SUNSHINE MINING & REFINING CO, S-3/A, 1998-01-15

SUNSHINE MINING & REFINING CO
S-3/A, 1998-01-15
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

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<PAGE> 1

As filed with the Securities and Exchange Commission on January 15, 1998
Registration No. 333-41641
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

--------------------------

SUNSHINE MINING AND REFINING COMPANY
(Exact name of registrant as specified in its charter)

DELAWARE 75-2618333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

877 W. MAIN STREET, SUITE 600
BOISE, IDAHO 83702
(208) 345-0660
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

--------------------------

JOHN S. SIMKO, CHIEF EXECUTIVE OFFICER
877 W. MAIN STREET, SUITE 600
BOISE, IDAHO 83702
(208) 345-0660
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

--------------------------

COPY TO:
JANICE V. SHARRY
HAYNES AND BOONE, LLP
3100 NATIONSBANK PLAZA
901 MAIN STREET
DALLAS, TEXAS 75202-3789
(214) 651-5000

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION DATED JANUARY 15, 1998

PROSPECTUS

______________________________

SUNSHINE MINING AND REFINING COMPANY

UP TO 25,000,000 SHARES OF COMMON STOCK

______________________________

This Prospectus relates to the reoffer and resale by certain selling
stockholders named herein (the "Selling Stockholders") of up to an aggregate of
25,000,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of Sunshine Mining and Refining Company, a Delaware corporation
(the "Company"), which are issuable (i) upon the conversion and pursuant to
certain payment terms of the Company's currently outstanding $15,000,000 Senior
Convertible Notes (the "Notes") and (ii) upon the exercise of certain warrants
to purchase Common Stock (the "Warrants"). This Prospectus does not purport to
cover the initial issuance by the Company of the Notes, Warrants or shares of
Common Stock to be issued (i) upon conversion and pursuant to certain payment
terms of the Notes or (ii) upon exercise of the Warrants, but only the reoffer
and resale of the Shares by the Selling Stockholders.

The Shares being registered represent a current estimate of the number
of Shares subject to issuance from time to time by the Company pursuant to the
terms of the Notes and Warrants. No assurance can be given that all such
Shares will be issued because the issuance of a portion of the Shares is
subject to, among other factors, the Company's determination to make interest
and mandatory prepayments on the Notes in Shares rather than cash and the then
current bid price of the Shares.

The Shares offered hereby have been approved for listing on the New
York Stock Exchange ("NYSE"). The Company's Common Stock is traded on the NYSE
under the symbol "SSC." On January 14, 1998, the reported closing sale price of
the Company's Common Stock was $1 per share.

SEE "RISK FACTORS" WHICH BEGINS ON PAGE 2 FOR CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

______________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus is January ___, 1998

<PAGE> 3
RISK FACTORS

Investors should carefully consider the following matters in
connection with an investment in the securities in addition to the other
information contained or incorporated by reference in this Prospectus.
Information contained or incorporated by reference in this Prospectus contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, which can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The following matters constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
differ materially from those in such forward-looking statements. Reference
should be made to (i) the Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, and the Amendment to that Annual Report filed on Form 10-K/A
on October 16, 1997 (collectively, the "Annual Report"), (ii) the Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997,
each as amended by Amendments on Form 10-Q/A to the identified Quarterly
Reports filed on October 16, 1997, and the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 (collectively, the "Quarterly Reports"),
(iii) the Prospectus/Proxy Statement on Form S-4 for the Special Meeting of
Stockholders of the Company held on March 29, 1996 (the "Prospectus/Proxy
Statement"), (iv) the Post-Effective Amendment No. 4 on Form S-3 to Form S-4
dated November 12, 1997, (v) the Proxy Statement for the Annual Meeting of
Stockholders of the Company held on June 10, 1997, and (vi) all financial
statements and notes thereto contained in the foregoing (all of which are
incorporated herein by reference) for a more detailed discussion of the
following matters.

OPERATING LOSSES

Substantially all of the Company's revenues are derived from the sale
of silver mined from its Sunshine Mine near Kellogg, Idaho. Accordingly, the
Company's earnings are directly related to the price of silver. Silver prices
have been depressed since 1985, and as a result the Company has experienced
losses from operations for each of the last ten years. The Company reported
net losses of $25.9 million, $15.5 million, and $4.9 million in each of 1996,
1995 and 1994, respectively. The Company expects to fund its losses for fiscal
1997 from the Company's cash and cash equivalents and silver bullion held for
investment. On a pro forma basis after giving effect to the sale of the Notes,
at September 30, 1997, Sunshine's cash and silver bullion held for investment
totaled approximately $25.7 million.

The operating losses and cash flow deficiencies of the Company are
expected to continue until silver prices recover substantially or the Company's
exploration efforts at the Sunshine Mine or its other properties are successful
in developing significant additional production. Absent the foregoing, the
Company may eventually be required to further curtail operations or cease its
mining activities at the Sunshine Mine altogether. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business and Properties" and the Consolidated Financial Statements (including
the Notes thereto) of the Company appearing in the Annual Report and Quarterly
Reports.

VOLATILITY OF SILVER PRICES

The Company's earnings are directly related to the price of silver,
and the value of the Common Stock has historically moved in correlation with
movements in silver prices. Silver prices are subject to fluctuation and are
affected by numerous factors beyond the control of the Company, which alone or
in combination may cause the price of silver to rise or fall. These factors
include, among others, expectations for inflation, speculative activities,
levels of silver production and demand for silver as a component of
manufactured goods. The following table sets forth for the periods

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indicated the high, low and average closing spot prices per ounce of silver on
the Commodity Exchange, Inc. ("COMEX") and also translates the average price as
stated into constant 1996 dollars.

