Bunker Hill focused on re-opening the famed zinc, lead, silver mine
Zinc prices are hitting ten year highs, while silver is poised to rally from 2019. As such Bunker Hill Mining Corp. (CSE: BNKR) (“Bunker Hill Mining”), owners of the famed polymetallic Bunker Hill mine is well positioned to benefit from this price growth.
The historic mine is a diversified zinc, lead, silver deposit located in Idaho’s Silver Valley, and was the crown jewel of the Coeur d’Alene mining district. As far as location goes, one couldn’t ask for a better address.
For over ninety years, from 1885-to-1982, the mine produced more than 1 million tonnes of zinc and 3.5 million tonnes of lead. Despite, these impressive output volumes, according to their SEC-compliant reserve statement, there remains around 9.1 million tonnes of high-grade zinc, lead and silver ore still to be mined. Even better, there is still room to expand this resource as more drilling gets underway on this enormous, underexplored ore body.
Bruce Reid, President and CEO of Bunker Hill Mining described the mine as
“The largest lead-zinc-silver deposit producing or not producing in the Americas.”
Not leaving anything to chance, the company bought the option to acquire 100% of the Bunker Hill mine for only $25 million, payable over 10 years- which in this environment, is a total steal.
The mine went out of production when its lead smelters were shut down by the EPA in 1981. An important milestone for Bunker Hill Mining was the signing of an agreement with the EPA in March 2018 that allows the company to operate the mine without being liable for any pollution created by its previous operators.
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With this agreement in place, Bunker Hill Mining is now accelerating the work required to re-open the mine. Maiden production is planned for 1Q2019, and the company plans to ship stockpiled material that is readily available and spend the next five years’ mining out material that can be easily extracted.
Another important cost-saving factor is that all the necessary infrastructure such as mine offices, workshops, power lines and water supply are perfectly intact. The underground infrastructure is also in excellent condition. Additionally, a skilled workforce is available in the nearby town that is just off Interstate 90.
With respect to smelting, Bunker Hill Mining plans to begin constructing a mill during the second half of this year with the aim of being able to process its own ore by 1Q2020. Until then, nearby smelters within five miles of the mine, will be used to treat Bunker Hill’s ore. Teck’s Trail smelter is within easy trucking distance, so smelting is not an issue.
The fact that Bunker Hill will produce lead, zinc and silver places it in a strong position. Zinc prices have been climbing since late 2015 when Glencore, the largest zinc producer in the world, removed about a third of its output, 500,000 tonnes of zinc concentrate from the market. A metal that was traditionally overlooked and seen as having a secure supply stream, has now caught the market off-guard as stocks have started to run low and capacity has not yet been brought back on line. Zinc prices rose a whopping 20% y.o.y last month to $3,269/tonne and additional supply simply cannot be brought on fast enough to satisfy the burgeoning demand.
The fact that the company is also leveraged to the silver and lead markets provides a natural hedge in the case of a downward turn in zinc prices. Lead prices have already reached six year highs and silver looks poised to rally.
In short, we believe Bunker Hill Mining presents an enticing investment opportunity for anyone wanting exposure to base metals. It boasts a huge ore body and scalable resource, with material already stockpiled and ready to ship, unbelievable location with neighboring smelters that can be used while management deploys their own and most importantly the fact that the company is leveraged to markets which are showing increasing demand and prices.