HECLA MINING CO/DE/

Hecla Mining Company stands as North America's premier silver producer, with a rich heritage dating back to 1891. Our operations at Greens Creek, Lucky Friday, and Keno Hill combined to produce 37% of total 2025 silver production in the U.S. and Canada, complemented by significant gold production from Greens Creek. Our strategic positioning in the stable jurisdictions of the U.S. and Canada provides us with distinct operational advantages and reduced political risk compared to our global peers. Our operational and strategic framework centers on four core pillars:

Achieving operational excellence through standardized systems and continuous improvement

Optimizing our portfolio through strategic reviews and targeting highest risk-adjusted return projects

Intensifying our focus on financial discipline with a rigorous capital allocation framework

Leveraging our position as North America's largest silver producer to meet growing demand from green technology markets

Recent Developments

On March 25, 2026, we completed the sale of our Hecla Quebec Inc. ("Hecla Quebec") subsidiary which owns the Casa Berardi mine to Orezone Gold Corporation ("Orezone") for a fair value of $385.7 million ($601.7 million on an undiscounted basis) comprised of the following:

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Cash of $170.0 million upon closing on March 25, 2026

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Accounts receivable related to working capital adjustments of $16.6 million

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65,757,265 Orezone common shares valued at $106.1 million on closing

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Deferred cash consideration ("Deferred Cash Consideration") with a fair value of $57.1 million for the cash payments of $30 million and $50 million to be received 18 months and 30 months after closing, respectively

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Contingent cash consideration ("Contingent Cash Consideration") with a fair value of $35.9 million for a total of up to $241 million of undiscounted payments consisting of:

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A fair value of $3.3 million for two annual gold-price related payments of $5 million each should the average gold price exceed $4,200/oz for the first and second years following closing

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A fair value of $9.9 million for two contingent payments of $10 million each due upon issuance of certain permits to open pit mine two identified orebodies

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A fair value of $22.7 million for certain future gold production-based royalty payments with an undiscounted value of up to $211 million ($80/ounce for the first 500,000 ounces, then $180/ounce thereafter from future open pit operations)

Orezone has a set-off right to reduce the unpaid balance of the Deferred Cash Consideration payments by 50% of the amount by which the financial assurance required by the Quebec government under the updated Casa Berardi closure plan exceeds $150 million, excluding increases caused by Orezone's post-closing actions. The excess closure amount ($11.5 million) has been included in determining the fair value of the Deferred Cash Consideration.

The sale of Hecla Quebec represents disciplined portfolio optimization and focuses capital allocation on our silver assets, which we believe to represent significant growth and value creation opportunities. We have solidified our revenue exposure to silver and we are focused on operating in what we view to be the most favorable jurisdictions. We used the cash proceeds from the transaction for debt reduction and balance sheet strengthening, enhancing our financial flexibility and capacity to invest in strategic growth investments.

We determined that the sale of Hecla Quebec represents a strategic shift that has a major effect on our operations and financial results and therefore, beginning in the first quarterly report on Form 10-Q for the period ended March 31, 2026, the Casa Berardi operation is no longer a reportable segment and its financial results are reflected in the Company’s unaudited interim condensed consolidated financial statements as a discontinued operation for all periods presented. Unless otherwise specified, the discussion of financial results within this Item 2 MD&A will focus on our continuing operations, in relation to the respective comparative periods which have been recast to reflect the continuing operations of our business.

Third Quarter 2026 Highlights

Operational Achievements:

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Production- We produced 4.2 million ounces of silver, compared to 4.6 million ounces in the third quarter of 2025, primarily due to lower throughput and grades at Greens Creek. We produced 11,996 ounces of gold at Greens Creek, a decrease compared to 15,584 ounces produced in the third quarter of 2025, driven by lower throughput and grades.

Financial Performance:

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Revenue Generation - Generated sales of $394.8 million, a 25% increase over the third quarter of 2025.

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Income from continuing operations and shareholder returns- Generated income from continuing operations of $149.6 million, compared to $89.4 million in the third quarter of 2025 and returned $2.5 million in dividends to common stockholders.

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Investments in Continuing Operations - Made capital investments of $51.7 million, including $11.7 million at Greens Creek, $23.7 million at Lucky Friday and $11.2 million at Keno Hill.

Year to date 2026 Highlights

Operational Achievements:

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Leading North American Silver Producer - Through the completion of the sale of Hecla Quebec, we have solidified our position as North America's premier silver producer.

