content: <PAGE>  1
           
                         SECURITIES AND EXCHANGE COMMISSION
  
                               Washington D. C.  20549
  
                                                
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                                      FORM 8-K
  
                       PURSUANT TO SECTION 13 OR 15(D) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
  Date of Report
  (Date of earliest event reported):                February 18, 1997
  
  
  
                         Hecla Mining Company
                                             
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        (Exact name of registrant as specified in its charter)
  
  
  
                               Delaware
                                       
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             (State or other jurisdiction of incorporation)
  
  
            1-8491                             82-0126240
                                                        
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  (Commission File Number)         (IRS Employer Identification No.)
  
  
  
  6500 Mineral Drive
  Coeur d'Alene, Idaho                         83814-8788
                                   
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  (Address of principal executive offices)      (Zip Code)
  
  
  
                           (208) 769-4100
                                           
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                    (Registrant's Telephone Number)
  
  
  
  
  
                                  Page 1 of 3 Pages
  
  
  
  
  
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  Item 5.   Other Events.
            ------------ 
  
            Attached  hereto   and  incorporated  herein  by   reference  are  the
  following:
  
            (a)   Registrant's Management  Discussion and Analysis  for Registrant
  for the year ended December 31, 1996, as Exhibit 99.1; and 
  
            (b)   Registrant's  Audited  Consolidated Financial  Statements as  of
  December 31, 1996 and 1995, and for each of the three years in the  period ended
  December  31,  1996,  together  with  the  report  of  Coopers & Lybrand  L.L.P.
  thereon, as Exhibit 99.2.
  
  Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits.
            ------------------------------------------------------------------ 
  
            Exhibit 99.1   Management's Discussion and Analysis for Registrant for
                           the year ended December 31, 1996.
  
            Exhibit 99.2   Registrant's Audited Consolidated Financial Statements.
  
            Exhibit 23.1   Consent of  Coopers & Lybrand L.L.P.,  to incorporation
                           by reference of their report dated February 7, 1997, on
                           the Consolidated Financial Statements of the Registrant
                           in the Registrant's Registration Statements on Forms 
                           S-3 (No. 33-72832 and No. 33-59659), and Forms S-8 (No.
                           33-7833, No. 33-41833, No.  33-14758, No. 33-40691, No.
                           33-60095 and No. 33-60099).
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
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                                      SIGNATURE
                                      ---------
  
            Pursuant  to the requirements of Section 12 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
  
  
  
  
                                By  /s/ Nathaniel K. Adams
                                  ---------------------------------------
                                  Name:   Nathaniel K. Adams
                                  Title:  Corporate Counsel and
                                               Assistant Secretary
  
  
  Dated:  February 18, 1997
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
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                                    EXHIBIT INDEX
  
  Exhibit No.              Title
  -----------              -----
  
  Exhibit 99.1   Management's Discussion and Analysis  for Registrant for the year
                 ended December 31, 1996.
  
  Exhibit 99.2   Registrant's Audited Consolidated Financial Statements.
  
  Exhibit 23.1   Consent  of  Coopers  &   Lybrand  L.L.P.,  to  incorporation  by
                 reference  of  their  report  dated  February  7,  1997,  on  the
                 Consolidated  Financial  Statements  of  the  Registrant  in  the
                 Registrant's Registration Statements on  Forms S-3 (No.  33-72832
                 and  No. 33-59659), and Forms S-8 (No. 33-7833, No. 33-41833, No.
                 33-14758, No. 33-40691, No. 33-60095 and No. 33-60099).
  
  
  
  
  
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  MANAGEMENT'S DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND  RESULTS  OF
  OPERATIONS.
  
  INTRODUCTION
  
  Hecla  Mining  Company  (Hecla   or  the  Company)  is  primarily   involved  in
  exploration,  development, mining, and  processing of gold,  silver, lead, zinc,
  and  industrial minerals.  As such, the Company's revenues and profitability are
  strongly influenced  by world  prices of  gold, silver,  lead,  and zinc,  which
  fluctuate  widely  and are  affected by  numerous  factors beyond  the Company's
  control,  including  inflation and  worldwide forces  of  supply and  demand for
  precious and base metals.  The aggregate effect of these factors is not possible
  to accurately predict.   In the following descriptions,  where there are changes
  that  are attributable  to  more  than one  factor,  the Company  presents  each
  attribute  in descending  order relative  to the  attribute's importance  to the
  overall change.
  
  Except for the  historical information contained in this Management's Discussion
  and  Analysis of  Financial  Condition and  Results of  Operations, the  matters
  discussed   below  are  forward-looking   statements  that   involve  risks  and
  uncertainties,   including  the  timely  development  of existing properties and
  reserves  (such as  the  Company's  Rosebud joint-venture  project)  and  future
  projects,  the impact of metals prices and metal production volatility, changing
  market  conditions and the regulatory  environment and the  other risks detailed
  below, and, from  time to time, as necessary, in  the Company's periodic reports
  filed   with   the  Securities   and   Exchange   Commission  (see   "Investment
  Considerations" of Part I, Item 1 of the Company's December 31, 1995, Form 10-K)
   .   As a  result, actual results  may differ materially  from those projected or
  implied.  These forward-looking statements  represent the Company's judgment  as
  of  the date of  this filing.   The  Company disclaims,  however, any  intent or
  obligation to update these forward-looking statements as circumstances change or
  develop.
  
  The Company incurred  losses applicable to common  shareholders for each of  the
  past  three  years in  the period  ended December  31, 1996.   If  the Company's
  estimates of market prices of gold, silver, lead, and zinc are realized in 1997,
  the Company expects to record income or (loss) in  the range of a $(2.0) million
  loss,  to $2.0  million  income,  after  the  expected  dividends  to  preferred
  shareholders   totaling  approximately   $8.1  million   for  the   year  ending
  December 31, 1997.   Due to the volatility of metals  prices and the significant
  impact metals  price changes have on  the Company's operations, there  can be no
  assurance that the actual results of operations for 1997 will be as projected.
  
  The variability  of metals prices  requires that  the Company, in  assessing the
  impact  of prices  on  recoverability of  its  metals segment  assets,  exercise
  judgment as  to whether price  changes are temporary  or are likely  to persist.
  The Company performs  a comprehensive  evaluation of the  recoverability of  its
  assets on a periodic basis.  This evaluation includes a review of estimated 
  
  
  
  
  
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  future  net cash  flows  against the  carrying  value of  the Company's  assets.
  Moreover,  a review  is  made  on a  quarterly  basis to  assess  the impact  of
  significant changes in market  conditions and other factors.   Asset write-downs
  may  occur if  the Company  determines that  the carrying  values  attributed to
  individual assets are not  recoverable given reasonable expectations  for future
  production and market conditions.
  
  At the Company's Grouse Creek mine  in which Hecla had an 80% interest  in 1996,
  following  the  end  of  the  third  quarter  of  1996,  the  Company  completed
  metallurgical testing and economic analysis of the Grouse deposit which had been
  ongoing throughout 1996.  Based on the information gathered through such period,
  as  well as  then current  metals prices,  the Company  determined that  the ore
  contained in  the Grouse deposit was  not economical at the  then current metals
  prices,  and the  Company determined to  suspend operations at  the Grouse Creek
  mine.  The mine will be  placed on a care-and-maintenance status upon completion
  of  mining at the  Sunbeam pit  which is  estimated to  occur during  the second
  quarter of 1997.   In connection with the decision to suspend  operations at the
  Grouse  Creek mine,  the  Company determined  that  certain third  quarter  1996
  adjustments  were required  to properly  reflect the  Company's interest  in the
  property  at net realizable value totaling approximately $5.3 million and future
  severance, holding, reclamation, and  closure costs totaling approximately $22.5
  million.
  
  On January  31, 1997, Great  Lakes Minerals Inc.  (Great Lakes) and  the Company
  entered into a letter agreement  terminating the Grouse Creek joint  venture and
  conveying Great Lakes' 20% interest in the Grouse Creek project to Hecla.  Great
  Lakes retained  a 5% defined net proceeds interest in  the project.  The Company
  has assumed 100% of the interests and obligations associated with the property.
  
  In September 1996, the Company announced  that the operator of the American Girl
  gold mine, in which the Company has a 47% joint-venture interest, had determined
  that operations at the American Girl  mine would be suspended effective November
  4, 1996.   During the first  six months of  1996 and  continuing into the  third
  quarter  of 1996, the American  Girl gold mine  experienced significantly higher
  than  anticipated operating  costs and  lower than  expected recovered  gold ore
  grade.   Based on its  periodic review of  the carrying  value of the  Company's
  mining  properties, the Company determined  that a third  quarter carrying value
  adjustment  totaling $7.6 million was required to properly reflect the estimated
  net realizable value  of its interest in  the American Girl joint  venture.  The
  amount  of  the adjustment  was based  on the  Company's  carrying value  of its
  interest in the American Girl mine in excess of estimated discounted future cash
  flows.  In addition to the  carrying value adjustment, the Company also recorded
  a  $0.3  million  provision for  closed  operations  to  increase the  Company's
  recorded liability for reclamation and closure costs to its estimate of its 
  
  
  
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  interest in future closure and reclamation costs at the American Girl mine.
  
  In 1996, Hecla and Santa Fe Pacific Gold Corporation  (Santa Fe) entered into an
  agreement for a 50/50 joint venture to develop the Company's Rosebud property in
  Pershing  County,  Nevada.   Pursuant  to  the  agreement,  a limited  liability
  corporation was established, with each  party owning a 50% interest, to  develop
  the Rosebud gold property, which  is an underground, oxide gold deposit.   Under
  the terms of the agreement, Hecla will manage the mining activities and ore will
  be trucked  approximately 100  miles to  Santa Fe's Twin  Creeks Pinon  mill for
  processing.   Total mine-site capital expenditures are currently estimated to be
  approximately $20.0-$25.0 million.  Under the terms  of the joint venture, Santa
  Fe  is responsible for funding the  first $12.5 million of mine-site development
  costs plus  road and mill facility  improvements.  Santa Fe  also contributed to
  the joint venture  exploration property  adjacent to the  Rosebud property,  and
  will fund the first  $1.0 million in exploration expenditures, and two-thirds of
  future  expenditures beyond  the initial  $1.0  million for  further exploration
  efforts at the project.
  
  Following  the  decision  to  develop the  Rosebud  project,  Euro-Nevada Mining
  Corporation Inc. (Euro-Nevada)  exercised its option  to purchase an  additional
  1.5% Net Smelter Return  royalty (NSR) from the  Company for $2.5 million.   The
  Company received and recorded  a gain of $2.5 million  in the fourth quarter  of
  1996 from  this transaction,  and  Euro-Nevada now  holds a  4%  NSR royalty  on
  production from the  Rosebud property.  Production at  the Rosebud joint venture
  project is expected to begin in May 1997.
  
  In connection with signing the Rosebud joint-venture agreement, a separate joint
  venture  agreement  concerning  the  Golden  Eagle  property  in  Ferry  County,
  Washington, was entered into between  Hecla and Santa Fe.   Santa Fe paid  Hecla
  $2.5 million  for an immediate 75%  interest in the Golden  Eagle joint venture.
  The  Company  recorded a  gain on  the transaction  totaling  $0.6 million.   In
  addition, Santa Fe is obligated to fund all expenditures required  at the Golden
  Eagle through the feasibility stage.
  
  In July 1996, operations recommenced at the Greens Creek silver  mine in Alaska.
  Grinding  and  flotation  circuit activities  in  the  mill  commenced ahead  of
  schedule.   The Company holds  a 29.73%  interest in  the mine  through a  joint
  venture  with Kennecott  Greens  Creek  Mining  Company,  the  operator  of  the
  property.   Production levels continued to increase following the recommencement
  of operations  in July 1996, and full production levels were achieved in January
  1997.
  
  In 1997,  the Company expects to  produce between 145,000 and  157,000 ounces of
  gold compared to actual 1996 gold production  of approximately 169,000 ounces of
  gold.  The 1997 estimated gold 
  
  
  
  
  
  
  
  
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  production includes  69,000 to 72,000  ounces from the Company's  La Choya mine,
  38,000 to 43,000 ounces from the Company's interest in the  Rosebud mine, 18,000
  to 20,000 ounces  from the Company's Grouse Creek mine,  20,000 to 22,000 ounces
  from the Company's  interest in the  Greens Creek mine  and other sources.   The
  Company's share of silver production for 1997  is expected to be between 5.7 and
  6.2  million ounces  compared to  1996 production  of approximately  3.0 million
  ounces.  The 1997 estimated silver production includes 2.1 to 2.3 million ounces
  from  the  Lucky Friday  mine,  3.4 to  3.7  million ounces  from  the Company's
  interest in  the Greens  Creek mine  and an additional  0.2 million  ounces from
  other sources.
  
  In  1996,  the  Company  shipped  approximately  1,072,000  tons  of  industrial
  minerals, including ball  clay, kaolin, feldspar, and  specialty aggregates. The
  Company's shipments of industrial minerals  are expected to increase in  1997 to
  approximately  1,095,000  tons.    Additionally,  the  Company  expects to  ship
  approximately 930,000 cubic yards  of landscape material from its  Mountain West
  Products subsidiary in 1997 compared to 996,000 cubic yards in 1996.
  
  RESULTS OF OPERATIONS
  
  1996 vs 1995
  
  The Company incurred a net loss of approximately $32.4 million ($0.63 per common
  share) in 1996 compared to a net loss of approximately $101.7 million ($2.11 per
  common share)  in  1995. After  $8.1  million in  dividends  to holders  of  the
  Company's Series B  Cumulative Convertible Preferred  Stock, the Company's  loss
  applicable to common shareholders  for 1996 was approximately $40.4  million, or
  $0.79 per common share  compared to $109.8 million, or $2.28 per common share in
  1995.   The  1996 decreased  loss was  due to  a  variety of  factors, the  most
  significant of which was the write-down  of the Company's interest in the Grouse
  Creek mine in the third quarter of 1995 totaling $97.0 million, compared to 1996
  adjustments totaling $35.7 million  for severance, holding, reclamation, closure
  costs, and carrying  value adjustments  for property, plant,  and equipment  and
  certain other assets at the Grouse Creek and American Girl mines.
  
  Sales  of the  Company's products  increased by  approximately $6.6  million, or
  4.4%,  in 1996  as compared  to 1995,  principally the  result of  (1) increased
  product  sales totaling  approximately  $16.8  million,  most notably  from  the
  industrial  minerals   operations  where  shipment  volumes   increased  at  all
  operations,  increased production  at the  La Choya  mine where  gold production
  increased approximately 8,000 ounces, as well as at the Greens  Creek mine where
  the   first  shipment  of  product  occurred  in  November  1996  following  the
  recommencement of  operations in July 1996;  and (2) an increase  in the average
  price of lead.   These two factors  were partially offset by  decreased sales of
  approximately $10.2 million attributable to 
  
  
  
  
  
  
  
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  (1) decreased gold  and silver production in 1996  at the Grouse Creek  mine and
  Republic gold mine,  the latter of which completed  operations in February 1995;
  (2)  decreased  sales  from  the Apex  processing  facility  which  was sold  in
  September  1995; and (3) decreased gold production at the Cactus mine due to the
  completion of operations in 1995.
  
  Comparing the  average metal prices for  1995 with 1996, gold  increased by 1.0%
  from $384 per ounce to $388 per ounce,  silver decreased slightly from $5.19 per
  ounce to $5.18 per ounce, lead increased by 20.7% from $0.29 per pound  to $0.35
  per pound, and zinc  decreased slightly from $0.47 to $0.46 per pound.
  
  Cost of sales  and other  direct production costs  increased approximately  $5.3
  million, or  4.4%, in 1996 compared to 1995, primarily a result of (1) increased
  production  costs of $6.9 million incurred at the industrial minerals operations
  which  correlates to  the  increased  sales  volume  at  these  operations;  (2)
  production  costs increased at the Lucky Friday mine totaling approximately $2.8
  million due to increased mining costs and the nonrecurring 1995  receipt of $1.1
  million in insurance  proceeds related to  an ore conveyance accident  in August
  1994; (3)  increased costs at the La  Choya mine of $1.2  million resulting from
  increased production at the mine; (4) increased costs at the  American Girl mine
  of $0.5 million due to  difficulties associated with mining in the  Oro Cruz ore
  body, partially offset by reduced costs following  the shutdown of operations in
  1996; and  (5) increased costs at  Greens Creek where costs  associated with the
  first shipment were recognized in the amount of $0.5 million. These increases in
  cost  of sales  and  other  direct production  costs  were partially  offset  by
  decreases  in operating costs at other operations, including (1) decreased costs
  associated with  the Apex  processing facility  totaling $4.1  million resulting
  from the processing plant being  sold in September 1995; (2) decreased  costs at
  the  Cactus  Unit  totaling  approximately  $1.0  million  associated  with  the
  completion of operations  in 1995; (3) decreased costs at  the Grouse Creek mine
  totaling $0.9 million which is associated with the second quarter 1996 temporary
  shutdown   of  operations  and  the  third  quarter  1996  decision  to  suspend
  operations, as  well as  higher costs  in 1995 associated  with the  start-up of
  operations;  and (4)  decreased operating  costs at  the Republic  mine totaling
  approximately $0.6 million due to the completion of operations in February 1995.
  
  Cost  of sales and other direct  production costs as a  percentage of sales from
  products remained constant at 80.2% in 1995 and 1996.  
  
  Depreciation, depletion, and amortization decreased $3.0 million, or 12.8%, from
  1995 to 1996 principally due to decreased depreciation at the  Grouse Creek mine
  ($6.8  million)  primarily  due  to  the write-down  of  the  carrying  value of
  property, plant, and equipment in the third quarter of 1995, partially offset by
  increased depreciation at (1) the La Choya mine ($1.9 million) due 
  
  
  
  
  
  
  
  
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  to  increased  gold  production; (2)  the  Greens  Creek  mine where  operations
  recommenced on  a start-up basis in  1996 ($1.4 million); (3)  the American Girl
  mine  ($0.3 million)  due  to the  increased  depreciable base  associated  with
  development  costs  of the  Oro Cruz,  partly offset  by  the write-down  of the
  carrying value of the American Girl mine property, plant, and  equipment, in the
  third quarter of 1996;  and (4) various industrial minerals  operations totaling
  approximately $0.2 million.
  
  Cash operating cost,  total cash cost, and total production  cost per gold ounce
  decreased from  $286, $288, and  $398 in 1995 to  $273, $276, and  $364 in 1996,
  respectively.  The decreases in the cash operating cost and  total cash cost per
  ounce are primarily due to decreases in the cost per ounce amounts at the Grouse
  Creek and  La Choya  mines, offset by  increased cost per  ounce amounts  at the
  American Girl  mine.  Total production costs per ounce decreased principally due
  to the decreased depreciation, depletion, and amortization expense at the Grouse
  Creek mine in 1996 which  is the result of  the 1995 carrying value  adjustment,
  partially  offset by increased  total production cost per  ounce at the American
  Girl.
  
  Cash operating costs,  total cash costs, and  total production costs  per silver
  ounce decreased from $4.57, $4.57, and $5.76 in  1995 to $4.24, $4.24, and $5.47
  in  1996, respectively.   The  decreases in the  cost per  silver ounce  are due
  primarily to increased  by-product production and  prices, principally lead,  in
  the 1996 period at the Lucky Friday mine.  Lead and zinc are by-products  at the
  Lucky Friday  mine, the net revenues of which are deducted from production costs
  in the calculation of production cost per silver ounce.
  
  Other  operating expenses decreased  by approximately  $68.6 million,  or 57.7%,
  from 1995  to 1996, due principally  to (1) the decreased  reduction in carrying
  value  of mining properties of  $84.5 million, consisting  of the Company's 1995
  reduction in carrying value of  the Company's interest in the Grouse  Creek mine
  ($97.0 million) and  the Company's interest in the ConSil  Corp.'s Silver Summit
  mine ($0.4 million), partly offset by  the 1996 reductions in carrying values of
  mining  properties at the American Girl mine totaling approximately $7.6 million
  and the Grouse Creek mine totaling approximately $5.3 million; and (2) decreased
  exploration expenditures  of approximately $2.3  million.  These  decreases were
  partially offset by an $18.2 million increase in provision for closed operations
  and environmental matters,  consisting of (1) the 1996 provision  for the Grouse
  Creek  mine  totaling  approximately  $22.5  million;  (2)  the  increased  1996
  provision  over the  1995 provision  for remediation  costs associated  with the
  Coeur d'Alene  River Basin of $2.4  million; (3) the American  Girl mine closure
  cost  accrual of  $0.3 million  in  1996; and  (4)  provision for  environmental
  matters at  the Company's  former Yellow  Pine mine  of $0.2  million, partially
  offset  by (1)  the 1995  provision totaling  $3.4 million  for the  Bunker Hill
  Superfund  Site; (2)  receipt  of $2.6  million  in insurance  proceeds in  1996
  related to the 
  
  
  
  
  
  
  
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  remediation  liability at  Bunker Hill;  and (3)  decreased expenditures  at the
  closed  Star Unit Area of $1.2 million  primarily due to timber sale proceeds of
  $0.9 million.
  
  Other income was approximately $7.7 million in 1996 compared to $10.8 million in
  1995.  The  $3.1 million decrease  was primarily due  to (1) decreased gains  on
  investments of $3.2 million due to the nonrecurring sale of certain common stock
  investments in  1995; (2) increased net  interest cost of $0.3  million; and (3)
  miscellaneous  expense in  1996 compared  to miscellaneous  income in  1995, the
  impact of  which was $0.3  million.   These decreases were  partially offset  by
  increased interest and  other income in  1996 over  1995 totaling $0.5  million.
  Total interest  cost increased $1.1  million in 1996, principally  due to higher
  borrowings  in  1996  under the  Company's  revolving  and  term loan  facility.
  Capitalized interest costs increased $0.8 million principally due to capitalized
  interest  costs  associated  with  the  Greens  Creek  development, the  Rosebud
  project, the Lucky  Friday expansion  project, and development  at the  American
  Girl's Oro Cruz ore body.
  
  Income taxes reflect a provision of $0.7 million in 1996 compared to a provision
  of  $0.3 million  in  1995.    The  provision in  1996  primarily  reflects  the
  provisions for  foreign income  taxes as  well as a  provision for  state income
  taxes, partially offset by the carryback of  certain 1996 expenditures to reduce
  U.S.  income taxes previously provided. The provision in 1995 primarily reflects
  the  provisions for U.S. and foreign  income taxes as a  result of certain asset
  and certain  common stock investment dispositions made during 1995, as well as a
  provision  for state income taxes, partially offset  by the carryback of certain
  1995 expenditures to reduce U.S. income taxes previously provided.
  
  RESULTS OF OPERATIONS
  
  1995 vs 1994
  
  The  Company  incurred a  net loss  of approximately  $101.7 million  ($2.11 per
  common share)  in 1995 compared  to a  net loss of  approximately $24.6  million
  ($0.56 per common share) in 1994. After $8.1 million in dividends to holders  of
  the Company's  Series B  Cumulative Convertible  Preferred Stock,  the Company's
  loss  applicable  to  common  shareholders  for  1995 was  approximately  $109.8
  million,  or $2.28  per common  share compared  to $32.7  million, or  $0.74 per
  common share in 1994.   The 1995 loss was due to a  variety of factors, the most
  significant of which was the third quarter write-down of the  Company's interest
  in the Grouse Creek mine.
  
  Sales of the  Company's products  increased by approximately  $26.3 million,  or
  21.0%,  in 1995  as compared to  1994, principally  the result  of (1) increased
  product sales  totaling $49.7 million,  most notably from the  Grouse Creek mine
  where  gold  and silver  production commenced  in  December 1994,  and increased
  production at the La 
  
  
  
  
  
  
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  Choya  and Lucky  Friday  mines; as  well  as from  several industrial  minerals
  operations; and (2) an increase in the average price of lead.  These two factors
  were  partially  offset  by  decreased  sales  of  approximately  $23.5  million
  attributable to (1) decreased gold and silver production in 1995 at the Republic
  gold mine  which completed operations in  February 1995; and (2)  decreased gold
  production at the  American Girl mine due to the  completion of most underground
  mining operations there in February 1995.
  
  Comparing  the average  metal prices  for 1994  with 1995, gold  remained fairly
  constant at $384  per ounce, silver decreased  by 1.7% from  $5.28 per ounce  to
  $5.19 per ounce, lead increased by 16%  from $0.25 per pound to $0.29 per pound,
  and zinc increased by 4% from $0.45 to $0.47 per pound.
  
  Cost  of sales and other  direct production costs  increased approximately $20.3
  million, or 20.0%, in 1995 compared to 1994, primarily a result of (1) increased
  production costs  of $24.7 million  incurred at  the Grouse Creek  mine in  1995
  where production commenced in  December 1994; (2) increased production  costs at
  Kentucky-Tennessee Clay  Company's (K-T Clay's)  kaolin and ball  clay divisions
  totaling approximately  $4.0  million, principally  due  to the  Langley  kaolin
  acquisition  in 1995; (3) increased  production costs at  Mountain West Products
  ($3.4 million) due  principally to  increased production, as  well as  increased
  freight and  raw materials costs; (4) increased production costs at the La Choya
  mine  ($2.7  million)  primarily  due  to increased  production;  (5)  increased
  production  costs   at  Colorado   Aggregate  Company  ($1.2   million)  related
  principally  to  a  change  in  product  mix  requirements;  and  (6)  increased
  production costs at Lucky Friday of $1.2 million due to  increased production in
  1995.   These increases in cost of sales and  other direct production costs were
  partially offset by decreases in operating costs at  other operations, the three
  most notable of which are (1) decreased production costs of $10.4 million at the
  Republic  mine due to completion  of operations in  February 1995; (2) decreased
  standby costs at the Greens Creek mine totaling $2.6 million in the 1995 period,
  a  direct result  of  management's  decision to  further  develop  the mine  and
  recommence production; and  (3) decreased cost of sales in  1995 at the American
  Girl mine totaling $2.6 million due to decreased gold production.
  
  Cost  of sales and other  direct production costs as  a percentage of sales from
  products decreased slightly from 80.8% in 1994 to 80.2% in 1995.  
  
  Depreciation, depletion, and amortization increased $9.2 million, or 64.8%, from
  1994 to 1995 principally due  to (1) increased depreciation at the  Grouse Creek
  mine  ($8.6  million)  which commenced  production  in  December  1994; and  (2)
  increased  depreciation at  the La  Choya mine  ($2.4 million) due  to increased
  production; both of which were partially offset by decreased 
  
  
  
  
  
  
  
  
  
  
                                          8
  
  
  
  
  
  
  
  <PAGE>  13
  
  depreciation  at the  Republic  mine ($2.2  million) due  to the  curtailment of
  operations in February 1995.
  
  Cash operating  costs, total  cash costs,  and total  production costs per  gold
  ounce increased from  $267, $273, and  $334 in 1994 to  $286, $288, and  $398 in
  1995, respectively.  The increases  were mainly attributed to the increased  per
  ounce production  costs at the Grouse Creek and American Girl mines during 1995,
  partially offset by decreased per ounce production costs at the La Choya mine.
  
  Cash operating  costs, total cash costs,  and total production costs  per silver
  ounce decreased from $5.81, $5.81, and $7.17 in 1994 to  $4.57, $4.57, and $5.76
  in  1995, respectively.    The decreases  were  due primarily  to (1)  increased
  production in 1995 at the Lucky Friday mine; and (2) increased average prices of
  lead and zinc in 1995.  Lead and zinc  are by-products at the Lucky Friday mine,
  the net revenues of which are  deducted from production costs in the calculation
  of production cost per silver ounce.
  
  Other operating expenses increased by approximately $79.6 million, or 203%, from
  1994 to  1995,  due principally  to  (1) the  third  quarter 1995  reduction  in
  carrying  value  of the  Company's  interest  in the  Grouse  Creek mine  ($97.0
  million) and  the Company's interest  in the  ConSil Corp.'s Silver  Summit mine
  ($0.4  million);  and (2)  the  third quarter  1995 adjustment  to  increase the
  Company's liability for environmental  remediation activity costs at  the Bunker
  Hill Superfund Site  ($3.4 million) and the Coeur  d'Alene Mining District ($0.3
  million).  These increases were partially offset by (1) the 1994 increase in the
  provision  for  closed operations  and  environmental  matters  related  to  the
  reclamation accruals for the Republic mine and the Coeur d'Alene Mining District
  totaling $7.3 million and $1.1 million, respectively; (2)  the 1994 $7.9 million
  reduction  in  carrying value  of mining  properties  adjustment related  to the
  Republic mine ($7.2 million), the Zenda property ($0.4 million), and exploration
  equipment ($0.3 million); (3) decreased general and administrative costs of $1.8
  million   in  1995,  primarily  due   to  the  nonrecurring   1994  expenses  of
  approximately $2.1 million related to the acquisition of Equinox Resources Ltd.;
  and (4) a decrease of approximately $1.3 million in exploration expense in 1995.
   
  Other income was approximately $10.8 million in 1995 compared to $5.2 million in
  1994.  The increase  was primarily due to (1)  the 1995 gain of $4.0  million on
  the sales of certain  common stock investments;  and (2) the  1995 gain of  $3.2
  million  on  the sale  of  the  Apex processing  facility;  both  of which  were
  partially offset by (1) the  1995 write-down of $1.1 million for  certain common
  stock investments;  and (2) the 1994  gain on the  sale of certain  common stock
  investments.   Total interest cost  decreased $0.6 million  in 1995, principally
  due to  the June 1994 retirement of long-term debt, partially offset by interest
  expense during 1995 related to 
  
  
  
  
  
  
  
  
  
                                          9
  
  
  
  
  
  
  
  <PAGE>  14
  
  new borrowing under the Company's revolving and term credit facility.
  
  In  1994, the Company recorded an extraordinary loss totaling approximately $0.8
  million on the early retirement of long-term debt.  The loss related principally
  to the write-off  of the unamortized balance of deferred  issuance costs related
  to the debt.
  
  Income taxes reflect a provision  of $0.3 million in 1995 compared  to a benefit
  of  $0.5  million  in 1994.    The  provision  in  1995 primarily  reflects  the
  provisions for  U.S. and  foreign taxes  due as  a result  of certain asset  and
  certain common stock  investment dispositions  made during  1995, as  well as  a
  provision  for state income taxes, partially  offset by the carryback of certain
  1995 expenditures to  reduce income  taxes previously provided.  The benefit  in
  1994  primarily reflects  the carryback  of 1994  and  prior year  net operating
  losses  to reduce  income  taxes previously  provided,  partially offset  by  an
  Internal Revenue Service settlement and a provision for state income taxes.
  
  FINANCIAL CONDITION AND LIQUIDITY
  
  A  substantial portion  of the  Company's revenue  is derived  from the  sale of
  products,  the prices  of  which are  affected by  numerous  factors beyond  the
  Company's control.   Prices may change dramatically in short periods of time and
  such  changes have a significant effect on revenues, profitability and liquidity
  of  the Company.    The Company  is subject  to  many of  the  same inflationary
  pressures as  the U.S. economy in  general.  The Company  continues to implement
  cost-cutting  measures in  an  effort  to  reduce  per  unit  production  costs.
  Management believes,  however, that the Company  may not be able  to continue to
  offset the impact of inflation over the long term through cost reductions alone.
  However,  the market  prices for products  produced by  the Company  have a much
  greater  impact than  inflation  on the  Company's  revenues and  profitability.
  Moreover, the discovery,  development and acquisition of  mineral properties are
  in many  instances unpredictable events.   Future metals prices, the  success of
  exploration programs,  changes in legal  and regulatory requirements,  and other
  property transactions can have a significant impact on the need for capital (see
  "Investment Considerations"  of Part  I, Part 1  of the  Company's December  31,
  1995, Form 10-K).
  
