Source: Streetwise Reports 04/05/2021
Bunker Hill Mining lays out its plans to transition to a 50% silver mine from base metals, and operate a mine on the leading edge of sustainability.
Bunker Hill Mining Corp.’s (BNKR:CSE; BHLL:OTCMKTS) eponymous mine in Idaho’s Coeur d’Alene mining district has a long and storied history. First discovered in 1885, the Bunker Hill Mine produced silver and base metals from 1885 until 1991, and accounted for some 42% of the lead, 41% of the zinc and 15% of the silver produced in the district. A combination of low metal prices and expensive infrastructure investment to be in compliance with newly enacted environmental regulations led to the mine’s closure.
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But now Bunker Hill is working to bring the mine back into production, with world-class environmental management and vigorous community engagement being central to the company’s strategy.
Helmed by an experienced team—Executive Chairman Richard Williams is a former COO of Barrick Gold Corp., CEO Sam Ash served as executive general manager of Barrick’s Lumwana copper mine in Zambia and its VP Sustainability Brad Barnett ran and optimized Barrick’s large portfolio of closed mine sites—management looked around the world to find a cornerstone asset for a new company.
It needed to have four things, Williams told Streetwise Reports. “First, it needed to have the potential of having a very long life, a mine life of more than 30 years.”
The next criterion was being in the lower half to lower quartile of the cost curve. “Commodity cycles look generous for a period of time, and then they come back and hit you pretty hard,” Williams explained. “We needed a foundational asset that could make real money when times are hard. Without that, the regeneration of the mine would never be sustainable.”
The third aspect was “we wanted to make sure it was in a safe jurisdiction with an intact mining permit and somewhere that we understood well and supported those that believe in sustainable mining. Idaho is as near to perfect a place for this as you could find.” Williams said.
Last, the project “needed to have the infrastructure, the outlet, the foundation, so it could be run at the front end of the best environmental, sustainability, social and governance standards possible, and produce metals that would support a greener global economy,” Williams emphasized. “We, and a regenerated and transformed Bunker Hill and its local mining community, wish to play our part in the ongoing move towards a cleaner and more sustainable mining industry.”
The Bunker Hill Mine met these criteria, “even though when you first look at it, it was incredibly distressed. The Clean Air and Clean Water acts of the 1970s and the Superfund CERCLA act of 1980 devastated the mines in the region because the old mining practices were very dirty and dangerous,” Williams explained. “Between 1981 and now, most of the operations in the area either closed down and stayed closed, or closed down and were tidied up.”
The mine’s lead and zinc smelters were disbanded, “but vast amounts of known metals still existed in the ground, accessed by well-built infrastructure, on patented private ground, and covered by an intact mining permit,” Williams said. “It became clear to me, Sam and the team that the mine held the potential for a very long life and a low cost operation; if we applied modern mining techniques we could turn it around ESG-wise, and it was probably in one of the most favorable jurisdictions for mining in the world.”
The team leaped into the project in March of last year and raised money to digitize 95 years of mine data, study and evolve their understanding of the geology and then start a value-focused drilling and sampling campaign. “By September of last year this had delivered 9 million tonnes of Inferred resource based on the old reserves that were going to be mined as the mine closed in 1981,” Williams explained. “As a next step we allocated new capital to explore the asset for the highest grade silver so that our future mining could produce as much silver as possible, as well as upgrading part of the Inferred resources into the Indicated category to support our restart plans.”
Restarting the mine has been a priority. “There is a community that needs jobs, and a state that values regeneration. We also have mine discharge water that has to be treated in an Environmental Protection Agency (EPA)-run facility before it flows into the local river and that costs us about $1 million a year. Our experience has taught us that the best way to secure sustainable value in a closed asset with an intact mining permit, and faith in our new company and its regeneration mission, is to get it operating. We are therefore focused on generating sustainable cash flow early so that we can reinvest that cash and to develop the mine in stages,” Williams said.
To that end, the company is moving quickly. It just released an updated resource estimate, increasing the resources by 15% and converting Inferred resources to the Indicated category, so that 43% of the resource is now Indicated. It expects to release a preliminary economic assessment (PEA) in early Q2 of 2021. “The PEA will take the restart plan to the provisional economic analysis level. A couple of months after that we plan to release a prefeasibility study having finalized the design for our new processing plant. After that, we will seek finance so we can be in production 18 to 24 months later,” Williams said.