<TABLE>
<CAPTION>
CONSTANT
NOMINAL DOLLARS 1996 DOLLARS
--------------------------------------- ------------
YEAR HIGH LOW AVERAGE AVERAGE
- ------------------------------------------ ------ ----- ------- ------------
<S> <C> <C> <C> <C>
1983 . . . . . . . . . . . . . . . . . . $14.74 $8.38 $11.46 $17.05
1984 . . . . . . . . . . . . . . . . . . 10.17 6.25 8.15 11.39
1985 . . . . . . . . . . . . . . . . . . 6.89 5.48 6.14 8.19

1986 . . . . . . . . . . . . . . . . . . 6.32 4.85 5.49 7.13
1987 . . . . . . . . . . . . . . . . . . 11.25 5.35 6.99 8.85

1988 . . . . . . . . . . . . . . . . . . 8.06 6.01 6.53 7.91
1989 . . . . . . . . . . . . . . . . . . 6.20 5.02 5.47 6.28
1990 . . . . . . . . . . . . . . . . . . 5.35 3.94 4.82 5.16

1991 . . . . . . . . . . . . . . . . . . 4.55 3.51 4.03 4.11
1992 . . . . . . . . . . . . . . . . . . 4.32 3.63 3.94 3.88
1993 . . . . . . . . . . . . . . . . . . 5.44 3.52 4.31 4.18

1994 . . . . . . . . . . . . . . . . . . 5.78 4.61 5.28 5.01
1995 . . . . . . . . . . . . . . . . . . 6.10 4.38 5.20 4.76
1996 . . . . . . . . . . . . . . . . . . 5.84 4.71 5.21 5.21
</TABLE>

On January 12, 1998, the closing price of spot silver as reported on
the COMEX was $5.44 per ounce. In constant 1996 dollars, the average spot
silver price from 1990 through 1996 has been approximately $4.62.

DEPENDENCE ON EXPLORATION SUCCESS

Substantially all of the Company's revenues are derived from the
Sunshine Mine which at current silver prices is not profitable. Therefore, the
future earnings of the Company are presently dependent on the success of
exploration at the Sunshine Mine and at the Company's other exploration
projects. No assurance can be given that the Company's exploration program
will prove successful. See "Business and Properties - Operations --
Exploration Activities at the Sunshine Mine" included in the Annual Report.

IMPRECISION OF RESERVE ESTIMATES

The ore reserve estimates presented in the Annual Report and Quarterly
Reports are estimates made by the Company's geologic personnel, and no assurance
can be given that the indicated quantity of in situ silver will be realized. No
independent consultants have been retained by the Company to review and verify
such estimates. Reserve estimates are expressions of judgment based largely on
data from diamond drill holes and underground openings, such as drifts or raises
which expose the mineralization on 1, 2 or 3 sides, sampling and similar
examinations. Reserve estimates may change

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as ore bodies are mined and additional data is derived. The Company's
estimates of proven and probable reserves for the Sunshine Mine are as of
January 1, 1997.

MINING RISKS AND INSURANCE

The Company's operations may be affected by risks and hazards
generally associated with the mining industry, including fires, cave-ins, rock
bursts, flooding, industrial accidents, mechanical or electrical failures, and
unusual or unexpected rock formations. Such risks could result in damage to,
or destruction of, mineral properties or producing facilities, personal injury,
environmental damage, delays in mining, monetary losses and possible legal
liability. Although the Company maintains insurance at levels consistent with
its historical experience and industry practice, no assurance can be given that
such insurance will continue to be available at economically feasible premiums.
Insurance for environmental risks (including potential for pollution or other
hazards as a result of the disposal of waste products occurring from
production) is not generally available to the Company or to other companies
within the industry.

GOVERNMENT REGULATION

The Company's activities are subject to extensive federal, state, and
local laws and regulations controlling not only the mining of and exploration
for mineral properties, but also the possible effects of such activities upon
the environment. Except as described under "Legal Proceedings - Environmental
Matters" included in the Annual Report and under "Legal Proceedings" included
in the Quarterly Reports, the Company is not aware of any material violations
of environmental laws, regulations, permits or licenses issued with respect to
the Company's operations. Future legislation and regulations could cause
additional expense, capital expenditures, restrictions and delays in the
mining, production or development of the Company's properties, the extent of
which cannot be predicted.

RISKS INHERENT IN FOREIGN OPERATIONS

The Company presently conducts international operations and
anticipates that it will continue to conduct significant international
operations in the future. Foreign properties, operations or investments may be
adversely affected by local, political and economic developments, exchange
controls, currency fluctuations, royalty and tax increases, retroactive tax
claims, renegotiation of contracts with governmental entities, expropriation,
import and export regulations and other foreign laws or policies governed by
operations of foreign-based companies, as well as by laws of policies of the
United States affecting foreign trade, taxation and investment. In addition,
as certain of the Company's operations are governed by foreign laws, in the
event of a dispute, the Company may be subject to the exclusive jurisdiction of
foreign courts or may not be successful in subjecting foreign persons to the
jurisdiction of courts in the United States. The Company may also be hindered
or prevented from enforcing the rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity.