  At  December   31,  1996,  assets  totaled  approximately   $268.4  million  and
  shareholders'  equity  totaled  approximately $145.5  million.    Cash  and cash
  equivalents increased  by $4.3 million to $8.3 million at December 31, 1996 from
  $4.0 million at the end of 1995.  Operating activities provided $22.3 million of
  cash during 1996.   The primary sources of cash were  from the La Choya mine and
  the  Company's  industrial  minerals  operations.   Partially  offsetting  these
  sources were (1) a $4.2 million increase in inventories, primarily at the Greens
  Creek mine and the La Choya mine; and (2) 
  
  
  
  
  
  
  
  
                                         10
  
  
  
  
  
  
  <PAGE>  15
  
  payments for reclamation and other noncurrent liabilities which required cash of
  $5.2  million.   Principal  noncash  charges  included in  operating  activities
  include (1) provisions for reclamation, holding, severance, and closure costs of
  approximately $28.3 million; (2) depreciation, depletion, and amortization costs
  of  approximately  $20.8  million; and  (3)  adjustments  for  reduction in  the
  carrying value of mining properties totaling approximately $12.9 million.
  
  The Company's investing activities used $35.5 million of cash during  1996.  The
  most  significant  use  of  cash  was $33.7  million  for  property,  plant, and
  equipment  additions described  below  and  the  transfer  of  $4.3  million  to
  restricted  investments for  additional reclamation  funding and  surety bonding
  collateral  requirements related to ongoing  and closed operations.   These uses
  were  partially offset  by proceeds  from  the sales  of assets  ($3.6 million),
  primarily for the sale of  an interest in the Golden Eagle joint venture and the
  sale  of  the  Apex mine,  and  proceeds  from  sales  of certain  common  stock
  investments ($0.1 million).   During 1996, the most significant  asset additions
  were  $19.0 million at the  Greens Creek mine, $3.8 million  at the Grouse Creek
  mine,  $2.5  million at  the  Lucky Friday  mine,  $2.4  million in  capitalized
  interest  at Greens Creek, Rosebud, Lucky Friday, and American Girl, and capital
  expenditures  of $1.7 million at K-T Clay's  kaolin division and $1.6 million at
  the American Girl mine.
  
  During 1996, $17.4 million of cash was provided from financing  activities.  The
  major sources  of cash were borrowings  on long-term debt of  $51.6 million from
  the Company's  revolving credit facility, proceeds  totaling approximately $22.0
  million from  the issuance  of 2.875  million common  shares in an  underwritten
  offering completed in January  1996, and borrowing against cash  surrender value
  of life insurance of $0.8  million, partially offset by repayments on  long-term
  debt of $48.9 million and payment of preferred stock dividends of $8.1 million.
  
  The Company currently estimates that capital expenditures to be incurred in 1997
  will  be in the range of $19.0 million  to $32.5 million, including $0.8 million
  of capitalized  interest.   These expenditures, excluding  capitalized interest,
  consist  primarily of (1) the Company's share of development expenditures at the
  Rosebud project ($10.0-$11.0 million), the Lucky Friday expansion project ($2.0-
  $14.0   million),  industrial   minerals  capitalized   expenditures  ($2.6-$2.8
  million), Greens  Creek mine  capitalized expenditures ($2.0-$2.2  million); and
  (2) expenditures at other  operating locations totaling $1.6-$1.7 million.   The
  high end  of the estimates  with respect to  the Lucky Friday  expansion project
  expenditures  are subject  to preparation  of a  final feasibility  study, final
  engineering  estimates, as well as  Board of Directors  approval.  These planned
  capital expenditures  will depend,  in large part,  on the Company's  ability to
  obtain the required funds from operating activities, amounts available under its
  revolving and 
  
  
  
  
  
  
  
  
  
                                         11
  
  
  
  
  
  
  
  
  <PAGE>  16
  
  term  loan  credit facility,  and other  potential  financing arrangements.   As
  market circumstances permit, the Company may also seek to finance certain of its
  cash requirements through the sale of equity or debt securities, as appropriate.
  There  can  be no  assurance that  actual  capitalized expenditures  will  be as
  projected  based  upon  the  uncertainties  associated with  the  estimates  for
  development of the Lucky Friday  expansion project and the Company's ability  to
  generate adequate funding for the projected capital expenditures.
  
  The Company's  estimate of  its capital  expenditure requirements  assumes, with
  respect to  the Greens Creek and  Rosebud properties, that the  Company's joint-
  venture partners will not  default with respect to their respective  portions of
  development costs and capital expenditures.  
  
  Pursuant  to a  Registration Statement  filed with  the Securities  and Exchange
  Commission and declared effective in the third quarter of 1995, the Company can,
  at  its  option,  issue debt  securities,  common  shares,  preferred shares  or
  warrants in an amount not to exceed $100.0 million in the aggregate.  In January
  1996, the Company issued 2.875 million  shares of its common stock to facilitate
  the  funding of the  Company's capital expenditures  in 1996.   The Company used
  $21.0  million of the net proceeds of  approximately $22.0 million from the sale
  of Common  Stock initially to  pay down debt  under its existing  bank revolving
  credit facility.   As of  December 31, 1996 and  February 18,  1997, a total  of
  $17.0  million  and $10.0  million, respectively,  remained available  under the
  credit facility.
  
  The Company has  a revolving and  term loan facility  (the Bank Agreement)  that
  allows it to borrow up to $55.0 million.  Amounts may be borrowed on a revolving
  credit basis  through  July 31,  1998,  and  are repayable  in  eight  quarterly
  installments beginning  on October 31, 1998.   During the commitment period, the
  Company pays  an annual  facility fee  ranging  from $178,750  to $261,250,  the
  amount of which is based  on average quarterly borrowings.  The  Bank Agreement,
  as amended, includes  certain collateral provisions,  including the pledging  of
  the common stock  of certain  of the  Company's subsidiaries  and providing  the
  lenders a  security interest in accounts receivable.  Under the amended terms of
  the  Bank Agreement,  the  Company is  required  to maintain  certain  financial
  ratios, and meet certain net worth  and indebtedness tests for which the Company
  was  in compliance at  December 31, 1996.   Amounts available  under the amended
  Bank Agreement are based  on a defined debt to  cash flow test.  As  of December
  31, 1996, the Company had borrowings of  $38.0 million and the ability to borrow
  the  remaining  $17.0  million  under  the  facility.    The  interest rate  for
  borrowings under the Bank Agreement as of December 31, 1996 was 7.16%.
  
  
  
  
  
  
  
  
  
  
  
  
                                         12
  
  
  
  
  
  <PAGE>  17
  
  The  Company's planned net  environmental and reclamation  expenditures for 1997
  are expected to be approximately $9.4 million, principally for environmental and
  reclamation  activities at  the Bunker  Hill Superfund  Site, the  Coeur d'Alene
  River Basin, and the Republic property.
  
  Exploration expenditures  for 1997 are  currently estimated to  be approximately
  $4.0-$5.0  million, although  the Company  is currently  evaluating a  number of
  opportunities  that could potentially increase this range by an additional $2.0-
  $4.0   million.    The  Company's  exploration  strategy  is  to  focus  further
  exploration at,  or in the vicinity of, its currently owned domestic and foreign
  properties.    Accordingly,  1997  domestic  exploration  expenditures  will  be
  incurred  principally at the Greens Creek, Rosebud, and Lucky Friday properties.
  Foreign exploration efforts in 1997 will center primarily on targets in Mexico.
  
  In the normal course of its business, the Company uses forward sales commitments
  and  commodity  put  and  call  option  contracts  to  manage  its  exposure  to
  fluctuations in  the  prices of  certain  metals which  it produces.    Contract
  positions are designed to ensure that the Company will receive a defined minimum
  price  for certain  quantities of  its production.   Gains  and losses,  and the
  related costs paid  or premiums received, for  option contracts which  hedge the
  sales prices of commodities are  deferred and included in income as  part of the
  hedged transaction.   Revenues from the aforementioned  contracts are recognized
  at the time contracts are  closed out by delivery of the underlying commodity or
  settlement of  the net position  in cash.   The  Company is  exposed to  certain
  losses, generally  the amount by which the contract price exceeds the spot price
  of a  commodity, in the event  of nonperformance by the  counterparties to these
  agreements.
  
  At December 31, 1996, the Company had forward sales commitments  through January
  31, 1997, for 1,000  ounces of gold at an average price of  $412 per ounce.  The
  estimated fair value  of these forward sales commitments was $43,000 at December
  31, 1996.  The  Company has also purchased options to put  34,440 ounces of gold
  to counterparties  at an  average price  of $396 per  ounce.   Concurrently, the
  Company sold options to allow  the counterparties to call 34,440 ounces  of gold
  from the Company at  an average price of $461 per ounce.   There was no net cost
  associated with the purchase and sale of these options which expire on a monthly
  basis through December 1997.  The London Final gold price at year end  was $369.
  At  December 31, 1996, the estimated fair  value of the Company's purchased gold
  put options was approximately $772,000.  If  the Company had chosen to close its
  offsetting short  gold call option position, it  would have incurred a liability
  of  approximately $2,000.    Additionally, the  Company  has entered  into  spot
  deferred  sales commitments  for 25,000  ounces of  gold at  $381 per  ounce for
  delivery on January  15, 1997.   The nature and  purpose of these  forward sales
  contracts, however, does not presently 
  
  
  
  
  
  
  
  
  
                                         13
  
  
  
  
  
  
  <PAGE>  18
  
  expose  the Company  to any  significant net  loss.   All of  the aforementioned
  contracts are designated as hedges at December 31, 1996.      
  
  In  November  1994, the  Company entered  into  a court-approved  Consent Decree
  requiring the Company and  certain other mining companies to  undertake specific
  remediation  work with respect  to the  Bunker Hill  Superfund Site  in northern
  Idaho.   At December 31, 1996, the Company's allowance for Bunker Hill Superfund
  Site remedial action  costs was  approximately $9.4 million,  which the  Company
  believes is adequate based on current estimates of aggregate costs.
  
  In  addition,  as  described  in  Note  6 of  Notes  to  Consolidated  Financial
  Statements  forming  part  of   the  Company's  audited  Consolidated  Financial
  Statements for the year  ended December 31, 1996, the Company  is a defendant in
  an  action filed in November 1990 by  Star Phoenix Mining Company (Star Phoenix)
  and certain principals of  Star Phoenix, asserting that the Company breached the
  terms of  Star Phoenix's lease agreement for the Company's Star Morning mine and
  that  the  Company interfered  with  certain contractual  relationships  of Star
  Phoenix relating to the Company's 1990  termination of such lease agreement.  In
  June 1994,  judgment was entered by  the Idaho State District  Court against the
  Company  in the legal proceeding in the  amount of $10.0 million in compensatory
  damages and $10.0  million in punitive damages based on  a jury verdict rendered
  in the  case in late May  1994.  The verdict  was appealed to  the Idaho Supreme
  Court which heard arguments in  April 1996 and is prepared to render its opinion
  in the  near  future.   Post-judgment  interest will  accrue  during the  appeal
  period; the current interest  rate is 10.875%.  In order to  stay the ability of
  Star Phoenix to  collect on the judgment  during the pending of  the appeal, the
  Company posted an  appeal bond in the amount of  $27.2 million representing 136%
  of  the District Court  judgment.  The Company  pledged U.S. Treasury securities
  totaling $10.0 million  as collateral for  the $27.2 million  appeal bond.   The
  Company  has vigorously pursued its appeal to the Idaho Supreme Court and it has
  been the  Company's position, and at  the current time it  remains the Company's
  position, that it  will not enter  into a settlement  with Star Phoenix for  any
  material amount.  Although the ultimate outcome of the appeal of the judgment is
  subject to  the inherent uncertainties  of any  legal proceeding,  based on  the
  Company's  analysis  of  the  factual  and  legal  issues  associated  with  the
  proceeding before  the District  Court and  based upon the  opinions of  outside
  counsel,  as of  the date  hereof, it  is management's  belief that  the Company
  should ultimately prevail in this matter, although there can be  no assurance in
  this regard.   In the  event of an unfavorable  outcome in this  proceeding, the
  Company  expects that  the judgment would  be paid  from the  pledged collateral
  totaling $10.0  million  with  the  remaining  balance  to  be  paid  from  bank
  borrowings,  other potential  financing  arrangements or  proceeds from  certain
  asset sales.
  
  
  
  
  
  
  
  
  
  
                                         14
  
  
  
                                       
  
  
  
  
  
  <PAGE>  19
  
  Although there  can be  no assurance as  to the  ultimate outcome  of the  above
  matter and  the other proceedings disclosed  in Note 6 of  Notes to Consolidated
  Financial  Statements  forming  part   of  the  Company's  audited  Consolidated
  Financial  Statements for the year ended December 31, 1996, it is the opinion of
  the Company's management,  based upon  the information available  at this  time,
  that  the expected outcome  of these matters, individually  or in the aggregate,
  will not  have  a material  adverse  effect on  the  results of  operations  and
  financial condition of the Company and its subsidiaries. 
  
  
  
  
  
  
  
  
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         15
  
  
  
  
  
  
  
                                       
  
                                         
  
  <PAGE>  20
  
                                                                      Exhibit 99.2
  REPORT OF INDEPENDENT ACCOUNTANTS
  
  The Board of Directors and Shareholders
  Hecla Mining Company
  
       We have  audited  the accompanying  consolidated  balance sheets  of  Hecla
  Mining Company  and subsidiaries  as  of December  31, 1996  and  1995, and  the
  related consolidated  statements of operations, changes  in shareholders' equity
  and  cash flows  for each of  the three years  in the period  ended December 31,
  1996.  These financial  statements are the responsibility of the  Company's man-
  agement.   Our  responsibility  is to  express  an  opinion on  these  financial
  statements based on our audits.  
  
       We  conducted our  audits  in accordance  with generally  accepted auditing
  standards.  Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements.  An audit also includes
  assessing  the  accounting principles  used  and significant  estimates  made by
  management, as  well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion. 
  
       In  our opinion, the financial statements referred to above present fairly,
  in  all material respects, the  consolidated financial position  of Hecla Mining
  Company and subsidiaries  as of December 31,  1996 and 1995, and  the results of
  their  operations and their cash flows for each of the three years in the period
  ended  December  31,  1996,  in conformity  with  generally  accepted accounting
  principles.
  
       As  discussed in  Note  1 to  the  consolidated financial  statements,  the
  Company  changed   its  method  of  accounting   for  environmental  remediation
  liabilities in 1996, the impairment of long-lived assets in 1995, and its method
  of accounting for investments in 1994.  
  
  
  
  /s/ COOPERS & LYBRAND L.L.P.
  
  Spokane, Washington
  
  February 7, 1997
  
  
  
  
  
  
  
  
  
  
  
                                         16
  
  
  
                                       
  
  
  
  <PAGE>  21
                              
                             HECLA MINING COMPANY AND SUBSIDIARIES
  
                                  CONSOLIDATED BALANCE SHEETS
  
                                    (dollars in thousands)
                                          __________
  
                                            ASSETS
  <TABLE>
  <CAPTION>
                                                                              December 31,
                                                                      ----------------------------
                                                                        1996              1995
                                                                      ---------         -
                                                                                       ---------
  <S>                                                                  <C>               <C>
  Current assets
    Cash and cash equivalents                                         $    8,256        $   4,024
    Accounts and notes receivable                                         24,168           25,571
    Income tax refund receivable                                           1,262              737
    Inventories                                                           22,879           20,915
    Other current assets                                                   2,284            2,038
                                                                      ----------       ----------
             Total current assets                                         58,849           53,285
  Investments                                                              1,723            2,200
  Restricted investments                                                  20,674           16,254
  Properties, plants and equipment, net                                  177,755          177,374
  Other noncurrent assets                                                  9,392            9,077
                                                                      ----------       ----------
             Total assets                                             $  268,393        $ 258,190
                                                                      ==========       ==========
  
                                           LIABILITIES
  Current liabilities
    Accounts payable and accrued expenses                             $   17,377        $  14,145
    Accrued payroll and related benefits                                   3,232            3,217
    Preferred stock dividends payable                                      2,012            2,012
    Accrued taxes                                                          1,427            1,042
    Accrued reclamation and closure costs                                  8,664            5,549
                                                                      ----------       ----------
             Total current liabilities                                    32,712           25,965
  Deferred income taxes                                                      359              359
  Long-term debt                                                          38,208           36,104
  Accrued reclamation and closure costs                                   45,953           26,782
  Other noncurrent liabilities                                             5,653            4,864
                                                                      ----------       ----------
             Total liabilities                                           122,885           94,074
                                                                      ----------       ----------
  Commitments and contingencies (Notes 1, 2 and 6)
  
                                          SHAREHOLDERS' EQUITY
  Preferred stock, $0.25 par value,
    authorized 5,000,000 shares;
    issued and outstanding - 2,300,000 shares,
    liquidation preference $117,012                                          575              575
  Common stock, $0.25 par value, authorized 100,000,000 shares;
    issued 1996 - 51,199,324 shares, issued 1995 - 48,317,324 shares      12,800           12,079
  Capital surplus                                                        351,559          330,352
  Accumulated deficit                                                   (213,610)        (173,206)
  Net unrealized gain (loss) on investments                                  (32)             100
  Foreign currency translation adjustment                                 (4,898)          (4,898)
  Less treasury stock, at cost;
    1996 - 62,085 common shares, 1995 - 62,072 common shares                (886)            (886)
                                                                      ----------       ----------
             Total shareholders' equity                                  145,508          164,116
                                                                      ----------       ----------
             Total liabilities and shareholders' equity               $  268,393        $ 258,190
                                                                      ==========       ==========
  
            The accompanying notes are an integral part of the consolidated financial statements.
  </TABLE>
                                                  17
  
  <PAGE>  22
                              HECLA MINING COMPANY AND SUBSIDIARIES
  
                              CONSOLIDATED STATEMENTS OF OPERATIONS
  
                   (dollars and shares in thousands, except per share amounts)
  
                                            __________
  <TABLE>
  <CAPTION>
                                                                            Year Ended December 31,
                                                                     -------------------------------------
                                                                       1996          1995           1994
                                                                     ---------     ----------     ---------
  <S>                                                                <C>           <C>            <C>
  Sales of products                                                  $ 158,252     $  151,615     $ 125,342
                                                                     ---------     ----------     ---------
  Cost of sales and other direct production costs                      126,878        121,546       101,278
  Depreciation, depletion and amortization                              20,451         23,462        14,233
                                                                     ---------      ---------     ---------
                                                                       147,329        145,008       115,511
                                                                     ---------      ---------     ---------
      Gross profit                                                      10,923          6,607         9,831
                                                                     ---------      ---------     ---------
  Other operating expenses
    General and administrative                                           9,365          9,371        11,132
    Exploration                                                          4,843          7,109         8,397
    Depreciation and amortization                                          338            367           524
    Provision for closed operations and environmental 
      matters                                                           22,806          4,615        11,353
    Reduction in carrying value of mining properties                    12,902         97,387         7,864
                                                                     ---------      ---------     ---------
                                                                        50,254        118,849        39,270
                                                                     ---------      ---------     ---------
         Loss from operations                                          (39,331)      (112,242)      (29,439)
                                                                     ---------      ---------     ---------
  Other income (expense)
    Interest and other income                                            8,630          8,089         5,227
    Miscellaneous income (expense)                                        (250)            18          (234)
    Gain (loss) on investments                                             (28)         3,169         1,053
    Interest expense:
      Interest costs                                                    (3,058)        (1,960)       (2,606)
      Less amount capitalized                                            2,360          1,516         1,751
                                                                     ---------      ---------     ---------
                                                                         7,654         10,832         5,191
                                                                     ---------      ---------     ---------
  Loss before income taxes and extraordinary item                      (31,677)      (101,410)      (24,248)
  Income tax (provision) benefit                                          (677)          (309)          468
                                                                     ---------      ---------     ---------
  Loss before extraordinary item                                       (32,354)      (101,719)      (23,780)
  Extraordinary loss on retirement of long-term debt                       - -            - -          (833)
                                                                     ---------      ---------     ---------
  Net loss                                                             (32,354)      (101,719)      (24,613)
  Preferred stock dividends                                             (8,050)        (8,050)       (8,050)
                                                                     ---------      ---------     ---------
  Loss applicable to common shareholders                             $ (40,404)    $ (109,769)    $ (32,663)
                                                                     =========      =========     =========
  Loss per common share
  Loss before extraordinary item                                        $(0.79)        $(2.28)       $(0.72)
  Extraordinary item                                                       - -            - -         (0.02)
                                                                        ------         ------        ------
                                                                        $(0.79)        $(2.28)       $(0.74)
                                                                        ======         ======        ======
  Weighted average number of common shares outstanding                  51,133         48,192        43,944
                                                                        ======         ======        ======
  
  
                         The accompanying notes are an integral part of the consolidated financial statements.
  </TABLE>
  
                                            18
  
  
  <PAGE>  23
                             HECLA MINING COMPANY AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (dollars in thousands)
  <TABLE>
  <CAPTION>
                                                                               Year Ended December 31,
                                                                     -------------------------------------------
                                                                        1996             1995            1994
                                                                     ----------       ----------      ----------
  <S>                                                                <C>              <C>             <C>
  Operating activities
    Net loss                                                         $   (32,354)     $ (101,719)     $  (24,613)
    Noncash elements included in net loss
       Depreciation, depletion and amortization                           20,789          23,829          14,757
       Gain on disposition of properties, plants 
          and equipment                                                     (706)         (3,417)           (354)
       (Gain) loss on investments                                             28          (3,169)         (1,053)
       Accretion of interest on long-term debt                               - -             - -           2,495
       Reduction in carrying value of mining properties                   12,902          97,387           7,864
       Provision for reclamation and closure costs                        28,284           8,071          11,353
       Loss on retirement of long-term debt                                  - -             - -             833
    Change in
       Accounts and notes receivable                                         192            (849)         (4,675)
       Income tax refund receivable                                         (525)           (490)           (247)
       Inventories                                                        (4,239)         (2,299)         (4,086)
       Other current assets                                                 (479)           (441)            406
       Accounts payable and accrued expenses                               3,232             575          (4,088)
       Accrued payroll and related benefits                                   15             493             668
       Accrued taxes                                                         385             117              (3)
       Accrued reclamation and closure costs
          and other noncurrent liabilities                                (5,210)         (6,326)         (4,608)
                                                                      ----------      ----------      ----------
    Net cash provided (used) by operating activities                      22,314          11,762          (5,351)
                                                                      ----------      ----------      ----------
  Investing activities
    Additions to properties, plants and equipment                        (33,731)        (45,308)        (66,559)
    Proceeds from disposition of properties, plants 
       and equipment                                                       3,641           3,822          13,809
    Proceeds from sale of investments                                        130           5,196          32,067
    Purchase of restricted investments                                    (4,308)         (2,701)        (13,553)
    Purchase of investments and change in cash surrender 
       value of life insurance, net                                         (726)         (1,047)            114
    Other, net                                                              (480)         (2,407)           (325)
                                                                      ----------      ----------      ----------
    Net cash used by investing activities                                (35,474)        (42,445)        (34,447)
                                                                      ----------      ----------      ----------
  Financing activities
    Common stock issued under stock option plans 
       and warrants                                                          - -           1,335           1,765
    Common stock issuance, net of issuance costs                          21,928             - -          63,499
    Preferred stock dividends                                             (8,050)         (8,050)         (8,050)
    Borrowings against cash surrender value of life insurance                801             - -             - -
    Borrowings on long-term debt                                          51,631          48,000             - -
    Repayment of long-term debt                                          (48,918)        (13,856)            - -
    Retirement of long-term debt including $16,283
       of accreted interest                                                  - -             - -         (50,169)
                                                                       ----------     ----------      ----------
    Net cash provided by financing activities                             17,392          27,429           7,045
                                                                      ----------      ----------      ----------
  Change in cash and cash equivalents
    Net increase (decrease) in cash and cash equivalents                   4,232          (3,254)        (32,753)
    Cash and cash equivalents at beginning of year                         4,024           7,278          40,031
                                                                      ----------      ----------      ----------
    Cash and cash equivalents at end of year                          $    8,256      $    4,024      $    7,278
                                                                      ==========      ==========      ==========
  Supplemental disclosure of cash flow information
    Cash paid during year for:
       Interest (net of amount capitalized), including
          $16,283 of accreted interest in 1994                        $      249      $     (136)     $   16,528
                                                                      ==========      ==========      ==========
       Income tax payments, net                                       $      148      $      216      $      436
                                                                      ==========      ==========      ==========
  See Notes 3 and 5 for noncash investing and financing activities. 
  
  
                        The accompanying notes are an integral part of the consolidated financial statements. 
  </TABLE>
                                              19
  
  <PAGE>  24
                              HECLA MINING COMPANY AND SUBSIDIARIES
  
                    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
  
                        For the Years Ended December 31, 1996, 1995 and 1994
  
                     (dollars and shares in thousands, except per share amounts)
                                                            _______________
  <TABLE>
  <CAPTION>
                                                                                                   Unrealized      Foreign
                                                                                                         Gain     Currency
                                    Preferred Stock       Common Stock     Capital   Accumulated    (Loss) on  Translation  Treasury
                                   -----------------    -----------------
                                    Shares    Amount    Shares    Amount   Surplus     Deficit    Investments   Adjustment    Stock
                                   -------   -------    -------  --------  --------   ----------  -----------  -----------  --------
  <S>                                <C>       <C>      <C>      <C>       <C>        <C>           <C>           <C>        <C>
  Balances, December 31, 1993        2,300     $  575   40,320   $10,080   $ 265,687  $ (30,774)    $    (8)      $   - -    $  (888)
     Effect of change in 
       accounting for investments                                                                       635
     Net loss                                                                           (24,613)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued under stock 
       option plans and exercise
       of warrants                                         349        87       1,678
     Stock issued for cash, 
       net of issuance costs                             7,475     1,869      61,630
     Net change in unrealized 
       gain (loss) on investments                                                                     2,769
     Net change in foreign 
       currency translation 
       adjustment                                                                                                  (3,158)
     Treasury stock purchased                                                                                                     (1)
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1994        2,300        575   48,144    12,036     328,995    (63,437)      3,396        (3,158)      (889)
     Net loss                                                                          (101,719)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued under stock 
       option plans and exercise
       of warrants                                         166        41       1,294
     Stock issued to directors                               7         2          63
     Net change in unrealized 
       gain (loss) on investments                                                                    (3,296)
     Net change in foreign 
       currency translation 
       adjustment                                                                                                  (1,740)
     Treasury stock issued                                                                                                         3
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1995        2,300        575   48,317    12,079     330,352   (173,206)        100        (4,898)      (886)
     Net loss                                                                           (32,354)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued for cash,
       net of issuance costs                             2,875       719      21,154
     Stock issued to directors                               7         2          53
     Net change in unrealized 
       gain (loss) on investments                                                                      (132)             
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1996        2,300     $  575   51,199   $12,800    $351,559  $(213,610)    $   (32)      $(4,898)    $ (886)
                                     =====     ======   ======   =======    ========  =========     =======       =======     ======
  
  
                        The accompanying notes are an integral part of the consolidated financial statements. 
  </TABLE>
                                                      20
  
  <PAGE>  25
  
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      ________
  
  NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
  
  A.   BASIS OF PRESENTATION -- The accompanying consolidated financial statements
  include  the  accounts of  Hecla  Mining Company  (Hecla  or  the Company),  its
  majority-owned subsidiaries and its  proportionate share of the accounts  of the
  joint  ventures  in  which  it   participates.    All  significant  intercompany
  transactions and accounts are eliminated in consolidation.  
  
  The Company's revenues and profitability are strongly influenced by world prices
  for  gold, silver, lead,  and zinc, which  fluctuate widely and  are affected by
  numerous factors beyond the Company's control, including inflation and worldwide
  forces  of supply  and demand.   The  aggregate effect  of these factors  is not
  possible to accurately predict.
  
  The preparation  of financial statements  in conformity with  generally accepted
  accounting principles requires management to make estimates and assumptions that
  affect  the reported  amounts  of  assets  and  liabilities  and  disclosure  of
  contingent assets and  liabilities at the dates of the  financial statements and
  the  reported amounts  of revenues  and expenses  during the  reporting periods.
  Actual results could differ materially from those estimates.
  
  Certain  consolidated  financial statement  amounts  have  been reclassified  to
  conform to the 1996 presentation.  These reclassifications had no  effect on the
  net loss or accumulated deficit as previously reported.
  
  B.   COMPANY'S BUSINESS  AND CONCENTRATIONS  OF  CREDIT RISK --  The Company  is
  engaged  in mining  and  mineral processing  activities, including  exploration,
  extraction, processing, and  reclamation.  The Company's  principal products are
  metals  (primarily  gold,  silver,  lead,  and  zinc)  and  industrial  minerals
  (primarily  clay, aggregate and landscape  products).  Substantially  all of the
  Company's operations  are conducted in the  United States and Mexico.   Sales of
  metals products are made principally to domestic and foreign custom smelters and
  metal traders.  The Company sells substantially all of its metallic concentrates
  to smelters which are subject  to extensive regulations including  environmental
  protection laws.   The Company has  no control over the  smelters' operations or
  their  compliance  with environmental  laws and  regulations.   If  the smelting
  capacity  available  to  the  Company  were  significantly  reduced  because  of
  environmental  requirements  or otherwise,  it  is possible  that  the Company's
  silver operations could  be adversely  affected.  Industrial  minerals are  sold
  principally to domestic and Mexican manufacturers and wholesalers. 
  
  
  
  
  
  
  
  
  
  
                                         21
  
  
  
    
  <PAGE>  26
  
  Sales to significant metals customers, as a percentage of total sales of metals,
  were as follows:
  
                                1996      1995      1994
                                ----      ----      ----
  Custom smelters               18.4%      8.9%      9.3%
  
  Custom metal traders
    Customer A                  31.2%     32.8%     38.3%
    Customer B                  29.5%     30.6%     19.2%
    Customer C                   7.7%     11.6%     12.9%
    Customer D                   7.5%      7.9%     11.9%
  
  During 1996, 1995 and 1994, the Company sold 9.8%, 7.0% and 13.0%, respectively,
  of its products to companies in foreign countries.
  
  The Company's financial instruments that are exposed to concentrations of credit
  risk  consist  primarily  of  cash  and  cash  equivalents  and  trade  accounts
  receivable.   The Company places  its cash and  temporary cash investments  with
  institutions of  high credit-worthiness.   At times  such investments may  be in
  excess  of  the FDIC  insurance  limit.    The  Company routinely  assesses  the
  financial strength of  its customers and,  as a  consequence, believes that  its
  trade accounts receivable credit risk exposure is limited.
  
  C.   INVENTORIES  -- Inventories  are stated  at the  lower  of average  cost or
  estimated net realizable value.
  
  D.   INVESTMENTS   --  The  Company  uses  the  equity  method  to  account  for
  investments  in  common  stock   of  operating  companies  20%  to   50%  owned.
  Investments  in nonoperating companies that  are not intended  for resale or are
  not readily marketable are valued at the  lower of cost or net realizable value.
  Marketable equity securities are  categorized as available for sale.   Effective
  January  1994,  the Company  adopted the  provisions  of Statement  of Financial
  Accounting  Standards No. 115, "Accounting  for Certain Investments  in Debt and
  Equity Securities."
  
