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y Variability in prices for diesel fuel and amounts of fuel used, and variability in prices for other consumables, which have impacted production costs at our operations. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – The Greens Creek Segment  for information on the variability in diesel fuel prices and consumption on production costs for the last three years. 

y Our acquisition of the remaining 70.3% of the Greens Creek mine for $758.5 million in April 2008, a portion of which was funded by a $140.0 million term loan and $220.0 million bridge loan. We recorded interest expense related to these credit facilities, including amortization of loan fees and interest rate swap adjustments, of $10.1 million and $19.1 million, respectively in 2009 and 2008. The amount of interest expense in 2009 is net of $1.9 million in capitalized interest. We also recorded approximately $6.0 million in expense in 2009 for additional debt-related fees. We completed repayment of the bridge loan balance in February 2009 and repayment of the term loan balance in October 2009. 

y The global financial crisis and recession beginning in 2008, which impacted metals prices, production costs, and our access to capital markets at that time. 

y An increase in the number of shares of our common stock outstanding, which impacts our income per common share. 

y Loss from discontinued operations, net of tax, for the year ended December 31, 2008 of $17.4 million, and a loss on sale of discontinued operations, net of tax, of $12.0 million recognized in 2008. 

A comprehensive discussion of our financial results for the years ended December 31, 2012, 2011 and 2010, individual operating unit performance, general corporate expenses and other significant items can be found in Item 7. Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations , as well as the Consolidated Financial Statements  and Notes  thereto. 

## Products and Segments 

Our segments are differentiated by geographic region. We produce zinc, lead and bulk concentrates at our Greens Creek unit and lead and zinc concentrates at our Lucky Friday unit, which we sell to custom smelters on contract, and unrefined gold and silver bullion bars (doré) at Greens Creek, which are sold directly to customers or further refined before sale to precious metals traders. The concentrates produced at our Greens Creek and Lucky Friday units contain payable silver, zinc and lead, and the concentrates produced at Greens Creek also contain payable gold. Payable metals are those included in our products that can be recovered and sold by smelters and refiners. Our segments as of December 31, 2012 included: 

y The Greens Creek unit, which has been 100%-owned since April of 2008 when we acquired the outstanding 70.3% from indirect subsidiaries of Rio Tinto, plc. Greens Creek is located on Admiralty Island, near Juneau, Alaska, and has been in production since 1989, with a temporary care and maintenance period from April 1993 through July 1996. During 2012, Greens Creek contributed $320.9 million, or 100%, of our consolidated sales. 

y The Lucky Friday unit located in northern Idaho. Lucky Friday is 100%-owned and has been a producing mine for us since 1958. Production at the Lucky Friday unit was suspended during 2012 as a result of the mine being placed on temporary care and maintenance (see Item 2. Property DeScription, Operating Properties, The Lucky Friday Unit ). Limited production recommenced in the first quarter of 2013, and we expect full production to resume in approximately mid-2013. 

The table below summarizes our production for the years ended December 31, 2012, 2011 and 2010. Zinc and lead production quantities are presented in short tons (“tons”). 

<img src='content_image/212416.jpg'>

## Licenses, Permits and Concessions 

We are required to obtain various licenses and permits to operate our mines and conduct exploration and reclamation activities. The suspension in production at the Lucky Friday unit during 2012 was pursuant to an order from the Federal Mine Safety and Health Administration. See Item 1A. Risk Factors – Legal, Market and Regulatory Risks – We are required to obtain governmental and lessor approvals and permits in order to conduct mining operations . In addition, we conduct our exploration activities in Mexico pursuant to concessions granted by the Mexican government, which are subject to certain political risks associated with foreign operations. See Item 1A. Risk Factors – Operation, Development, Exploration and Acquisition Risks – Our foreign activities are subject to additional inherent risks . 

## Physical Assets 

Our business is capital intensive and requires ongoing capital investment for the replacement, modernization or expansion of equipment and facilities and to develop new ore reserves. At December 31, 2012, the book value of our property, plant, equipment and mineral interests, net of accumulated depreciation, was approximately $996.7 million . We maintain insurance policies against property loss and business interruption. However, such insurance contains exclusions and limitations on coverage, and there can be no assurance that claims would be paid under such insurance policies in connection with a particular event. See Item 1A. Risk Factors – Operation, Development, Exploration and Acquisition Risks – Our operations may be adversely affected by risks and hazards associated with the mining industry that may not be fully covered by insurance. 

## Employees 

As of December 31, 2012, we employed 735 people, and we believe relations with our employees are generally good. 

Many of the employees at our Lucky Friday unit are represented by a union. The current collective bargaining agreement with workers at our Lucky Friday unit expires on April 30, 2016. As a result of the requirement to remove built-up cementitious material from the Silver Shaft, underground access was limited and production temporarily suspended at the Lucky Friday, forcing Hecla Limited to lay off 121 employees in January 2012 (approximately 25 of those employees accepted temporary positions at other Hecla operations). Employment at the Lucky Friday has returned to roughly its level prior to the suspension of production, as the Silver Shaft work is complete. See Part II, Item 7. Management’s Discussion and Analysis of Financial 