DILUTION; EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE

As of December 31, 1997, there were 255.1 million shares of Common
Stock outstanding (excluding 4.7 million treasury shares). The Company has
previously registered with the Commission an aggregate of approximately 54.9
million shares of Common Stock for resale by certain stockholders of the
Company, including (i) approximately 30 million shares estimated to be issuable
upon conversion of outstanding Eurobonds at a current conversion price of $1.00
per share; (ii) approximately 7.3 million shares issuable upon exercise of
outstanding warrants at a current exercise price of $1.38 per share; (iii)
approximately 10.1 million shares issuable upon exercise of outstanding warrants
at a current exercise price of $2.12 per share; (iv) approximately 2.1 million
shares issuable upon exercise of outstanding warrants at a current exercise
price of $2.875 per share; (v) approximately 900,000 shares issuable upon
conversion of outstanding convertible notes at a current conversion price of
$1.66 per share; and (vii) approximately 4.5 million shares issuable upon
exercise of outstanding options at an average exercise price of approximately
$1.50 per share. In addition, the Company has reserved a significant number of
shares of Common Stock for future issuance pursuant to the exercise of
outstanding warrants and options. There can be no assurance that the sale of
shares of Common Stock previously registered or to be registered for resale or
the issuance of the shares of

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Common Stock which have been reserved for future issuance will not have a
material adverse effect on the then prevailing market price of the Common
Stock. Furthermore, issuance of the shares of Common Stock would result in
significant dilution to the stockholders of the Company.

THE COMPANY

The Company is one of the world's leading silver producers. The
Company owns the Sunshine Mine in the Coeur d'Alene Mining District near
Kellogg, Idaho and the Pirquitas Mine in northwest Argentina. The Sunshine
Mine, in operation for over 100 years, has produced more silver than any other
primary silver producing mine in North America. Preliminary pre-feasibility
studies at Pirquitas have already resulted in the classification as proven and
probable reserves of 66.9 million ounces of silver.

The Company is a Delaware corporation. The Company's principal
executive office and mailing address are 877 W. Main Street, Suite 600, Boise,
Idaho 83702 and its telephone number is (208) 345-0660.

RECENT DEVELOPMENTS

ISSUANCE OF NOTES

On November 24, 1997, the Company completed a private placement of the
Notes and Warrants to Stonehill Partners, L.P., GRS Partners, Aurora Limited
Partnership and Stonehill Offshore Partners (collectively, the "Investors"). The
Notes and Warrants were purchased pursuant to a purchase agreement dated as of
November 24, 1997, and in connection with the sale of such Notes and Warrants,
the Company granted registration rights covering the Shares to the Investors
pursuant to a registration rights agreement (the "Registration Rights
Agreement") dated as of November 24, 1997, between the Company and the
Investors. In January 1998, Stonehill Institutional Partners, L.P. purchased the
Notes and Warrants (including the registration rights related thereto) held by
GRS Partners and Aurora Limited Partnership.

The Notes rank senior to all subordinated obligations of the Company
and are convertible into shares of Common Stock. The initial conversion price
of the Notes is $0.95, subject to reset and adjustment as set forth in the
terms of the Notes. In addition, the Company may, at its option, make interest
payments, mandatory prepayments and certain other payments in respect of the
Notes in shares of Common Stock. Interest on the Notes accrues at an initial
rate of 10% per annum (subject to adjustment) and is payable semi-annually.
The Notes are guaranteed by Sunshine Argentina, Inc. and Sunshine Exploration,
Inc., subsidiaries of the Company, and may be guaranteed by Sunshine Precious
Metals, Inc. ("SPMI"), also a subsidiary of the Company, upon the retirement
or refinancing of SPMI's 8% Senior Exchangeable Notes due 2000. The Notes
amortize in twelve equal quarterly installments commencing February 24, 2000
and mature on November 24, 2002.

Warrants to purchase an aggregate of 1,500,000 shares of Common Stock
were also issued to the Investors on November 24, 1997. The Warrants are
exercisable beginning on the first date on which none of the Notes remain
outstanding until November 24, 2002 (subject to extension as set forth in the
Warrants). The exercise price of the Warrants is equal to 110% of the lowest
conversion price last in effect under the Notes. The number of shares of
Common Stock issuable upon exercise of the Warrants is subject to adjustment
based on certain anti-dilution provisions set forth in the Notes and Warrants.

The Notes and the Warrants are subject to limitation on transfer which
prohibit any transfer of the Notes or Warrants which would result in there
being more that 10 holders of the Notes or Warrants, respectively. In
addition, both the Notes and Warrants limit the number of shares of Common
Stock which may be issued in respect of the Notes and Warrants. Such shares
(which

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constitute the Shares offered hereby) may not exceed the maximum number (the
"Maximum Number") of shares of Common Stock that can be issued without
obtaining stockholder approval under the rules of the NYSE. In the event an
issuance of shares of Common Stock under the terms of the Notes or Warrants
would exceed the Maximum Number, the Company is required to make a cash payment
in lieu thereof.

The Company believes the sale of the Notes gives the Company more than
sufficient liquidity to carry out the additional test work required to bring
the Pirquitas Mine through its final feasibility studies and to do a
significant amount of drilling at the La Joya del Sol in southern Argentina and
at its other properties. The Company anticipates that additional capital may
also be subsequently required to finance its contemplated exploration and
development program. Although no assurance can be given that the additional
financing will be available, the Company believes that advances in the status
of its properties in Argentina and the major improvements to date at the
Sunshine Mine, along with the prospects of silver prices improving
significantly in the next year, will allow the Company access the capital
markets on significantly better terms next year. Although there can be no
assurance in this regard.

NEW MINING TECHNIQUES

The Company has been implementing mechanized cut and fill mining over
the last two years as development of the West Change area of the Sunshine Mine
has proceeded. The Company also expects to use the methodology in the
development of future undeveloped areas in the mine, and in the extraction of a
portion of the reserves in the mine not contained in the West Chance. The
benefits of the method are two-fold. There can be a reduction in direct mining
costs from the method if the ore body has characteristics to allow the benefits
of the method to be fully implemented. This would normally mean that the ore
body has sufficient continuity and strike length to allow the crew and equipment
to access multiple headings in each shift.