  Realized gains and losses on the sale of securities are recognized on a specific
  identification basis.   Unrealized gains and losses are included  as a component
  of shareholders' equity net of related deferred income taxes, unless a permanent
  impairment in value has occurred, which is then charged to operations.  
  
  Restricted investments held at  December 31, 1996 and 1995,  primarily represent
  investments  in  money  market  funds  and  U.S.  Treasury  securities.    These
  investments  are  restricted for  reclamation  funding, as  well  as reclamation
  surety bond and appeal bond collateral requirements.
  
  E.   PROPERTIES, PLANTS AND  EQUIPMENT -- Properties,  plants and equipment  are
  stated at the lower of cost or estimated net 
  
  
  
  
  
                                         22
  
  
  
    
  <PAGE>  27
  
  realizable  value.  Maintenance, repairs and renewals are charged to operations.
  Betterments of a major nature are capitalized.  When assets are retired or sold,
  the  costs   and  related  allowances  for  depreciation  and  amortization  are
  eliminated from  the accounts and  any resulting  gain or loss  is reflected  in
  operations.   Idle  facilities, placed on  a standby  basis, are  carried at the
  lower of net book value or estimated net realizable value.
  
  Management  of the  Company reviews  the net carrying  value of  all facilities,
  including  idle facilities,  on  a  regular,  periodic  basis.    These  reviews
  consider, among other factors, (1)  the net realizable value of each  major type
  of  asset, on  a  property-by-property basis,  to  reach a  judgment  concerning
  possible permanent  impairment of value and  any need for a  write-down in asset
  value; (2) the ability of the Company  to fund all care, maintenance and standby
  costs; (3) the  status and usage  of the assets,  while in a   standby mode,  to
  thereby  determine whether  some form  of amortization  is appropriate;  and (4)
  current estimates of metal prices that  affect the decision to reopen or  make a
  disposition of  the assets.  The  Company estimates 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 estimates
  of  metal  to be  recovered from  proven and  probable  ore reserves  and, where
  appropriate,  from  the continuity  of  existing, developed  ore  bodies, future
  production  costs and  future metals  prices over  the estimated  remaining mine
  life.    If  undiscounted cash  flows  are less  than  the carrying  value  of a
  property, an impairment  loss is  recognized based upon  the estimated  expected
  future  net  cash  flows  from  the property  discounted  at  an  interest  rate
  commensurate  with the risk  involved.  Effective  January 1,  1995, the Company
  adopted the provisions of  Statement of Financial Accounting Standards  No. 121,
  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
  be Disposed Of" (SFAS  No. 121).  The adoption of the provisions of SFAS No. 121
  had no  material effect on the  results of operations or  financial condition of
  the Company.
  
  Management's estimates  of metals  prices, recoverable  proven and probable  ore
  reserves, and  operating, capital and reclamation costs are subject to risks and
  uncertainties of change affecting the recoverability of the Company's investment
  in various  projects.  Although management  has made its best  estimate of these
  factors  based on  current conditions,  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 its operating properties and the
  need for asset impairment write-downs.
  
  Depreciation  is  based on  the  estimated useful  lives  of the  assets  and is
  computed using straight-line, declining-balance, and 
  
  
  
  
  
  
  
  
                                         23
  
  
  
    
  <PAGE>  28
  
  unit-of-production methods.  Depletion  is computed using the unit-of-production
  method.
  
  Management's  calculations  of proven  and probable  ore  reserves are  based on
  engineering  and geological  estimates including  minerals prices  and operating
  costs.  Changes in the geological and engineering  interpretation of various ore
  bodies, mineral prices and operating costs may change the Company's estimates of
  proven and probable  reserves.  It  is reasonably possible  that certain of  the
  Company's estimates of proven and probable reserves will change in the near term
  resulting in  a change to amortization  and reclamation accrual rates  in future
  reporting periods.
  
  F.   MINE  EXPLORATION  AND DEVELOPMENT  --  Exploration  costs are  charged  to
  operations  as incurred,  as are  normal development  costs at  operating mines.
  Major  mine development expenditures at  operating properties and  at new mining
  properties not yet producing are capitalized.
  
  G.   RECLAMATION OF MINING AREAS -- All of the Company's operations  are subject
  to reclamation and closure requirements.  Minimum standards for mine reclamation
  have been  established by  various  governmental agencies  which affect  certain
  operations  of the  Company.   A  reserve for  mine reclamation  costs has  been
  established for restoring certain abandoned and currently disturbed mining areas
  based  upon estimates  of cost  to comply  with existing  reclamation standards.
  Mine   reclamation  costs  for  operating  properties   are  accrued  using  the
  unit-of-production  method and  charged  to  cost  of  sales  and  other  direct
  production costs.   The estimated amount  of metals or minerals  to be recovered
  from  a mine  site is  based  on internal  and external  geological data  and is
  reviewed by management on a  periodic basis.  Changes in such  estimated amounts
  which affect reclamation cost accrual rates are reflected on a prospective basis
  unless they indicate there is a  current impairment of an asset's carrying value
  and a decision is made to permanently close the property, in which case they are
  recognized  currently  and  charged  to  provision  for  closed  operations  and
  environmental matters.  It is reasonably possible that the Company's estimate of
  its ultimate accrual for reclamation  costs will change in the near  term due to
  possible  changes  in laws  and  regulations, and  interpretations  thereof, and
  changes in cost estimates.
  
  H.   REMEDIATION  OF MINING AREAS --  The Company accrues  costs associated with
  environmental remediation obligations when  it is probable that such  costs will
  be incurred and  they are reasonably  estimable.  Accruals for  estimated losses
  from  environmental remediation  obligations generally  are recognized  no later
  than completion of the remedial feasibility  study and are charged to  provision
  for closed operations and  environmental matters.  Costs of  future expenditures
  for  environmental remediation are not  discounted to their  present value; such
  costs are based on 
  
  
  
  
  
  
  
  
                                         24
  
  
  
  <PAGE>  29
  
  management's  current estimate of amounts that  are 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.
  
  In October 1996, the  American Institute of Certified Public  Accountants issued
  Statement of Position 96-1,  "Environmental Remediation Liabilities" (SOP 96-1).
  SOP 96-1  provides authoritative  guidance with  respect to specific  accounting
  issues that are present in the recognition, measurement, display, and disclosure
  of  environmental remediation  liabilities.   The  provisions  of SOP  96-1  are
  effective  for  fiscal years  beginning after  December 15,  1996.   The Company
  adopted  the provisions  of  the SOP  96-1 during  1996.   The  adoption of  the
  provisions of SOP  96-1 had no material  effect on the results  of operations or
  financial condition of the Company.
  
  It  is reasonably possible that,  due to uncertainties  associated with defining
  the  nature and extent of  environmental contamination, application  of laws and
  regulations by  regulatory authorities,  and changes in  remediation technology,
  the  ultimate  cost of  remediation could  change in  the  future.   The Company
  periodically  reviews  its accrued  liabilities  for such  remediation  costs as
  evidence  becomes  available  indicating  that  its  remediation  liability  has
  changed.
  
  I.   INCOME TAXES -- The Company records deferred tax liabilities and assets for
  the expected  future income tax consequences of events that have been recognized
  in its financial statements.  Deferred tax liabilities and assets are determined
  based  on the  temporary differences  between the  financial statement  carrying
  amounts  and the tax bases of assets  and liabilities using enacted tax rates in
  effect in the years in which the temporary differences are expected to reverse. 
  
  J.   LOSS  PER  COMMON SHARE  -- Loss  per common  share  is computed  by adding
  preferred  stock  dividends to  the  net loss  and  dividing the  result  by the
  weighted average number of shares of   common stock and common stock equivalents
  (stock options) outstanding during each reporting period unless the common stock
  equivalents are antidilutive.  Due to the losses in 1996, 1995 and 1994,  common
  stock equivalents are  antidilutive and  therefore have been  excluded from  the
  computation.
  
  K.   REVENUE  RECOGNITION -- Sales of  metal products sold  directly to smelters
  are recorded  when title and risk of loss transfer  to the smelter, at estimated
  metal  prices.   Recorded  values  are  adjusted  periodically  and  upon  final
  settlement.   Metal in products  tolled (rather than  sold to smelters)  is sold
  under  contracts for  future delivery;  such sales  are recorded  at contractual
  amounts when products are available to be processed by the smelter or 
  
  
  
  
  
  
  
  
  
                                         25
  
  
  
  
  <PAGE>  30
  
  refinery.   Sales  of  industrial minerals  are recognized  as the  minerals are
  delivered.
  
  L.   INTEREST  EXPENSE --  Interest costs  incurred during  the construction  of
  qualifying assets are capitalized as part of the asset cost.
  
  M.   CASH  EQUIVALENTS -- The Company  considers cash equivalents  to consist of
  highly liquid investments with a remaining maturity of three months or less when
  purchased. 
  
  N.   FOREIGN CURRENCY TRANSLATION -- The Company operates in Mexico with its two
  wholly owned  subsidiaries:  Minera Hecla,  S.A. de C.V. (Minera  Hecla) and K-T
  Clay de Mexico  S.A. de C.V. (K-T  Mexico).  The functional  currency for Minera
  Hecla and  K-T Mexico is the  U.S. dollar.  Accordingly,  the Company translates
  the  monetary  assets  and liabilities  of  both  subsidiaries  at the  year-end
  exchange rate  while  nonmonetary  assets  and  liabilities  are  translated  at
  historical  rates.  Income  and expense accounts  are translated  at the average
  exchange  rate for each period.   Translation adjustments  and transaction gains
  and losses are reflected in the net loss for the period.
  
  Prior to  the second quarter of  1995, K-T Mexico's functional  currency was the
  Mexican peso.  During the second quarter of 1995, K-T Mexico commenced invoicing
  its  customers  in U.S.  dollars  instead  of the  Mexican  peso.   This  change
  indicated a change in the functional currency from the Mexican  peso to the U.S.
  dollar.    The  change  in  the  functional  currency  has  been  accounted  for
  prospectively commencing in the second quarter of 1995.  Accumulated translation
  adjustments  from  prior  periods  are  included  as  a  separate  component  of
  shareholders'  equity.  The translated  amounts for nonmonetary  assets prior to
  the change have become the accounting basis for those assets.
  
  O.   RISK  MANAGEMENT CONTRACTS  -- In  the normal  course of its  business, the
  Company  uses  forward  sales commitments  and  commodity  put  and call  option
  contracts to manage its exposure to fluctuations in the prices of certain metals
  which it produces.  Contract  positions are designed to ensure that  the Company
  will receive a  defined minimum price for certain  quantities of its production.
  Gains and losses, and the related  costs paid or premium received, for contracts
  which  hedge the  sales  prices of  commodities  are deferred  and  subsequently
  included  in  income as  part  of the  hedged  transaction.   Revenues  from the
  aforementioned contracts are  recognized at  the time metals  are available  for
  shipment to the refineries.  The Company is exposed to certain losses, generally
  the amount by which the contract price exceeds the spot price of a commodity, in
  the event of nonperformance by the counterparties to these agreements.
  
  
  
  
  
  
  
  
  
  
  
                                         26
  
  
  
  
  <PAGE>  31
  
  P.   ACCOUNTING FOR STOCK OPTIONS  -- In October 1995, the  Financial Accounting
  Standards Board  issued Statement  of  Financial Accounting  Standards No.  123,
  "Accounting  for Stock-Based  Compensation"  (SFAS  No.  123).    SFAS  No.  123
  establishes  financial  accounting  and   reporting  standards  for  stock-based
  employee compensation  plans.  SFAS No.  123 encourages all entities  to adopt a
  fair  value based  method of  accounting, but  allows an  entity to  continue to
  measure compensation cost  for those plans  using the intrinsic value  method of
  accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
  for Stock Issued to Employees."   The Company adopted the disclosure  provisions
  only of SFAS No. 123 in 1996.
  
  NOTE 2:  INVENTORIES
  
  Inventories consist of the following (in thousands): 
  
                                                   December 31,
                                                ------------------
                                                 1996       1995
                                                -------   --------
      Concentrates, bullion, metals in transit
         and other products                     $ 4,839    $ 2,519
      Industrial minerals products                8,902      8,671
      Materials and supplies                      9,138      9,725
                                                -------   --------
                                                $22,879    $20,915
                                                =======   ========
  
  At December 31, 1996, the Company had forward  sales commitments through January
  31, 1997, for  1,000 ounces of gold  at an average price  of $412 per ounce  and
  spot  deferred contracts for 25,000  ounces of gold at an  average price of $381
  for delivery on January 15, 1997.  The Company has also purchased options to put
  34,440  ounces of gold to counterparties at an  average price of $396 per ounce.
  Concurrently,  the  Company sold  options to  allow  the counterparties  to call
  34,440  ounces of gold from the  Company at an average price  of $461 per ounce.
  There was  no net cost  associated with the  purchase and sale  of these options
  which expire, in tandem, on a  monthly basis through December 31, 1997.   All of
  the aforementioned contracts are designated as hedges at December 31, 1996.  The
  London Final gold price at December 31, 1996 was $369 per ounce.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                         27
  
  
  
  
  <PAGE>  32
  
  NOTE 3:  PROPERTIES, PLANTS AND EQUIPMENT
  
  The major components of properties, plants and equipment are (in thousands):
  
                                                  December 31,
                                               ---------------------
                                                 1996       1995
                                               ---------  ---------
      Mining properties                        $  39,893  $  45,023
      Development costs                           99,659    122,842
      Plants and equipment                       246,091    209,100
      Land                                         6,142      6,501
                                               ---------  ---------
                                                 391,785    383,466
      Less accumulated depreciation,
         depletion and amortization              214,030    206,092
                                               ---------  ---------
      Net carrying value                       $ 177,755  $ 177,374
                                               =========  =========
  
  In the third quarter  of 1996, based  on its periodic reviews  of the status  of
  various mining properties, the Company  determined that certain adjustments were
  appropriate  to  properly  reflect  estimated  net  realizable  values.    These
  adjustments,  totaling $12.9  million, consisted  of write-downs  of properties,
  plants and equipment, inventories and production notes payable for the Company's
  interest in the American  Girl mine ($7.6 million),  and properties, plants  and
  equipment and  inventories for the Company's  interest in the Grouse  Creek mine
  ($5.3 million).  The American Girl write-down was due to lower than expected ore
  reserves  and  lower ore  grade  associated with  the  Oro Cruz  ore  body which
  resulted  in the  operator's decision  to close the  mine effective  November 4,
  1996.  The Grouse Creek write-down was associated with the Company's decision to
  suspend operations  after determining that the  ore contained in the  Grouse ore
  body was not  economical to mine at current metals prices.  Mine operations will
  be suspended late  in the  second quarter  of 1997  once mining  of the  Sunbeam
  deposit is complete.
  
  In  1995, adjustments to the carrying value  of mining properties totaling $97.4
  million  were recorded to write down the  Company's interest in the Grouse Creek
  mine  ($97.0 million) and  for the Company's  interest in  ConSil Corp.'s Silver
  Summit mine ($0.4 million).
  
  In  1994, the major  portion of the  $7.9 million adjustment was  related to the
  $7.2  million write-down of property, plant, equipment and supplies inventory at
  the Republic mine, which  completed operations in February 1995.   Also included
  was a $0.7 million write-down of exploration equipment and other property.
  
  The net carrying values of the major mining  properties of the Company that were
  on a standby or idle basis at December 31, 1996 
  
  
  
  
  
                                         28
  
  
  
  <PAGE>  33
  
  and 1995, were approximately $4.0 million and $7.6 million, respectively.
  
  On September  6, 1996, Hecla  and Santa Fe  Pacific Gold Corporation  (Santa Fe)
  entered  into a  joint venture  agreement with  respect to  the  development and
  operation  of  the Rosebud  project.    Pursuant  to  the agreement,  a  limited
  liability corporation was established with  each party owning a 50% interest  in
  the project.  No gain or  loss was recognized in connection with the  agreement.
  Under the  terms of the agreement,  Hecla will manage the  mining activities and
  Santa Fe will manage mill processing.   Total mine-site capital expenditures  to
  bring  the mine  into production  are expected  to be  approximately $20.0-$25.0
  million, of which $11.1 has been expended through December 31,  1996.  Under the
  terms of  the agreement, Santa  Fe funded the  first $12.5 million  of mine-site
  development and  is also responsible  to fund  costs of road  and mill  facility
  improvements.   Santa Fe also  contributed exploration property  adjacent to the
  Rosebud   property,  and  will  fund  the  first  $1.0  million  in  exploration
  expenditures,  and  two-thirds of  future  exploration  expenditures beyond  the
  initial $1.0 million.
  
  In 1996, Euro-Nevada Mining Corporation Inc. (Euro-Nevada)  exercised its option
  to  purchase an additional 1.5% Net Smelter  Return royalty (NSR) on the Rosebud
  property for  $2.5 million, the proceeds  of which were retained  by Hecla under
  the  terms of the  agreement with Santa Fe.   After the  exercise of its option,
  Euro-Nevada holds a 4% NSR on production from the Rosebud property.  The Company
  recognized a gain of $2.5 million associated with this transaction.
  
  In 1996, the Company and Santa Fe entered into a joint-venture agreement for the
  Golden Eagle property located adjacent to the Company's Republic mine.  Santa Fe
  purchased an immediate 75%  interest in the joint venture for $2.5 million.  The
  Company recorded a  gain on the  transaction totaling $0.6  million.  Under  the
  agreement, Santa  Fe is  to fund  all expenditures at  the property  through the
  economic feasibility stage.
  
  On September  27, 1995, the Company  sold its Apex Unit  processing facility for
  $8.0 million, plus  certain working  capital items totaling  an additional  $1.4
  million, recognizing a  gain on  the sale totaling  approximately $3.2  million.
  The  Company received  $4.4  million in  cash  at closing  and  accepted a  note
  receivable for the remaining $5.0  million.  Under the note, $3.0  million, plus
  accrued  interest, was  paid  on September 27,  1996, and  the  balance of  $2.0
  million, plus accrued interest, is due on September 27, 1997.
  
  On  February 8, 1994, the Company  sold a 20% interest in  its Grouse Creek gold
  project to  Great Lakes Minerals  Inc. of Toronto,  Ontario (Great Lakes).   The
  purchase price of $6.8 million represents 20% of the amount spent by the Company
  on  acquisition, exploration  and development  of the  project through  June 30,
  1993, and a fixed 
  
  
  
  
  
  
  
  
                                         29
  
  
  
  
  <PAGE>  34
  
  premium of  $1.25 million.   On January  31, 1997,  Great Lakes and  the Company
  entered into a  letter agreement terminating the Grouse  Creek Joint Venture and
  conveying Great  Lakes' interest in  the Grouse Creek  project to Hecla.   Great
  Lakes retained a 5%  defined net proceeds interest in the project.   The Company
  has assumed 100% of the interests and obligations associated with the property.
  
  NOTE 4:  INCOME TAXES
  
  Major  components  of  the Company's  income  tax  provision  (benefit) are  (in
  thousands):
  
                                         1996       1995    1994
                                        ------     ------   ------
  Current
      Federal                           $(749)    $ (298)   $ (805)
      State                               341        307       337
      Foreign                           1,085        300       - -
                                        -----     ------    ------
  Income tax provision (benefit)        $ 677     $  309    $ (468)
                                        =====     ======    ======
  
  Domestic  and  foreign  components of  income  (loss)  before  income taxes  and
  extraordinary item  for the years ended December 31,  1996, 1995 and 1994 are as
  follows (in thousands):
  
                                         December 31,
                               ----------------------------------
                                 1996        1995         1994
                               --------    ----------    --------
     Domestic                  $(36,468)    $(104,050)   $(23,698)
     Foreign                      4,791         2,640        (550)
                               --------     ---------    --------
        Total                  $(31,677)    $(101,410)   $(24,248)
                               ========     =========    ========
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                         30
  
  
  
      
  
  <PAGE>  35
  
  
  The components of the net deferred tax liability were as follows (in thousands):
  
                                                   December 31,
                                            -------------------------
                                               1996           1995
                                             --------       ---------
     Deferred tax assets
        Accrued reclamation costs            $ 17,988       $  10,832
        Investment valuation differences        1,924           1,969
        Capital loss carryover                  2,826           3,431
        Postretirement benefits other
          than pensions                           967             898
        Other liabilities                          13             230
        Deferred compensation                     795             612
        Accounts receivable                       456             456
        Properties, plants and equipment          - -          10,969
        Foreign net operating losses            3,048           2,314
        Federal net operating losses           72,686          57,398
        State net operating losses              7,514           4,867
        Tax credit carryforwards                2,659           3,435
        Miscellaneous                           2,518           2,103
                                             --------       ---------
        Total deferred tax assets             113,394          99,514
        Valuation allowance                  (107,937)        (97,705)
                                             --------       ---------
          Net deferred tax assets               5,457           1,809
                                             --------       ---------
     Deferred tax liabilities
        Properties, plants and equipment       (3,903)            - -
        Deferred income                          (210)           (287)
        Pension costs                            (951)           (624)
        Inventories                              (393)           (898)
        Deferred state income taxes, net         (359)           (359)
                                             --------       ---------
        Total deferred tax liabilities         (5,816)         (2,168)
                                             --------       ---------
     Net deferred tax liability              $   (359)      $    (359)
                                             ========       =========
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                         31
  
  
  
  <PAGE>  36
  
  The  Company has recorded a valuation  allowance to reflect the estimated amount
  of  deferred  tax assets  which  may  not be  realized  principally  due to  the
  expiration of net operating losses and tax credit carryforwards.  The changes in
  the valuation  allowance for the years  ended December 31, 1996,  1995 and 1994,
  are as follows (in thousands): 
  
                                      1996        1995        1994
                                    ---------   ---------   ---------
  Balance at beginning of year     $ (97,705)   $(67,149)   $(58,529)
  Increase related to nonutilization
   of net operating loss carry-
   forwards and nonrecognition
   of deferred tax assets due to
   uncertainty of recovery           (10,232)    (30,556)     (8,620)
                                   ----------   --------    --------
  Balance at end of year           $(107,937)   $(97,705)   $(67,149)
                                   =========    ========    ========
  
  The annual tax provision (benefit)  is different from the amount which  would be
  provided  by applying  the statutory  federal income  tax rate to  the Company's
  pretax loss. The reasons for the difference are (in thousands): 
  <TABLE>
  <CAPTION>
                                        1996                   1995                   1994
                                 --------------------   -------------------    -------------------
   <S>                            <C>            <C>    <C>           <C>      <C>           <C>
    Computed "statutory"
       benefit                    $ (10,770)     (34)%  $ (34,479)     (34)%   $  (8,244)     (34)%
    Nonutilization of net
       operating losses and
       effect of foreign tax
       provisions, if applicable     11,716       37       34,782       34         8,085       33
    State income taxes, net 
       of federal tax benefit          (269)      (1)           6        0          (309)      (1)
                                  ---------     ----    ---------     ----     ---------     ----
                                  $     677        2%   $     309        0%    $    (468)      (2)%
                                  =========     ====    =========     ====     =========     ====
  </TABLE>
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                                 32
  
  
  
  
  
  <PAGE>  37
  
  Substantially  all of the Company's net operating loss carryovers are attributed
  to  preference  related  items,  and  therefore  are  not  available  to  offset
  alternative  minimum  taxable income.   However,  they  are available  to offset
  future  regular taxable income.  At December 31, 1996, the Company had tax basis
  net operating loss carryovers available to offset future regular and alternative
  minimum  (AMT) and foreign  taxable income.  These  carryovers expire as follows
  (in thousands):
  
               Regular                     Foreign
               Tax Net       AMT Net         Net      Investment
              Operating     Operating     Operating   Tax Credit
               Losses        Losses        Losses     Carryovers
             -----------   ----------    -----------  -----------
      1997     $ 2,020      $   695        $   - -       $  117
      1998      11,005          308            235          468
      1999       6,235        1,199          7,923          310
      2000       3,089          789            810          240
      2001       4,538        1,683            - -          115
      2002       2,717          346            - -          - -
      2003       1,792          623            - -          - -
      2004      16,406          532            - -          - -
      2005      10,744          878            - -          - -
      2006      23,766        3,105            - -          - -
      2007      27,134        8,285            - -          - -
      2008      28,179       21,827            - -          - -
      2009      11,670        5,274            - -          - -
      2010      19,087       14,743            - -          - -
      2011      45,400       44,000            - -          - -
            ----------   ----------     ----------     --------
            $  213,782   $  104,287     $    8,968     $  1,250
            ==========   ==========     ==========     ========
  
  At December 31,  1996, for income  tax purposes,  the Company had  approximately
  $17.9 million and $8.5 million, respectively, of regular and alternative minimum
  tax net operating loss carryovers from Equinox Resources Ltd. (Equinox) and CoCa
  Mines  Inc.  Due  to these mergers, there  will be limitations  on the amount of
  these net  operating losses that  can be  utilized in any  given year to  reduce
  certain future taxable income. 
  
  The Company has  approximately $0.5  million in alternative  minimum tax  credit
  carryovers eligible to reduce future regular tax liabilities.
  
  
  
  
  
  
  
  
  
  
  
  
                                         33
  
  
  
  <PAGE>  38
  
  
  NOTE 5:   LONG-TERM DEBT AND CREDIT AGREEMENT
  
  Long-term debt consists of the following (in thousands):
  
                                            December 31,
                                       ----------------------
                                          1996         1995
                                       ---------    ---------
  Revolving credit agreement           $  38,000    $  35,000
  Notes payable - Sunbeam                    346          692
  Production notes payable                   - -          609
  Other long-term debt                       208          149
                                       ---------    ---------
                                          38,554       36,450
       Less current portion                 (346)        (346)
                                       ---------    ---------
                                       $  38,208    $  36,104
                                       =========    =========
  
  Revolving Credit Agreement
  
  The Company has  a revolving and  term loan facility  (the Bank Agreement)  that
  allows it to borrow up to $55.0 million.  Amounts may be borrowed on a revolving
  credit  basis  through  July 31, 1998,  and  are  repayable  in eight  quarterly
  installments  beginning on October 31, 1998.   During the commitment period, the
  Company  pays an  annual facility  fee ranging  from $178,750  to $261,250,  the
  amount of which is based  on average quarterly borrowings.  The  Bank Agreement,
  as amended, includes  certain collateral provisions,  including the pledging  of
  the  common stock  of certain  of the Company's  subsidiaries and  providing the
  lenders a  security interest in accounts receivable.  Under the amended terms of
  the  Bank Agreement,  the  Company is  required  to maintain  certain  financial
  ratios, and meet certain net worth  and indebtedness tests for which the Company
  was  in compliance at  December 31, 1996.   Amounts available  under the amended
  Bank Agreement are based  on a defined debt to  cash flow test.  As  of December
  31, 1996, the Company had  borrowings of $38.0 million and the ability to borrow
  the  remaining  $17.0  million under  the  facility.    The  interest  rate  for
  borrowings under the Bank Agreement as of December 31, 1996 was 7.16%.
  
  Zero Coupon Convertible Notes
  
  On June 13, 1994, the Company redeemed its Zero  Coupon Convertible Notes with a
  face   value  of  approximately  $50.2   million.    The   Company  recorded  an
  extraordinary  loss on retirement of  long-term debt totaling approximately $0.8
  million, which related principally  to the write-off of the  unamortized balance
  of deferred issuance costs of the notes.
  
  
  
  
  
  
  
                                         34
  
  
  
  
  
  <PAGE>  39
  
  Notes Payable - Sunbeam
  
  The  notes are  non-interest bearing,  discounted at  15%  and payable  in three
  annual  equal  amounts.   The  first  two  installments of  the  notes, totaling
  approximately $346,000  each, were paid in  January 1995 and January  1996.  The
  final installment was paid in January 1997.
  
  Production Notes Payable
  
  When the Company acquired Equinox in March 1994, the then outstanding production
  participating preferred  shares were converted to production  notes and recorded
  as long-term debt. The attributes of the production notes are identical to their
  predecessor production  participating preferred  shares.   The valuation  of the
  production  notes is based on the present  value of the estimated cumulative net
  cash flow discounted at 10% from  the American Girl/Oro Cruz project. Based upon
  the repayment  terms of the production  notes and the shutdown  of operations at
  the American Girl  mine in November  1996, prior to  the mine reaching  positive
  cumulative cash flow, the Company does not  expect to pay the notes.  Therefore,
  the notes were written off in 1996.
  
  NOTE 6:   COMMITMENTS AND CONTINGENCIES
  
  Commitments
  
  The  Company  leases  various   facilities  and  equipment  under  noncancelable
  operating lease arrangements.  The major facilities and equipment leases are for
  terms  of  three to  ten  years.   Future  minimum  lease  payments under  these
  noncancelable operating  leases  as of  December 31,  1996, are  as follows  (in
  thousands):
  
       Year ending December 31,
       ------------------------
       1997                                   $  4,381
       1998                                      2,123
       1999                                      1,832
       2000                                      1,118
       2001                                        562
       Thereafter                                  312
                                              --------
       Total minimum lease payments           $ 10,328
                                              ========
  
  Approximately  $1.6  million  of the  above  minimum  lease  payments relate  to
  equipment used at the Company's Grouse Creek mine which was written down in 1996
  and  1995  (see Note  4).   In  1996,  the Company  announced  plans  to suspend
  operations at the Grouse Creek mine once the Sunbeam ore reserves are mined and 
  
  
  
  
  
  
  
                                         35
  
  
  
  
  
  <PAGE>  40
  
  processed.   The lease obligations  for 1997  have been accrued  and charged  to
  operations in 1996.  The Company anticipates making arrangements such that there
  will be no material additional  lease obligations in connection with  the Grouse
  Creek mine beyond  1997.  However,  there can be  no assurance that  the Company
  will be successful in making such arrangements.
  
  Rent expense  incurred for operating leases during  the years ended December 31,
  1996,  1995 and  1994  was approximately  $4.2  million, $3.8  million  and $2.2
  million, respectively.
  
  Contingencies
  
  Bunker Hill
  
  In October  1989, and again in  February 1990, the  Company was notified  by the
  Environmental  Protection Agency  (EPA) that  the EPA  considered the  Company a
  potentially responsible party (PRP) at the Bunker Hill Superfund Site located at
  Kellogg, Idaho  (Bunker Hill  Site).   In February 1994,  the Company  and three
  other mining companies, as PRPs, entered into a Consent Decree with  EPA and the
  State of Idaho  pursuant to which  the Company  and two of  the three  companies
  signing the  decree agreed  to implement  remediation work at  a portion  of the
  Bunker  Hill  Site.   The  remediation has  primarily involved  the  removal and
  replacement  of lead-contaminated soils in residential yards within the site and
  is estimated  to be  completed by the  participating mining  companies over  the
  period of the next  four to six years.  The Consent Decree also provides for the
  mining  companies to reimburse EPA for a  portion of the government's past costs
  incurred at  the Bunker Hill Site.  The Consent  Decree was approved and entered
  by the Federal District Court in Idaho on November 17, 1994.  The Consent Decree
  settles the Company's response-cost liability under Superfund at the Bunker Hill
  Site.  Based  upon the terms of the Consent Decree  and an agreement between the
  participating mining companies relating to the  allocation of the cost for  work
  under the  Consent Decree,  the Company  has estimated  and established  a total
  allowance for liability  for remedial activity costs at the  Bunker Hill Site of
  $9.4 million as of December 31, 1996.   As with any estimate of this nature,  it
  is reasonably possible that  the Company's recorded estimate of  this obligation
  may change in the near term.
  
