the current quarter were $0.4 million lower compared to the same period in 2025. Current quarter investments included $3.4 million for a tailings expansion project, $2.7 million for mining equipment and development, $2.0 million for a cleaner cell replacement and other mill items, $1.6 million for definition drilling and $0.9 million for surface infrastructure and equipment.

The $192.2 million increase in gross profit for the nine months ended September 30, 2026, compared to the same period in 2025 was primarily due to higher realized sales prices for all metals, partly offset by lower sales volumes for all metals, except lead.

Capital investments in the current year were $1.4 million lower compared to the same period in 2025. Current year investments included $7.0 million for a tailings expansion project, $6.2 million for primary ore access development, $4.9 million for mining equipment and development, $4.8 million for surface infrastructure and equipment, $3.8 million for definition drilling and $1.2 million for a cleaner cell replacement.

The charts below illustrate the factors contributing to Cash Cost per Silver Ounce for Greens Creek:

For the three and nine months ended September 30, 2026, the increase in Cash Cost, Before By-product Credits, per Silver Ounce and AISC, Before By-product Credits, per Silver Ounce compared to the same period in 2025 was primarily due to lower silver production, in addition to higher production costs. By-product credits increased for both the three and nine month periods ended September 30, 2026, compared to the same periods in the prior years due to higher gold by-product credits, resulting in lower Cash Cost per Silver Ounce and AISC per Silver Ounce compared to the comparative periods from 2025.

Lucky Friday

(1)

(2)

A reconciliation of these non-GAAP measures to costs applicable to sales, the most comparable GAAP measure, can be found below in Reconciliation of Costs Applicable to Sales (GAAP) to Cash Cost, Before By-product Credits (non-GAAP) and Cash Cost (non-GAAP) and All-In Sustaining Cost, Before By-product Credits (non-GAAP) and All-In Sustaining Cost (non-GAAP).

Gross profit increased by $21.3 million for the three months ended September 30, 2026 compared to the comparable period in 2025, reflecting higher realized silver prices, partly offset by lower sales volumes, except for zinc.

Capital investments increased by $6.8 million for the three months ended September 30, 2026, compared to the same period in 2025. Significant capital investments during the three months ended September 30, 2026, included $8.3 million on tailings facility pond 5 construction, capital development of $6.6 million, $2.0 million for the surface cooling project, $1.3 million for the national portal project, $1.0 million for a shaft rehabilitation, $0.9 million for a cone crusher replacement, $0.9 million for ramp work, and $0.8 million for definition drilling.

Gross profit increased by $112.0 million for the nine months ended September 30, 2026 compared to the comparable period in 2025, reflecting higher realized prices for all metals and higher sales volumes for all metals reflecting higher production from improved grades.

Capital investments increased by $9.1 million for the nine months ended September 30, 2026, compared to the same period in 2025. Significant capital investments during the nine months ended September 30, 2026, included capital development of $20.1 million, $15.6 million on tailings facility pond 5 construction, $4.5 million for the surface cooling project, $5.1 million for a shaft rehabilitation and related work, $3.8 million for underground equipment, $3.5 million on a cone crusher replacement and other mill items, $2.4 million for definition drilling, and $2.0 million for ramp work.

The charts below illustrate the factors contributing to Cash Cost per Silver Ounce for Lucky Friday:

For the three months ended September 30, 2026, Cash Cost per Silver Ounce was lower than the same period in 2025 primarily due to higher by-product credits and lower treatment costs, partly offset by higher profit sharing. AISC per Silver Ounce are higher than the comparable period from 2025 due to higher sustaining capital investments.

For the nine months ended September 30, 2026, Cash Cost per Silver Ounce was lower than the same period in 2025 due to higher by-product credits and lower treatment costs, partly offset by higher as-produced costs, primarily related to higher profit sharing. AISC per Silver Ounce were higher than the same period in 2025 primarily due to higher sustaining capital investments.

Keno Hill

(1)

Excludes depreciation, depletion and amortization.