However, the biggest benefit of the method is the ability to rapidly
develop an ore body and put it into production, as has been demonstrated in the
West Chance area. Using the Company's traditional development methodology
would likely have required an additional one to two years to bring the ore body
into full production. Full production itself provides the biggest cost benefit
to the mine versus its recent history as fixed costs, which represented 40-50%
of total costs in 1996, are spread over a larger base of production.

USE OF PROCEEDS

The Company will not receive any proceeds from the resale of the
Shares.

The Company may, in the future, receive proceeds from the exercise of
the Warrants, but only if and to the extent the Warrants are exercised.
Management cannot predict the amount of proceeds, if any, that may be generated
from the exercise of the Warrants. The net proceeds that may be realized by
the Company upon exercise of the Warrants will not be utilized for any specific
purpose other than to contribute to the Company's working capital and to
continue the operations of the Company in accordance with the business strategy
identified by management. In addition, the Company may have its indebtedness
reduced as a result of conversion of the Notes, but only if the Notes are
converted and then only in an amount equal to the outstanding principal amount
of such Notes converted. Based upon the current outstanding principal amount
of such Notes and assuming that all such Notes are converted, the aggregate
reduction in the Company's indebtedness (on a consolidated basis) would be
approximately $15.0 million. The Company incurred such indebtedness in order to
fund the Company's exploration and development program at the Pirquitas Mine in
northwest Argentina, its evaluation program at the Joya del Sol in southern
Argentina, as well as exploration on its numerous properties.

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<PAGE> 8
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 600
million shares of Common Stock, par value $.01 per share, of which 255.1
million shares were outstanding (excluding 4.7 million treasury shares) at
December 31, 1997 and were held of record by approximately 30,000 holders, and
(ii) 20 million shares of Preferred Stock, $1.00 par value, issuable in one or
more series, with such dividend rates, liquidation preferences, redemption,
conversion and voting rights and such further designations, powers,
preferences, rights, limitations and restrictions as may be fixed and
determined by the Board of Directors of the Company, all without a vote of the
Company's stockholders. No shares of Preferred Stock are outstanding. The
Company's outstanding capital stock is fully paid and nonassessable and none of
the authorized capital stock is entitled to preemptive rights.

The Company also has outstanding warrants to purchase Common Stock
which are all currently exercisable, except for the Warrants which are
exercisable when the Notes are no longer outstanding.

For a summarized description of recent transactions which have
affected the capital stock of the Company, see the Prospectus/Proxy Statement,
the Consolidated Statements of Stockholders Equity contained in the
Consolidated Financial Statements appearing in the Annual Report and the
November 12 Post-Effective Amendment No. 4 on Form S-3.

COMMON STOCK

Subject to the rights of holders of any outstanding shares of
Preferred Stock, holders of shares of the Common Stock are entitled to share
equally in dividends from sources legally available when, as and if declared by
the Board of Directors. The Company's payment of cash dividends on its shares
of capital stock is restricted.

Each stockholder is entitled to one vote for each share of Common
Stock held by such holder. Because stockholders are not entitled to cumulate
their votes, stockholders holding a majority of the outstanding Common Stock,
and any shares of voting preferred stock which may be issued, are able to elect
all members of the Board of Directors of the Company. Holders of Common Stock
have no preemptive rights, and shares of Common Stock have no redemption,
sinking fund or conversion privileges.

In the event of any liquidation, dissolution or winding up of the
affairs of the Company, subject to the rights of holders of any Preferred
Stock, the holders of Common Stock are entitled to receive pro rata any assets
of the Company after the satisfaction of corporate liabilities.

Article Five of the Certificate of Incorporation of the Company
requires the affirmative vote or consent of the holders of (i) a majority of
the Company's shares entitled to vote thereon and (ii) a majority of any series
or class of Preferred Stock entitled to vote as a class thereon, in order to
approve any business combination, including any merger, consolidation, or the
sale, lease, exchange or other disposition of all or substantially all of the
Company's assets (including a disposition in connection with the dissolution or
winding up or liquidation of the Company). Article Five may not be amended,
altered, changed or repealed without the prior affirmative vote or consent of
the holders of (i) 66 2/3% of all shares of stock entitled to vote thereon and
(ii) 66 2/3% of any series or class of preferred stock upon which the right to
vote as a class thereon has been conferred by the resolution or resolutions
adopted by the Company's Board of Directors providing for the issue of such
series or class of preferred stock. Such provisions may have the effect of
delaying, deterring or preventing a change of control of the Company.

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The Company currently does not pay cash dividends on its shares of
Common Stock and has not paid cash dividends on its shares of Common Stock
since the third quarter of 1981. Any future declaration of dividends will be
at the discretion of the Board of Directors of the Company, which will
consider, among other factors, current and projected earnings and the liquidity
position of the Company. The Company does not expect any resumption of
dividends in the foreseeable future.

The payment of cash dividends by the Company is subject to certain
restrictions. Certain of the Company's debt securities impose restrictions on
the Company's ability to declare or pay cash dividends and make certain
distributions on its capital stock. Pursuant to the most restrictive of these
provisions, at December 31, 1996, no funds were available for cash dividends on
shares of the Company's capital stock, including its Common Stock.

Meetings of the Stockholders. The By-Laws of the Company provide that
the stockholders shall have annual meetings, at such date and time designated
by the Board of Directors, and special meetings, called by the Chairman of the
Board, the President or by the Board of Directors or by written order of a
majority of the directors. The stockholders must be given written notice of
each such meeting of stockholders. In the case of special meetings, the
purpose or purposes for which the meeting is called shall be given to each
stockholder entitled to vote, not less than ten nor more than sixty days before
the meeting. In order to determine the stockholders entitled to notice of or
to vote at any meeting of stockholders, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting. The Company shall prepare and make, at
least ten days before every meeting of the stockholders, a complete list of the
stockholders entitled to vote at the meeting. Such list shall be open to the
examination of any stockholder for a period of ten days prior to the meeting.