  Coeur d'Alene River Basin Natural Resource Damage Claims
  
  - Coeur d'Alene Tribe Claims
  
  In July  1991, the  Coeur d'Alene  Indian Tribe (the  Tribe) brought  a lawsuit,
  under the Comprehensive Environmental Response Liability Act of 1980, as amended
  (CERCLA), in  Idaho Federal District Court  against the Company and  a number of
  other mining
  
  
  
  
  
  
  
  
                                         36
  
  
  
  
  <PAGE>  41
  
  companies asserting claims for damages to natural resources 
  located  downstream from the Bunker Hill Site  over which the Tribe alleges some
  ownership or  control.  The Company  has answered the  Tribe's complaint denying
  liability for  natural resource damages.   In  July 1992, in  a separate  action
  between  the Tribe  and the  State of  Idaho, the  Idaho Federal  District Court
  determined that  the Tribe  does  not own  the beds,  banks and  waters of  Lake
  Coeur d'Alene and  the lower portion of its  tributaries, the ownership of which
  is  the primary  basis for the  natural resource  damage claims  asserted by the
  Tribe against the Company.  Based upon the Tribe's appeal of this decision,  the
  Court in the natural resource damage  litigation stayed the court proceedings in
  the natural resource  damage litigation until  a final decision  is made on  the
  question of the Tribe's ownership.   On December 9, 1994, the 9th  Circuit Court
  reversed the  decision of the Idaho Federal District Court and remanded the case
  of the Tribe's ownership for trial before the Idaho Federal District Court.   In
  April 1996,  the U.S.  Supreme Court  accepted the appeal  from the  9th Circuit
  Court decision to the U.S. Supreme Court.  A decision in the case is expected by
  approximately  June 1997.  In  July 1994, the United States,  as Trustee for the
  Coeur d'Alene Tribe, initiated a  separate suit in Idaho Federal  District Court
  seeking a  determination  that the  Coeur d'Alene Tribe  owns approximately  the
  lower  one-third  of Lake  Coeur d'Alene.    The State  has  denied the  Tribe's
  ownership of any portion of Lake Coeur d'Alene  and its tributaries.  In October
  1996, the legal proceeding related to the Tribe's natural resource damage claims
  was  consolidated  with the  United States  Natural Resources  Damage litigation
  described below.
  
  - U.S. Government Claims
  
  On  March 22, 1996, the United States  filed a lawsuit in Idaho Federal District
  Court  against the  Company and  other mining  companies who  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
  (the  Basin) in northern Idaho  over which the  United States asserts  to be the
  trustee under CERCLA.  The lawsuit asserts 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 the
  Company 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.  The Company answered the complaint  on May 17, 1996, denying liability to
  the  United  States under  CERCLA  and  the  Clean  Water  Act  and  asserted  a
  counterclaim against the United States for  the federal government's involvement
  in mining  activity in the Basin  which contributed to the  releases and damages
  alleged by the United States.  The Company believes it 
  
  
  
  
  
  
  
  
  
  
                                         37
  
  
  
  <PAGE>  42
  
  also has a number of defenses to the United States' claims.  In 
  October  1996, the Court consolidated  the Coeur d'Alene  Tribe Natural Resource
  Damage litigation with  this lawsuit  for discovery and  other limited  pretrial
  purposes.
  
  - State of Idaho Claims
  
  On March  22, 1996, the Company  entered into an agreement  (the Agreement) with
  the State  of Idaho  pursuant to  which the Company  agreed to  continue certain
  financial  contributions  to  environmental  cleanup  work  in the  Basin  being
  undertaken by a  State Trustees group.   In return, the State agreed  not to sue
  the Company for damage to natural resources for which the State is a trustee for
  a period  of five years,  to pursue settlement with  the Company of  the State's
  natural resource damage claims and to grant the Company credit  against any such
  State claims for  all expenditures  made under the  Agreement and certain  other
  Company contributions and expenditures for environmental cleanup in the Basin.  
  
  With  respect to  the Basin litigation,  the Company  increased its  accrual for
  closed  operations and environmental  matters by  approximately $2.7  million in
  1996.  At December 31, 1996, the  Company's accrual for remediation activity  in
  the Basin  totals $2.2 million.   These expenditures are anticipated  to be made
  over  the  next four  years.   Depending on  the  results of  the aforementioned
  lawsuits,  it  is  reasonably  possible  that  the  Company's  estimate  of  its
  obligation may change in the near term.
  
  In  1991, the Company initiated litigation in  the Idaho State District Court in
  Kootenai County, Idaho, against  a number of insurance companies  which provided
  comprehensive  general  liability  insurance  coverage to  the  Company  and its
  predecessors.  The Company believes that the insurance companies have  a duty to
  defend and  indemnify the  Company under  their  policies of  insurance for  all
  liabilities  and claims asserted  against the Company  by the EPA  and the Tribe
  under CERCLA  related to the Bunker Hill  Site and Coeur d'Alene  River Basin in
  northern Idaho.   In 1992, the Court ruled that  the primary insurance companies
  had a duty to  defend the Company in the Tribe's lawsuit.  During 1995 and 1996,
  the Company entered into  settlement agreements with  a number of the  insurance
  carriers  named  in  the litigation.    The  Company  has  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 Site Consent Decree.  Litigation
  is still  pending against one insurer with  trial continued until the underlying
  environmental claims against the Company are resolved or settled.  The remaining
  insurer  is  providing   the  Company  with  a  partial  defense  in  all  Basin
  environmental litigation.  As of 
  
  
  
  
  
  
  
  
  
  
                                         38
  
  
  
  
  <PAGE>  43
  
  December 31, 1996, the Company had not reduced its accrual for 
  reclamation  and closure  costs  to  reflect  the  receipt  of  any  anticipated
  insurance proceeds.
  
  Star Phoenix
  
  In June 1994,  a judgment was  entered against  the Company in  the Idaho  State
  District Court in the amount of $10.0 million in compensatory  damages and $10.0
  million in punitive damages  based on a jury verdict  rendered in late May  1994
  with respect to a lawsuit  previously filed against the Company by  Star Phoenix
  Mining Company (Star Phoenix), a former lessee of the Star  Morning mine, over a
  dispute between the Company  and Star Phoenix concerning the  Company's November
  1990 termination  of the Star Phoenix  lease of the Star  Morning mine property.
  On May  3, 1995,  the District Court  issued its  final opinion  and order on  a
  number of  post-trial issues pending  before the Court.   The opinion  and order
  included the  Court's denial of the post-trial motions filed by Star Phoenix and
  certain of its principals  regarding claims which had been  previously dismissed
  by the  Court during trial.   The Court also awarded  Star Phoenix approximately
  $300,000 in attorneys' fees and costs.  The judgement was appealed  to the Idaho
  State  Supreme Court  which heard  arguments in  April 1996  and is  expected to
  render  its opinion  in the  near future.   Post-judgment  interest will  accrue
  during  the appeal period.   In  order to  stay the ability  of Star  Phoenix to
  collect  on the  judgment during  the pendency  of the  appeal, the  Company has
  posted  an appeal bond in the  amount of $27.2 million  representing 136% of the
  District  Court judgment.  The Company pledged U.S. Treasury securities totaling
  $10.0  million as  collateral for the  appeal bond.   This  collateral amount is
  included in restricted investments at December  31, 1996, and December 31, 1995.
  The Company has vigorously  pursued its appeal to the Idaho Supreme Court and it
  has  been  the Company's  position,  and  at the  current  time  it remains  the
  Company's position, that  it will not enter into a  settlement with Star Phoenix
  for any  material amount.   Although the ultimate outcome  of the appeal  of the
  Idaho District  Court judgment is subject  to the inherent uncertainties  of any
  legal proceeding, based  upon the Company's  analysis of  the factual and  legal
  issues associated with the proceeding before the Idaho District  Court and based
  on the opinions of  outside counsel, as of the  date hereof, it is  management's
  belief that the Company should ultimately prevail in this matter, although there
  can  be no assurance in this  regard.  Accordingly, the  Company has not accrued
  any liability associated with this litigation.
  
  The Company is subject to  other legal proceedings and claims which  have arisen
  in the  ordinary course of its  business and have not  been finally adjudicated.
  Although  there can  be no  assurance as  to the  ultimate disposition  of these
  matters and the proceedings disclosed above, it is the opinion of the 
  
  
  
  
  
  
  
  
  
  
                                         39
  
  
  
  
  <PAGE>  44
  
  Company's management, based upon the information available at 
  this time,  that the expected outcome  of these matters, individually  or in the
  aggregate, will not have a material  adverse effect on the results of operations
  and financial condition of the Company.
  
  NOTE 7:   EMPLOYEE BENEFIT PLANS
  
  The Company and certain subsidiaries have defined benefit pension plans covering
  substantially all employees.   One  plan covering eligible  salaried and  hourly
  employees  provides  retirement  benefits  and   is  based  on  the   employee's
  compensation  during  the  highest 36  months  of  the  last  120 months  before
  retirement.    Three  other pension  plans  covering  eligible  hourly employees
  provide  benefits of  stated  amounts for  each  year  of service.    It is  the
  Company's  policy to  make contributions to  these plans sufficient  to meet the
  minimum  funding requirements  of  applicable laws  and  regulations, plus  such
  additional  amounts,  if  any, as  the  Company  and  its actuarial  consultants
  consider  appropriate.   Contributions  are intended  to  provide not  only  for
  benefits attributed to service to date, but also for those expected to be earned
  in  the  future.   Plan assets  for these  plans  consist principally  of equity
  securities, insurance contracts and corporate and U.S. government obligations.
  
  Net periodic pension cost (income)  for the plans consisted of the  following in
  1996, 1995 and 1994 (in thousands): 
  
                                       1996       1995      1994
                                      -------    ------    -------
  Service cost                        $   881    $  778    $   938
  Interest cost                         2,196     2,021      1,938
  Return on plan assets                (3,499)   (2,607)    (2,737)
  Amortization of transition asset       (419)     (434)      (434)
  Amortization of unrecognized
    prior service cost                     91        70         70
  Amortization of unrecognized net
    gain from earlier periods             (60)      (12)        (4)
                                      -------    ------    -------
      Net pension income              $  (810)   $ (184)   $  (229)
                                      =======    ======    =======
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                         40
  
  
  
  <PAGE>  45
  The  following table  sets forth  the  funded status  of the  plans and  amounts
  recognized in the Company's consolidated balance sheets (in thousands): 
  
                                                   December 31,
                                             -------------------------
                                               1996             1995
                                             --------         --------
  Actuarial present value of
    benefit obligations:
    Vested benefits                          $ 29,917         $ 30,203
    Nonvested benefits                            321              155
                                             --------         --------
  Accumulated benefit obligations              30,238           30,358
  Effect of projected future salary
    and wage increases                          1,842            2,014
                                             --------         --------
  Projected benefit obligations              $ 32,080         $ 32,372
                                             ========         ========
  Plan assets                                $ 44,984         $ 39,881
  Projected benefit obligations               (32,080)         (32,372)
                                             --------         --------
  Plan assets in excess of projected
    benefit obligations                        12,904            7,509
  Unrecognized net gain                        (9,260)          (3,976)
  Unrecognized prior service cost               1,378              932
  Unrecognized net asset
    at January 1                               (2,213)          (2,647)
                                             ---------        --------
  Pension asset recognized in
    consolidated balance sheets              $  2,809         $  1,818
                                             ========         ========
  
  The projected benefit obligation was calculated by applying the following rates:
  
                                                  1996       1995
                                                 ------      -----
  Discount rate                                    7.50%     7.00%
  Long-term compensation increase                  4.00%     4.00%
  Long-term rate of return on
    plan assets                                    9.00%     8.00%
  
  The Company  provides certain  postretirement benefits, principally  health care
  and  life insurance  benefits for  qualifying retired  employees.  The  costs of
  these benefits are being funded  out of general corporate funds and  are accrued
  over the period in which active employees  provide services to the Company.  Net
  periodic  postretirement  benefit cost  included  the  following components  (in
  thousands):
  
                                         1996        1995        1994
                                        -------     -------    --------
  Service cost                           $   16      $   13      $   24
  Interest cost                             145         154         141
  Amortization of gain                      (24)        (18)        (13)
                                         ------       -----      ------
  Net postretirement benefit cost        $  137      $  149      $  152
                                         ======      ======      ======
                                                 41
  
  
  
  
  
  <PAGE>  46
  
  The  following  table  sets forth  the  status  of  the postretirement  benefits
  programs  (other  than  pensions)  and  amounts  recognized  in  the   Company's
  consolidated balance sheets (in thousands):
  
                                               December 31,
                                          --------------------
                                            1996         1995
                                          --------    --------
  Accumulated postretirement
  benefit obligations: 
    Retirees                              $  1,236    $  1,353
    Fully eligible, active plan
      participants                             441         400
    Other active plan participants             234         310
                                          --------    --------
                                             1,911       2,063
  Unrecognized net gain                        571         374
                                          --------    --------
  Accumulated postretirement
    benefit obligations recognized
    in consolidated balance sheets        $  2,482    $  2,437
                                          ========    ========
  
  The  actuarial  assumptions  used   in  determining  the  Company's  accumulated
  postretirement benefit obligation are provided  in the table below.  Due  to the
  short period which the  Company provides medical benefits  to its retirees,  the
  increases in medical  costs are assumed to be  6% in each year.  A  1% change in
  the  assumed health care cost trend rate  would not have a significant impact on
  the accumulated postretirement  benefit obligation or  the aggregate of  service
  and interest costs for 1996 or 1995.
  
                                          1996     1995
                                         -------  -------
  Discount rate                           7.50%   7.00%
  Trend rate for medical benefits         6.00%   6.00%
  
  The Company has a nonqualified deferred compensation plan which permits eligible
  officers, directors and key employees to  defer a portion of their compensation.
  The deferred  compensation, which  together with  Company  matching amounts  and
  accumulated interest is accrued  and partially funded, is distributable  in cash
  after  retirement or  termination of  employment, and at  December 31,  1996 and
  1995, amounted  to approximately $2.3  million and  $1.8 million,  respectively.
  The  Company amended the Deferred  Compensation Plan effective  January 1, 1995.
  The amended plan allows the participants to defer up to a maximum of 50% of base
  salary and up to 100% of annual  bonuses.  The participant may elect to  receive
  such  deferred amounts,  together with  interest at  the Moody's  Corporate Bond
  Yield rate, in one payment  at retirement, or on any plan  anniversary after the
  completion of three years, as elected.  
  
  
  
  
  
                                         42
  
  
  
  
  
  <PAGE>  47
  
  The Company  has an employees'  Capital Accumulation Plan which  is available to
  all salaried  and certain  hourly employees after  completion of  six months  of
  service.  Employees may contribute from  2% to 15% of their compensation  to the
  plan.   The  Company makes  a  matching contribution  of  25% of  an  employee's
  contribution   up  to,  but  not  exceeding,  5%  of  the  employee's  earnings.
  Commencing in  1997,  the Company's  matching  contribution will  be 25%  of  an
  employee's contribution up to, but not exceeding, 6% of the employee's earnings.
  The Company's contribution was approximately $190,000 in 1996, $173,000 in 1995,
  and $170,000 in 1994.
  
  NOTE 8:  SHAREHOLDERS' EQUITY
  
  Preferred Stock
  
  The Company has 2.3  million shares of Series B Cumulative Convertible Preferred
  Stock (the Preferred  Shares) outstanding.  Holders of the  Preferred Shares are
  entitled to  receive cumulative cash dividends  at the annual rate  of $3.50 per
  share payable quarterly, when and if declared by the Board of Directors.
  
  The  Preferred Shares are convertible, in whole or in part, at the option of the
  holders thereof, into  shares of common stock at an  initial conversion price of
  $15.55 per share  of common stock.  The Preferred Shares  were not redeemable by
  the Company prior  to July 1, 1996.  After such  date, the shares are redeemable
  at the  option of the  Company at any  time, in whole  or in part,  initially at
  $52.45 per  share and thereafter at  prices declining ratably on each  July 1 to
  $50 per share on or after July 1, 2003.
  
  Holders of  the Preferred Shares  have no  voting rights except  if the  Company
  fails to pay the equivalent of six quarterly dividends.   If these dividends are
  not  paid, the holders of Preferred Shares, voting as a class, shall be entitled
  to elect  two additional directors.   The holders of Preferred  Shares also have
  voting  rights  related  to certain  amendments  to  the  Company's Articles  of
  Incorporation.
  
  The Preferred Shares rank senior to the common stock and  any outstanding shares
  of  Series A  Preferred  Shares.    The  Preferred  Shares  have  a  liquidation
  preference  of  $50  per share  plus  all  declared and  unpaid  dividends which
  aggregate $117,012,000 at December 31, 1996.
  
  Shareholder Rights Plan
  
  In 1996,  the Company adopted a  new Shareholder Rights Plan  replacing the 1986
  Shareholder Rights  Plan which had expired.   Pursuant to this  plan, holders of
  common stock received one 
  
  
  
  
  
  
  
  
  
                                         43
  
  
  
  
  
  <PAGE>  48
  
  preferred share  purchase right for each common share held.   The rights will be
  triggered once an Acquiring Person, as defined in the plan, acquires 15% or more
  of the Company's outstanding common shares.  The 15% triggering threshold may be
  reduced by the Board  of Directors to not less than 10%.   When exercisable, the
  right   would,  subject   to  certain   adjustments  and   alterations,  entitle
  rightholders, other than the Acquiring Person or group, to purchase common stock
  of the  Company or the acquiring company having a  market value of twice the $50
  exercise price of the right.   The rights are nonvoting, may be redeemed  at any
  time at a  price of  one cent per  right, and  expire in May  2006.   Additional
  details are  set forth in  the Rights  Agreement filed with  the Securities  and
  Exchange Commission on May 10, 1996.
  
  Stock Option Plans
  
  At  December 31, 1996, executives, key employees  and directors had been granted
  options to purchase common shares under stock option plans described below.  The
  Company  has  adopted  the  disclosure-only provisions  of  SFAS  No.  123.   No
  compensation expense has been recognized in 1996 or 1995 for unexercised options
  related to  the stock option  plans.   Had compensation cost  for the  Company's
  stock option plans been determined based on the fair value at the grant date for
  awards in 1996  and 1995  consistent with the  provisions of SFAS  No. 123,  the
  Company's loss and per  share loss applicable to common shareholders  would have
  been increased  to the pro  forma amounts indicated below  (in thousands, except
  per share amounts):
  
                                      1996          1995
                                   ----------    ----------
  Loss applicable to common 
     shareholders:
        As reported                  $ 40,404     $109,769
        Pro forma                    $ 41,261     $109,826
  
  Loss applicable to common 
     shareholders per share:
        As reported                  $   0.79     $   2.28
        Pro forma                    $   0.81     $   2.28
  
  The fair value of each option grant is estimated  on the date of grant using the
  Black-Scholes   option-pricing  model   with   the  following   weighted-average
  assumptions:
  
     Expected dividend yield            0.00%
     Expected stock price volatility   42.65%
     Risk-free interest rate:           5.63%
     Expected life of options           4.1 years
  
  The  weighted average grant-date fair value of  options granted in 1996 and 1995
  was $3.40 and $4.17, respectively.
  
  
  
  
  
                                         44
  
  
  
  
  
  <PAGE>  49
  
  The Company adopted a nonstatutory stock option plan in 1987.  The plan provides
  that options  may be granted to  certain officers and key  employees to purchase
  common stock  at a price of  not less than 50%  of the fair market  value at the
  date  of grant.   The  plan also  provides that  options may  be granted  with a
  corresponding number of stock  appreciation rights and/or tax offset  bonuses to
  assist  the optionee  in paying  the income  tax liability  that may  exist upon
  exercise of the  options.  All of  the outstanding stock options under  the 1987
  plan  were granted at  an exercise price equal  to the fair  market value at the
  date of grant and with an associated tax offset bonus.  In 1995,  15,000 options
  under the  1987 plan were granted.  Outstanding  options under the 1987 plan are
  immediately exercisable for  periods up  to ten  years.   At December 31,  1996,
  there were 53,748 shares available for grant in the future under  the plan.  The
  plan expires on February 13, 1997.
  
  In  1995, the  Company  adopted the  new  Hecla Mining  Company  Stock Plan  for
  Nonemployee   Directors  (the  Directors'  Stock  Plan),  which  is  subject  to
  termination by the Board of Directors at any time.  Each nonemployee director is
  credited with 1,000 shares of the common stock of the Company on May 30  of each
  year.   Nonemployee directors joining the Board of Directors after May 30 of any
  year are credited with a pro-rata number of shares based upon the date they join
  the  Board.   All credited  shares are  held in  trust for  the benefit  of each
  director until delivered to the Director.  Delivery of the shares from the trust
  occurs  upon the  earliest of  (1) death  or disability;  (2) retirement;  (3) a
  cessation of  the director's service  for any other  reason; or (4) a  change in
  control of the Company.  Subject to certain restrictions, directors may elect to
  receive delivery of  shares on  such date or  in annual installments  thereafter
  over  5, 10 or  15 years.   The shares of  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.   The maximum number of shares
  of  common stock which may  be granted pursuant to the  Directors' Stock Plan is
  120,000.   During 1996  and 1995,  7,000 and  6,539  shares, respectively,  were
  credited to the nonemployee directors.  At December 31, 1996, there were 106,461
  shares available for grant in the future under the plan.
  
  In 1995, the shareholders of the Company approved the 1995  Stock Incentive Plan
  which provides for a variety of stock-based grants to the Company's officers and
  key  employees.   The  plan  provides  for the  grant  of  stock options,  stock
  appreciation rights, restricted stock and performance units to eligible officers
  and key employees of the Company.   Stock options under the plan are required to
  be granted at 100% of the  market value of the stock  on the date of the  grant.
  There were  no options to acquire  shares granted in  1995 under the  1995 plan.
  The terms of such options shall be no longer than ten years from the date 
  
  
  
  
  
  
  
  
  
  
  
                                         45
  
  
  
  
  
  
  <PAGE>  50
  
  of grant.   During 1996, 278,000 options to  acquire shares were granted  to the
  Company's officers  and  key employees  of  which 215,000  of  these options  to
  acquire  shares have vesting  requirements of 20%  on the grant date  and 20% on
  each of the next four anniversary dates from the grant date.  During 1996, 1,500
  options to acquire  shares expired under the  1995 plan.  At  December 31, 1996,
  there were 1,723,500 options to acquire shares available for grant in the future
  under the plan.
  
  Transactions concerning stock  options pursuant  to all of  the above  described
  plans are summarized as follows: 
  
                                                                  Weighted Average
                                                   Shares           Exercise Price
                                                  --------          --------------
           Outstanding, December 31, 1993          301,660               $10.39
  
           Year ended December 31, 1994
                   Granted                         120,000               $ 9.63
                   Exercised                       (61,037)              $ 8.69
                   Expired                         (13,123)              $11.23
                                                   -------
           Outstanding, December 31, 1994          347,500               $10.35
  
           Year ended December 31, 1995
                   Granted                          15,000               $ 9.38
                   Exercised                       (12,500)              $ 9.81
                   Expired                         (33,508)              $ 8.62
                                                   -------
           Outstanding, December 31, 1995          316,492               $10.51
                                                   -------
           Year ended December 31, 1996
                   Granted                         278,000               $ 8.28
                   Exercised                           - -                  - -
                   Expired                         (48,500)              $10.57
                                                   -------
           Outstanding, December 31, 1996          545,992               $ 9.37
                                                   =======
  
  The following table  presents information  about the options  outstanding as  of
  December 31, 1996.
  <TABLE>
  <CAPTION
                                                                                       Weighted Average
                                                                              ---------------------------------
                                                             Range of                               Remaining
                                          Shares          Exercise Price      Exercise Price      Life (Years)
                                          --------      --------------        --------------      -------------
      <S>                                  <C>          <C>                        <C>                <C>
      Exercisable options                  221,915      $ 6.75 - $ 9.63            $ 8.85             8.2
      Exercisable options                  152,077      $10.38 - $12.25            $11.26             2.9
                                          --------
      Total exercisable options            373,992      $ 6.75 - $12.25            $ 9.84             6.0
  
      Unexercisable options                172,000      $ 6.75 - $ 8.63            $ 8.37             9.2
                                          --------
          Total all options                545,992      $ 6.75 - $12.25            $ 9.37             7.1
                                          ========
  </TABLE>
  
  The aggregate  amounts charged (credited) to operations in connection with the 
  plans  were $0, $(21,000) and $(23,000) in 1996, 1995 and 1994, respectively.
  
                                          46
  
  
  
  <PAGE>  51
  
  As a result of the acquisition of Equinox Resources Ltd. (Equinox) in  1994, the
  outstanding options under the  Equinox stock option plan became  exercisable for
  Hecla common shares.  Transactions concerning the Equinox options, giving effect
  to the common share exchange ratio, are as follows:
  
                                                      Exercise
                                     Shares             Price
                                 ------------    ---------------------
  Outstanding, December 31, 1993     252,300     $ 3.78 - $19.56
  
  Year ended December 31, 1994
       Exercised                    (251,400)    $ 3.45 - $17.82
                                 -----------
  Outstanding, December 31, 1994         900              $17.82
  
  Year ended December 31, 1995
       Expired                          (900)             $17.82
                                 -----------
  Outstanding, December 31, 1995         - -                 - -
                                 ===========
  
  1996 Common Stock Offering
  
  On January  23, 1996, 2,875,000 shares  of the Company's common  stock were sold
  under the  Company's  existing Registration  Statement  which provides  for  the
  issuance  of up  to $100.0  million  of equity  and  debt securities.   The  net
  proceeds  from the offering of approximately $22.0 million were used principally
  to reduce the outstanding borrowings under the Company's bank credit agreement.
  
  
  
  
  
  
  
  
  
  
  
  
                                         47
  
  
  
  <PAGE>  52
  
  NOTE 9:  BUSINESS SEGMENTS (IN THOUSANDS)
  <TABLE>
  <CAPTION>                                        
                                                                     1996              1995               1994
                                                                 ------------       -----------        -----------
  <S>                                                            <C>                <C>                <C>
  Net sales to unaffiliated customers
     Metals (including $32,034, $27,729 
         and $18,493 from Mexican operations
         in 1996, 1995 and 1994)                                 $     81,409       $    79,810        $    60,828
     Industrial minerals (including $4,204,
         $2,664 and $2,885 in Mexico in 1996,
         1995 and 1994)                                                76,843            67,391             60,229
     Specialty metals                                                     - -             4,414              4,285
                                                                 ------------       -----------        -----------
                                                                 $    158,252       $   151,615        $   125,342
                                                                 ============       ===========        ===========
  Income (loss) from operations
     Metals (including $7,734, $6,396
         and $2,307 from Mexican operations 
         in 1996, 1995 and 1994)                                 $    (38,711)      $  (109,449)       $   (24,658)
     Industrial minerals (including $92,
         $(341) and $(810) in Mexico in 1996,
         1995 and 1994)                                                 9,083             6,690              6,872
     Specialty metals                                                     - -               255                  3
     General corporate                                                 (9,703)           (9,738)           (11,656)
                                                                 ------------       -----------        -----------
                                                                 $    (39,331)      $  (112,242)       $   (29,439)
                                                                 ============       ===========        ===========
  Capital expenditures
     Metals (including $411, $2,319 and 
         $466 in Mexico in 1996, 1995 
         and 1994)                                               $     30,388       $    32,838        $    62,002
     Industrial minerals (including
         $93, $183 and $1,352 in Mexico
         in 1996, 1995 and 1994)                                        3,075            11,811              3,615
     Specialty metals                                                     - -                81                453
     General corporate assets                                             268               578                489
                                                                 ------------       -----------        -----------
                                                                 $     33,731       $    45,308        $    66,559
                                                                 ============       ===========        ===========
  Depreciation, depletion and amortization
     Metals                                                      $     15,728       $    18,859        $     9,699
     Industrial minerals                                                4,723             4,580              4,501
     Specialty metals                                                     - -                23                 33
     General corporate assets                                             338               367                524
                                                                 ------------       -----------        -----------
                                                                 $     20,789       $    23,829        $    14,757
                                                                 ============       ===========        ===========
  Identifiable assets
     Metals (including $7,268, $15,702 
         and $19,241 in Mexico in 1996,
         1995 and 1994)                                          $    155,082       $   144,246        $   179,258
     Industrial minerals (including
         $3,513, $4,888 and $6,192 in 
         Mexico in 1996, 1995 and 1994)                                70,613            71,163             59,502
     Specialty metals                                                     - -               - -              6,288
     General corporate assets                                          34,520            35,998             36,507
     Idle facilities                                                    8,178             6,783             53,027
                                                                 ------------       ------------       -----------
                                                                 $    268,393       $   258,190        $   334,582
                                                                 ============       ===========        ===========
  </TABLE>
  
                                                 48
  
  
  
  
  
  
  <PAGE>  53
  
  Net sales  and identifiable assets of  each segment are those  that are directly
  identified with those operations.  General corporate assets consist primarily of
  cash,  receivables, investments and corporate property, plant and equipment.  As
  a result of  depressed metals  prices, operations were  suspended at the  Greens
  Creek mine in April 1993, and the property was placed  on a care-and-maintenance
  basis pending resumption  of operations.   At December 31,  1994, the  Company's
  recorded net  book value of  identifiable assets  at the Greens  Creek mine  was
  approximately  $50.3 million.  This amount was classified in the idle facilities
  category at December 31, 1994.  On May 17, 1995, the Company announced plans for
  redevelopment  of the Greens Creek  mine and at December  31, 1996 and 1995, the
  recorded  net book  value of identifiable  assets at  the Greens  Creek mine was
  classified in the metals category.  The Greens Creek mine recommenced operations
  in July 1996 and full production levels were achieved in January 1997.
  
  NOTE 10:  FAIR VALUE OF FINANCIAL INSTRUMENTS
  
  The  following estimated fair value amounts have been determined using available
  market   information  and   appropriate  valuation   methodologies.     However,
  considerable  judgment is required to  interpret market data  and to develop the
  estimates of fair  value.  Accordingly, the  estimates presented herein  are not
  necessarily indicative  of the amounts  the Company  could realize in  a current
  market exchange.
  
  The following  methods and assumptions were  used to estimate the  fair value of
  each class of financial instruments for which it is practicable to estimate that
  value.    Potential  income tax  ramifications  related  to  the realization  of
  unrealized  gains  and losses  that  would  be incurred  in  an  actual sale  or
  settlement have not been taken into consideration.
  
  The  carrying  amounts  for  cash  and  cash  equivalents,  accounts  and  notes
  receivable,  restricted investments  and  current liabilities  are a  reasonable
  estimate of  their fair values.   Fair  value for equity  securities investments
  available  for sale is determined  by quoted market  prices.  The  fair value of
  long-term debt is based on the discounted value  of contractual cash flows.  The
  discount  rate is  estimated using  the  rates currently  offered for  debt with
  similar remaining maturities.
  