We have not disclosed cost per ounce statistics for the Keno Hill operation as it has not met our definition of commercial production. See above"Consolidated Results of Continuing Operations" for our definition of commercial production. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.

We acquired our Keno Hill operation as part of the Alexco Resource Corp. acquisition in September 2022 and since then we have focused on development activities and began ramping up the mill during the second quarter of 2023. The mine is currently permitted to a maximum annual average of 440 tons per day, with average mill throughput during the three months ended September 30, 2026 of 415 tons per day (2025: 323 tons per day), with silver grades milled of 26.2 ounces per ton (2025: 31.8 ounces per ton). In September 2026, the mill averaged 437 tons per day, approximately 99% of the mine's permitted rate. While this demonstrated Keno Hill's value generation at target throughputs, the tailings storage, waste rock disposal, and water treatment capacity available under our current permits will not support that rate until those permits are amended and the related infrastructure is built. As discussed further below under “Strategic Focus and Path to 440 Tons Per Day,” we expect to suppress throughput beginning in the fourth quarter of 2026, with a further reduction beginning in January 2027, and we expect to hold throughput at the lower rate until those permits are amended and the related infrastructure is built.

During the three months ended September 30, 2026, Keno Hill recorded sales of $50.2 million (2025: $47.6 million), with the increase due to higher realized prices, partly offset by lower metals sales volumes resulting from lower grades. As a result of higher revenues, Keno Hill generated gross profit of $18.8 million during the three months ended September 30, 2026 (2025: $16.4 million). During the quarter, Keno Hill incurred capital investments of $11.2 million, primarily related to $5.0 million for mine development and infrastructure, $3.9 million for dry-stack tailings facility, $1.3 million for mobile equipment, and $0.7 million for definition drilling.

During the nine months ended September 30, 2026, Keno Hill recorded sales of $131.1 million (2025: $90.6 million), with the increase due to higher realized prices, partly offset by lower metals sales volumes driven by lower grades. As a result of higher revenues, Keno Hill generated gross profit of $50.0 million during the nine months ended September 30, 2026 (2025: $17.7 million). During the nine months ended September 30, 2026, Keno Hill incurred capital investments of $33.5 million, primarily related to $20.9 million for mine development and infrastructure, $5.4 million for phase 2 of the dry-stack tailings facility, $4.6 million for mobile equipment, and $1.8 million for definition drilling.

Prior Period Disruptions and Ongoing Impacts

From the second quarter of 2023 (commencement of production) until late August 2024, ore production and mill throughput generally increased as planned, although they remained below the mill’s permitted rate. Beginning in mid‑2024 and continuing into 2025, Keno Hill was impacted by external events that affected permitting, projects, production, and delayed our ability to achieve sustained, profitable production.

In late June 2024, an unrelated third party, Victoria Gold, experienced a heap leach failure at its Eagle Mine located near Keno Hill. The Yukon Government (“YG”) and the First Nation of Na‑Cho Nyäk Dun (“FNNND”) focused on responding to the incident rather than on routine permitting matters. As a result, we were required to suspend milling operations at Keno Hill between August 27 and October 26, 2024 while awaiting authorizations and permits.

Between October 2024 and the first quarter of 2025, Keno Hill experienced power curtailments after Yukon Energy ("YE" the local utility) suffered a turbine failure at its Aishihik hydroelectric plant in Whitehorse. That failure, combined with YE's transmission line maintenance and increased power demand due to cold winter temperatures, resulted in reduced power deliveries to Keno Hill and prevented us from fully powering the mine and mill on multiple occasions. These power constraints reduced silver production by approximately 130,000 ounces and resulted in approximately $0.5 million of labor costs for idled employees through September 30, 2025. Power conditions improved following the first quarter of 2025 and we do not expect additional curtailments due to the Aishihik turbine, which was successfully repaired in the third quarter of 2025. However, we have experienced power curtailments and may do so again, particularly since we are in the cold weather season. See the Risk Factors"Production at Keno Hill will decline beginning in the fourth quarter of 2026 and could be further curtailed or suspended until permit amendments are obtained and related infrastructure is built." under Part II, Item 1A. - Risk Factors of this report and"We may be subject to a number of unanticipated risks related to inadequate infrastructure." in our 2025 Form 10-K.

