Idaho’s Bunker Hill Zinc Mine on Fast Track….
Bunker Hill Mining Inc. (operating as Liberty Silver) (CSE: LSL) are on the brink of relaunching one of the largest silver-lead-zinc mines on the planet, spurred on by the dramatic turnaround in the respective markets over the last two years. As zinc prices continue to soar past decade highs, the Idaho’s Bunker Hill looks like an increasingly strong contender to enter the supply chain; at current market values, historical production at Bunker Hill would be worth $330 per tonne, or about US$12 billion for the lot.
Two years ago, making it their mission to cut production in an attempt to turn around a morbidly obese zinc market, Glencore curtailed output at mines in Australia, Peru, Ireland and Kazakhstan to solve a supply overhang and save prices from six-year lows. The feat worked, zinc prices mounted a ten-year high, and the market thinned to the extent that the spot price is now at the greatest premium to futures in a little over a decade, hinting that demand has far outstripped supply. No doubt new production will curtail this escalation in only a few years, but a couple of additional factors mean that there is space alongside the zinc mines planned for launch in the near future.
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Last time prices were high, the Chinese response was considerable, increasing production by 15% and making it more difficult for others to take advantage; however, this year’s official statistics from China show that zinc output has actually decreased (potentially due to the state’s ongoing environmental commitments), leaving the market a little wider open than in 2006 when zinc touched $4,600/tonne. Additionally, while Glencore will of course bring production back online, they have stated that this will be a gentle process so as not to disturb the marketplace, and even if they chose to fire up everything they’ve got, it wouldn’t be sufficient to fulfill current demand.
The Bunker Hill Mine is the largest lead-silver-zinc advanced development project in the Americas currently inactive. Between 1887 and 1981 the mine produced 35,944,000 tonnes of ore, with a lead content of 8.76%, 3.76% zinc, and 4.53 oz/tonne of silver. Coeur d’Alene contains a number of past-producing mines, including Lucky Friday, Galena, Sunshine and Crescent. Crucially, management at Bunker Hill Mining have already brought major mines to fruition in the past, including the aforementioned Galena Mine, the second-most prolific primary silver mine in United States history.
But the thing that really sells Bunker Hill to me is the existing historical SEC compliant reserve statements, which require minimal additional work to make NI 43-101 compliant, and provide a solid basis for fast tracking the project in order to overtake the competition. There are a number of mines expected to come online by 2020, but none as reputable or as credible as Bunker Hill. The already prolific area has large developed zones of mineralization with high grade ores on mostly patented ground, which essentially means that virtually no additional permits are required. Furthermore, the mines at the project are still well-equipped and in seemingly excellent condition.
All markets are cyclical, and high pricing does not make good news for most consumers; zinc miners and their shareholders, on the other hand, should look forward to a more stable marketplace for the foreseeable future, with large returns in the short and medium term. Investing in a zinc miner such as Bunker Hill Mining should be done sooner rather than later; in fact, if this project weren’t able to progress as quickly as it can, I’d say it had missed the boat.