“When we took over the mine last year, we had an enormous amount of data, but no useful information,” CEO Sam Ash explained. “We digitized the historical information and created a working 3D geologic model that’s at the forefront of what’s technologically possible. This informed a 9,000-foot drill and channel sampling program focused on proving the historical resources to 43-101 standards, whilst we conducted a detailed survey of the existing mine infrastructure and the mine’s water system.”
The recently released updated resource estimate consists of an Indicated resource of 4.4 Mt containing 3.03 Moz of silver, 487 Mlb of zinc, and 176 Mlb of lead and Inferred resource of 5.6 Mt containing 8.3 Moz of silver, 548 Mlb of zinc, and 312 Mlb of lead.
The company is taking a two-pronged approach to drilling, the first is development drilling to support the restart PEA that will be released shortly.
The second prong is to focus on silver exploration. “We looked at the right way to unlock the long-term value and we believe that is via the exploitation of its considerable silver potential,” Ash said. “Historically Bunker Hill was mined for its base metals, primarily lead and zinc, which fed the on-site high-margin, but environmentally toxic smelting operation. But what’s often forgotten is that it was also one of the largest and shallowest silver mines in the Silver Valley, producing 165 Moz of silver as a byproduct.”
“Historically, half of the Bunker Hill Mine’s revenue was from the sale of silver,” Williams explained, “and we believe that we can re-establish that profile, in ways that not only ensure the highest operating margins, but also provide the maximum amount of that valuable metal to the electronics and green-energy industries.”
The company has initiated a silver-focused exploration effort and drilling program in parallel with the PEA drilling. “We want to rebalance the revenue stream where silver becomes over time the dominant revenue stream going forward,” Ash explained. The company has a full exploration program planned for this year focused on silver. “As we explore deeper into the mine, there are indications that the silver grades will increase.”
Recent drill results have backed up Williams and Ash’s claims. Chip sampling has returned 10 separate high-grade silver mineralization results greater than 900 g/t silver equivalent in the Deadwood vein. Plus, drilling has uncovered high-grade silver, lead and zinc, including an assay that measured 3.8 meters at 197 g/t silver, 21.2% lead and 2.7% zinc, totaling 996.6 g/t AgEq.
These results “confirm high grade silver mineralization in two distinct areas of the upper mine close to existing infrastructure,” the company reported. “Firstly, we have confirmed the silver potential of the Deadwood vein through ten separate high-grade channel samples. Secondly, our systematic targeting methodology allowed us to confirm the presence of high-grade silver mineralization on the 5-level through drilling, within an area where no historical mining was conducted. Both of these areas, along with others, will be followed up and developed over the coming weeks.”
With its focus on sustainability, the company also worked to understand the mine’s water system and devise interventions to immediately improve the quality of the water being discharged from the mine. “We discovered that a small internal stream is causing most of the problems, so we were able to reduce the amount of metal in the discharge water by 70% by building and operating a pre-treatment facility within the mine,” Ash explained.
Bunker Hill’s management sees a focus on sustainability as essential to the creation of value. “There’s a couple of things that we’re going to be doing that are on the leading edge of sustainable mining,” Ash explained. “We envision the new mine as being a fully electrified, digitally enabled mine; our vision is to be net zero direct emissions, with no diesel equipment and minimal surface expression, and an active partner with the community in enhancing the quality and beauty of the local environment.”
In support of this, the company plans to do all the ore processing and tailings deposition underground. “We’re not going to have a tailings dam; we’re not going to create surface disturbance. There is a ski resort on the mountain above the mine and our goal is to have our impact so small that the ski resort operates without people knowing that there is a mining operation taking place underneath them,” Ash said.
Independent financial analyst Matt Badiali follows Bunker Hill and wrote on March 30, “This looks like a huge opportunity for investors looking to add a new silver name to their portfolio because Bunker Hill isn’t just upgrading their existing resources, they have new tools to find more of the high-grade material that made the mine famous in the past.
“Today, Bunker Hill is a C$54.4 million company. That means we can buy its current resources for 3¢ per pound of lead and zinc…and get the silver for free. This can’t last. As we get closer to the PEA, shares will continue to creep upward. Particularly if they put out more positive drill results over the next three months.”
Badiali concluded, “This little silver company is worth a whole lot more than its current price. It looks like a fantastic speculation for folks looking to play the junior silver space.”
Bunker Hill has about 163 million shares outstanding, with approximately 7% closely held by management and approximately 50% is represented by long-term institutional shareholders.
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1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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