A month after defaulting on US$400,000 in lease payments for the past-producing Bunker Hill zinc-lead-silver mine property and Superfund site in the Silver Valley of Idaho, Bunker Hill Mining (CSE: BNKR) has struck a deal with the mine owner to reinstate the lease at a much lower cost.
The mine owner — Placer Mining Corp. — has agreed to slash the monthly lease payments owed by Bunker Hill Mining 70% from the previous US$200,000 to US$60,000, for the next 12 months. The concessions can be extended over another six months if Bunker Hill Mining “achieves certain agreed goals on its work program at the mine,” the company stated.
The reduction in payments “will be made up for by adding the accumulated reduction to the purchase price of the mine, should the company choose to exercise its purchase option,” Bunker Hill said in a press release on Nov. 13. (Bunker Hill Mining and Placer Mining Corp. signed a two-year mining lease agreement with a “buy” option in August 2017, and the lease became effective in December 2017.)
In addition, Bunker Hill Mining said it is in talks with the U.S. Environmental Protection Agency (EPA) on possible concessions regarding its payment obligations to the federal regulatory body.
Under its original deal with the EPA reached in March, Bunker Hill agreed to pay the agency US$20 million over seven years for historic water-treatment costs dealing with the mine’s effluent. Bunker Hill also agreed to make semi-annual payments of US$480,000 (US$80,000 per month) to the EPA to continue running the water-treatment facility. (Bunker Hill’s monthly payments to the EPA were on top of its lease-purchase agreement to the mine’s owner.)
The settlement agreements reached in March between Placer Mining Corp. and the EPA, and Bunker Hill Mining and the EPA, present “an opportunity for the potential re-use of the mine that had been dormant for many years,” the EPA states on its website.
“Through this settlement, EPA is clearing the way for a new operator to resume mining, bringing jobs back to the community, while also securing the ongoing cleanup of contaminated water and recovery of EPA’s past cleanup costs,” said Scott Pruitt, the EPA Administrator at the time. “EPA is delivering on its Superfund Task Force commitments.” (Pruitt, a Republican from Oklahoma, was confirmed as head of the EPA in February 2017 and resigned in July 2018.)
Historic mining and milling methods at the Bunker Hill mining and metallurgical complex in northern Idaho disposed of tailings in rivers and streams, “spreading contaminants throughout the floodplain of the South Fork Coeur d’Alene River,” the EPA’s website says. “Soil, sediment, groundwater and surface water became contaminated with heavy metals such as lead.”
The EPA also notes that “a complete cleanup will take decades” and that the program “is one of the nation’s largest and most complex Superfund sites.”
Water-treatment costs at the Bunker Hill mine are ongoing.
The EPA “regularly incurs costs in operating a wastewater-treatment plant that treats the approximately 1,300 to 1,400 gallons per minute of acid mine drainage released from the mine on an ongoing daily basis,” the agency states. “If not collected and treated at the wastewater-treatment plant, acid mine drainage from the mine would flow through the mine yard, across properties where public and environmental exposures would occur, and into Bunker Creek and the South Fork of the Coeur d’Alene River, where it would have significant detrimental effects on water quality and the ecosystem.”
In addition to news of the reduced lease payments due to Placer Mining, Bunker Hill Mining said its board has approved an equity private placement for up to C$300,000. The placement will consist of up to 4 million units (consisting of one common share and one common share purchase warrant) to be sold at 7.5¢ per unit. Each whole warrant can be exercised over the next two years to acquire one common share at 10¢.
Bunker Hill Mining also announced the resignation of board member Howard Crosby “for personal reasons.” Management states that Crosby’s departure “was not the result of any disagreement with the company, or on any matter relating to the company’s operations.”
The Toronto-based mining company also said it has appointed a new director, John Liu, who is a partner at private equity firm Valuestone Advisors. As of Oct. 20, Valuestone Global Resources Fund (owned by Valuestone, which was set up by China’s Jiangxi Copper Corp.), owned 16% of Bunker Hill Mining’s shares, (19.9%) fully diluted.
The Bunker Hill mine closed in 1981, and is one of the largest zinc-lead-silver deposits in the Americas not in production.
The EPA declared the Bunker Hill mine and smelter complex the country’s second-largest Superfund site in 1983.
“Today, after 35 years and almost US$900 million in cleanup costs, Bunker Hill’s tailings heap still oozes 400 lb. of toxic metals a day into the South Fork of the Coeur d’Alene River,” Bloomberg Businessweek reported on Nov. 12. “After picking up more mine waste downstream, the river dumps almost 400 tons of lead and 700 tons of zinc into Lake Coeur d’Alene every year.
“So far, much of the metals pouring down from Silver Valley has settled innocuously on the bottom of the lake, undiffused in the overlying water,” the Bloomberg article reports. “But the pollution is a ticking time bomb. Coeur d’Alene’s rapid development is loading the lake with nutrients from septic systems, lawn runoff, and logging activity, among other sources. Nutrients promote plant growth, which depletes the water’s oxygen supply. When the water becomes sufficiently anoxic — depleted of saturated oxygen — the metals will dissolve and flux upward into the water column, turning the lake into a toxic sink of liquefied arsenic, cadmium, lead and zinc.”
At press time, Bunker Hill Mining’s shares traded at 9¢, down 10% from market open.
Over the last year the company has traded within a range of 3¢ to $3.15 per share.