  
  
  
  
  
  
  
  
                                         49
  
  
  
  <PAGE>  54
  
  The   estimated  fair  values  of  financial  instruments  are  as  follows  (in
  thousands):
  
  <TABLE>
  <CAPTION>                                             December 31,
                                     -------------------------------------------------
                                              1996                     1995
                                     -----------------------     ---------------------
                                      Carrying       Fair        Carrying       Fair
                                      Amounts        Value        Amounts       Value
                                     ----------     --------     --------     --------
  <S>                                <C>            <C>          <C>          <C>
  Financial assets
    Cash and cash equivalents        $    8,256     $  8,256     $  4,024     $  4,024
    Accounts and notes receivable        24,168       24,168       25,571       25,571
    Investments
      Equity securities available
         for sale                           165          165          455          455
      Restricted                         20,674       20,674       16,254       16,254
    Gold spot deferred contracts            - -          299          - -          - -
    Gold forward sales contracts            - -           43          - -          228
    Gold put options                        - -          772          - -          436
  Financial liabilities
    Current liabilities                  32,712       32,712       25,965       25,965
    Long-term debt - principal           38,208       38,208       36,104       35,563
    Gold call options                       - -            2          - -          134
  
  </TABLE>
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                         50
  
  
  
  
  
  
  <PAGE>  55
  
                                                                      Exhibit 23.1
  
  
  
  
  
                                                  
                                   Commission File No. 1-8491
  
  
                         CONSENT OF INDEPENDENT ACCOUNTANTS
  
  
  We consent to  the incorporation by reference in  the registration statements of
  Hecla Mining  Company and subsidiaries on  Forms S-3 (File No.  33-72832 and No.
  33-59659) and Forms  S-8 (File  No. 33-7833, 33-41833,  33-14758, 33-40691,  33-
  60095  and  33-60099) of  our report,  which  includes an  explanatory paragraph
  concerning changes  in accounting  for environmental remediation  liabilities in
  1996, impairment of long-lived assets in 1995, and accounting for investments in
  1994,  dated February  7,  1997, on  our  audits of  the  consolidated financial
  statements of Hecla Mining Company and subsidiaries as of December  31, 1996 and
  1995, and for the years  ended December 31, 1996, 1995 and 1994, which report is
  included in this Form 8-K.
  
  
  
  /s/ Coopers & Lybrand L.L.P.
  
  Spokane, Washington
  February 18, 1997
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "HECLA MINING COMPANY FORM 8-K", "secsgml_size_bytes": 161218}]
metadata_filer: {"company-data": {"conformed-name": "HECLA MINING CO/DE/", "cik": "0000719413", "assigned-sic": "1400", "irs-number": "820126240", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-08491", "film-number": "97537954"}, "business-address": {"street1": "6500 MINERAL DR", "street2": "P O BOX C8000", "city": "COEUR D ALENE", "state": "ID", "zip": "83814-8788", "phone": "2087694100"}, "mail-address": {"street1": "6500 MINERAL DR", "street2": "P O BOX C8000", "city": "COEUR D ALEN", "state": "ID", "zip": "83814-8788"}}
text: 1
           
                         SECURITIES AND EXCHANGE COMMISSION
  
                               Washington D. C.  20549
  
                                                
                                     -----------
  
                                      FORM 8-K
  
                       PURSUANT TO SECTION 13 OR 15(D) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
  Date of Report
  (Date of earliest event reported):                February 18, 1997
  
                         Hecla Mining Company
                                             
  ------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)
  
                               Delaware
                                       
  ------------------------------------------------------------------
             (State or other jurisdiction of incorporation)
  
            1-8491                             82-0126240
                                                        
  ------------------------------------------------------------------
  (Commission File Number)         (IRS Employer Identification No.)
  
  6500 Mineral Drive
  Coeur d'Alene, Idaho                         83814-8788
                                   
  ------------------------------------------------------------------
  (Address of principal executive offices)      (Zip Code)
  
                           (208) 769-4100
                                           
  ------------------------------------------------------------------
                    (Registrant's Telephone Number)
  
                                  Page 1 of 3 Pages
  2
  
  Item 5.   Other Events.
            ------------ 
  
            Attached  hereto   and  incorporated  herein  by   reference  are  the
  following:
  
            (a)   Registrant's Management  Discussion and Analysis  for Registrant
  for the year ended December 31, 1996, as Exhibit 99.1; and 
  
            (b)   Registrant's  Audited  Consolidated Financial  Statements as  of
  December 31, 1996 and 1995, and for each of the three years in the  period ended
  December  31,  1996,  together  with  the  report  of  Coopers & Lybrand  L.L.P.
  thereon, as Exhibit 99.2.
  
  Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits.
            ------------------------------------------------------------------ 
  
            Exhibit 99.1   Management's Discussion and Analysis for Registrant for
                           the year ended December 31, 1996.
  
            Exhibit 99.2   Registrant's Audited Consolidated Financial Statements.
  
            Exhibit 23.1   Consent of  Coopers & Lybrand L.L.P.,  to incorporation
                           by reference of their report dated February 7, 1997, on
                           the Consolidated Financial Statements of the Registrant
                           in the Registrant's Registration Statements on Forms 
                           S-3 (No. 33-72832 and No. 33-59659), and Forms S-8 (No.
                           33-7833, No. 33-41833, No.  33-14758, No. 33-40691, No.
                           33-60095 and No. 33-60099).
  
                                  Page 2 of 3 Pages
  3
  
                                      SIGNATURE
                                      ---------
  
            Pursuant  to the requirements of Section 12 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
  
                                By  /s/ Nathaniel K. Adams
                                  ---------------------------------------
                                  Name:   Nathaniel K. Adams
                                  Title:  Corporate Counsel and
                                               Assistant Secretary
  
  Dated:  February 18, 1997
  
                                  Page 3 of 3 Pages
  4
  
                                    EXHIBIT INDEX
  
  Exhibit No.              Title
  -----------              -----
  
  Exhibit 99.1   Management's Discussion and Analysis  for Registrant for the year
                 ended December 31, 1996.
  
  Exhibit 99.2   Registrant's Audited Consolidated Financial Statements.
  
  Exhibit 23.1   Consent  of  Coopers  &   Lybrand  L.L.P.,  to  incorporation  by
                 reference  of  their  report  dated  February  7,  1997,  on  the
                 Consolidated  Financial  Statements  of  the  Registrant  in  the
                 Registrant's Registration Statements on  Forms S-3 (No.  33-72832
                 and  No. 33-59659), and Forms S-8 (No. 33-7833, No. 33-41833, No.
                 33-14758, No. 33-40691, No. 33-60095 and No. 33-60099).
  5
  
  MANAGEMENT'S DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND  RESULTS  OF
  OPERATIONS.
  
  INTRODUCTION
  
  Hecla  Mining  Company  (Hecla   or  the  Company)  is  primarily   involved  in
  exploration,  development, mining, and  processing of gold,  silver, lead, zinc,
  and  industrial minerals.  As such, the Company's revenues and profitability are
  strongly influenced  by world  prices of  gold, silver,  lead,  and zinc,  which
  fluctuate  widely  and are  affected by  numerous  factors beyond  the Company's
  control,  including  inflation and  worldwide forces  of  supply and  demand for
  precious and base metals.  The aggregate effect of these factors is not possible
  to accurately predict.   In the following descriptions,  where there are changes
  that  are attributable  to  more  than one  factor,  the Company  presents  each
  attribute  in descending  order relative  to the  attribute's importance  to the
  overall change.
  
  Except for the  historical information contained in this Management's Discussion
  and  Analysis of  Financial  Condition and  Results of  Operations, the  matters
  discussed   below  are  forward-looking   statements  that   involve  risks  and
  uncertainties,   including  the  timely  development  of existing properties and
  reserves  (such as  the  Company's  Rosebud joint-venture  project)  and  future
  projects,  the impact of metals prices and metal production volatility, changing
  market  conditions and the regulatory  environment and the  other risks detailed
  below, and, from  time to time, as necessary, in  the Company's periodic reports
  filed   with   the  Securities   and   Exchange   Commission  (see   "Investment
  Considerations" of Part I, Item 1 of the Company's December 31, 1995, Form 10-K)
   .   As a  result, actual results  may differ materially  from those projected or
  implied.  These forward-looking statements  represent the Company's judgment  as
  of  the date of  this filing.   The  Company disclaims,  however, any  intent or
  obligation to update these forward-looking statements as circumstances change or
  develop.
  
  The Company incurred  losses applicable to common  shareholders for each of  the
  past  three  years in  the period  ended December  31, 1996.   If  the Company's
  estimates of market prices of gold, silver, lead, and zinc are realized in 1997,
  the Company expects to record income or (loss) in  the range of a $(2.0) million
  loss,  to $2.0  million  income,  after  the  expected  dividends  to  preferred
  shareholders   totaling  approximately   $8.1  million   for  the   year  ending
  December 31, 1997.   Due to the volatility of metals  prices and the significant
  impact metals  price changes have on  the Company's operations, there  can be no
  assurance that the actual results of operations for 1997 will be as projected.
  
  The variability  of metals prices  requires that  the Company, in  assessing the
  impact  of prices  on  recoverability of  its  metals segment  assets,  exercise
  judgment as  to whether price  changes are temporary  or are likely  to persist.
  The Company performs  a comprehensive  evaluation of the  recoverability of  its
  assets on a periodic basis.  This evaluation includes a review of estimated
  6
  
  future  net cash  flows  against the  carrying  value of  the Company's  assets.
  Moreover,  a review  is  made  on a  quarterly  basis to  assess  the impact  of
  significant changes in market  conditions and other factors.   Asset write-downs
  may  occur if  the Company  determines that  the carrying  values  attributed to
  individual assets are not  recoverable given reasonable expectations  for future
  production and market conditions.
  
  At the Company's Grouse Creek mine  in which Hecla had an 80% interest  in 1996,
  following  the  end  of  the  third  quarter  of  1996,  the  Company  completed
  metallurgical testing and economic analysis of the Grouse deposit which had been
  ongoing throughout 1996.  Based on the information gathered through such period,
  as  well as  then current  metals prices,  the Company  determined that  the ore
  contained in  the Grouse deposit was  not economical at the  then current metals
  prices,  and the  Company determined to  suspend operations at  the Grouse Creek
  mine.  The mine will be  placed on a care-and-maintenance status upon completion
  of  mining at the  Sunbeam pit  which is  estimated to  occur during  the second
  quarter of 1997.   In connection with the decision to suspend  operations at the
  Grouse  Creek mine,  the  Company determined  that  certain third  quarter  1996
  adjustments  were required  to properly  reflect the  Company's interest  in the
  property  at net realizable value totaling approximately $5.3 million and future
  severance, holding, reclamation, and  closure costs totaling approximately $22.5
  million.
  
  On January  31, 1997, Great  Lakes Minerals Inc.  (Great Lakes) and  the Company
  entered into a letter agreement  terminating the Grouse Creek joint  venture and
  conveying Great Lakes' 20% interest in the Grouse Creek project to Hecla.  Great
  Lakes retained  a 5% defined net proceeds interest in  the project.  The Company
  has assumed 100% of the interests and obligations associated with the property.
  
  In September 1996, the Company announced  that the operator of the American Girl
  gold mine, in which the Company has a 47% joint-venture interest, had determined
  that operations at the American Girl  mine would be suspended effective November
  4, 1996.   During the first  six months of  1996 and  continuing into the  third
  quarter  of 1996, the American  Girl gold mine  experienced significantly higher
  than  anticipated operating  costs and  lower than  expected recovered  gold ore
  grade.   Based on its  periodic review of  the carrying  value of the  Company's
  mining  properties, the Company determined  that a third  quarter carrying value
  adjustment  totaling $7.6 million was required to properly reflect the estimated
  net realizable value  of its interest in  the American Girl joint  venture.  The
  amount  of  the adjustment  was based  on the  Company's  carrying value  of its
  interest in the American Girl mine in excess of estimated discounted future cash
  flows.  In addition to the  carrying value adjustment, the Company also recorded
  a  $0.3  million  provision for  closed  operations  to  increase the  Company's
  recorded liability for reclamation and closure costs to its estimate of its 
  
                                          2
  7
  
  interest in future closure and reclamation costs at the American Girl mine.
  
  In 1996, Hecla and Santa Fe Pacific Gold Corporation  (Santa Fe) entered into an
  agreement for a 50/50 joint venture to develop the Company's Rosebud property in
  Pershing  County,  Nevada.   Pursuant  to  the  agreement,  a limited  liability
  corporation was established, with each  party owning a 50% interest, to  develop
  the Rosebud gold property, which  is an underground, oxide gold deposit.   Under
  the terms of the agreement, Hecla will manage the mining activities and ore will
  be trucked  approximately 100  miles to  Santa Fe's Twin  Creeks Pinon  mill for
  processing.   Total mine-site capital expenditures are currently estimated to be
  approximately $20.0-$25.0 million.  Under the terms  of the joint venture, Santa
  Fe  is responsible for funding the  first $12.5 million of mine-site development
  costs plus  road and mill facility  improvements.  Santa Fe  also contributed to
  the joint venture  exploration property  adjacent to the  Rosebud property,  and
  will fund the first  $1.0 million in exploration expenditures, and two-thirds of
  future  expenditures beyond  the initial  $1.0  million for  further exploration
  efforts at the project.
  
  Following  the  decision  to  develop the  Rosebud  project,  Euro-Nevada Mining
  Corporation Inc. (Euro-Nevada)  exercised its option  to purchase an  additional
  1.5% Net Smelter Return  royalty (NSR) from the  Company for $2.5 million.   The
  Company received and recorded  a gain of $2.5 million  in the fourth quarter  of
  1996 from  this transaction,  and  Euro-Nevada now  holds a  4%  NSR royalty  on
  production from the  Rosebud property.  Production at  the Rosebud joint venture
  project is expected to begin in May 1997.
  
  In connection with signing the Rosebud joint-venture agreement, a separate joint
  venture  agreement  concerning  the  Golden  Eagle  property  in  Ferry  County,
  Washington, was entered into between  Hecla and Santa Fe.   Santa Fe paid  Hecla
  $2.5 million  for an immediate 75%  interest in the Golden  Eagle joint venture.
  The  Company  recorded a  gain on  the transaction  totaling  $0.6 million.   In
  addition, Santa Fe is obligated to fund all expenditures required  at the Golden
  Eagle through the feasibility stage.
  
  In July 1996, operations recommenced at the Greens Creek silver  mine in Alaska.
  Grinding  and  flotation  circuit activities  in  the  mill  commenced ahead  of
  schedule.   The Company holds  a 29.73%  interest in  the mine  through a  joint
  venture  with Kennecott  Greens  Creek  Mining  Company,  the  operator  of  the
  property.   Production levels continued to increase following the recommencement
  of operations  in July 1996, and full production levels were achieved in January
  1997.
  
  In 1997,  the Company expects to  produce between 145,000 and  157,000 ounces of
  gold compared to actual 1996 gold production  of approximately 169,000 ounces of
  gold.  The 1997 estimated gold 
  
                                          3
  8
  
  production includes  69,000 to 72,000  ounces from the Company's  La Choya mine,
  38,000 to 43,000 ounces from the Company's interest in the  Rosebud mine, 18,000
  to 20,000 ounces  from the Company's Grouse Creek mine,  20,000 to 22,000 ounces
  from the Company's  interest in the  Greens Creek mine  and other sources.   The
  Company's share of silver production for 1997  is expected to be between 5.7 and
  6.2  million ounces  compared to  1996 production  of approximately  3.0 million
  ounces.  The 1997 estimated silver production includes 2.1 to 2.3 million ounces
  from  the  Lucky Friday  mine,  3.4 to  3.7  million ounces  from  the Company's
  interest in  the Greens  Creek mine  and an additional  0.2 million  ounces from
  other sources.
  
  In  1996,  the  Company  shipped  approximately  1,072,000  tons  of  industrial
  minerals, including ball  clay, kaolin, feldspar, and  specialty aggregates. The
  Company's shipments of industrial minerals  are expected to increase in  1997 to
  approximately  1,095,000  tons.    Additionally,  the  Company  expects to  ship
  approximately 930,000 cubic yards  of landscape material from its  Mountain West
  Products subsidiary in 1997 compared to 996,000 cubic yards in 1996.
  
  RESULTS OF OPERATIONS
  
  1996 vs 1995
  
  The Company incurred a net loss of approximately $32.4 million ($0.63 per common
  share) in 1996 compared to a net loss of approximately $101.7 million ($2.11 per
  common share)  in  1995. After  $8.1  million in  dividends  to holders  of  the
  Company's Series B  Cumulative Convertible Preferred  Stock, the Company's  loss
  applicable to common shareholders  for 1996 was approximately $40.4  million, or
  $0.79 per common share  compared to $109.8 million, or $2.28 per common share in
  1995.   The  1996 decreased  loss was  due to  a  variety of  factors, the  most
  significant of which was the write-down  of the Company's interest in the Grouse
  Creek mine in the third quarter of 1995 totaling $97.0 million, compared to 1996
  adjustments totaling $35.7 million  for severance, holding, reclamation, closure
  costs, and carrying  value adjustments  for property, plant,  and equipment  and
  certain other assets at the Grouse Creek and American Girl mines.
  
  Sales  of the  Company's products  increased by  approximately $6.6  million, or
  4.4%,  in 1996  as compared  to 1995,  principally the  result of  (1) increased
  product  sales totaling  approximately  $16.8  million,  most notably  from  the
  industrial  minerals   operations  where  shipment  volumes   increased  at  all
  operations,  increased production  at the  La Choya  mine where  gold production
  increased approximately 8,000 ounces, as well as at the Greens  Creek mine where
  the   first  shipment  of  product  occurred  in  November  1996  following  the
  recommencement of  operations in July 1996;  and (2) an increase  in the average
  price of lead.   These two factors  were partially offset by  decreased sales of
  approximately $10.2 million attributable to 
  
                                          4
  9
  
  (1) decreased gold  and silver production in 1996  at the Grouse Creek  mine and
  Republic gold mine,  the latter of which completed  operations in February 1995;
  (2)  decreased  sales  from  the Apex  processing  facility  which  was sold  in
  September  1995; and (3) decreased gold production at the Cactus mine due to the
  completion of operations in 1995.
  
  Comparing the  average metal prices for  1995 with 1996, gold  increased by 1.0%
  from $384 per ounce to $388 per ounce,  silver decreased slightly from $5.19 per
  ounce to $5.18 per ounce, lead increased by 20.7% from $0.29 per pound  to $0.35
  per pound, and zinc  decreased slightly from $0.47 to $0.46 per pound.
  
  Cost of sales  and other  direct production costs  increased approximately  $5.3
  million, or  4.4%, in 1996 compared to 1995, primarily a result of (1) increased
  production  costs of $6.9 million incurred at the industrial minerals operations
  which  correlates to  the  increased  sales  volume  at  these  operations;  (2)
  production  costs increased at the Lucky Friday mine totaling approximately $2.8
  million due to increased mining costs and the nonrecurring 1995  receipt of $1.1
  million in insurance  proceeds related to  an ore conveyance accident  in August
  1994; (3)  increased costs at the La  Choya mine of $1.2  million resulting from
  increased production at the mine; (4) increased costs at the  American Girl mine
  of $0.5 million due to  difficulties associated with mining in the  Oro Cruz ore
  body, partially offset by reduced costs following  the shutdown of operations in
  1996; and  (5) increased costs at  Greens Creek where costs  associated with the
  first shipment were recognized in the amount of $0.5 million. These increases in
  cost  of sales  and  other  direct production  costs  were partially  offset  by
  decreases  in operating costs at other operations, including (1) decreased costs
  associated with  the Apex  processing facility  totaling $4.1  million resulting
  from the processing plant being  sold in September 1995; (2) decreased  costs at
  the  Cactus  Unit  totaling  approximately  $1.0  million  associated  with  the
  completion of operations  in 1995; (3) decreased costs at  the Grouse Creek mine
  totaling $0.9 million which is associated with the second quarter 1996 temporary
  shutdown   of  operations  and  the  third  quarter  1996  decision  to  suspend
  operations, as  well as  higher costs  in 1995 associated  with the  start-up of
  operations;  and (4)  decreased operating  costs at  the Republic  mine totaling
  approximately $0.6 million due to the completion of operations in February 1995.
  
  Cost  of sales and other direct  production costs as a  percentage of sales from
  products remained constant at 80.2% in 1995 and 1996.  
  
  Depreciation, depletion, and amortization decreased $3.0 million, or 12.8%, from
  1995 to 1996 principally due to decreased depreciation at the  Grouse Creek mine
  ($6.8  million)  primarily  due  to  the write-down  of  the  carrying  value of
  property, plant, and equipment in the third quarter of 1995, partially offset by
  increased depreciation at (1) the La Choya mine ($1.9 million) due 
  
                                       5
  10
  
  to  increased  gold  production; (2)  the  Greens  Creek  mine where  operations
  recommenced on  a start-up basis in  1996 ($1.4 million); (3)  the American Girl
  mine  ($0.3 million)  due  to the  increased  depreciable base  associated  with
  development  costs  of the  Oro Cruz,  partly offset  by  the write-down  of the
  carrying value of the American Girl mine property, plant, and  equipment, in the
  third quarter of 1996;  and (4) various industrial minerals  operations totaling
  approximately $0.2 million.
  
  Cash operating cost,  total cash cost, and total production  cost per gold ounce
  decreased from  $286, $288, and  $398 in 1995 to  $273, $276, and  $364 in 1996,
  respectively.  The decreases in the cash operating cost and  total cash cost per
  ounce are primarily due to decreases in the cost per ounce amounts at the Grouse
  Creek and  La Choya  mines, offset by  increased cost per  ounce amounts  at the
  American Girl  mine.  Total production costs per ounce decreased principally due
  to the decreased depreciation, depletion, and amortization expense at the Grouse
  Creek mine in 1996 which  is the result of  the 1995 carrying value  adjustment,
  partially  offset by increased  total production cost per  ounce at the American
  Girl.
  
  Cash operating costs,  total cash costs, and  total production costs  per silver
  ounce decreased from $4.57, $4.57, and $5.76 in  1995 to $4.24, $4.24, and $5.47
  in  1996, respectively.   The  decreases in the  cost per  silver ounce  are due
  primarily to increased  by-product production and  prices, principally lead,  in
  the 1996 period at the Lucky Friday mine.  Lead and zinc are by-products  at the
  Lucky Friday  mine, the net revenues of which are deducted from production costs
  in the calculation of production cost per silver ounce.
  
  Other  operating expenses decreased  by approximately  $68.6 million,  or 57.7%,
  from 1995  to 1996, due principally  to (1) the decreased  reduction in carrying
  value  of mining properties of  $84.5 million, consisting  of the Company's 1995
  reduction in carrying value of  the Company's interest in the Grouse  Creek mine
  ($97.0 million) and  the Company's interest in the ConSil  Corp.'s Silver Summit
  mine ($0.4 million), partly offset by  the 1996 reductions in carrying values of
  mining  properties at the American Girl mine totaling approximately $7.6 million
  and the Grouse Creek mine totaling approximately $5.3 million; and (2) decreased
  exploration expenditures  of approximately $2.3  million.  These  decreases were
  partially offset by an $18.2 million increase in provision for closed operations
  and environmental matters,  consisting of (1) the 1996 provision  for the Grouse
  Creek  mine  totaling  approximately  $22.5  million;  (2)  the  increased  1996
  provision  over the  1995 provision  for remediation  costs associated  with the
  Coeur d'Alene  River Basin of $2.4  million; (3) the American  Girl mine closure
  cost  accrual of  $0.3 million  in  1996; and  (4)  provision for  environmental
  matters at  the Company's  former Yellow  Pine mine  of $0.2  million, partially
  offset  by (1)  the 1995  provision totaling  $3.4 million  for the  Bunker Hill
  Superfund  Site; (2)  receipt  of $2.6  million  in insurance  proceeds in  1996
  related to the 
  
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  remediation  liability at  Bunker Hill;  and (3)  decreased expenditures  at the
  closed  Star Unit Area of $1.2 million  primarily due to timber sale proceeds of
  $0.9 million.
  
  Other income was approximately $7.7 million in 1996 compared to $10.8 million in
  1995.  The  $3.1 million decrease  was primarily due  to (1) decreased gains  on
  investments of $3.2 million due to the nonrecurring sale of certain common stock
  investments in  1995; (2) increased net  interest cost of $0.3  million; and (3)
  miscellaneous  expense in  1996 compared  to miscellaneous  income in  1995, the
  impact of  which was $0.3  million.   These decreases were  partially offset  by
  increased interest and  other income in  1996 over  1995 totaling $0.5  million.
  Total interest  cost increased $1.1  million in 1996, principally  due to higher
  borrowings  in  1996  under the  Company's  revolving  and  term loan  facility.
  Capitalized interest costs increased $0.8 million principally due to capitalized
  interest  costs  associated  with  the  Greens  Creek  development, the  Rosebud
  project, the Lucky  Friday expansion  project, and development  at the  American
  Girl's Oro Cruz ore body.
  
  Income taxes reflect a provision of $0.7 million in 1996 compared to a provision
  of  $0.3 million  in  1995.    The  provision in  1996  primarily  reflects  the
  provisions for  foreign income  taxes as  well as a  provision for  state income
  taxes, partially offset by the carryback of  certain 1996 expenditures to reduce
  U.S.  income taxes previously provided. The provision in 1995 primarily reflects
  the  provisions for U.S. and foreign  income taxes as a  result of certain asset
  and certain  common stock investment dispositions made during 1995, as well as a
  provision  for state income taxes, partially offset  by the carryback of certain
  1995 expenditures to reduce U.S. income taxes previously provided.
  
  RESULTS OF OPERATIONS
  
  1995 vs 1994
  
  The  Company  incurred a  net loss  of approximately  $101.7 million  ($2.11 per
  common share)  in 1995 compared  to a  net loss of  approximately $24.6  million
  ($0.56 per common share) in 1994. After $8.1 million in dividends to holders  of
  the Company's  Series B  Cumulative Convertible  Preferred Stock,  the Company's
  loss  applicable  to  common  shareholders  for  1995 was  approximately  $109.8
  million,  or $2.28  per common  share compared  to $32.7  million, or  $0.74 per
  common share in 1994.   The 1995 loss was due to a  variety of factors, the most
  significant of which was the third quarter write-down of the  Company's interest
  in the Grouse Creek mine.
  
  Sales of the  Company's products  increased by approximately  $26.3 million,  or
  21.0%,  in 1995  as compared to  1994, principally  the result  of (1) increased
  product sales  totaling $49.7 million,  most notably from the  Grouse Creek mine
  where  gold  and silver  production commenced  in  December 1994,  and increased
  production at the La 
  
                                          7
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  Choya  and Lucky  Friday  mines; as  well  as from  several industrial  minerals
  operations; and (2) an increase in the average price of lead.  These two factors
  were  partially  offset  by  decreased  sales  of  approximately  $23.5  million
  attributable to (1) decreased gold and silver production in 1995 at the Republic
  gold mine  which completed operations in  February 1995; and (2)  decreased gold
  production at the  American Girl mine due to the  completion of most underground
  mining operations there in February 1995.
  
  Comparing  the average  metal prices  for 1994  with 1995, gold  remained fairly
  constant at $384  per ounce, silver decreased  by 1.7% from  $5.28 per ounce  to
  $5.19 per ounce, lead increased by 16%  from $0.25 per pound to $0.29 per pound,
  and zinc increased by 4% from $0.45 to $0.47 per pound.
  
  Cost  of sales and other  direct production costs  increased approximately $20.3
  million, or 20.0%, in 1995 compared to 1994, primarily a result of (1) increased
  production costs  of $24.7 million  incurred at  the Grouse Creek  mine in  1995
  where production commenced in  December 1994; (2) increased production  costs at
  Kentucky-Tennessee Clay  Company's (K-T Clay's)  kaolin and ball  clay divisions
  totaling approximately  $4.0  million, principally  due  to the  Langley  kaolin
  acquisition  in 1995; (3) increased  production costs at  Mountain West Products
  ($3.4 million) due  principally to  increased production, as  well as  increased
  freight and  raw materials costs; (4) increased production costs at the La Choya
  mine  ($2.7  million)  primarily  due  to increased  production;  (5)  increased
  production  costs   at  Colorado   Aggregate  Company  ($1.2   million)  related
  principally  to  a  change  in  product  mix  requirements;  and  (6)  increased
  production costs at Lucky Friday of $1.2 million due to  increased production in
  1995.   These increases in cost of sales and  other direct production costs were
  partially offset by decreases in operating costs at  other operations, the three
  most notable of which are (1) decreased production costs of $10.4 million at the
  Republic  mine due to completion  of operations in  February 1995; (2) decreased
  standby costs at the Greens Creek mine totaling $2.6 million in the 1995 period,
  a  direct result  of  management's  decision to  further  develop  the mine  and
  recommence production; and  (3) decreased cost of sales in  1995 at the American
  Girl mine totaling $2.6 million due to decreased gold production.
  
  Cost  of sales and other  direct production costs as  a percentage of sales from
  products decreased slightly from 80.8% in 1994 to 80.2% in 1995.  
  
  Depreciation, depletion, and amortization increased $9.2 million, or 64.8%, from
  1994 to 1995 principally due  to (1) increased depreciation at the  Grouse Creek
  mine  ($8.6  million)  which commenced  production  in  December  1994; and  (2)
  increased  depreciation at  the La  Choya mine  ($2.4 million) due  to increased
  production; both of which were partially offset by decreased 
  
                                          8
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  depreciation  at the  Republic  mine ($2.2  million) due  to the  curtailment of
  operations in February 1995.
  
  Cash operating  costs, total  cash costs,  and total  production costs per  gold
  ounce increased from  $267, $273, and  $334 in 1994 to  $286, $288, and  $398 in
  1995, respectively.  The increases  were mainly attributed to the increased  per
  ounce production  costs at the Grouse Creek and American Girl mines during 1995,
  partially offset by decreased per ounce production costs at the La Choya mine.
  
  Cash operating  costs, total cash costs,  and total production costs  per silver
  ounce decreased from $5.81, $5.81, and $7.17 in 1994 to  $4.57, $4.57, and $5.76
  in  1995, respectively.    The decreases  were  due primarily  to (1)  increased
  production in 1995 at the Lucky Friday mine; and (2) increased average prices of
  lead and zinc in 1995.  Lead and zinc  are by-products at the Lucky Friday mine,
  the net revenues of which are  deducted from production costs in the calculation
  of production cost per silver ounce.
  
  Other operating expenses increased by approximately $79.6 million, or 203%, from
  1994 to  1995,  due principally  to  (1) the  third  quarter 1995  reduction  in
  carrying  value  of the  Company's  interest  in the  Grouse  Creek mine  ($97.0
  million) and  the Company's interest  in the  ConSil Corp.'s Silver  Summit mine
  ($0.4  million);  and (2)  the  third quarter  1995 adjustment  to  increase the
  Company's liability for environmental  remediation activity costs at  the Bunker
  Hill Superfund Site  ($3.4 million) and the Coeur  d'Alene Mining District ($0.3
  million).  These increases were partially offset by (1) the 1994 increase in the
  provision  for  closed operations  and  environmental  matters  related  to  the
  reclamation accruals for the Republic mine and the Coeur d'Alene Mining District
  totaling $7.3 million and $1.1 million, respectively; (2)  the 1994 $7.9 million
  reduction  in  carrying value  of mining  properties  adjustment related  to the
  Republic mine ($7.2 million), the Zenda property ($0.4 million), and exploration
  equipment ($0.3 million); (3) decreased general and administrative costs of $1.8
  million   in  1995,  primarily  due   to  the  nonrecurring   1994  expenses  of
  approximately $2.1 million related to the acquisition of Equinox Resources Ltd.;
  and (4) a decrease of approximately $1.3 million in exploration expense in 1995.
   