The holders of a majority of the shares of capital stock issued and
outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum at any meeting of stockholders. When a quorum is
present at any meeting of the stockholders, the vote of the holders of a
majority of the shares of capital stock entitled to vote, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which a different vote is required by law, the
Certificate of Incorporation or the By-Laws.

Limitation of Liability. As permitted by the Delaware General
Corporation Law (the "DGCL"), the Company's Certificate of Incorporation
provides that directors of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of a fiduciary duty
as a director, including gross negligence, except to the extent such exemption
from liability is not permitted by the DGCL. This includes liability for (i)
any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (iii) any transaction
from which the director derived any improper personal benefit or (iv) any act
or omission where the liability of the director is expressly provided by the
statute.

As a result of this provision, the Company and its stockholders may be
unable to obtain monetary damages from a director for breach of the duty of
care. Although stockholders may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, stockholders may
not have an effective remedy against the challenged conduct if equitable
remedies are unavailable.

In addition, the Company's Certificate of Incorporation and By-Laws
provide certain rights of indemnification for all officers and directors.

The Delaware Business Combination Act. The Company is subject to the
provisions of Section 203 of the DGCL. Section 203 prohibits a publicly held
Delaware corporation from engaging

- 8 -
<PAGE> 10
in a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes mergers, asset sales and
certain other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, as defined therein, owns,
or within three years did own, 15% or more of the corporation's voting stock.
This statute contains provisions enabling a corporation to avoid the statute's
restrictions if the stockholders holding a majority of the shares of the
corporation's voting stock approve an amendment to the corporation's
certificate of incorporation or bylaws. The Company does not intend to "elect
out" of this statute.

Miscellaneous. The Common Stock is listed on the NYSE. American
Stock Transfer & Trust Company is the transfer agent and registrar for the
Common Stock.

PREFERRED STOCK

The Board of Directors is authorized, subject to any limitations
prescribed by Delaware law, to provide for the issuance of Preferred Stock in
one or more series, to establish from time to time the number of shares to be
included in each such series, to fix the rights, preferences and privileges of
the shares of each wholly unissued series and any qualifications, limitations
or restrictions therein, and to increase or decrease the number of shares of
any such series (but not below the number of shares of such series then
outstanding), without any further vote or action by the stockholders. The
Board of Directors may authorize the issuance of Preferred Stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of Common Stock. Thus, the issuance of Preferred Stock may have
the effect of delaying, deferring or preventing a change in control of the
Company. The Company has no current plan to issue any shares of Preferred
Stock.

PLAN OF DISTRIBUTION

The Company will not receive any of the proceeds of the sale of the
Shares offered hereby. The Shares may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Selling Stockholders
may from time to time offer the Shares through brokers, dealers or agents who
may receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the Shares for whom they
may act as agent. The Selling Stockholders and any such brokers, dealers or
agents who participate in the distribution of the Shares may be deemed to be
"underwriters", and any profits on the sale of the Shares by them and any
discounts, commissions or concessions received by any such brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act.

The Shares offered hereby may be sold from time to time by the Selling
Stockholders, or, to the extent permitted, by pledgees, donees, transferees or
other successors in interest. The Shares may be disposed of from time to time
in one or more transactions through any one or more of the following: (i) the
purchasers directly, (ii) in ordinary brokerage transactions and transactions
in which the broker solicits purchasers, (iii) through underwriters or dealers
who may receive compensation in the form of underwriting discounts,
concessions, or commissions from the Selling Stockholders or such successors in
interest and/or from the purchasers of the Shares for whom they may act as
agent, (iv) the writing of options on the Shares, (v) the pledge of the Shares
as security for any loan or obligation, including pledges to brokers or dealers
who may, from time to time, themselves effect distributions of the Shares or
interests therein, (vi) purchases by a broker or dealer as principal and resale
by such

- 9 -
<PAGE> 11

broker or dealer for its own account, (vii) a block trade in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction and
(viii) an exchange distribution in accordance with the rules of such exchange or
transactions in the over the counter market. Such sales may be made at prices
and at terms then prevailing or at prices related to the then current market
price or at negotiated prices and terms. In effecting sales, brokers or dealers
may arrange for other brokers or dealers to participate. The Selling
Stockholders or such successors in interest, and any underwriters, brokers,
dealers or agents that participate in the distribution of the Shares, may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
profit on the sale of the Shares by them and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting commissions or discounts under the Securities Act. At
any time a particular offer of the Shares is made, a revised Prospectus or
Prospectus Supplement, if required, will be distributed which will set forth the
aggregate amount and type of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from the
Selling Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such Prospectus Supplement and, if necessary, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part, will be filed with the Commission to reflect the disclosure of
additional information with respect to the distribution of the Shares. In
addition, the Shares covered by this Prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this Prospectus.

To the best knowledge of the Company, there are currently no plans,
arrangements or understandings between any Selling Stockholders and any broker,
dealer, agent or underwriter regarding the sale of the Shares by the Selling
Stockholders. There is no assurance that any Selling Stockholder will sell any
or all of the Shares offered by it hereunder or that any such Selling
Stockholder will not transfer, devise or gift such Shares by other means not
described herein.

The Selling Stockholders and other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders and any other such person. Furthermore, under
Regulation M under the Exchange Act, any person engaged in the distribution of
the Shares may not simultaneously engage in market-making activities with
respect to the particular Shares being distributed for certain periods prior to
the commencement of such distribution. All of the foregoing may affect the
marketability of the Shares and the ability of any person or entity to engage
in market-making activities with respect to the Shares.

