DIA PROJECT

Hecla and its wholly owned subsidiary Hecla Merger Company entered into an asset purchase agreement with Independence. The Independence Acquisition is currently expected to close in the summer of 2008, and is subject to customary closing conditions, necessary regulatory approvals and affirmative vote by Independence shareholders. If the Independence acquisition is consummated, among the terms of the Asset Purchase Agreement is that all litigation between us and Independence will be dismissed, and we will acquire all of Independence’s right, title and interest to the DIA properties and the related agreements between us and Independence.

Mining of the area continued despite the disagreements between the parties. During 2004, some 164,624 tons were mined and milled (by Hecla) assaying 13.17 oz. silver per ton, 7.78% lead, and 2.36% zinc. For the year 2004 the project lost $3,000,605. 3,000,605. The DIA Project total cost at December 31, 2004 was $36,353,259. Independence Lead Mines considered that the DIA Project was not viable to undertake with the mining method chosen and the existing economic conditions, and did not justify the start-up of a large mining operation on the Lessor's property. During 2003 Hecla mined and milled 151,991 tons containing 15.76 oz. silver per ton, 9.05% lead, and 2.18% zinc. For the year 2003 the project lost $723,147. For the year 2002, the project lost an additional $1,369,439. The DIA project total costs at the end of first quarter 2003 were $32,674,780. None of the projects exploration and development costs have been recovered. During 2002 Hecla mined and milled 159,651 tons containing 13 oz. Silver per ton, 7.45% lead, and 2.14% zinc.

The company still continued to experience substantial differences with Hecla regarding the DIA project. The company alleged that based on the DIA project records, Hecla's management engaged in a massive pretence, representing the project as one with economic viability by declaring "Proven and Probable Reserves". In fact, the company said, with the mining method chosen along with the deficiencies of the mill, and the actual economic condition, the record clearly shows there never were any Proven and Probable Reserves. Hecla's management chose to engage in "Fraudulent Pretence of Viability", resulting in the removal and waste of approximately 1,200,000 tons of mineralized material from Independence's mining claims.