  Other income was approximately $10.8 million in 1995 compared to $5.2 million in
  1994.  The increase  was primarily due to (1)  the 1995 gain of $4.0  million on
  the sales of certain  common stock investments;  and (2) the  1995 gain of  $3.2
  million  on  the sale  of  the  Apex processing  facility;  both  of which  were
  partially offset by (1) the  1995 write-down of $1.1 million for  certain common
  stock investments;  and (2) the 1994  gain on the  sale of certain  common stock
  investments.   Total interest cost  decreased $0.6 million  in 1995, principally
  due to  the June 1994 retirement of long-term debt, partially offset by interest
  expense during 1995 related to 
  
                                          9
  14
  
  new borrowing under the Company's revolving and term credit facility.
  
  In  1994, the Company recorded an extraordinary loss totaling approximately $0.8
  million on the early retirement of long-term debt.  The loss related principally
  to the write-off  of the unamortized balance of deferred  issuance costs related
  to the debt.
  
  Income taxes reflect a provision  of $0.3 million in 1995 compared  to a benefit
  of  $0.5  million  in 1994.    The  provision  in  1995 primarily  reflects  the
  provisions for  U.S. and  foreign taxes  due as  a result  of certain asset  and
  certain common stock  investment dispositions  made during  1995, as  well as  a
  provision  for state income taxes, partially  offset by the carryback of certain
  1995 expenditures to  reduce income  taxes previously provided.  The benefit  in
  1994  primarily reflects  the carryback  of 1994  and  prior year  net operating
  losses  to reduce  income  taxes previously  provided,  partially offset  by  an
  Internal Revenue Service settlement and a provision for state income taxes.
  
  FINANCIAL CONDITION AND LIQUIDITY
  
  A  substantial portion  of the  Company's revenue  is derived  from the  sale of
  products,  the prices  of  which are  affected by  numerous  factors beyond  the
  Company's control.   Prices may change dramatically in short periods of time and
  such  changes have a significant effect on revenues, profitability and liquidity
  of  the Company.    The Company  is subject  to  many of  the  same inflationary
  pressures as  the U.S. economy in  general.  The Company  continues to implement
  cost-cutting  measures in  an  effort  to  reduce  per  unit  production  costs.
  Management believes,  however, that the Company  may not be able  to continue to
  offset the impact of inflation over the long term through cost reductions alone.
  However,  the market  prices for products  produced by  the Company  have a much
  greater  impact than  inflation  on the  Company's  revenues and  profitability.
  Moreover, the discovery,  development and acquisition of  mineral properties are
  in many  instances unpredictable events.   Future metals prices, the  success of
  exploration programs,  changes in legal  and regulatory requirements,  and other
  property transactions can have a significant impact on the need for capital (see
  "Investment Considerations"  of Part  I, Part 1  of the  Company's December  31,
  1995, Form 10-K).
  
  At  December   31,  1996,  assets  totaled  approximately   $268.4  million  and
  shareholders'  equity  totaled  approximately $145.5  million.    Cash  and cash
  equivalents increased  by $4.3 million to $8.3 million at December 31, 1996 from
  $4.0 million at the end of 1995.  Operating activities provided $22.3 million of
  cash during 1996.   The primary sources of cash were  from the La Choya mine and
  the  Company's  industrial  minerals  operations.   Partially  offsetting  these
  sources were (1) a $4.2 million increase in inventories, primarily at the Greens
  Creek mine and the La Choya mine; and (2) 
  
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  payments for reclamation and other noncurrent liabilities which required cash of
  $5.2  million.   Principal  noncash  charges  included in  operating  activities
  include (1) provisions for reclamation, holding, severance, and closure costs of
  approximately $28.3 million; (2) depreciation, depletion, and amortization costs
  of  approximately  $20.8  million; and  (3)  adjustments  for  reduction in  the
  carrying value of mining properties totaling approximately $12.9 million.
  
  The Company's investing activities used $35.5 million of cash during  1996.  The
  most  significant  use  of  cash  was $33.7  million  for  property,  plant, and
  equipment  additions described  below  and  the  transfer  of  $4.3  million  to
  restricted  investments for  additional reclamation  funding and  surety bonding
  collateral  requirements related to ongoing  and closed operations.   These uses
  were  partially offset  by proceeds  from  the sales  of assets  ($3.6 million),
  primarily for the sale of  an interest in the Golden Eagle joint venture and the
  sale  of  the  Apex mine,  and  proceeds  from  sales  of certain  common  stock
  investments ($0.1 million).   During 1996, the most significant  asset additions
  were  $19.0 million at the  Greens Creek mine, $3.8 million  at the Grouse Creek
  mine,  $2.5  million at  the  Lucky Friday  mine,  $2.4  million in  capitalized
  interest  at Greens Creek, Rosebud, Lucky Friday, and American Girl, and capital
  expenditures  of $1.7 million at K-T Clay's  kaolin division and $1.6 million at
  the American Girl mine.
  
  During 1996, $17.4 million of cash was provided from financing  activities.  The
  major sources  of cash were borrowings  on long-term debt of  $51.6 million from
  the Company's  revolving credit facility, proceeds  totaling approximately $22.0
  million from  the issuance  of 2.875  million common  shares in an  underwritten
  offering completed in January  1996, and borrowing against cash  surrender value
  of life insurance of $0.8  million, partially offset by repayments on  long-term
  debt of $48.9 million and payment of preferred stock dividends of $8.1 million.
  
  The Company currently estimates that capital expenditures to be incurred in 1997
  will  be in the range of $19.0 million  to $32.5 million, including $0.8 million
  of capitalized  interest.   These expenditures, excluding  capitalized interest,
  consist  primarily of (1) the Company's share of development expenditures at the
  Rosebud project ($10.0-$11.0 million), the Lucky Friday expansion project ($2.0-
  $14.0   million),  industrial   minerals  capitalized   expenditures  ($2.6-$2.8
  million), Greens  Creek mine  capitalized expenditures ($2.0-$2.2  million); and
  (2) expenditures at other  operating locations totaling $1.6-$1.7 million.   The
  high end  of the estimates  with respect to  the Lucky Friday  expansion project
  expenditures  are subject  to preparation  of a  final feasibility  study, final
  engineering  estimates, as well as  Board of Directors  approval.  These planned
  capital expenditures  will depend,  in large part,  on the Company's  ability to
  obtain the required funds from operating activities, amounts available under its
  revolving and 
  
                                         11
  16
  
  term  loan  credit facility,  and other  potential  financing arrangements.   As
  market circumstances permit, the Company may also seek to finance certain of its
  cash requirements through the sale of equity or debt securities, as appropriate.
  There  can  be no  assurance that  actual  capitalized expenditures  will  be as
  projected  based  upon  the  uncertainties  associated with  the  estimates  for
  development of the Lucky Friday  expansion project and the Company's ability  to
  generate adequate funding for the projected capital expenditures.
  
  The Company's  estimate of  its capital  expenditure requirements  assumes, with
  respect to  the Greens Creek and  Rosebud properties, that the  Company's joint-
  venture partners will not  default with respect to their respective  portions of
  development costs and capital expenditures.  
  
  Pursuant  to a  Registration Statement  filed with  the Securities  and Exchange
  Commission and declared effective in the third quarter of 1995, the Company can,
  at  its  option,  issue debt  securities,  common  shares,  preferred shares  or
  warrants in an amount not to exceed $100.0 million in the aggregate.  In January
  1996, the Company issued 2.875 million  shares of its common stock to facilitate
  the  funding of the  Company's capital expenditures  in 1996.   The Company used
  $21.0  million of the net proceeds of  approximately $22.0 million from the sale
  of Common  Stock initially to  pay down debt  under its existing  bank revolving
  credit facility.   As of  December 31, 1996 and  February 18,  1997, a total  of
  $17.0  million  and $10.0  million, respectively,  remained available  under the
  credit facility.
  
  The Company has  a revolving and  term loan facility  (the Bank Agreement)  that
  allows it to borrow up to $55.0 million.  Amounts may be borrowed on a revolving
  credit basis  through  July 31,  1998,  and  are repayable  in  eight  quarterly
  installments beginning  on October 31, 1998.   During the commitment period, the
  Company pays  an annual  facility fee  ranging  from $178,750  to $261,250,  the
  amount of which is based  on average quarterly borrowings.  The  Bank Agreement,
  as amended, includes  certain collateral provisions,  including the pledging  of
  the common stock  of certain  of the  Company's subsidiaries  and providing  the
  lenders a  security interest in accounts receivable.  Under the amended terms of
  the  Bank Agreement,  the  Company is  required  to maintain  certain  financial
  ratios, and meet certain net worth  and indebtedness tests for which the Company
  was  in compliance at  December 31, 1996.   Amounts available  under the amended
  Bank Agreement are based  on a defined debt to  cash flow test.  As  of December
  31, 1996, the Company had borrowings of  $38.0 million and the ability to borrow
  the  remaining  $17.0  million  under  the  facility.    The  interest rate  for
  borrowings under the Bank Agreement as of December 31, 1996 was 7.16%.
  
                                         12
  17
  
  The  Company's planned net  environmental and reclamation  expenditures for 1997
  are expected to be approximately $9.4 million, principally for environmental and
  reclamation  activities at  the Bunker  Hill Superfund  Site, the  Coeur d'Alene
  River Basin, and the Republic property.
  
  Exploration expenditures  for 1997 are  currently estimated to  be approximately
  $4.0-$5.0  million, although  the Company  is currently  evaluating a  number of
  opportunities  that could potentially increase this range by an additional $2.0-
  $4.0   million.    The  Company's  exploration  strategy  is  to  focus  further
  exploration at,  or in the vicinity of, its currently owned domestic and foreign
  properties.    Accordingly,  1997  domestic  exploration  expenditures  will  be
  incurred  principally at the Greens Creek, Rosebud, and Lucky Friday properties.
  Foreign exploration efforts in 1997 will center primarily on targets in Mexico.
  
  In the normal course of its business, the Company uses forward sales commitments
  and  commodity  put  and  call  option  contracts  to  manage  its  exposure  to
  fluctuations in  the  prices of  certain  metals which  it produces.    Contract
  positions are designed to ensure that the Company will receive a defined minimum
  price  for certain  quantities of  its production.   Gains  and losses,  and the
  related costs paid  or premiums received, for  option contracts which  hedge the
  sales prices of commodities are  deferred and included in income as  part of the
  hedged transaction.   Revenues from the aforementioned  contracts are recognized
  at the time contracts are  closed out by delivery of the underlying commodity or
  settlement of  the net position  in cash.   The  Company is  exposed to  certain
  losses, generally  the amount by which the contract price exceeds the spot price
  of a  commodity, in the event  of nonperformance by the  counterparties to these
  agreements.
  
  At December 31, 1996, the Company had forward sales commitments  through January
  31, 1997, for 1,000  ounces of gold at an average price of  $412 per ounce.  The
  estimated fair value  of these forward sales commitments was $43,000 at December
  31, 1996.  The  Company has also purchased options to put  34,440 ounces of gold
  to counterparties  at an  average price  of $396 per  ounce.   Concurrently, the
  Company sold options to allow  the counterparties to call 34,440 ounces  of gold
  from the Company at  an average price of $461 per ounce.   There was no net cost
  associated with the purchase and sale of these options which expire on a monthly
  basis through December 1997.  The London Final gold price at year end  was $369.
  At  December 31, 1996, the estimated fair  value of the Company's purchased gold
  put options was approximately $772,000.  If  the Company had chosen to close its
  offsetting short  gold call option position, it  would have incurred a liability
  of  approximately $2,000.    Additionally, the  Company  has entered  into  spot
  deferred  sales commitments  for 25,000  ounces of  gold at  $381 per  ounce for
  delivery on January  15, 1997.   The nature and  purpose of these  forward sales
  contracts, however, does not presently 
  
                                         13
  18
  
  expose  the Company  to any  significant net  loss.   All of  the aforementioned
  contracts are designated as hedges at December 31, 1996.      
  
  In  November  1994, the  Company entered  into  a court-approved  Consent Decree
  requiring the Company and  certain other mining companies to  undertake specific
  remediation  work with respect  to the  Bunker Hill  Superfund Site  in northern
  Idaho.   At December 31, 1996, the Company's allowance for Bunker Hill Superfund
  Site remedial action  costs was  approximately $9.4 million,  which the  Company
  believes is adequate based on current estimates of aggregate costs.
  
  In  addition,  as  described  in  Note  6 of  Notes  to  Consolidated  Financial
  Statements  forming  part  of   the  Company's  audited  Consolidated  Financial
  Statements for the year  ended December 31, 1996, the Company  is a defendant in
  an  action filed in November 1990 by  Star Phoenix Mining Company (Star Phoenix)
  and certain principals of  Star Phoenix, asserting that the Company breached the
  terms of  Star Phoenix's lease agreement for the Company's Star Morning mine and
  that  the  Company interfered  with  certain contractual  relationships  of Star
  Phoenix relating to the Company's 1990  termination of such lease agreement.  In
  June 1994,  judgment was entered by  the Idaho State District  Court against the
  Company  in the legal proceeding in the  amount of $10.0 million in compensatory
  damages and $10.0  million in punitive damages based on  a jury verdict rendered
  in the  case in late May  1994.  The verdict  was appealed to  the Idaho Supreme
  Court which heard arguments in  April 1996 and is prepared to render its opinion
  in the  near  future.   Post-judgment  interest will  accrue  during the  appeal
  period; the current interest  rate is 10.875%.  In order to  stay the ability of
  Star Phoenix to  collect on the judgment  during the pending of  the appeal, the
  Company posted an  appeal bond in the amount of  $27.2 million representing 136%
  of  the District Court  judgment.  The Company  pledged U.S. Treasury securities
  totaling $10.0 million  as collateral for  the $27.2 million  appeal bond.   The
  Company  has vigorously pursued its appeal to the Idaho Supreme Court and it has
  been the  Company's position, and at  the current time it  remains the Company's
  position, that it  will not enter  into a settlement  with Star Phoenix for  any
  material amount.  Although the ultimate outcome of the appeal of the judgment is
  subject to  the inherent uncertainties  of any  legal proceeding,  based on  the
  Company's  analysis  of  the  factual  and  legal  issues  associated  with  the
  proceeding before  the District  Court and  based upon the  opinions of  outside
  counsel,  as of  the date  hereof, it  is management's  belief that  the Company
  should ultimately prevail in this matter, although there can be  no assurance in
  this regard.   In the  event of an unfavorable  outcome in this  proceeding, the
  Company  expects that  the judgment would  be paid  from the  pledged collateral
  totaling $10.0  million  with  the  remaining  balance  to  be  paid  from  bank
  borrowings,  other potential  financing  arrangements or  proceeds from  certain
  asset sales.
  
                                         14
  19
  
  Although there  can be  no assurance as  to the  ultimate outcome  of the  above
  matter and  the other proceedings disclosed  in Note 6 of  Notes to Consolidated
  Financial  Statements  forming  part   of  the  Company's  audited  Consolidated
  Financial  Statements for the year ended December 31, 1996, it is the opinion of
  the Company's management,  based upon  the information available  at this  time,
  that  the expected outcome  of these matters, individually  or in the aggregate,
  will not  have  a material  adverse  effect on  the  results of  operations  and
  financial condition of the Company and its subsidiaries. 
  
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         15
  20
  
                                                                      Exhibit 99.2
  REPORT OF INDEPENDENT ACCOUNTANTS
  
  The Board of Directors and Shareholders
  Hecla Mining Company
  
       We have  audited  the accompanying  consolidated  balance sheets  of  Hecla
  Mining Company  and subsidiaries  as  of December  31, 1996  and  1995, and  the
  related consolidated  statements of operations, changes  in shareholders' equity
  and  cash flows  for each of  the three years  in the period  ended December 31,
  1996.  These financial  statements are the responsibility of the  Company's man-
  agement.   Our  responsibility  is to  express  an  opinion on  these  financial
  statements based on our audits.  
  
       We  conducted our  audits  in accordance  with generally  accepted auditing
  standards.  Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements.  An audit also includes
  assessing  the  accounting principles  used  and significant  estimates  made by
  management, as  well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion. 
  
       In  our opinion, the financial statements referred to above present fairly,
  in  all material respects, the  consolidated financial position  of Hecla Mining
  Company and subsidiaries  as of December 31,  1996 and 1995, and  the results of
  their  operations and their cash flows for each of the three years in the period
  ended  December  31,  1996,  in conformity  with  generally  accepted accounting
  principles.
  
       As  discussed in  Note  1 to  the  consolidated financial  statements,  the
  Company  changed   its  method  of  accounting   for  environmental  remediation
  liabilities in 1996, the impairment of long-lived assets in 1995, and its method
  of accounting for investments in 1994.  
  
  /s/ COOPERS & LYBRAND L.L.P.
  
  Spokane, Washington
  
  February 7, 1997
  
                                         16
  21
                              
                             HECLA MINING COMPANY AND SUBSIDIARIES
  
                                  CONSOLIDATED BALANCE SHEETS
  
                                    (dollars in thousands)
                                          __________
  
                                            ASSETS
  December 31,
                                                                      ----------------------------
                                                                        1996              1995
                                                                      ---------         -
                                                                                       ---------
  Current assets
    Cash and cash equivalents                                         $    8,256        $   4,024
    Accounts and notes receivable                                         24,168           25,571
    Income tax refund receivable                                           1,262              737
    Inventories                                                           22,879           20,915
    Other current assets                                                   2,284            2,038
                                                                      ----------       ----------
             Total current assets                                         58,849           53,285
  Investments                                                              1,723            2,200
  Restricted investments                                                  20,674           16,254
  Properties, plants and equipment, net                                  177,755          177,374
  Other noncurrent assets                                                  9,392            9,077
                                                                      ----------       ----------
             Total assets                                             $  268,393        $ 258,190
                                                                      ==========       ==========
  
                                           LIABILITIES
  Current liabilities
    Accounts payable and accrued expenses                             $   17,377        $  14,145
    Accrued payroll and related benefits                                   3,232            3,217
    Preferred stock dividends payable                                      2,012            2,012
    Accrued taxes                                                          1,427            1,042
    Accrued reclamation and closure costs                                  8,664            5,549
                                                                      ----------       ----------
             Total current liabilities                                    32,712           25,965
  Deferred income taxes                                                      359              359
  Long-term debt                                                          38,208           36,104
  Accrued reclamation and closure costs                                   45,953           26,782
  Other noncurrent liabilities                                             5,653            4,864
                                                                      ----------       ----------
             Total liabilities                                           122,885           94,074
                                                                      ----------       ----------
  Commitments and contingencies (Notes 1, 2 and 6)
  
                                          SHAREHOLDERS' EQUITY
  Preferred stock, $0.25 par value,
    authorized 5,000,000 shares;
    issued and outstanding - 2,300,000 shares,
    liquidation preference $117,012                                          575              575
  Common stock, $0.25 par value, authorized 100,000,000 shares;
    issued 1996 - 51,199,324 shares, issued 1995 - 48,317,324 shares      12,800           12,079
  Capital surplus                                                        351,559          330,352
  Accumulated deficit                                                   (213,610)        (173,206)
  Net unrealized gain (loss) on investments                                  (32)             100
  Foreign currency translation adjustment                                 (4,898)          (4,898)
  Less treasury stock, at cost;
    1996 - 62,085 common shares, 1995 - 62,072 common shares                (886)            (886)
                                                                      ----------       ----------
             Total shareholders' equity                                  145,508          164,116
                                                                      ----------       ----------
             Total liabilities and shareholders' equity               $  268,393        $ 258,190
                                                                      ==========       ==========
  
            The accompanying notes are an integral part of the consolidated financial statements.
  17
  22
                              HECLA MINING COMPANY AND SUBSIDIARIES
  
                              CONSOLIDATED STATEMENTS OF OPERATIONS
  
                   (dollars and shares in thousands, except per share amounts)
  
                                            __________
  Year Ended December 31,
                                                                     -------------------------------------
                                                                       1996          1995           1994
                                                                     ---------     ----------     ---------
  Sales of products                                                  $ 158,252     $  151,615     $ 125,342
                                                                     ---------     ----------     ---------
  Cost of sales and other direct production costs                      126,878        121,546       101,278
  Depreciation, depletion and amortization                              20,451         23,462        14,233
                                                                     ---------      ---------     ---------
                                                                       147,329        145,008       115,511
                                                                     ---------      ---------     ---------
      Gross profit                                                      10,923          6,607         9,831
                                                                     ---------      ---------     ---------
  Other operating expenses
    General and administrative                                           9,365          9,371        11,132
    Exploration                                                          4,843          7,109         8,397
    Depreciation and amortization                                          338            367           524
    Provision for closed operations and environmental 
      matters                                                           22,806          4,615        11,353
    Reduction in carrying value of mining properties                    12,902         97,387         7,864
                                                                     ---------      ---------     ---------
                                                                        50,254        118,849        39,270
                                                                     ---------      ---------     ---------
         Loss from operations                                          (39,331)      (112,242)      (29,439)
                                                                     ---------      ---------     ---------
  Other income (expense)
    Interest and other income                                            8,630          8,089         5,227
    Miscellaneous income (expense)                                        (250)            18          (234)
    Gain (loss) on investments                                             (28)         3,169         1,053
    Interest expense:
      Interest costs                                                    (3,058)        (1,960)       (2,606)
      Less amount capitalized                                            2,360          1,516         1,751
                                                                     ---------      ---------     ---------
                                                                         7,654         10,832         5,191
                                                                     ---------      ---------     ---------
  Loss before income taxes and extraordinary item                      (31,677)      (101,410)      (24,248)
  Income tax (provision) benefit                                          (677)          (309)          468
                                                                     ---------      ---------     ---------
  Loss before extraordinary item                                       (32,354)      (101,719)      (23,780)
  Extraordinary loss on retirement of long-term debt                       - -            - -          (833)
                                                                     ---------      ---------     ---------
  Net loss                                                             (32,354)      (101,719)      (24,613)
  Preferred stock dividends                                             (8,050)        (8,050)       (8,050)
                                                                     ---------      ---------     ---------
  Loss applicable to common shareholders                             $ (40,404)    $ (109,769)    $ (32,663)
                                                                     =========      =========     =========
  Loss per common share
  Loss before extraordinary item                                        $(0.79)        $(2.28)       $(0.72)
  Extraordinary item                                                       - -            - -         (0.02)
                                                                        ------         ------        ------
                                                                        $(0.79)        $(2.28)       $(0.74)
                                                                        ======         ======        ======
  Weighted average number of common shares outstanding                  51,133         48,192        43,944
                                                                        ======         ======        ======
  
                         The accompanying notes are an integral part of the consolidated financial statements.
  18
  23
                             HECLA MINING COMPANY AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (dollars in thousands)
  Year Ended December 31,
                                                                     -------------------------------------------
                                                                        1996             1995            1994
                                                                     ----------       ----------      ----------
  Operating activities
    Net loss                                                         $   (32,354)     $ (101,719)     $  (24,613)
    Noncash elements included in net loss
       Depreciation, depletion and amortization                           20,789          23,829          14,757
       Gain on disposition of properties, plants 
          and equipment                                                     (706)         (3,417)           (354)
       (Gain) loss on investments                                             28          (3,169)         (1,053)
       Accretion of interest on long-term debt                               - -             - -           2,495
       Reduction in carrying value of mining properties                   12,902          97,387           7,864
       Provision for reclamation and closure costs                        28,284           8,071          11,353
       Loss on retirement of long-term debt                                  - -             - -             833
    Change in
       Accounts and notes receivable                                         192            (849)         (4,675)
       Income tax refund receivable                                         (525)           (490)           (247)
       Inventories                                                        (4,239)         (2,299)         (4,086)
       Other current assets                                                 (479)           (441)            406
       Accounts payable and accrued expenses                               3,232             575          (4,088)
       Accrued payroll and related benefits                                   15             493             668
       Accrued taxes                                                         385             117              (3)
       Accrued reclamation and closure costs
          and other noncurrent liabilities                                (5,210)         (6,326)         (4,608)
                                                                      ----------      ----------      ----------
    Net cash provided (used) by operating activities                      22,314          11,762          (5,351)
                                                                      ----------      ----------      ----------
  Investing activities
    Additions to properties, plants and equipment                        (33,731)        (45,308)        (66,559)
    Proceeds from disposition of properties, plants 
       and equipment                                                       3,641           3,822          13,809
    Proceeds from sale of investments                                        130           5,196          32,067
    Purchase of restricted investments                                    (4,308)         (2,701)        (13,553)
    Purchase of investments and change in cash surrender 
       value of life insurance, net                                         (726)         (1,047)            114
    Other, net                                                              (480)         (2,407)           (325)
                                                                      ----------      ----------      ----------
    Net cash used by investing activities                                (35,474)        (42,445)        (34,447)
                                                                      ----------      ----------      ----------
  Financing activities
    Common stock issued under stock option plans 
       and warrants                                                          - -           1,335           1,765
    Common stock issuance, net of issuance costs                          21,928             - -          63,499
    Preferred stock dividends                                             (8,050)         (8,050)         (8,050)
    Borrowings against cash surrender value of life insurance                801             - -             - -
    Borrowings on long-term debt                                          51,631          48,000             - -
    Repayment of long-term debt                                          (48,918)        (13,856)            - -
    Retirement of long-term debt including $16,283
       of accreted interest                                                  - -             - -         (50,169)
                                                                       ----------     ----------      ----------
    Net cash provided by financing activities                             17,392          27,429           7,045
                                                                      ----------      ----------      ----------
  Change in cash and cash equivalents
    Net increase (decrease) in cash and cash equivalents                   4,232          (3,254)        (32,753)
    Cash and cash equivalents at beginning of year                         4,024           7,278          40,031
                                                                      ----------      ----------      ----------
    Cash and cash equivalents at end of year                          $    8,256      $    4,024      $    7,278
                                                                      ==========      ==========      ==========
  Supplemental disclosure of cash flow information
    Cash paid during year for:
       Interest (net of amount capitalized), including
          $16,283 of accreted interest in 1994                        $      249      $     (136)     $   16,528
                                                                      ==========      ==========      ==========
       Income tax payments, net                                       $      148      $      216      $      436
                                                                      ==========      ==========      ==========
  See Notes 3 and 5 for noncash investing and financing activities. 
  
                        The accompanying notes are an integral part of the consolidated financial statements.
  19
  24
                              HECLA MINING COMPANY AND SUBSIDIARIES
  
                    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
  
                        For the Years Ended December 31, 1996, 1995 and 1994
  
                     (dollars and shares in thousands, except per share amounts)
                                                            _______________
  Unrealized      Foreign
                                                                                                         Gain     Currency
                                    Preferred Stock       Common Stock     Capital   Accumulated    (Loss) on  Translation  Treasury
                                   -----------------    -----------------
                                    Shares    Amount    Shares    Amount   Surplus     Deficit    Investments   Adjustment    Stock
                                   -------   -------    -------  --------  --------   ----------  -----------  -----------  --------
  Balances, December 31, 1993        2,300     $  575   40,320   $10,080   $ 265,687  $ (30,774)    $    (8)      $   - -    $  (888)
     Effect of change in 
       accounting for investments                                                                       635
     Net loss                                                                           (24,613)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued under stock 
       option plans and exercise
       of warrants                                         349        87       1,678
     Stock issued for cash, 
       net of issuance costs                             7,475     1,869      61,630
     Net change in unrealized 
       gain (loss) on investments                                                                     2,769
     Net change in foreign 
       currency translation 
       adjustment                                                                                                  (3,158)
     Treasury stock purchased                                                                                                     (1)
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1994        2,300        575   48,144    12,036     328,995    (63,437)      3,396        (3,158)      (889)
     Net loss                                                                          (101,719)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued under stock 
       option plans and exercise
       of warrants                                         166        41       1,294
     Stock issued to directors                               7         2          63
     Net change in unrealized 
       gain (loss) on investments                                                                    (3,296)
     Net change in foreign 
       currency translation 
       adjustment                                                                                                  (1,740)
     Treasury stock issued                                                                                                         3
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1995        2,300        575   48,317    12,079     330,352   (173,206)        100        (4,898)      (886)
     Net loss                                                                           (32,354)
     Preferred stock dividends
       ($3.50 per share)                                                                 (8,050)
     Stock issued for cash,
       net of issuance costs                             2,875       719      21,154
     Stock issued to directors                               7         2          53
     Net change in unrealized 
       gain (loss) on investments                                                                      (132)             
                                     -----     ------   ------   -------    --------  ---------     -------       -------     ------
  Balances, December 31, 1996        2,300     $  575   51,199   $12,800    $351,559  $(213,610)    $   (32)      $(4,898)    $ (886)
                                     =====     ======   ======   =======    ========  =========     =======       =======     ======
  
                        The accompanying notes are an integral part of the consolidated financial statements.
  20
  25
  
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      ________
  
  NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
  
  A.   BASIS OF PRESENTATION -- The accompanying consolidated financial statements
  include  the  accounts of  Hecla  Mining Company  (Hecla  or  the Company),  its
  majority-owned subsidiaries and its  proportionate share of the accounts  of the
  joint  ventures  in  which  it   participates.    All  significant  intercompany
  transactions and accounts are eliminated in consolidation.  
  
  The Company's revenues and profitability are strongly influenced by world prices
  for  gold, silver, lead,  and zinc, which  fluctuate widely and  are affected by
  numerous factors beyond the Company's control, including inflation and worldwide
  forces  of supply  and demand.   The  aggregate effect  of these factors  is not
  possible to accurately predict.
  
  The preparation  of financial statements  in conformity with  generally accepted
  accounting principles requires management to make estimates and assumptions that
  affect  the reported  amounts  of  assets  and  liabilities  and  disclosure  of
  contingent assets and  liabilities at the dates of the  financial statements and
  the  reported amounts  of revenues  and expenses  during the  reporting periods.
  Actual results could differ materially from those estimates.
  
  Certain  consolidated  financial statement  amounts  have  been reclassified  to
  conform to the 1996 presentation.  These reclassifications had no  effect on the
  net loss or accumulated deficit as previously reported.
  
  B.   COMPANY'S BUSINESS  AND CONCENTRATIONS  OF  CREDIT RISK --  The Company  is
  engaged  in mining  and  mineral processing  activities, including  exploration,
  extraction, processing, and  reclamation.  The Company's  principal products are
  metals  (primarily  gold,  silver,  lead,  and  zinc)  and  industrial  minerals
  (primarily  clay, aggregate and landscape  products).  Substantially  all of the
  Company's operations  are conducted in the  United States and Mexico.   Sales of
  metals products are made principally to domestic and foreign custom smelters and
  metal traders.  The Company sells substantially all of its metallic concentrates
  to smelters which are subject  to extensive regulations including  environmental
  protection laws.   The Company has  no control over the  smelters' operations or
  their  compliance  with environmental  laws and  regulations.   If  the smelting
  capacity  available  to  the  Company  were  significantly  reduced  because  of
  environmental  requirements  or otherwise,  it  is possible  that  the Company's
  silver operations could  be adversely  affected.  Industrial  minerals are  sold
  principally to domestic and Mexican manufacturers and wholesalers. 
  
                                         21
  26
  
  Sales to significant metals customers, as a percentage of total sales of metals,
  were as follows:
  
                                1996      1995      1994
                                ----      ----      ----
  Custom smelters               18.4%      8.9%      9.3%
  
  Custom metal traders
    Customer A                  31.2%     32.8%     38.3%
    Customer B                  29.5%     30.6%     19.2%
    Customer C                   7.7%     11.6%     12.9%
    Customer D                   7.5%      7.9%     11.9%
  
  During 1996, 1995 and 1994, the Company sold 9.8%, 7.0% and 13.0%, respectively,
  of its products to companies in foreign countries.
  