Pursuant to the Registration Rights Agreement entered into in
connection with the offer and sale of the Notes by the Company, each of the
Company and the Selling Stockholders will be indemnified by the other against
certain liabilities, including certain liabilities under the Securities Act, or
will be entitled to contribution in connection therewith.

The Company has agreed to pay substantially all of the expenses
incidental to the registration, offering and sale of the Shares to the public
other than commissions, fees and discounts of underwriters, brokers, dealers
and agents.

SELLING STOCKHOLDERS

The Selling Stockholders consist of Stonehill Partners, L.P.,
Stonehill Institutional Partners, L.P. and Stonehill Offshore Partners Limited.
The Selling Stockholders

- 10 -
<PAGE> 12
currently hold Notes and Warrants convertible into or exercisable for the
Shares. It is unknown if, when or in what amounts a Selling Stockholder may
offer Shares for sale and the names of the Selling Stockholders who may sell
the Shares.

There can be no assurance that the Selling Stockholders will sell any
or all of the Shares offered hereby. Because the Selling Stockholders may
offer all, some or none of the Shares pursuant to the Offering contemplated by
this Prospectus, no estimate can be given by the Selling Stockholders at this
time.

Other than as a result of the ownership of the Notes, to the best of
the Company's knowledge, none of the Selling Stockholders had any material
relationship with the Company within the three year period ending on the date
of this Prospectus.

SHARES ELIGIBLE FOR FUTURE SALE

The up to 25,000,000 shares of Common Stock offered and sold in this
Offering will be freely tradeable without restrictions or further registration
under the Securities Act, except for any such securities owned by an
"affiliate" of the Company as such term is defined under Rule 144. Shares
owned by an "affiliate" of the Company may not be resold in the absence of
registration under the Securities Act unless an exemption from registration is
available, including the exemptions contained in Rule 144.

In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned his or her
shares for at least one year, including an "affiliate," as that term is
defined below, is entitled to sell, within any three-month period, that number
of shares that does not exceed the greater of 1% of the then outstanding shares
or the average weekly trading volume of the then outstanding shares during the
four calendar weeks preceding each such sale. A person (or persons whose
shares are aggregated) who is not deemed an "affiliate" of the Company, and who
has beneficially owned shares for at least two years, is entitled to sell such
shares under Rule 144 without regard to the volume limitations described above.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly,
or indirectly through the use of one or more intermediaries, controls, or is
controlled by, or is under the common control with, such issuer.

The Company is unable to estimate the number of shares that may be
sold in the future by its existing and future stockholders or the effect, if
any, that sales of shares by such stockholders will have on the market price of
the Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock by existing stockholders could adversely affect the prevailing
market price.

- 11 -
<PAGE> 13
LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be
passed on for the Company by Haynes and Boone, LLP, Dallas, Texas.

EXPERTS

The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1996, as
amended by the amendment filed on Form 10-K/A on October 16, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance with the Exchange Act, the Company files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements, and other information can be
inspected and copied at the public reference facilities that the Commission
maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at 7 World Trade Center, 13th Floor,
New York, New York 10048, and Northwestern Atrium Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661. Copies of these materials can be
obtained at prescribed rates from the Public Reference Section of the
Commission at the principal offices of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission. The address of the Commission's Web Site is http://www.sec.gov.
The Company's Common Stock is listed for trading on the New York Stock Exchange
under the symbol "SSC". Quarterly Reports and other information concerning the
Company can be inspected at the offices of such Exchange, 20 Broad Street, New
York, New York 10005.

The Company has filed with the Commission the Registration Statement
on Form S-3 under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in schedules and exhibits to
the Registration Statement as permitted by the rules and regulations of the
Commission. Statements made in the Prospectus concerning the contents of any
documents referred to herein are not necessarily complete. With respect to
each such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description,
and each such statement shall be deemed qualified in its entirety by such
reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
in this Prospectus: (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by the Amendment filed on Form 10K/A on October
16, 1997, (file No. 001-10012); (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997, each as amended by Amendments
to the identified Quarterly Reports filed on Form 10-Q/A on October 16, 1997,
and for the quarter ended

- 12 -
<PAGE> 14
September 30, 1997 (file No. 001-10012); (iii) the Proxy Statement for the
Annual Meeting of Stockholders of the Company held on June 10, 1996 (File No.
001-10012); (iv) the description of Common Stock contained in Sunshine's
Registration Statement No. 1-7966, as amended, filed pursuant to the Securities
Exchange Act of 1934; and (v) all other reports filed pursuant to Section 13(a)
or 15(d) of the Exchange Act since the fiscal year ended December 31, 1996.

All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the completion of the Offering shall be deemed to be incorporated
by reference herein. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed superseded or
modified for purposes of this Prospectus to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated by reference herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Company, 877 W. Main Street, Suite 600, Boise, Idaho
83702, Attention: Rebecca L. Saunders, Secretary. Telephone requests may be
directed to Rebecca L. Saunders, Secretary, at (208) 345-0660.

- 13 -
<PAGE> 15
================================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR
MADE SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
______________________________

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SHARES ELIGIBLE FOR FUTURE SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

UP TO 25,000,000 SHARES OF
COMMON STOCK

SUNSHINE MINING AND
REFINING COMPANY

_________________________________
PROSPECTUS
_________________________________

January __, 1998

================================================================================
<PAGE> 16
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . . . . . . . . . . . . . . . . . $ 5,700
NYSE Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,500
Printing and Photocopying Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,200
=========

</TABLE>

All of the above expenses except the Securities and Exchange
Commission registration fee and the NYSE listing fee listing fee are estimated.
All of such expenses will be borne by the Registrant.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The information set forth pursuant to Item 20 of the Registrant's
Registration Statement on Form S-4 (Registration No. 33-98876) is incorporated
herein.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
* 4.1 Certificate of Incorporation, filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-4 (Registration No. 33-98876), which exhibit is incorporated herein by
reference.