Current Operational Challenges

Keno Hill continues to face operational challenges that constrain throughput and limit our ability to ramp up production. These challenges include: Flame and Moth infrastructure (power availability); workforce availability and retention in a remote location; execution of infrastructure projects; limited camp capacity; and incremental demands on site infrastructure and resources associated with the ramp‑up of our subsidiary’s environmental remediation services activities at the Keno Hill site.

In addition, deliveries of certain equipment, including haul trucks, a bolter, a scissor deck, and a generator, were delayed during the first quarter. These delays affected capital development activities and, in the future, if delays occur and are not resolved on a timely basis, they could adversely impact mining flexibility and future ore availability.

Permitting and Infrastructure Constraints

Maintaining recent production levels and any future increases in production requires additional capacity across several operational areas, including tailings storage, waste rock disposal, water treatment and discharge limits, camp accommodation, and reliable power supply. Expanding these capacities requires obtaining new permits or amending existing permits, as well as capital investments to develop the associated infrastructure.

Although progress continues on these permitting matters, the pace of advancement has been affected by delays resulting from the Eagle Mine incident and heightened regulatory focus on the Yukon mining sector.

Tailings Storage

We estimate that approximately 200,000 tons of tailings storage capacity remains available under our current permits; additional capacity beyond that, through the next phase of the dry-stack tailings facility (Phase 3), will require permit amendments and related construction. How long the remaining capacity lasts will depend on the rate at which we mill ore and on the tailings generated per ton milled, which varies with ore grades, the characteristics of the ore processed, and the density at which tailings are placed. At milling rates for the nine months ended September 30, 2026, we project that we would exhaust that capacity in the second quarter of 2028, before Phase 3 is expected to be permitted and constructed. In an effort to maintain operational continuity and to extend the remaining capacity until Phase 3 is in place, we plan to suppress throughput as described below under “Strategic Focus and Path to 440 Tons Per Day.” Even at the reduced rate, however, we expect to exhaust our tailings storage capacity unless Phase 3 is permitted and constructed during the 2029 construction season. If it is not, milling could be further curtailed or interrupted. The construction season in the Yukon is approximately April through October, and if permits are received by the first half of 2029, it is possible that tailings expansion could be advanced far enough in 2029 to permit the mill to resume normal production levels, and begin ramping up to higher production levels by the end of 2029.

Quartz Mining License and Water License Amendments

Keno Hill's mill is currently permitted to process up to 440 tons per day (and it has achieved that rate for multiple weeks); however, several factors other than mill capacity limit actual throughput, including dry-stack tailings capacity and restrictions on waste rock production and disposal. To sustain operations at or near this permitted rate, we will need to amend our quartz mining license (“QML”) and water license (“WL”) to address these constraints. The process for securing these amendments includes submission of a Project Proposal to the Yukon Environmental and Socio‑economic Assessment Board (“YESAB”), which we currently intend to submit by year-end 2026.

The YG is required to consult with the FNNND on permitting matters, including the YESAB review process. FNNND previously entered into a Comprehensive Cooperation and Benefits Agreement ("CBA") for Keno Hill, and we believe they remain supportive of the project. However, there can be no assurance that such support will continue or that the timing or outcome of the YESAB review will not be affected by FNNND’s position. In addition, FNNND has indicated interest in revisiting the existing CBA, including unresolved wealth‑sharing provisions. We do not currently believe that negotiating changes to the CBA would impede the YESAB review process, but it is possible it could.

The YESAB review process is expected to take approximately 12 months following submission of the Project Proposal, after which applications for amendments to the QML and WL would be submitted to the applicable regulators. We currently estimate that this overall process could be completed by approximately mid‑2029, although each sequential step in this process is subject to its own timing variability, and delays at any stage would affect the overall timeline. There can be no assurance, however, that any of these approvals or amendments will be obtained on this timeline or at all. Construction of the subject projects would commence after receiving the permits and is anticipated to take at least a full construction season.