  The Company's financial instruments that are exposed to concentrations of credit
  risk  consist  primarily  of  cash  and  cash  equivalents  and  trade  accounts
  receivable.   The Company places  its cash and  temporary cash investments  with
  institutions of  high credit-worthiness.   At times  such investments may  be in
  excess  of  the FDIC  insurance  limit.    The  Company routinely  assesses  the
  financial strength of  its customers and,  as a  consequence, believes that  its
  trade accounts receivable credit risk exposure is limited.
  
  C.   INVENTORIES  -- Inventories  are stated  at the  lower  of average  cost or
  estimated net realizable value.
  
  D.   INVESTMENTS   --  The  Company  uses  the  equity  method  to  account  for
  investments  in  common  stock   of  operating  companies  20%  to   50%  owned.
  Investments  in nonoperating companies that  are not intended  for resale or are
  not readily marketable are valued at the  lower of cost or net realizable value.
  Marketable equity securities are  categorized as available for sale.   Effective
  January  1994,  the Company  adopted the  provisions  of Statement  of Financial
  Accounting  Standards No. 115, "Accounting  for Certain Investments  in Debt and
  Equity Securities."
  
  Realized gains and losses on the sale of securities are recognized on a specific
  identification basis.   Unrealized gains and losses are included  as a component
  of shareholders' equity net of related deferred income taxes, unless a permanent
  impairment in value has occurred, which is then charged to operations.  
  
  Restricted investments held at  December 31, 1996 and 1995,  primarily represent
  investments  in  money  market  funds  and  U.S.  Treasury  securities.    These
  investments  are  restricted for  reclamation  funding, as  well  as reclamation
  surety bond and appeal bond collateral requirements.
  
  E.   PROPERTIES, PLANTS AND  EQUIPMENT -- Properties,  plants and equipment  are
  stated at the lower of cost or estimated net 
  
                                         22
  27
  
  realizable  value.  Maintenance, repairs and renewals are charged to operations.
  Betterments of a major nature are capitalized.  When assets are retired or sold,
  the  costs   and  related  allowances  for  depreciation  and  amortization  are
  eliminated from  the accounts and  any resulting  gain or loss  is reflected  in
  operations.   Idle  facilities, placed on  a standby  basis, are  carried at the
  lower of net book value or estimated net realizable value.
  
  Management  of the  Company reviews  the net carrying  value of  all facilities,
  including  idle facilities,  on  a  regular,  periodic  basis.    These  reviews
  consider, among other factors, (1)  the net realizable value of each  major type
  of  asset, on  a  property-by-property basis,  to  reach a  judgment  concerning
  possible permanent  impairment of value and  any need for a  write-down in asset
  value; (2) the ability of the Company  to fund all care, maintenance and standby
  costs; (3) the  status and usage  of the assets,  while in a   standby mode,  to
  thereby  determine whether  some form  of amortization  is appropriate;  and (4)
  current estimates of metal prices that  affect the decision to reopen or  make a
  disposition of  the assets.  The  Company estimates 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 estimates
  of  metal  to be  recovered from  proven and  probable  ore reserves  and, where
  appropriate,  from  the continuity  of  existing, developed  ore  bodies, future
  production  costs and  future metals  prices over  the estimated  remaining mine
  life.    If  undiscounted cash  flows  are less  than  the carrying  value  of a
  property, an impairment  loss is  recognized based upon  the estimated  expected
  future  net  cash  flows  from  the property  discounted  at  an  interest  rate
  commensurate  with the risk  involved.  Effective  January 1,  1995, the Company
  adopted the provisions of  Statement of Financial Accounting Standards  No. 121,
  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
  be Disposed Of" (SFAS  No. 121).  The adoption of the provisions of SFAS No. 121
  had no  material effect on the  results of operations or  financial condition of
  the Company.
  
  Management's estimates  of metals  prices, recoverable  proven and probable  ore
  reserves, and  operating, capital and reclamation costs are subject to risks and
  uncertainties of change affecting the recoverability of the Company's investment
  in various  projects.  Although management  has made its best  estimate of these
  factors  based on  current conditions,  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 its operating properties and the
  need for asset impairment write-downs.
  
  Depreciation  is  based on  the  estimated useful  lives  of the  assets  and is
  computed using straight-line, declining-balance, and 
  
                                         23
  28
  
  unit-of-production methods.  Depletion  is computed using the unit-of-production
  method.
  
  Management's  calculations  of proven  and probable  ore  reserves are  based on
  engineering  and geological  estimates including  minerals prices  and operating
  costs.  Changes in the geological and engineering  interpretation of various ore
  bodies, mineral prices and operating costs may change the Company's estimates of
  proven and probable  reserves.  It  is reasonably possible  that certain of  the
  Company's estimates of proven and probable reserves will change in the near term
  resulting in  a change to amortization  and reclamation accrual rates  in future
  reporting periods.
  
  F.   MINE  EXPLORATION  AND DEVELOPMENT  --  Exploration  costs are  charged  to
  operations  as incurred,  as are  normal development  costs at  operating mines.
  Major  mine development expenditures at  operating properties and  at new mining
  properties not yet producing are capitalized.
  
  G.   RECLAMATION OF MINING AREAS -- All of the Company's operations  are subject
  to reclamation and closure requirements.  Minimum standards for mine reclamation
  have been  established by  various  governmental agencies  which affect  certain
  operations  of the  Company.   A  reserve for  mine reclamation  costs has  been
  established for restoring certain abandoned and currently disturbed mining areas
  based  upon estimates  of cost  to comply  with existing  reclamation standards.
  Mine   reclamation  costs  for  operating  properties   are  accrued  using  the
  unit-of-production  method and  charged  to  cost  of  sales  and  other  direct
  production costs.   The estimated amount  of metals or minerals  to be recovered
  from  a mine  site is  based  on internal  and external  geological data  and is
  reviewed by management on a  periodic basis.  Changes in such  estimated amounts
  which affect reclamation cost accrual rates are reflected on a prospective basis
  unless they indicate there is a  current impairment of an asset's carrying value
  and a decision is made to permanently close the property, in which case they are
  recognized  currently  and  charged  to  provision  for  closed  operations  and
  environmental matters.  It is reasonably possible that the Company's estimate of
  its ultimate accrual for reclamation  costs will change in the near  term due to
  possible  changes  in laws  and  regulations, and  interpretations  thereof, and
  changes in cost estimates.
  
  H.   REMEDIATION  OF MINING AREAS --  The Company accrues  costs associated with
  environmental remediation obligations when  it is probable that such  costs will
  be incurred and  they are reasonably  estimable.  Accruals for  estimated losses
  from  environmental remediation  obligations generally  are recognized  no later
  than completion of the remedial feasibility  study and are charged to  provision
  for closed operations and  environmental matters.  Costs of  future expenditures
  for  environmental remediation are not  discounted to their  present value; such
  costs are based on 
  
                                         24
  29
  
  management's  current estimate of amounts that  are 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.
  
  In October 1996, the  American Institute of Certified Public  Accountants issued
  Statement of Position 96-1,  "Environmental Remediation Liabilities" (SOP 96-1).
  SOP 96-1  provides authoritative  guidance with  respect to specific  accounting
  issues that are present in the recognition, measurement, display, and disclosure
  of  environmental remediation  liabilities.   The  provisions  of SOP  96-1  are
  effective  for  fiscal years  beginning after  December 15,  1996.   The Company
  adopted  the provisions  of  the SOP  96-1 during  1996.   The  adoption of  the
  provisions of SOP  96-1 had no material  effect on the results  of operations or
  financial condition of the Company.
  
  It  is reasonably possible that,  due to uncertainties  associated with defining
  the  nature and extent of  environmental contamination, application  of laws and
  regulations by  regulatory authorities,  and changes in  remediation technology,
  the  ultimate  cost of  remediation could  change in  the  future.   The Company
  periodically  reviews  its accrued  liabilities  for such  remediation  costs as
  evidence  becomes  available  indicating  that  its  remediation  liability  has
  changed.
  
  I.   INCOME TAXES -- The Company records deferred tax liabilities and assets for
  the expected  future income tax consequences of events that have been recognized
  in its financial statements.  Deferred tax liabilities and assets are determined
  based  on the  temporary differences  between the  financial statement  carrying
  amounts  and the tax bases of assets  and liabilities using enacted tax rates in
  effect in the years in which the temporary differences are expected to reverse. 
  
  J.   LOSS  PER  COMMON SHARE  -- Loss  per common  share  is computed  by adding
  preferred  stock  dividends to  the  net loss  and  dividing the  result  by the
  weighted average number of shares of   common stock and common stock equivalents
  (stock options) outstanding during each reporting period unless the common stock
  equivalents are antidilutive.  Due to the losses in 1996, 1995 and 1994,  common
  stock equivalents are  antidilutive and  therefore have been  excluded from  the
  computation.
  
  K.   REVENUE  RECOGNITION -- Sales of  metal products sold  directly to smelters
  are recorded  when title and risk of loss transfer  to the smelter, at estimated
  metal  prices.   Recorded  values  are  adjusted  periodically  and  upon  final
  settlement.   Metal in products  tolled (rather than  sold to smelters)  is sold
  under  contracts for  future delivery;  such sales  are recorded  at contractual
  amounts when products are available to be processed by the smelter or 
  
                                         25
  30
  
  refinery.   Sales  of  industrial minerals  are recognized  as the  minerals are
  delivered.
  
  L.   INTEREST  EXPENSE --  Interest costs  incurred during  the construction  of
  qualifying assets are capitalized as part of the asset cost.
  
  M.   CASH  EQUIVALENTS -- The Company  considers cash equivalents  to consist of
  highly liquid investments with a remaining maturity of three months or less when
  purchased. 
  
  N.   FOREIGN CURRENCY TRANSLATION -- The Company operates in Mexico with its two
  wholly owned  subsidiaries:  Minera Hecla,  S.A. de C.V. (Minera  Hecla) and K-T
  Clay de Mexico  S.A. de C.V. (K-T  Mexico).  The functional  currency for Minera
  Hecla and  K-T Mexico is the  U.S. dollar.  Accordingly,  the Company translates
  the  monetary  assets  and liabilities  of  both  subsidiaries  at the  year-end
  exchange rate  while  nonmonetary  assets  and  liabilities  are  translated  at
  historical  rates.  Income  and expense accounts  are translated  at the average
  exchange  rate for each period.   Translation adjustments  and transaction gains
  and losses are reflected in the net loss for the period.
  
  Prior to  the second quarter of  1995, K-T Mexico's functional  currency was the
  Mexican peso.  During the second quarter of 1995, K-T Mexico commenced invoicing
  its  customers  in U.S.  dollars  instead  of the  Mexican  peso.   This  change
  indicated a change in the functional currency from the Mexican  peso to the U.S.
  dollar.    The  change  in  the  functional  currency  has  been  accounted  for
  prospectively commencing in the second quarter of 1995.  Accumulated translation
  adjustments  from  prior  periods  are  included  as  a  separate  component  of
  shareholders'  equity.  The translated  amounts for nonmonetary  assets prior to
  the change have become the accounting basis for those assets.
  
  O.   RISK  MANAGEMENT CONTRACTS  -- In  the normal  course of its  business, the
  Company  uses  forward  sales commitments  and  commodity  put  and call  option
  contracts to manage its exposure to fluctuations in the prices of certain metals
  which it produces.  Contract  positions are designed to ensure that  the Company
  will receive a  defined minimum price for certain  quantities of its production.
  Gains and losses, and the related  costs paid or premium received, for contracts
  which  hedge the  sales  prices of  commodities  are deferred  and  subsequently
  included  in  income as  part  of the  hedged  transaction.   Revenues  from the
  aforementioned contracts are  recognized at  the time metals  are available  for
  shipment to the refineries.  The Company is exposed to certain losses, generally
  the amount by which the contract price exceeds the spot price of a commodity, in
  the event of nonperformance by the counterparties to these agreements.
  
                                         26
  31
  
  P.   ACCOUNTING FOR STOCK OPTIONS  -- In October 1995, the  Financial Accounting
  Standards Board  issued Statement  of  Financial Accounting  Standards No.  123,
  "Accounting  for Stock-Based  Compensation"  (SFAS  No.  123).    SFAS  No.  123
  establishes  financial  accounting  and   reporting  standards  for  stock-based
  employee compensation  plans.  SFAS No.  123 encourages all entities  to adopt a
  fair  value based  method of  accounting, but  allows an  entity to  continue to
  measure compensation cost  for those plans  using the intrinsic value  method of
  accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
  for Stock Issued to Employees."   The Company adopted the disclosure  provisions
  only of SFAS No. 123 in 1996.
  
  NOTE 2:  INVENTORIES
  
  Inventories consist of the following (in thousands): 
  
                                                   December 31,
                                                ------------------
                                                 1996       1995
                                                -------   --------
      Concentrates, bullion, metals in transit
         and other products                     $ 4,839    $ 2,519
      Industrial minerals products                8,902      8,671
      Materials and supplies                      9,138      9,725
                                                -------   --------
                                                $22,879    $20,915
                                                =======   ========
  
  At December 31, 1996, the Company had forward  sales commitments through January
  31, 1997, for  1,000 ounces of gold  at an average price  of $412 per ounce  and
  spot  deferred contracts for 25,000  ounces of gold at an  average price of $381
  for delivery on January 15, 1997.  The Company has also purchased options to put
  34,440  ounces of gold to counterparties at an  average price of $396 per ounce.
  Concurrently,  the  Company sold  options to  allow  the counterparties  to call
  34,440  ounces of gold from the  Company at an average price  of $461 per ounce.
  There was  no net cost  associated with the  purchase and sale  of these options
  which expire, in tandem, on a  monthly basis through December 31, 1997.   All of
  the aforementioned contracts are designated as hedges at December 31, 1996.  The
  London Final gold price at December 31, 1996 was $369 per ounce.
  
                                         27
  32
  
  NOTE 3:  PROPERTIES, PLANTS AND EQUIPMENT
  
  The major components of properties, plants and equipment are (in thousands):
  
                                                  December 31,
                                               ---------------------
                                                 1996       1995
                                               ---------  ---------
      Mining properties                        $  39,893  $  45,023
      Development costs                           99,659    122,842
      Plants and equipment                       246,091    209,100
      Land                                         6,142      6,501
                                               ---------  ---------
                                                 391,785    383,466
      Less accumulated depreciation,
         depletion and amortization              214,030    206,092
                                               ---------  ---------
      Net carrying value                       $ 177,755  $ 177,374
                                               =========  =========
  
  In the third quarter  of 1996, based  on its periodic reviews  of the status  of
  various mining properties, the Company  determined that certain adjustments were
  appropriate  to  properly  reflect  estimated  net  realizable  values.    These
  adjustments,  totaling $12.9  million, consisted  of write-downs  of properties,
  plants and equipment, inventories and production notes payable for the Company's
  interest in the American  Girl mine ($7.6 million),  and properties, plants  and
  equipment and  inventories for the Company's  interest in the Grouse  Creek mine
  ($5.3 million).  The American Girl write-down was due to lower than expected ore
  reserves  and  lower ore  grade  associated with  the  Oro Cruz  ore  body which
  resulted  in the  operator's decision  to close the  mine effective  November 4,
  1996.  The Grouse Creek write-down was associated with the Company's decision to
  suspend operations  after determining that the  ore contained in the  Grouse ore
  body was not  economical to mine at current metals prices.  Mine operations will
  be suspended late  in the  second quarter  of 1997  once mining  of the  Sunbeam
  deposit is complete.
  
  In  1995, adjustments to the carrying value  of mining properties totaling $97.4
  million  were recorded to write down the  Company's interest in the Grouse Creek
  mine  ($97.0 million) and  for the Company's  interest in  ConSil Corp.'s Silver
  Summit mine ($0.4 million).
  
  In  1994, the major  portion of the  $7.9 million adjustment was  related to the
  $7.2  million write-down of property, plant, equipment and supplies inventory at
  the Republic mine, which  completed operations in February 1995.   Also included
  was a $0.7 million write-down of exploration equipment and other property.
  
  The net carrying values of the major mining  properties of the Company that were
  on a standby or idle basis at December 31, 1996 
  
                                         28
  33
  
  and 1995, were approximately $4.0 million and $7.6 million, respectively.
  
  On September  6, 1996, Hecla  and Santa Fe  Pacific Gold Corporation  (Santa Fe)
  entered  into a  joint venture  agreement with  respect to  the  development and
  operation  of  the Rosebud  project.    Pursuant  to  the agreement,  a  limited
  liability corporation was established with  each party owning a 50% interest  in
  the project.  No gain or  loss was recognized in connection with the  agreement.
  Under the  terms of the agreement,  Hecla will manage the  mining activities and
  Santa Fe will manage mill processing.   Total mine-site capital expenditures  to
  bring  the mine  into production  are expected  to be  approximately $20.0-$25.0
  million, of which $11.1 has been expended through December 31,  1996.  Under the
  terms of  the agreement, Santa  Fe funded the  first $12.5 million  of mine-site
  development and  is also responsible  to fund  costs of road  and mill  facility
  improvements.   Santa Fe also  contributed exploration property  adjacent to the
  Rosebud   property,  and  will  fund  the  first  $1.0  million  in  exploration
  expenditures,  and  two-thirds of  future  exploration  expenditures beyond  the
  initial $1.0 million.
  
  In 1996, Euro-Nevada Mining Corporation Inc. (Euro-Nevada)  exercised its option
  to  purchase an additional 1.5% Net Smelter  Return royalty (NSR) on the Rosebud
  property for  $2.5 million, the proceeds  of which were retained  by Hecla under
  the  terms of the  agreement with Santa Fe.   After the  exercise of its option,
  Euro-Nevada holds a 4% NSR on production from the Rosebud property.  The Company
  recognized a gain of $2.5 million associated with this transaction.
  
  In 1996, the Company and Santa Fe entered into a joint-venture agreement for the
  Golden Eagle property located adjacent to the Company's Republic mine.  Santa Fe
  purchased an immediate 75%  interest in the joint venture for $2.5 million.  The
  Company recorded a  gain on the  transaction totaling $0.6  million.  Under  the
  agreement, Santa  Fe is  to fund  all expenditures at  the property  through the
  economic feasibility stage.
  
  On September  27, 1995, the Company  sold its Apex Unit  processing facility for
  $8.0 million, plus  certain working  capital items totaling  an additional  $1.4
  million, recognizing a  gain on  the sale totaling  approximately $3.2  million.
  The  Company received  $4.4  million in  cash  at closing  and  accepted a  note
  receivable for the remaining $5.0  million.  Under the note, $3.0  million, plus
  accrued  interest, was  paid  on September 27,  1996, and  the  balance of  $2.0
  million, plus accrued interest, is due on September 27, 1997.
  
  On  February 8, 1994, the Company  sold a 20% interest in  its Grouse Creek gold
  project to  Great Lakes Minerals  Inc. of Toronto,  Ontario (Great Lakes).   The
  purchase price of $6.8 million represents 20% of the amount spent by the Company
  on  acquisition, exploration  and development  of the  project through  June 30,
  1993, and a fixed 
  
                                         29
  34
  
  premium of  $1.25 million.   On January  31, 1997,  Great Lakes and  the Company
  entered into a  letter agreement terminating the Grouse  Creek Joint Venture and
  conveying Great  Lakes' interest in  the Grouse Creek  project to Hecla.   Great
  Lakes retained a 5%  defined net proceeds interest in the project.   The Company
  has assumed 100% of the interests and obligations associated with the property.
  
  NOTE 4:  INCOME TAXES
  
  Major  components  of  the Company's  income  tax  provision  (benefit) are  (in
  thousands):
  
                                         1996       1995    1994
                                        ------     ------   ------
  Current
      Federal                           $(749)    $ (298)   $ (805)
      State                               341        307       337
      Foreign                           1,085        300       - -
                                        -----     ------    ------
  Income tax provision (benefit)        $ 677     $  309    $ (468)
                                        =====     ======    ======
  
  Domestic  and  foreign  components of  income  (loss)  before  income taxes  and
  extraordinary item  for the years ended December 31,  1996, 1995 and 1994 are as
  follows (in thousands):
  
                                         December 31,
                               ----------------------------------
                                 1996        1995         1994
                               --------    ----------    --------
     Domestic                  $(36,468)    $(104,050)   $(23,698)
     Foreign                      4,791         2,640        (550)
                               --------     ---------    --------
        Total                  $(31,677)    $(101,410)   $(24,248)
                               ========     =========    ========
  
                                         30
  35
  
  The components of the net deferred tax liability were as follows (in thousands):
  
                                                   December 31,
                                            -------------------------
                                               1996           1995
                                             --------       ---------
     Deferred tax assets
        Accrued reclamation costs            $ 17,988       $  10,832
        Investment valuation differences        1,924           1,969
        Capital loss carryover                  2,826           3,431
        Postretirement benefits other
          than pensions                           967             898
        Other liabilities                          13             230
        Deferred compensation                     795             612
        Accounts receivable                       456             456
        Properties, plants and equipment          - -          10,969
        Foreign net operating losses            3,048           2,314
        Federal net operating losses           72,686          57,398
        State net operating losses              7,514           4,867
        Tax credit carryforwards                2,659           3,435
        Miscellaneous                           2,518           2,103
                                             --------       ---------
        Total deferred tax assets             113,394          99,514
        Valuation allowance                  (107,937)        (97,705)
                                             --------       ---------
          Net deferred tax assets               5,457           1,809
                                             --------       ---------
     Deferred tax liabilities
        Properties, plants and equipment       (3,903)            - -
        Deferred income                          (210)           (287)
        Pension costs                            (951)           (624)
        Inventories                              (393)           (898)
        Deferred state income taxes, net         (359)           (359)
                                             --------       ---------
        Total deferred tax liabilities         (5,816)         (2,168)
                                             --------       ---------
     Net deferred tax liability              $   (359)      $    (359)
                                             ========       =========
  
                                         31
  36
  
  The  Company has recorded a valuation  allowance to reflect the estimated amount
  of  deferred  tax assets  which  may  not be  realized  principally  due to  the
  expiration of net operating losses and tax credit carryforwards.  The changes in
  the valuation  allowance for the years  ended December 31, 1996,  1995 and 1994,
  are as follows (in thousands): 
  
                                      1996        1995        1994
                                    ---------   ---------   ---------
  Balance at beginning of year     $ (97,705)   $(67,149)   $(58,529)
  Increase related to nonutilization
   of net operating loss carry-
   forwards and nonrecognition
   of deferred tax assets due to
   uncertainty of recovery           (10,232)    (30,556)     (8,620)
                                   ----------   --------    --------
  Balance at end of year           $(107,937)   $(97,705)   $(67,149)
                                   =========    ========    ========
  
  The annual tax provision (benefit)  is different from the amount which  would be
  provided  by applying  the statutory  federal income  tax rate to  the Company's
  pretax loss. The reasons for the difference are (in thousands):
  1996                   1995                   1994
                                 --------------------   -------------------    -------------------
  Computed "statutory"
       benefit                    $ (10,770)     (34)%  $ (34,479)     (34)%   $  (8,244)     (34)%
    Nonutilization of net
       operating losses and
       effect of foreign tax
       provisions, if applicable     11,716       37       34,782       34         8,085       33
    State income taxes, net 
       of federal tax benefit          (269)      (1)           6        0          (309)      (1)
                                  ---------     ----    ---------     ----     ---------     ----
                                  $     677        2%   $     309        0%    $    (468)      (2)%
                                  =========     ====    =========     ====     =========     ====
  32
  37
  
  Substantially  all of the Company's net operating loss carryovers are attributed
  to  preference  related  items,  and  therefore  are  not  available  to  offset
  alternative  minimum  taxable income.   However,  they  are available  to offset
  future  regular taxable income.  At December 31, 1996, the Company had tax basis
  net operating loss carryovers available to offset future regular and alternative
  minimum  (AMT) and foreign  taxable income.  These  carryovers expire as follows
  (in thousands):
  
               Regular                     Foreign
               Tax Net       AMT Net         Net      Investment
              Operating     Operating     Operating   Tax Credit
               Losses        Losses        Losses     Carryovers
             -----------   ----------    -----------  -----------
      1997     $ 2,020      $   695        $   - -       $  117
      1998      11,005          308            235          468
      1999       6,235        1,199          7,923          310
      2000       3,089          789            810          240
      2001       4,538        1,683            - -          115
      2002       2,717          346            - -          - -
      2003       1,792          623            - -          - -
      2004      16,406          532            - -          - -
      2005      10,744          878            - -          - -
      2006      23,766        3,105            - -          - -
      2007      27,134        8,285            - -          - -
      2008      28,179       21,827            - -          - -
      2009      11,670        5,274            - -          - -
      2010      19,087       14,743            - -          - -
      2011      45,400       44,000            - -          - -
            ----------   ----------     ----------     --------
            $  213,782   $  104,287     $    8,968     $  1,250
            ==========   ==========     ==========     ========
  
  At December 31,  1996, for income  tax purposes,  the Company had  approximately
  $17.9 million and $8.5 million, respectively, of regular and alternative minimum
  tax net operating loss carryovers from Equinox Resources Ltd. (Equinox) and CoCa
  Mines  Inc.  Due  to these mergers, there  will be limitations  on the amount of
  these net  operating losses that  can be  utilized in any  given year to  reduce
  certain future taxable income. 
  
  The Company has  approximately $0.5  million in alternative  minimum tax  credit
  carryovers eligible to reduce future regular tax liabilities.
  
                                         33
  38
  
  NOTE 5:   LONG-TERM DEBT AND CREDIT AGREEMENT
  
  Long-term debt consists of the following (in thousands):
  
                                            December 31,
                                       ----------------------
                                          1996         1995
                                       ---------    ---------
  Revolving credit agreement           $  38,000    $  35,000
  Notes payable - Sunbeam                    346          692
  Production notes payable                   - -          609
  Other long-term debt                       208          149
                                       ---------    ---------
                                          38,554       36,450
       Less current portion                 (346)        (346)
                                       ---------    ---------
                                       $  38,208    $  36,104
                                       =========    =========
  
  Revolving Credit Agreement
  
  The Company has  a revolving and  term loan facility  (the Bank Agreement)  that
  allows it to borrow up to $55.0 million.  Amounts may be borrowed on a revolving
  credit  basis  through  July 31, 1998,  and  are  repayable  in eight  quarterly
  installments  beginning on October 31, 1998.   During the commitment period, the
  Company  pays an  annual facility  fee ranging  from $178,750  to $261,250,  the
  amount of which is based  on average quarterly borrowings.  The  Bank Agreement,
  as amended, includes  certain collateral provisions,  including the pledging  of
  the  common stock  of certain  of the Company's  subsidiaries and  providing the
  lenders a  security interest in accounts receivable.  Under the amended terms of
  the  Bank Agreement,  the  Company is  required  to maintain  certain  financial
  ratios, and meet certain net worth  and indebtedness tests for which the Company
  was  in compliance at  December 31, 1996.   Amounts available  under the amended
  Bank Agreement are based  on a defined debt to  cash flow test.  As  of December
  31, 1996, the Company had  borrowings of $38.0 million and the ability to borrow
  the  remaining  $17.0  million under  the  facility.    The  interest  rate  for
  borrowings under the Bank Agreement as of December 31, 1996 was 7.16%.
  
  Zero Coupon Convertible Notes
  
  On June 13, 1994, the Company redeemed its Zero  Coupon Convertible Notes with a
  face   value  of  approximately  $50.2   million.    The   Company  recorded  an
  extraordinary  loss on retirement of  long-term debt totaling approximately $0.8
  million, which related principally  to the write-off of the  unamortized balance
  of deferred issuance costs of the notes.
  
                                         34
  39
  
  Notes Payable - Sunbeam
  
  The  notes are  non-interest bearing,  discounted at  15%  and payable  in three
  annual  equal  amounts.   The  first  two  installments of  the  notes, totaling
  approximately $346,000  each, were paid in  January 1995 and January  1996.  The
  final installment was paid in January 1997.
  
  Production Notes Payable
  
  When the Company acquired Equinox in March 1994, the then outstanding production
  participating preferred  shares were converted to production  notes and recorded
  as long-term debt. The attributes of the production notes are identical to their
  predecessor production  participating preferred  shares.   The valuation  of the
  production  notes is based on the present  value of the estimated cumulative net
  cash flow discounted at 10% from  the American Girl/Oro Cruz project. Based upon
  the repayment  terms of the production  notes and the shutdown  of operations at
  the American Girl  mine in November  1996, prior to  the mine reaching  positive
  cumulative cash flow, the Company does not  expect to pay the notes.  Therefore,
  the notes were written off in 1996.
  
  NOTE 6:   COMMITMENTS AND CONTINGENCIES
  
  Commitments
  
  The  Company  leases  various   facilities  and  equipment  under  noncancelable
  operating lease arrangements.  The major facilities and equipment leases are for
  terms  of  three to  ten  years.   Future  minimum  lease  payments under  these
  noncancelable operating  leases  as of  December 31,  1996, are  as follows  (in
  thousands):
  
       Year ending December 31,
       ------------------------
       1997                                   $  4,381
       1998                                      2,123
       1999                                      1,832
       2000                                      1,118
       2001                                        562
       Thereafter                                  312
                                              --------
       Total minimum lease payments           $ 10,328
                                              ========
  
  Approximately  $1.6  million  of the  above  minimum  lease  payments relate  to
  equipment used at the Company's Grouse Creek mine which was written down in 1996
  and  1995  (see Note  4).   In  1996,  the Company  announced  plans  to suspend
  operations at the Grouse Creek mine once the Sunbeam ore reserves are mined and 
  
                                         35
  40
  
  processed.   The lease obligations  for 1997  have been accrued  and charged  to
  operations in 1996.  The Company anticipates making arrangements such that there
  will be no material additional  lease obligations in connection with  the Grouse
  Creek mine beyond  1997.  However,  there can be  no assurance that  the Company
  will be successful in making such arrangements.
  
  Rent expense  incurred for operating leases during  the years ended December 31,
  1996,  1995 and  1994  was approximately  $4.2  million, $3.8  million  and $2.2
  million, respectively.
  
  Contingencies
  
  Bunker Hill
  
  In October  1989, and again in  February 1990, the  Company was notified  by the
  Environmental  Protection Agency  (EPA) that  the EPA  considered the  Company a
  potentially responsible party (PRP) at the Bunker Hill Superfund Site located at
  Kellogg, Idaho  (Bunker Hill  Site).   In February 1994,  the Company  and three
  other mining companies, as PRPs, entered into a Consent Decree with  EPA and the
  State of Idaho  pursuant to which  the Company  and two of  the three  companies
  signing the  decree agreed  to implement  remediation work at  a portion  of the
  Bunker  Hill  Site.   The  remediation has  primarily involved  the  removal and
  replacement  of lead-contaminated soils in residential yards within the site and
  is estimated  to be  completed by the  participating mining  companies over  the
  period of the next  four to six years.  The Consent Decree also provides for the
  mining  companies to reimburse EPA for a  portion of the government's past costs
  incurred at  the Bunker Hill Site.  The Consent  Decree was approved and entered
  by the Federal District Court in Idaho on November 17, 1994.  The Consent Decree
  settles the Company's response-cost liability under Superfund at the Bunker Hill
  Site.  Based  upon the terms of the Consent Decree  and an agreement between the
  participating mining companies relating to the  allocation of the cost for  work
  under the  Consent Decree,  the Company  has estimated  and established  a total
  allowance for liability  for remedial activity costs at the  Bunker Hill Site of
  $9.4 million as of December 31, 1996.   As with any estimate of this nature,  it
  is reasonably possible that  the Company's recorded estimate of  this obligation
  may change in the near term.
  