* 4.2 Amendment to Certificate of Incorporation, filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated May 22, 1996 (File No. 33-98876), which exhibit is incorporated
herein by reference.

* 4.3 Bylaws, filed as Exhibit 3.2 to the Registrant's Registration Statement on Form
S-4 (Registration No. 33-99876), which exhibit is incorporated herein by reference.

* 4.4 Specimen Common Stock Certificate, filed as Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-63446), which exhibit is incorporated herein by
reference.

** 5.1 Opinion of Haynes and Boone, LLP.

* 10.1 Employee Nonqualified Stock Option Plan of Sunshine, filed as Exhibit 10.9 to Sunshine's
Annual Report on Form 10-K for the fiscal year ended December 31, 1986, and incorporated
herein by reference.

* 10.2 Amendment No. 1 to the 1987 Employee Nonqualified Stock Option Plan of Sunshine, filed as
Exhibit 10.8 to Sunshine's Registration Statement on Form S-1 (Registration No. 33-63446),
as amended and incorporated herein by reference.

* 10.3 Amendment No. 2 to the 1987 Employee Nonqualified Stock Option Plan of Sunshine, filed as
Exhibit 10.1 to Sunshine's Quarterly Report on Form 10-Q for the period ended June 30,
1994, and incorporated herein by reference.

* 10.4 1993 Incentive Stock Option Plan of Sunshine, filed as Exhibit 10.18 to Sunshine's
Registration Statement on Form S-1 (Registration No. 33-63446), as amended and incorporated
herein by reference.
</TABLE>

II-1
<PAGE> 17

<TABLE>
<S> <C>
* 10.5 1995 Employee Nonqualified Stock Option Plan of Sunshine.

* 10.6 Executive Employment Agreement entered into as of January 1, 1994, between Sunshine and
John S. Simko, filed as Exhibit 10.8 to Sunshine's Registration Statement on Form S-1
(Registration No. 33-73608), as amended and incorporated herein by reference.

* 10.7 Executive Employment Agreement entered into as of January 1, 1994, between Sunshine and
William W. Davis, filed as Exhibit 10.9 to Sunshine's Registration Statement on Form S-1
(Registration No. 33-73608), as amended and incorporated herein by reference.

* 10.8 Executive Employment Agreement entered into as of January 1, 1994, between Sunshine and
Harry F. Cougher, filed as Exhibit No. 10.10 to Sunshine's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, and incorporated herein by reference.

* 10.9 Mining Lease, dated March 15, 1994, by and between Revenue-Virginiuus Mines Corporation, a
Colorado corporation, as lessor, and Sunshine, as lessee, filed as Exhibit No. 10.1 to
Sunshine's Quarterly Report on Form 10-Q for the period ended March 31, 1994, and
incorporated herein by reference.

* 10.10 Agreement dated July 1, 1995 by and between Consolidated Silver Corporation and Sunshine
Precious Metals, Inc., as purchaser, for the purchase of a certain mining property, filed
as Exhibit 10.1 to Sunshine's Quarterly Report on Form 10-Q for the period ended June 10,
1995, and incorporated herein by reference.

* 10.11 Registration Rights Agreement dated November 24, 1997, between the Company and Stonehill
Partners, L.P., GRS Partners, Aurora Limited Partnership and Stonehill Offshore Partners
Limited.

* 10.12 Specimen form of Warrant to Purchase Common Stock issued on November 24, 1997, to
affiliates of Stonehill Investment Corp.

* 10.13 Specimen form of Senior Convertible Promissory Note issued on November 24, 1997, to
affiliates of Stonehill Investment Corp.

** 23.1 Consent of Haynes and Boone, LLP (included in the opinion filed as Exhibit 5.1).

** 23.2 Consent of Ernst & Young LLP.

* 24.1 Power of Attorney (set forth on signature page hereof).

- --------------------------
</TABLE>

* Previously filed.
** Filed herewith.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement
(notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar of securities would not exceed that
which

II-2
<PAGE> 18
was registered) and any deviation from the low or
high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if in the
aggregate, the changes in volume and price represents
no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement); and

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;

Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

II-3
<PAGE> 19
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 20
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, as of the 12th
day of January, 1998.

SUNSHINE MINING AND REFINING COMPANY

By:/s/ WILLIAM W. DAVIS
-----------------------------------------
William W. Davis
Executive Vice President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and as of the 12th day of January, 1998:

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOHN S. SIMKO * Director, Chief Executive Officer and
- ----------------------------------------------- Chairman of the Board
John S. Simko

/s/ G. CHRIS ANDERSEN * Director
- -----------------------------------------------
G. Chris Andersen

/s/ DANIEL D. JACKSON * Director
- -----------------------------------------------
Daniel D. Jackson

/s/ V. DALE BABBITT * Director
- -----------------------------------------------
V. Dale Babbitt

/s/ WILLIAM W. DAVIS Executive Vice President,
- ----------------------------------------------- Chief Financial and
William W. Davis Accounting Officer

/s/ ROBERT B. SMITH, JR. * Director
- -----------------------------------------------
Robert B. Smith, Jr.