Waste Rock and Water Management Constraints

Our current QML places limits on the cumulative amount of waste rock that may be produced during mining and on waste rock storage capacity and classification. At current mining rates, we project that the waste rock production limit could be reached by approximately mid‑2027, at which point waste rock production would need to be halted absent receipt of a QML amendment. The planned suppression in throughput described below under “Strategic Focus and Path to 440 Tons Per Day” is intended to keep waste rock production and storage within our existing QML limits until the amended QML is received, which we currently expect by approximately mid‑2029.

Our QML also limits capacity in our waste rock disposal areas. If suppressing production is not effective in preserving waste rock disposal capacity, or if neither the QML amendment nor the separate changes to our QML that we are seeking (independent of the QML amendment process described above) is received in 2029, we expect to exhaust our waste rock storage capacity, even at the reduced rate, and mine production could be further curtailed or stop until the amended permits are received and related construction is completed. At Bermingham, we have reached our authorized capacity for the current facility and we are temporarily storing waste rock in stockpiles until approvals to expand the waste rock disposal area can be obtained. In the event the YG restricts our ability to temporarily stockpile waste rock, our ability to further develop Bermingham would be limited (or halted), which could negatively impact production at Keno Hill. There is no assurance such approvals will be received, or that the YG will not impose restrictions, which could force us to further curtail or halt production if alternative arrangements cannot be found.

As we develop new mining zones at Keno Hill, we have periodically encountered higher‑than‑expected groundwater inflows. While we currently remain within permitted water discharge limits, development of new zones could require an amendment to our WL. There can be no assurance that the YG would grant such an amendment. If we are unable to amend our WL on a timely basis and continued development would result in discharges exceeding permitted limits, we may be required to curtail production or adjust mine sequencing to remain in compliance.

See the Risk Factor in our 2025 Form 10‑K, “We are required to obtain governmental permits and other approvals in order to conduct mining operations.”

Strategic Focus and Path to 440 Tons Per Day

As stated above, Keno Hill has generated profits at current throughput rates and metal prices. Our near‑term strategic focus is to advance permitting and execute key infrastructure projects to place the mine on a path toward achieving sustainable production at its currently permitted rate of 440 tons per day. At that rate and at current prices, we expect Keno Hill would generate sustained positive free cash flow while preserving optionality for potential expansion beyond 440 tons per day. As discussed above, to sustain operations at or near this permitted rate, we will need to amend our QML and WL to expand our tailings, waste rock and water treatment capacity. Sustained production at this level would require ore from both the Bermingham deposit and the lower‑grade Flame & Moth deposit, and, as discussed above, completion of infrastructure projects, receipt of required permit amendments, continued mine development, and maintenance of social license to operate.

We expect to begin suppressing throughput in the fourth quarter of 2026 to approximately 300 tons per day, with further suppression, expected beginning in January 2027 to levels significantly below third quarter 2026 throughput. We expect to provide 2027 production guidance for Keno Hill in February 2027. Available capacity for water treatment, tailings storage, and waste rock disposal under our current permits will not support our current levels of production until our QML and WL are amended and the related projects constructed. We are suppressing throughput to preserve that capacity so that operations can continue until then; this is not a cost-driven decision. We are currently targeting license amendments to be finalized by mid-2029, after which, once the related infrastructure is constructed, we would expect to ramp back up toward throughput of 440 tons per day. Permitting timelines depend on regulatory review outside our control and could be extended. If those permits or the related infrastructure projects are delayed beyond our current schedule, throughput could be constrained further or interrupted entirely until the necessary tailings and waste rock storage capacity is in place.

We expect silver production to decline by proportionally less than throughput because, during this period, we expect to be more selective in both mining and processing. In the mine, we will attempt to reduce dilution and prioritize higher-grade areas of the deposit. In the mill, we expect to preferentially process higher-grade material and stockpile lower-grade material for later processing. Actual production will depend on the grades, dilution, and recoveries we achieve.