  Coeur d'Alene River Basin Natural Resource Damage Claims
  
  - Coeur d'Alene Tribe Claims
  
  In July  1991, the  Coeur d'Alene  Indian Tribe (the  Tribe) brought  a lawsuit,
  under the Comprehensive Environmental Response Liability Act of 1980, as amended
  (CERCLA), in  Idaho Federal District Court  against the Company and  a number of
  other mining
  
                                         36
  41
  
  companies asserting claims for damages to natural resources 
  located  downstream from the Bunker Hill Site  over which the Tribe alleges some
  ownership or  control.  The Company  has answered the  Tribe's complaint denying
  liability for  natural resource damages.   In  July 1992, in  a separate  action
  between  the Tribe  and the  State of  Idaho, the  Idaho Federal  District Court
  determined that  the Tribe  does  not own  the beds,  banks and  waters of  Lake
  Coeur d'Alene and  the lower portion of its  tributaries, the ownership of which
  is  the primary  basis for the  natural resource  damage claims  asserted by the
  Tribe against the Company.  Based upon the Tribe's appeal of this decision,  the
  Court in the natural resource damage  litigation stayed the court proceedings in
  the natural resource  damage litigation until  a final decision  is made on  the
  question of the Tribe's ownership.   On December 9, 1994, the 9th  Circuit Court
  reversed the  decision of the Idaho Federal District Court and remanded the case
  of the Tribe's ownership for trial before the Idaho Federal District Court.   In
  April 1996,  the U.S.  Supreme Court  accepted the appeal  from the  9th Circuit
  Court decision to the U.S. Supreme Court.  A decision in the case is expected by
  approximately  June 1997.  In  July 1994, the United States,  as Trustee for the
  Coeur d'Alene Tribe, initiated a  separate suit in Idaho Federal  District Court
  seeking a  determination  that the  Coeur d'Alene Tribe  owns approximately  the
  lower  one-third  of Lake  Coeur d'Alene.    The State  has  denied the  Tribe's
  ownership of any portion of Lake Coeur d'Alene  and its tributaries.  In October
  1996, the legal proceeding related to the Tribe's natural resource damage claims
  was  consolidated  with the  United States  Natural Resources  Damage litigation
  described below.
  
  - U.S. Government Claims
  
  On  March 22, 1996, the United States  filed a lawsuit in Idaho Federal District
  Court  against the  Company and  other mining  companies who  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
  (the  Basin) in northern Idaho  over which the  United States asserts  to be the
  trustee under CERCLA.  The lawsuit asserts 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 the
  Company 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.  The Company answered the complaint  on May 17, 1996, denying liability to
  the  United  States under  CERCLA  and  the  Clean  Water  Act  and  asserted  a
  counterclaim against the United States for  the federal government's involvement
  in mining  activity in the Basin  which contributed to the  releases and damages
  alleged by the United States.  The Company believes it 
  
                                         37
  42
  
  also has a number of defenses to the United States' claims.  In 
  October  1996, the Court consolidated  the Coeur d'Alene  Tribe Natural Resource
  Damage litigation with  this lawsuit  for discovery and  other limited  pretrial
  purposes.
  
  - State of Idaho Claims
  
  On March  22, 1996, the Company  entered into an agreement  (the Agreement) with
  the State  of Idaho  pursuant to  which the Company  agreed to  continue certain
  financial  contributions  to  environmental  cleanup  work  in the  Basin  being
  undertaken by a  State Trustees group.   In return, the State agreed  not to sue
  the Company for damage to natural resources for which the State is a trustee for
  a period  of five years,  to pursue settlement with  the Company of  the State's
  natural resource damage claims and to grant the Company credit  against any such
  State claims for  all expenditures  made under the  Agreement and certain  other
  Company contributions and expenditures for environmental cleanup in the Basin.  
  
  With  respect to  the Basin litigation,  the Company  increased its  accrual for
  closed  operations and environmental  matters by  approximately $2.7  million in
  1996.  At December 31, 1996, the  Company's accrual for remediation activity  in
  the Basin  totals $2.2 million.   These expenditures are anticipated  to be made
  over  the  next four  years.   Depending on  the  results of  the aforementioned
  lawsuits,  it  is  reasonably  possible  that  the  Company's  estimate  of  its
  obligation may change in the near term.
  
  In  1991, the Company initiated litigation in  the Idaho State District Court in
  Kootenai County, Idaho, against  a number of insurance companies  which provided
  comprehensive  general  liability  insurance  coverage to  the  Company  and its
  predecessors.  The Company believes that the insurance companies have  a duty to
  defend and  indemnify the  Company under  their  policies of  insurance for  all
  liabilities  and claims asserted  against the Company  by the EPA  and the Tribe
  under CERCLA  related to the Bunker Hill  Site and Coeur d'Alene  River Basin in
  northern Idaho.   In 1992, the Court ruled that  the primary insurance companies
  had a duty to  defend the Company in the Tribe's lawsuit.  During 1995 and 1996,
  the Company entered into  settlement agreements with  a number of the  insurance
  carriers  named  in  the litigation.    The  Company  has  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 Site Consent Decree.  Litigation
  is still  pending against one insurer with  trial continued until the underlying
  environmental claims against the Company are resolved or settled.  The remaining
  insurer  is  providing   the  Company  with  a  partial  defense  in  all  Basin
  environmental litigation.  As of 
  
                                         38
  43
  
  December 31, 1996, the Company had not reduced its accrual for 
  reclamation  and closure  costs  to  reflect  the  receipt  of  any  anticipated
  insurance proceeds.
  
  Star Phoenix
  
  In June 1994,  a judgment was  entered against  the Company in  the Idaho  State
  District Court in the amount of $10.0 million in compensatory  damages and $10.0
  million in punitive damages  based on a jury verdict  rendered in late May  1994
  with respect to a lawsuit  previously filed against the Company by  Star Phoenix
  Mining Company (Star Phoenix), a former lessee of the Star  Morning mine, over a
  dispute between the Company  and Star Phoenix concerning the  Company's November
  1990 termination  of the Star Phoenix  lease of the Star  Morning mine property.
  On May  3, 1995,  the District Court  issued its  final opinion  and order on  a
  number of  post-trial issues pending  before the Court.   The opinion  and order
  included the  Court's denial of the post-trial motions filed by Star Phoenix and
  certain of its principals  regarding claims which had been  previously dismissed
  by the  Court during trial.   The Court also awarded  Star Phoenix approximately
  $300,000 in attorneys' fees and costs.  The judgement was appealed  to the Idaho
  State  Supreme Court  which heard  arguments in  April 1996  and is  expected to
  render  its opinion  in the  near future.   Post-judgment  interest will  accrue
  during  the appeal period.   In  order to  stay the ability  of Star  Phoenix to
  collect  on the  judgment during  the pendency  of the  appeal, the  Company has
  posted  an appeal bond in the  amount of $27.2 million  representing 136% of the
  District  Court judgment.  The Company pledged U.S. Treasury securities totaling
  $10.0  million as  collateral for the  appeal bond.   This  collateral amount is
  included in restricted investments at December  31, 1996, and December 31, 1995.
  The Company has vigorously  pursued its appeal to the Idaho Supreme Court and it
  has  been  the Company's  position,  and  at the  current  time  it remains  the
  Company's position, that  it will not enter into a  settlement with Star Phoenix
  for any  material amount.   Although the ultimate outcome  of the appeal  of the
  Idaho District  Court judgment is subject  to the inherent uncertainties  of any
  legal proceeding, based  upon the Company's  analysis of  the factual and  legal
  issues associated with the proceeding before the Idaho District  Court and based
  on the opinions of  outside counsel, as of the  date hereof, it is  management's
  belief that the Company should ultimately prevail in this matter, although there
  can  be no assurance in this  regard.  Accordingly, the  Company has not accrued
  any liability associated with this litigation.
  
  The Company is subject to  other legal proceedings and claims which  have arisen
  in the  ordinary course of its  business and have not  been finally adjudicated.
  Although  there can  be no  assurance as  to the  ultimate disposition  of these
  matters and the proceedings disclosed above, it is the opinion of the 
  
                                         39
  44
  
  Company's management, based upon the information available at 
  this time,  that the expected outcome  of these matters, individually  or in the
  aggregate, will not have a material  adverse effect on the results of operations
  and financial condition of the Company.
  
  NOTE 7:   EMPLOYEE BENEFIT PLANS
  
  The Company and certain subsidiaries have defined benefit pension plans covering
  substantially all employees.   One  plan covering eligible  salaried and  hourly
  employees  provides  retirement  benefits  and   is  based  on  the   employee's
  compensation  during  the  highest 36  months  of  the  last  120 months  before
  retirement.    Three  other pension  plans  covering  eligible  hourly employees
  provide  benefits of  stated  amounts for  each  year  of service.    It is  the
  Company's  policy to  make contributions to  these plans sufficient  to meet the
  minimum  funding requirements  of  applicable laws  and  regulations, plus  such
  additional  amounts,  if  any, as  the  Company  and  its actuarial  consultants
  consider  appropriate.   Contributions  are intended  to  provide not  only  for
  benefits attributed to service to date, but also for those expected to be earned
  in  the  future.   Plan assets  for these  plans  consist principally  of equity
  securities, insurance contracts and corporate and U.S. government obligations.
  
  Net periodic pension cost (income)  for the plans consisted of the  following in
  1996, 1995 and 1994 (in thousands): 
  
                                       1996       1995      1994
                                      -------    ------    -------
  Service cost                        $   881    $  778    $   938
  Interest cost                         2,196     2,021      1,938
  Return on plan assets                (3,499)   (2,607)    (2,737)
  Amortization of transition asset       (419)     (434)      (434)
  Amortization of unrecognized
    prior service cost                     91        70         70
  Amortization of unrecognized net
    gain from earlier periods             (60)      (12)        (4)
                                      -------    ------    -------
      Net pension income              $  (810)   $ (184)   $  (229)
                                      =======    ======    =======
  
                                         40
  45
  The  following table  sets forth  the  funded status  of the  plans and  amounts
  recognized in the Company's consolidated balance sheets (in thousands): 
  
                                                   December 31,
                                             -------------------------
                                               1996             1995
                                             --------         --------
  Actuarial present value of
    benefit obligations:
    Vested benefits                          $ 29,917         $ 30,203
    Nonvested benefits                            321              155
                                             --------         --------
  Accumulated benefit obligations              30,238           30,358
  Effect of projected future salary
    and wage increases                          1,842            2,014
                                             --------         --------
  Projected benefit obligations              $ 32,080         $ 32,372
                                             ========         ========
  Plan assets                                $ 44,984         $ 39,881
  Projected benefit obligations               (32,080)         (32,372)
                                             --------         --------
  Plan assets in excess of projected
    benefit obligations                        12,904            7,509
  Unrecognized net gain                        (9,260)          (3,976)
  Unrecognized prior service cost               1,378              932
  Unrecognized net asset
    at January 1                               (2,213)          (2,647)
                                             ---------        --------
  Pension asset recognized in
    consolidated balance sheets              $  2,809         $  1,818
                                             ========         ========
  
  The projected benefit obligation was calculated by applying the following rates:
  
                                                  1996       1995
                                                 ------      -----
  Discount rate                                    7.50%     7.00%
  Long-term compensation increase                  4.00%     4.00%
  Long-term rate of return on
    plan assets                                    9.00%     8.00%
  
  The Company  provides certain  postretirement benefits, principally  health care
  and  life insurance  benefits for  qualifying retired  employees.  The  costs of
  these benefits are being funded  out of general corporate funds and  are accrued
  over the period in which active employees  provide services to the Company.  Net
  periodic  postretirement  benefit cost  included  the  following components  (in
  thousands):
  
                                         1996        1995        1994
                                        -------     -------    --------
  Service cost                           $   16      $   13      $   24
  Interest cost                             145         154         141
  Amortization of gain                      (24)        (18)        (13)
                                         ------       -----      ------
  Net postretirement benefit cost        $  137      $  149      $  152
                                         ======      ======      ======
                                                 41
  46
  
  The  following  table  sets forth  the  status  of  the postretirement  benefits
  programs  (other  than  pensions)  and  amounts  recognized  in  the   Company's
  consolidated balance sheets (in thousands):
  
                                               December 31,
                                          --------------------
                                            1996         1995
                                          --------    --------
  Accumulated postretirement
  benefit obligations: 
    Retirees                              $  1,236    $  1,353
    Fully eligible, active plan
      participants                             441         400
    Other active plan participants             234         310
                                          --------    --------
                                             1,911       2,063
  Unrecognized net gain                        571         374
                                          --------    --------
  Accumulated postretirement
    benefit obligations recognized
    in consolidated balance sheets        $  2,482    $  2,437
                                          ========    ========
  
  The  actuarial  assumptions  used   in  determining  the  Company's  accumulated
  postretirement benefit obligation are provided  in the table below.  Due  to the
  short period which the  Company provides medical benefits  to its retirees,  the
  increases in medical  costs are assumed to be  6% in each year.  A  1% change in
  the  assumed health care cost trend rate  would not have a significant impact on
  the accumulated postretirement  benefit obligation or  the aggregate of  service
  and interest costs for 1996 or 1995.
  
                                          1996     1995
                                         -------  -------
  Discount rate                           7.50%   7.00%
  Trend rate for medical benefits         6.00%   6.00%
  
  The Company has a nonqualified deferred compensation plan which permits eligible
  officers, directors and key employees to  defer a portion of their compensation.
  The deferred  compensation, which  together with  Company  matching amounts  and
  accumulated interest is accrued  and partially funded, is distributable  in cash
  after  retirement or  termination of  employment, and at  December 31,  1996 and
  1995, amounted  to approximately $2.3  million and  $1.8 million,  respectively.
  The  Company amended the Deferred  Compensation Plan effective  January 1, 1995.
  The amended plan allows the participants to defer up to a maximum of 50% of base
  salary and up to 100% of annual  bonuses.  The participant may elect to  receive
  such  deferred amounts,  together with  interest at  the Moody's  Corporate Bond
  Yield rate, in one payment  at retirement, or on any plan  anniversary after the
  completion of three years, as elected.  
  
                                         42
  47
  
  The Company  has an employees'  Capital Accumulation Plan which  is available to
  all salaried  and certain  hourly employees after  completion of  six months  of
  service.  Employees may contribute from  2% to 15% of their compensation  to the
  plan.   The  Company makes  a  matching contribution  of  25% of  an  employee's
  contribution   up  to,  but  not  exceeding,  5%  of  the  employee's  earnings.
  Commencing in  1997,  the Company's  matching  contribution will  be 25%  of  an
  employee's contribution up to, but not exceeding, 6% of the employee's earnings.
  The Company's contribution was approximately $190,000 in 1996, $173,000 in 1995,
  and $170,000 in 1994.
  
  NOTE 8:  SHAREHOLDERS' EQUITY
  
  Preferred Stock
  
  The Company has 2.3  million shares of Series B Cumulative Convertible Preferred
  Stock (the Preferred  Shares) outstanding.  Holders of the  Preferred Shares are
  entitled to  receive cumulative cash dividends  at the annual rate  of $3.50 per
  share payable quarterly, when and if declared by the Board of Directors.
  
  The  Preferred Shares are convertible, in whole or in part, at the option of the
  holders thereof, into  shares of common stock at an  initial conversion price of
  $15.55 per share  of common stock.  The Preferred Shares  were not redeemable by
  the Company prior  to July 1, 1996.  After such  date, the shares are redeemable
  at the  option of the  Company at any  time, in whole  or in part,  initially at
  $52.45 per  share and thereafter at  prices declining ratably on each  July 1 to
  $50 per share on or after July 1, 2003.
  
  Holders of  the Preferred Shares  have no  voting rights except  if the  Company
  fails to pay the equivalent of six quarterly dividends.   If these dividends are
  not  paid, the holders of Preferred Shares, voting as a class, shall be entitled
  to elect  two additional directors.   The holders of Preferred  Shares also have
  voting  rights  related  to certain  amendments  to  the  Company's Articles  of
  Incorporation.
  
  The Preferred Shares rank senior to the common stock and  any outstanding shares
  of  Series A  Preferred  Shares.    The  Preferred  Shares  have  a  liquidation
  preference  of  $50  per share  plus  all  declared and  unpaid  dividends which
  aggregate $117,012,000 at December 31, 1996.
  
  Shareholder Rights Plan
  
  In 1996,  the Company adopted a  new Shareholder Rights Plan  replacing the 1986
  Shareholder Rights  Plan which had expired.   Pursuant to this  plan, holders of
  common stock received one 
  
                                         43
  48
  
  preferred share  purchase right for each common share held.   The rights will be
  triggered once an Acquiring Person, as defined in the plan, acquires 15% or more
  of the Company's outstanding common shares.  The 15% triggering threshold may be
  reduced by the Board  of Directors to not less than 10%.   When exercisable, the
  right   would,  subject   to  certain   adjustments  and   alterations,  entitle
  rightholders, other than the Acquiring Person or group, to purchase common stock
  of the  Company or the acquiring company having a  market value of twice the $50
  exercise price of the right.   The rights are nonvoting, may be redeemed  at any
  time at a  price of  one cent per  right, and  expire in May  2006.   Additional
  details are  set forth in  the Rights  Agreement filed with  the Securities  and
  Exchange Commission on May 10, 1996.
  
  Stock Option Plans
  
  At  December 31, 1996, executives, key employees  and directors had been granted
  options to purchase common shares under stock option plans described below.  The
  Company  has  adopted  the  disclosure-only provisions  of  SFAS  No.  123.   No
  compensation expense has been recognized in 1996 or 1995 for unexercised options
  related to  the stock option  plans.   Had compensation cost  for the  Company's
  stock option plans been determined based on the fair value at the grant date for
  awards in 1996  and 1995  consistent with the  provisions of SFAS  No. 123,  the
  Company's loss and per  share loss applicable to common shareholders  would have
  been increased  to the pro  forma amounts indicated below  (in thousands, except
  per share amounts):
  
                                      1996          1995
                                   ----------    ----------
  Loss applicable to common 
     shareholders:
        As reported                  $ 40,404     $109,769
        Pro forma                    $ 41,261     $109,826
  
  Loss applicable to common 
     shareholders per share:
        As reported                  $   0.79     $   2.28
        Pro forma                    $   0.81     $   2.28
  
  The fair value of each option grant is estimated  on the date of grant using the
  Black-Scholes   option-pricing  model   with   the  following   weighted-average
  assumptions:
  
     Expected dividend yield            0.00%
     Expected stock price volatility   42.65%
     Risk-free interest rate:           5.63%
     Expected life of options           4.1 years
  
  The  weighted average grant-date fair value of  options granted in 1996 and 1995
  was $3.40 and $4.17, respectively.
  
                                         44
  49
  
  The Company adopted a nonstatutory stock option plan in 1987.  The plan provides
  that options  may be granted to  certain officers and key  employees to purchase
  common stock  at a price of  not less than 50%  of the fair market  value at the
  date  of grant.   The  plan also  provides that  options may  be granted  with a
  corresponding number of stock  appreciation rights and/or tax offset  bonuses to
  assist  the optionee  in paying  the income  tax liability  that may  exist upon
  exercise of the  options.  All of  the outstanding stock options under  the 1987
  plan  were granted at  an exercise price equal  to the fair  market value at the
  date of grant and with an associated tax offset bonus.  In 1995,  15,000 options
  under the  1987 plan were granted.  Outstanding  options under the 1987 plan are
  immediately exercisable for  periods up  to ten  years.   At December 31,  1996,
  there were 53,748 shares available for grant in the future under  the plan.  The
  plan expires on February 13, 1997.
  
  In  1995, the  Company  adopted the  new  Hecla Mining  Company  Stock Plan  for
  Nonemployee   Directors  (the  Directors'  Stock  Plan),  which  is  subject  to
  termination by the Board of Directors at any time.  Each nonemployee director is
  credited with 1,000 shares of the common stock of the Company on May 30  of each
  year.   Nonemployee directors joining the Board of Directors after May 30 of any
  year are credited with a pro-rata number of shares based upon the date they join
  the  Board.   All credited  shares are  held in  trust for  the benefit  of each
  director until delivered to the Director.  Delivery of the shares from the trust
  occurs  upon the  earliest of  (1) death  or disability;  (2) retirement;  (3) a
  cessation of  the director's service  for any other  reason; or (4) a  change in
  control of the Company.  Subject to certain restrictions, directors may elect to
  receive delivery of  shares on  such date or  in annual installments  thereafter
  over  5, 10 or  15 years.   The shares of  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.   The maximum number of shares
  of  common stock which may  be granted pursuant to the  Directors' Stock Plan is
  120,000.   During 1996  and 1995,  7,000 and  6,539  shares, respectively,  were
  credited to the nonemployee directors.  At December 31, 1996, there were 106,461
  shares available for grant in the future under the plan.
  
  In 1995, the shareholders of the Company approved the 1995  Stock Incentive Plan
  which provides for a variety of stock-based grants to the Company's officers and
  key  employees.   The  plan  provides  for the  grant  of  stock options,  stock
  appreciation rights, restricted stock and performance units to eligible officers
  and key employees of the Company.   Stock options under the plan are required to
  be granted at 100% of the  market value of the stock  on the date of the  grant.
  There were  no options to acquire  shares granted in  1995 under the  1995 plan.
  The terms of such options shall be no longer than ten years from the date 
  
                                         45
  50
  
  of grant.   During 1996, 278,000 options to  acquire shares were granted  to the
  Company's officers  and  key employees  of  which 215,000  of  these options  to
  acquire  shares have vesting  requirements of 20%  on the grant date  and 20% on
  each of the next four anniversary dates from the grant date.  During 1996, 1,500
  options to acquire  shares expired under the  1995 plan.  At  December 31, 1996,
  there were 1,723,500 options to acquire shares available for grant in the future
  under the plan.
  
  Transactions concerning stock  options pursuant  to all of  the above  described
  plans are summarized as follows: 
  
                                                                  Weighted Average
                                                   Shares           Exercise Price
                                                  --------          --------------
           Outstanding, December 31, 1993          301,660               $10.39
  
           Year ended December 31, 1994
                   Granted                         120,000               $ 9.63
                   Exercised                       (61,037)              $ 8.69
                   Expired                         (13,123)              $11.23
                                                   -------
           Outstanding, December 31, 1994          347,500               $10.35
  
           Year ended December 31, 1995
                   Granted                          15,000               $ 9.38
                   Exercised                       (12,500)              $ 9.81
                   Expired                         (33,508)              $ 8.62
                                                   -------
           Outstanding, December 31, 1995          316,492               $10.51
                                                   -------
           Year ended December 31, 1996
                   Granted                         278,000               $ 8.28
                   Exercised                           - -                  - -
                   Expired                         (48,500)              $10.57
                                                   -------
           Outstanding, December 31, 1996          545,992               $ 9.37
                                                   =======
  
  The following table  presents information  about the options  outstanding as  of
  December 31, 1996.
  Exercisable options                  221,915      $ 6.75 - $ 9.63            $ 8.85             8.2
      Exercisable options                  152,077      $10.38 - $12.25            $11.26             2.9
                                          --------
      Total exercisable options            373,992      $ 6.75 - $12.25            $ 9.84             6.0
  
      Unexercisable options                172,000      $ 6.75 - $ 8.63            $ 8.37             9.2
                                          --------
          Total all options                545,992      $ 6.75 - $12.25            $ 9.37             7.1
                                          ========
  The aggregate  amounts charged (credited) to operations in connection with the 
  plans  were $0, $(21,000) and $(23,000) in 1996, 1995 and 1994, respectively.
  
                                          46
  51
  
  As a result of the acquisition of Equinox Resources Ltd. (Equinox) in  1994, the
  outstanding options under the  Equinox stock option plan became  exercisable for
  Hecla common shares.  Transactions concerning the Equinox options, giving effect
  to the common share exchange ratio, are as follows:
  
                                                      Exercise
                                     Shares             Price
                                 ------------    ---------------------
  Outstanding, December 31, 1993     252,300     $ 3.78 - $19.56
  
  Year ended December 31, 1994
       Exercised                    (251,400)    $ 3.45 - $17.82
                                 -----------
  Outstanding, December 31, 1994         900              $17.82
  
  Year ended December 31, 1995
       Expired                          (900)             $17.82
                                 -----------
  Outstanding, December 31, 1995         - -                 - -
                                 ===========
  
  1996 Common Stock Offering
  
  On January  23, 1996, 2,875,000 shares  of the Company's common  stock were sold
  under the  Company's  existing Registration  Statement  which provides  for  the
  issuance  of up  to $100.0  million  of equity  and  debt securities.   The  net
  proceeds  from the offering of approximately $22.0 million were used principally
  to reduce the outstanding borrowings under the Company's bank credit agreement.
  
                                         47
  52
  
  NOTE 9:  BUSINESS SEGMENTS (IN THOUSANDS)
  1996              1995               1994
                                                                 ------------       -----------        -----------
  Net sales to unaffiliated customers
     Metals (including $32,034, $27,729 
         and $18,493 from Mexican operations
         in 1996, 1995 and 1994)                                 $     81,409       $    79,810        $    60,828
     Industrial minerals (including $4,204,
         $2,664 and $2,885 in Mexico in 1996,
         1995 and 1994)                                                76,843            67,391             60,229
     Specialty metals                                                     - -             4,414              4,285
                                                                 ------------       -----------        -----------
                                                                 $    158,252       $   151,615        $   125,342
                                                                 ============       ===========        ===========
  Income (loss) from operations
     Metals (including $7,734, $6,396
         and $2,307 from Mexican operations 
         in 1996, 1995 and 1994)                                 $    (38,711)      $  (109,449)       $   (24,658)
     Industrial minerals (including $92,
         $(341) and $(810) in Mexico in 1996,
         1995 and 1994)                                                 9,083             6,690              6,872
     Specialty metals                                                     - -               255                  3
     General corporate                                                 (9,703)           (9,738)           (11,656)
                                                                 ------------       -----------        -----------
                                                                 $    (39,331)      $  (112,242)       $   (29,439)
                                                                 ============       ===========        ===========
  Capital expenditures
     Metals (including $411, $2,319 and 
         $466 in Mexico in 1996, 1995 
         and 1994)                                               $     30,388       $    32,838        $    62,002
     Industrial minerals (including
         $93, $183 and $1,352 in Mexico
         in 1996, 1995 and 1994)                                        3,075            11,811              3,615
     Specialty metals                                                     - -                81                453
     General corporate assets                                             268               578                489
                                                                 ------------       -----------        -----------
                                                                 $     33,731       $    45,308        $    66,559
                                                                 ============       ===========        ===========
  Depreciation, depletion and amortization
     Metals                                                      $     15,728       $    18,859        $     9,699
     Industrial minerals                                                4,723             4,580              4,501
     Specialty metals                                                     - -                23                 33
     General corporate assets                                             338               367                524
                                                                 ------------       -----------        -----------
                                                                 $     20,789       $    23,829        $    14,757
                                                                 ============       ===========        ===========
  Identifiable assets
     Metals (including $7,268, $15,702 
         and $19,241 in Mexico in 1996,
         1995 and 1994)                                          $    155,082       $   144,246        $   179,258
     Industrial minerals (including
         $3,513, $4,888 and $6,192 in 
         Mexico in 1996, 1995 and 1994)                                70,613            71,163             59,502
     Specialty metals                                                     - -               - -              6,288
     General corporate assets                                          34,520            35,998             36,507
     Idle facilities                                                    8,178             6,783             53,027
                                                                 ------------       ------------       -----------
                                                                 $    268,393       $   258,190        $   334,582
                                                                 ============       ===========        ===========
  48
  53
  
  Net sales  and identifiable assets of  each segment are those  that are directly
  identified with those operations.  General corporate assets consist primarily of
  cash,  receivables, investments and corporate property, plant and equipment.  As
  a result of  depressed metals  prices, operations were  suspended at the  Greens
  Creek mine in April 1993, and the property was placed  on a care-and-maintenance
  basis pending resumption  of operations.   At December 31,  1994, the  Company's
  recorded net  book value of  identifiable assets  at the Greens  Creek mine  was
  approximately  $50.3 million.  This amount was classified in the idle facilities
  category at December 31, 1994.  On May 17, 1995, the Company announced plans for
  redevelopment  of the Greens Creek  mine and at December  31, 1996 and 1995, the
  recorded  net book  value of identifiable  assets at  the Greens  Creek mine was
  classified in the metals category.  The Greens Creek mine recommenced operations
  in July 1996 and full production levels were achieved in January 1997.
  
  NOTE 10:  FAIR VALUE OF FINANCIAL INSTRUMENTS
  
  The  following estimated fair value amounts have been determined using available
  market   information  and   appropriate  valuation   methodologies.     However,
  considerable  judgment is required to  interpret market data  and to develop the
  estimates of fair  value.  Accordingly, the  estimates presented herein  are not
  necessarily indicative  of the amounts  the Company  could realize in  a current
  market exchange.
  
  The following  methods and assumptions were  used to estimate the  fair value of
  each class of financial instruments for which it is practicable to estimate that
  value.    Potential  income tax  ramifications  related  to  the realization  of
  unrealized  gains  and losses  that  would  be incurred  in  an  actual sale  or
  settlement have not been taken into consideration.
  
  The  carrying  amounts  for  cash  and  cash  equivalents,  accounts  and  notes
  receivable,  restricted investments  and  current liabilities  are a  reasonable
  estimate of  their fair values.   Fair  value for equity  securities investments
  available  for sale is determined  by quoted market  prices.  The  fair value of
  long-term debt is based on the discounted value  of contractual cash flows.  The
  discount  rate is  estimated using  the  rates currently  offered for  debt with
  similar remaining maturities.
  
                                         49
  54
  
  The   estimated  fair  values  of  financial  instruments  are  as  follows  (in
  thousands):
  December 31,
                                     -------------------------------------------------
                                              1996                     1995
                                     -----------------------     ---------------------
                                      Carrying       Fair        Carrying       Fair
                                      Amounts        Value        Amounts       Value
                                     ----------     --------     --------     --------
  Financial assets
    Cash and cash equivalents        $    8,256     $  8,256     $  4,024     $  4,024
    Accounts and notes receivable        24,168       24,168       25,571       25,571
    Investments
      Equity securities available
         for sale                           165          165          455          455
      Restricted                         20,674       20,674       16,254       16,254
    Gold spot deferred contracts            - -          299          - -          - -
    Gold forward sales contracts            - -           43          - -          228
    Gold put options                        - -          772          - -          436
  Financial liabilities
    Current liabilities                  32,712       32,712       25,965       25,965
    Long-term debt - principal           38,208       38,208       36,104       35,563
    Gold call options                       - -            2          - -          134
  50
  55
  
                                                                      Exhibit 23.1
  
                                                  
                                   Commission File No. 1-8491
  
                         CONSENT OF INDEPENDENT ACCOUNTANTS
  
  We consent to  the incorporation by reference in  the registration statements of
  Hecla Mining  Company and subsidiaries on  Forms S-3 (File No.  33-72832 and No.
  33-59659) and Forms  S-8 (File  No. 33-7833, 33-41833,  33-14758, 33-40691,  33-
  60095  and  33-60099) of  our report,  which  includes an  explanatory paragraph
  concerning changes  in accounting  for environmental remediation  liabilities in
  1996, impairment of long-lived assets in 1995, and accounting for investments in
  1994,  dated February  7,  1997, on  our  audits of  the  consolidated financial
  statements of Hecla Mining Company and subsidiaries as of December  31, 1996 and
  1995, and for the years  ended December 31, 1996, 1995 and 1994, which report is
  included in this Form 8-K.
  
  /s/ Coopers & Lybrand L.L.P.
  
  Spokane, Washington
  February 18, 1997