Bunker Hill rebuild ships first Idaho ore, eyes silver  

Bunker Hill Mining (TSX: BNKR; US-OTC: BHLL) has started feeding ore through its rebuilt Idaho mill, moving the historical Silver Valley mine from construction to ramp-up after six years of redevelopment. The next test is whether the company can generate steady concentrate shipments and cash flow to counteract poor share price performance this year. 

The company has more than 20,000 tons (18,144 tonnes) of ore stockpiled at the crusher and plans to ramp mining towards the mill design level of 1,800 tons per day before reaching full production next year, CEO Sam Ash said in an interview. At steady state, Bunker Hill expects about nine concentrate trucks a day to leave for Teck Resources’ (TSX: TECK.A, TECK.B; NYSE: TECK) Trail smelter in British Columbia, 210 km north by road. 

“We’re putting the first ore through the plant today,” Ash told The Northern Miner on June 25. “It’s a pretty exciting day.” 

It’s now up to Ash, a third-generation mining engineer whose father briefly worked at the Bunker Hill zinc plant in 1976, and the Bunker Hill team, to prove a mine long known for false starts can run in a market looking for closer supplies of zinc, lead and silver. If the plant reaches nameplate capacity and trucks move steadily to Trail, Bunker Hill stands to gain the cash-flow base Ash says can fund exploration for new silver zones, a larger haulage system and consolidation in a district that had produced 1.2 billion oz. silver. 

Location map of Bunker Hill int he Silver Valley of Idaho. Credit: Bunker Hill Mining

However, Bunker Hill’s stock fell 25% in March after a C$33.8-million discounted financing package diluted shares and Chief Financial Officer Gerbrand van Heerden abruptly resigned. The stock has lost 25% of its value this year to $4.40 on Monday, even though a 1-for-35 reverse stock split boosted the price at one point. Market capitalization was at $205 million. 

Cash flow 

Capital development for the first three to five years of the mine plan is complete, Ash said, while crews focus on development for later years. The 2022 prefeasibility study pegged initial restart capital at $55 million, including contingency. The final cost appears higher after later refinancing and balance-sheet restructuring, but Bunker Hill has not given an updated all-in restart figure. 

Bunker Hill had just under $30 million (C$42.5-million) in the bank at March 31, enough to reach positive cash flow, Ash said. Teck has also provided a $10-million undrawn working-capital facility that Bunker Hill can use if ramp-up problems emerge. Teck helped finance the restart and Ash said the offtake follows standard concentrate sales terms. 

Bunker Hill has no metals streaming agreement in place, after refinancing with Sprott’s royalty and streaming arm last year to remove a multi-metal stream from the capital stack, giving the company more exposure to higher metals prices. A royalty remains, along with a silver-backed debt facility with Monetary Metals. 

Silver pivot 

The mine plan starts with zinc-rich ore because it offers the fastest and cheapest route back to production. Ash said that choice has fed a market view that Bunker Hill remains mainly a base-metals story, even though the old mine produced 165 million oz. silver as a by-product. 

“We really see that Bunker Hill will be a primary silver producer and should be viewed through that lens,” Ash said. “We’re changing that narrative.” 

The new Cate-8 discovery gives that claim its first near-term drive. The target sits in the upper mine near existing workings, where Bunker Hill expected to find a single silver vein. Instead, drilling cut a wider mineralized corridor with many high-grade silver veins, Ash said. 

The company has drilled 12 holes at Cate-8 so far and all have hit mineralization, the executive said. Assays have been returned for seven. The target lies about 40 to 91.5 metres from existing development, giving Bunker Hill a faster route to possible mining than a surface discovery needing new access. 

“What we found was orders of magnitude greater than what we thought we would find,” Ash said. “We actually stumbled upon a mineralized zone or corridor.” 

Minable target 

Bunker Hill’s latest target estimate pegs Cate-8 at 50,000 to 168,000 tons grading 5.75 to 9.32 oz. silver-equivalent per ton for about a million ounces. Ash cautioned that the estimate remains conceptual and unproven. 

The best early holes include BHE26-02, which cut 28.6 feet (8.71 metres) grading 3.02 oz. silver per ton (103.39 grams per tonne), 7.44% lead and 0.85% zinc from 453 feet downhole, including 17.1 feet at 4.19 oz. silver per ton , 10.67% lead and 0.73% zinc.  

Drill hole BHE26-03 returned 15.5 ft grading 6.4 oz. silver per ton, 0.5% zinc and 20.4% lead about 310 feet from current mine development. Bunker Hill said true widths remain unknown. 

Bunker Hill is now drilling to move the zone towards indicated status by next year. The goal is to finish enough resource work, engineering and mine planning to add silver-loaded Cate-8 production in 2027, Ash said. 

The main bottleneck in the current operation is underground haulage, not the mill, Ash said. Bunker Hill could expand the mill to 2,500 tons per day, but the mine needs more haulage capacity to reach that higher rate. 

The proposed expansion, called “Bunker Hill 2.0” is to add a new portal and a 10,000-foot decline. 

Bunker Hill has already received a $150-million letter of intent from the U.S. Export-Import Bank to support the work. Ash said desktop work puts the decline cost near $60 million. He expects the remaining funds could help refinance debt and lower the company’s cost of capital. 

Legacy concerns 

Bunker Hill’s path to first ore was shorter than many U.S. mine builds because the operation sits on private land and patented mining claims, Ash said. The company worked through Idaho regulators while rebuilding its relationship with the U.S. Environmental Protection Agency at a Superfund site. 

When Ash’s team arrived in 2020, Bunker Hill did not own the asset and held a lease with an option to buy that had to be renegotiated. The team also had to finance construction during a weak market for mine development. 

The local labour market has helped the final push. Bunker Hill has passed 100 employees and expects to peak near 200. Many miners in the Silver Valley had kept homes in northern Idaho while flying to jobs in Alaska, Canada, Nevada and Arizona, Ash said. 

Future options 

Exploration is also moving beyond Cate-8. Bunker Hill plans work this summer on the Motor vein, Ranger-Page and Government Gulch prospects. 

It acquired Ranger-Page in December, beside the old Bunker Hill mine. The land covers part of a surprisingly poorly tested corridor between two historical operations, according to Ash. 

The Government Gulch target lies under cover but has shown a strong geophysical anomaly from surface to about 300 metres depth, Ash said. 

The broader land package supports Ash’s plan to build a multi-asset company in the Silver Valley. 

“One mine operation does not make a mid-tier,” Ash said. “The aspiration is to be a multi-asset mid-tier mining company.”