If the prerequisites to continue mining through both (i) the mid-2027 to mid-2029 (or later) period and (ii) mid-2029 (or later) and thereafter, including receipt of QML and WL amendments, are not met on a timely basis, our operations and financial results could be materially adversely affected. Already, we expect 2027-2029 to be a period of lower revenue and higher costs due to the decreased production described above. Even if amended permits are received on a timely basis, there will be a period of time required to construct the associated infrastructure. Given that the overall permitting process involves multiple sequential regulatory steps, each subject to its own timing variability, and risks inherent to construction in Yukon once permits are received, mining rates and continuous operation at Keno Hill between approximately 2027 and 2030 remains uncertain. It is likely that there will be times of curtailed production, beyond the suppression described above, if not outright halts to production during that period.

If any one of the prerequisites described above is not achieved on a timely basis, or if metal prices decrease materially from current levels, Keno Hill could be placed on care and maintenance. See the Risk Factor in Part II, Item 1A. of this report,“Production at Keno Hill will decline beginning in the fourth quarter of 2026 and could be further curtailed or suspended until permit amendments are obtained and related infrastructure is built,” and the Risk Factor in our 2025 Form 10‑K, “We may not realize all of the anticipated benefits from our acquisitions, including our 2022 acquisition of Alexco.”

Corporate Matters

Income Taxes

For the three months ended September 30, 2026, the Company recorded an income and mining tax provision of $40.5 million (2025: $31.0 million), resulting in an effective tax rate of 21.3% (2025: 25.8%). For the nine months ended September 30, 2026, the Company recorded an income and mining tax provision of $110.2 million (2025: $61.4 million) resulting in an effective tax rate of 20.3% (2025: 29.3%). The comparability of our income and mining tax provision and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) mining taxes; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) foreign exchange rates including non-recognition of foreign exchange gains and losses; (v) percentage depletion; (vi) the non-recognition of tax assets, and (vii) the change in tax status of our Klondex ULC subsidiary. The effective tax rate will fluctuate, sometimes significantly, period to period. The change in the effective tax rate during the three and nine months ended September 30, 2026, compared to the comparable period in 2025 is primarily related to variations in our income before taxes and the relative effect on the tax provision.

Each reporting period we assess our deferred tax balances based on a review of long-range forecasts and quarterly activity. A valuation allowance is provided for deferred tax assets for which it is more likely than not the related tax benefits will not be realized. We analyze our deferred tax assets and, if it is determined that we will not realize all or a portion of our deferred tax assets, we record or increase a valuation allowance. Conversely, if it is determined we will ultimately more likely than not be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact our ability to realize our deferred tax assets. Valuation allowances are provided on deferred tax assets in certain Canadian jurisdictions. For additional information, please see risk factors Our accounting and other estimates may be imprecise and Our ability to recognize the benefits of deferred tax assets related to net operating loss carryforwards and other items is dependent on future cash flows generating taxable incomein Item 1A -Risk Factors in our 2025 Form 10-K.

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

The tables below present reconciliations between the most comparable GAAP measure of costs applicable to sales to the non-GAAP measures of (i) Cash Cost, Before By-product Credits, (ii) Cash Cost, (iii) AISC, Before By-product Credits and (iv) AISC for our segments and for the consolidated Company for the three and nine months ended September 30, 2026 and 2025.

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

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

We have not disclosed cost per ounce statistics for the Keno Hill operation as it has not met our definition of commercial production. See above “Consolidated Results of Continuing Operations” for our definition of commercial production and its applicability to Keno Hill. Determination of when those criteria have been met requires the use of judgment, and our definition of commercial production may differ from that of other mining companies.

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

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

(1)

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

(2)

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

(3)

For the three and nine months ended September 30, 2026, Other includes $22.4 million (2025: $16.2 million) and $37.6 million (2025: $29.9 million) of costs applicable to sales, respectively, related to our environmental remediation services business.

(4)

Keno Hill has not yet reached commercial production and is excluded from the calculation of Cash Cost, Before By-product Credits, Cash Cost, AISC, Before By-product Credits, and AISC.

(5)