/s/ OREN G. SHAFFER * Director
- -----------------------------------------------
Oren G. Shaffer

/s/ GEORGE M. ELVIN * Director
- -----------------------------------------------
George M. Elvin

*/s/ WILLIAM W. DAVIS
- -----------------------------------------------
William W. Davis
(As Attorney-in-Fact
for each person indicated)
</TABLE>

II-5
<PAGE> 21
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
------- -------
NO.
---
<S> <C>
* 4.1 Certificate of Incorporation, filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-4 (Registration No. 33-98876), which exhibit is incorporated herein by
reference.

* 4.3 Bylaws, filed as Exhibit 3.2 to the Registrant's Registration Statement on Form
S-4 (Registration No. 33-99876), which exhibit is incorporated herein by reference.

* 4.4 Specimen Common Stock Certificate, filed as Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-63446), which exhibit is incorporated herein by
reference.

** 5.1 Opinion of Haynes and Boone, LLP.

* 10.5 1995 Employee Nonqualified Stock Option Plan of Sunshine.

<PAGE> 22

<TABLE>
<S> <C>
* 10.11 Registration Rights Agreement dated November 24, 1997, between the Company and Stonehill
Partners, L.P., GRS Partners, Aurora Limited Partnership and Stonehill Offshore Partners
Limited.

* 10.12 Specimen form of Warrant to Purchase Common Stock issued on November 24, 1997, to
affiliates of Stonehill Investment Corp.

* 10.13 Specimen form of Senior Convertible Promissory Note issued on November 24, 1997, to
affiliates of Stonehill Investment Corp.

** 23.1 Consent of Haynes and Boone, LLP (included in the opinion filed as Exhibit 5.1).

** 23.2 Consent of Ernst & Young LLP.

* 24.1 Power of Attorney (set forth on signature page hereof).

- --------------------------
</TABLE>

* Previously filed.
** Filed herewith.

<PAGE> 1

[HAYNES AND BOONE LETTERHEAD]

EXHIBIT 5.1

January 14, 1998

Sunshine Mining and Refining Company
877 W. Main Street, Suite 600
Boise, Idaho 83702

Gentlemen:

We have acted as counsel to Sunshine Mining and Refining Company, a Delaware
corporation (the "Company"), in connection with the preparation of the
Company's Registration Statement on Form S-3 (Registration No. 333-41641) and
the amendments thereto (the Registration Statement, as amended, is hereinafter
referred to as the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to the offer and sale by certain stockholders of
the Company (the "Selling Stockholders") of up to 25,000,000 shares (the
"Stockholders' Securities") of the Company's Common Stock, par value $0.01 per
share ("Common Stock"), to be issued (i) upon the conversion and pursuant to
certain payment terms of the Company's currently outstanding $15 million Senior
Convertible Notes (the "Notes") and (ii) upon the exercise of certain warrants
to purchase Common Stock (the "Warrants").

In connection therewith, we have examined and relied upon the original, or
copies certified to our satisfaction, of (i) the Certificate of Incorporation
of the Company, as amended (the "Certificate of Incorporation"), and the Bylaws
of the Company; (ii) the minutes and records of the corporate proceedings of
the Company with respect to the issuance and sale of the Notes and the Warrants
and the issuance of the Stockholders' Securities to be issued pursuant to the
Notes and the Warrants; (iii) the Registration Statement and all exhibits
thereto; (iv) that certain Registration Rights Agreement, dated November 24,
1997, by and among the Company and the Selling Stockholders; (v) the specimen
form of Warrant filed as Exhibit 10.12 to the Registration Statement; (vi) the
specimen form of Note filed as Exhibit 10.13 to the Registration Statement;
(vii) the specimen Common Stock certificate filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-63446); and (viii)
such other documents and instruments as we have deemed necessary for the
expression of the opinions contained herein.

In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof. As to various questions of fact
material to this opinion, where such facts have not been independently
established, and as to the content and form of certain minutes, records,
resolutions and other documents or writings of the Company, we have relied, to
the extent we have deemed reasonably appropriate, upon representations or
certificates of officers of the Company or governmental officials. Finally, we
have assumed that all formalities required
<PAGE> 2

Sunshine Mining and Refining Company
January 14, 1998
Page 2

by the Company's Certificate of Incorporation, Bylaws and the General
Corporation Law of the State of Delaware will be complied with when the
Stockholders' Securities are issued.

Based upon the foregoing, and having due regard for such legal considerations
as we deem relevant, we are of the opinion that (i) the Stockholders'
Securities to be issued by the Company upon the conversion and pursuant to
certain payment terms of the Notes, as described in the Registration Statement,
have been duly authorized and when issued in accordance with the terms of the
Notes, will be validly issued, fully paid and non-assessable and (ii) the
Stockholders' Securities to be issued by the Company upon exercise of the
Warrants and payment of the exercise price relating thereto, all as described
in the Registration Statement, have been duly authorized and when issued in
accordance with the terms of the Warrants, will be validly issued, fully paid
and non-assessable

We are members of the Bar of the State of Texas and do not purport to be
experts on, or generally familiar with, or qualified to express legal
conclusions based upon, laws other than the laws of the State of Texas, the
General Corporation Law of the State of Delaware, and the federal laws of the
United States of America. All opinions expressed herein are specifically
limited to the laws of the State of Texas and the General Corporation Law of
the State of Delaware.

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to this firm under "Legal Matters" in the Prospectus forming a part
of such Registration Statement.

Very truly yours,

/s/ HAYNES AND BOONE, LLP

Haynes and Boone, LLP

<PAGE> 1
EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Sunshine Mining and
Refining Company for the registration of 25,000,000 shares of its common stock
and to the incorporation by reference therein of our report dated February 21,
1997 (except Note 5, as to which the date is September 10, 1997), with respect
to the consolidated financial statements of Sunshine Mining and Refining
Company, as amended, included in its Form 10-K/A.

/s/ ERNST & YOUNG LLP

Dallas, Texas
January 12, 1998