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Production- We produced 12.3 million ounces of silver, compared to 13.2 million ounces of silver in 2025, with the decrease primarily due to lower grades at Keno Hill and throughput at Greens Creek. At Greens Creek, we produced 39,081 ounces of gold, a decrease compared to 47,093 ounces produced in 2025, driven by lower grade and throughput.

Financial Performance:

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Revenue Generation - Generated sales of $1.1 billion, a 54% increase over 2025.

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Income from continuing operations and shareholder returns- Generated income from continuing operations of $432.1 million, compared to $148.0 million in the 2025 period and returned $7.6 million in dividends to common stockholders.

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Investments in Continuing Operations - Made capital investments of $130.1 million, including $29.9 million at Greens Creek, $57.4 million at Lucky Friday and $33.5 million at Keno Hill.

Growth Pipeline

We are evaluating several organic growth opportunities that may leverage existing infrastructure, operational expertise, and permitting frameworks.

Greens Creek is advancing engineering and evaluation of a pyrite concentrate circuit which has the potential to recover additional silver and gold that currently report to tailings. If the project is approved, intermittent production using temporary equipment could occur from late 2027 through 2028, with construction of the new circuit expected to be completed in late 2028. Thereafter, preliminary metallurgical and engineering work indicate the project could, at average reserve grades, add approximately 1.0 to 1.2 million ounces of silver and 10,000 to 15,000 ounces of gold in annual production, once fully ramped up.

We are also evaluating the potential to reprocess all or part of the existing dry-stack tailings facility at Greens Creek. Advances in processing technology and growing market demand for this type of material have created the potential to turn material once managed only as tailings into a marketable low-grade feedstock. This project could recover additional silver and gold currently contained in tailings material, subject to further metallurgical testing and the identification of a suitable third-party processing arrangement. In the fourth quarter, we expect to load a test parcel from Greens Creek of approximately 5,500 dry metric tonnes of this low-grade feedstock for shipment and sale to a third-party smelter.

Lastly, we continue to evaluate the potential restart of our permitted Midas mill in northern Nevada. Any restart would depend on, among other things, our ability to expand the existing high-grade gold and silver resource to a scale sufficient to support a sustainable operation.

Each of these opportunities remains in varying stages of exploration, engineering, metallurgical evaluation, permitting review, and economic analysis. The timing, scope, and ultimate development of these opportunities may influence future capital allocation decisions, exploration expenditures, and sustaining or growth capital requirements, and may require the receipt of additional permits, approvals, and other authorizations. We have not approved final construction or development of any of these projects (other than the test parcel described above), and any decision to proceed would require further technical, economic, and regulatory review and approval by management and, where applicable, our Board of Directors. There is no assurance that any of these opportunities will be developed, or that if developed, will be completed on the timeline or with the results anticipated at the time of any such approval. See the Risk Factor"The growth opportunities described in this report are subject to significant risks and uncertainties" under Item 1A. "Risk Factors" in Part II of this report.

External Factors that Impact our Results

Our financial results vary as a result of fluctuations in market prices primarily for silver and, to a lesser extent, gold, zinc, lead, and copper. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. To date, tariffs have not materially impacted our financial results. However, future tariffs or other global trade restraints could impact our performance. Historically our US operations have had significant sales into China and Canada, and each of those countries is or could be subject to tariffs, and each has or may retaliate in kind. As a result of tariffs, the China market is effectively closed for us, and we have not shipped any products to China since March 2025. Notwithstanding these recent developments, we believe that the outlook for precious metals fundamentals is favorable due to macro-economic factors such as geopolitical uncertainty and global growth expectations, which have resulted in significant volatility in the financial and commodities markets, including the precious metals market. See Item 1A. “Risk Factors” contained in Part I of our 2025 Form 10-K for further discussion. Because we cannot control the price of our products, except to the extent we have entered into hedging transactions, the key measures that management focuses on in operating our business are production volumes, payable sales volumes, Cash Cost per Silver Ounce After By-product Credits (“Cash Cost”) (non-GAAP) and All-In Sustaining Cost per Silver Ounce After By-product Credits (“AISC”) (non-GAAP), operating cash flows, capital investments, free cash flow (non-GAAP), and adjusted EBITDA (non-GAAP). The average realized prices for all metals sold by us continued to exhibit significant volatility during the period. We have also experienced significant cost inflation across our operations, principally associated with higher energy prices, increased costs for other consumables such as reagents, explosives, steel, and higher labor and contractor costs.