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As of this morning, Bunker Hill Mining (BNKR.CN; BHLL.OTC) has released a prefeasibility study on its Bunker Hill Mine in Idaho that puts the asset on the way to renewed operation.
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This accomplishment didn’t seem possible just three years ago, when a new team took over the struggling company.
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At that point, the negotiations with the EPA to close out the mine’s Superfund status were at a perilous juncture, and there was no clear strategy to resuscitate the mine.
Fast forward to today, and Bunker Hill Mining has removed the EPA impediments...relocated a mill to the mine site...and has hard numbers showing the mine can be a turnkey operation.
It’s an achievement of the first order, one that bodes well not just for getting Bunker Hill into production, but to other projects this high-caliber team may take on in the future.
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Over $25 Million Of Annual Cash Flow
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The prefeasibility study shows the Bunker Hill Mine generating over $25 million of cash flow per year. Not bad for a company trading at a market capitalization of just $21 million.
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Now consider that the projected initial five-year mine life is based on only the measured and indicated resources outlined at Bunker Hill and does not include the inferred resources, which are substantial. Nor does it include the enormous upside potential considering it is the largest-scale and shallowest mine in Idaho’s prolific Silver Valley.
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Management points out that in the 100 years that the mine previously operated, it was always running on only about five to 10 years of resources.
The prior owners knew the ore continued at depth at Bunker Hill, so they didn’t bother to drill out a huge resource at any one time.
Still, there was plenty enough ore to keep the mine running, and Bunker Hill Mining has shown that to be the case now.
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The Resources Are There For
A Long-Lived Mine
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Certainly, the 11-year mine life envisioned in the PEA is very likely to play out (not least because they upgraded the resource since that was published). The silver-intensive resources for that mine plan are in the outer years, when the current inferred resources kick in.
As is standard for the industry, there’s every reason to believe that more drilling will prove up those years into the indicated and measured categories.
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Better still, because of the silver-intensive nature of these out years, Bunker Hill’s average annual cash flow is likely to balloon after year five.
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With low capex of $55 million, detailed engineering complete, and a deal in place with mining savvy Sprott to provide the bulk of the cash required, this is a shovel-ready project that will be built in short order.
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That’s especially true now that the mill Bunker Hill Mining bought from Teck is now on site.
The mill was located 150 miles away from Bunker Hill. The company completed the decommissioning and mobilization of the mill to the operation site ahead of time and under budget.
Notably, the company paid just $3 million for the mill.
It’s all part of a low-risk restart that Bunker Hill has in store for it. Because the mine is on private land in Idaho, the project has no permitting constraints to moving forward rapidly to commercial production by the end of next year.
The big hurdle was the EPA and project finance negotiations, and the team at Bunker Hill has already put a bow on those.
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Bet On The First Team To Build
A Mine Out Of A Superfund Site
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There are several reasons to like Bunker Hill Mining as an investment at current levels.
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• The company’s mine is a turnkey operation that looks very fundable based on current capex projections.
• The mine is projected to crank out $25 million in cash flow per year.
• That number is likely to increase in the outer years for the mine, as inferred resources heavy in silver become measured and indicated (and thus brought into the mine plan).
• The lack of significant permitting hurdles combined with an on-site mill ready for assembly means the Bunker Hill mine will be on the fast track to production.
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But over and above these bullish indicators is the performance of the Bunker Hill team.
Like they did at Barrick, SSR Mining and Rio Tinto, this is a group that has proven itself adept at setting a plan and then executing on that plan.
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As the Bunker Hill mine moves steadily toward production, it should surprise no one if Bunker Hill Mining looks to repeat its success with another project (or projects).
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That kind of upside comes part and parcel with this team, and it reflects the talent they’ve been able to bring to bear at Bunker Hill.
If you’re looking for a “get-it-done” silver company with a bright future, you’d do well to begin researching Bunker Hill Mining.
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