VANCOUVER (miningweekly.com) – One of America’s most famous mines is set to restart operations, after a team of mine developers that have done it before in Idaho’s Silver Valley, recently obtained a lease and option to buy the historic brownfield project.
Using a Canadian shell company to advance the acquisition of the erstwhile base metals mine, president and CEO Bruce Reid told Mining Weekly Online in an interview that the company plans to rebrand as Bunker Hill Mining in the coming weeks, to better reflect its involvement with the legendary flagship asset.
He has tried to buy the mine twice before, and his dream finally came a step closer to fruition when the company in August inked a definitive accord to buy the storied asset from vendor Placer Mining.
The acquisition will include all mining rights and claims, surface rights, existing infrastructure at Milo Gulch, machinery and buildings at the Kellogg Tunnel portal level, as well as all underground equipment and infrastructure.
The acquisition would also include all current and historic data relating to the Bunker Hill mine complex, such as drill logs, reports, maps, level plans and similar information located at the mine site, or any other location.
Under the terms of the deal, the price for the Bunker Hill assets is $45-million. Liberty has already made a payment of $150 000 and another $3.5-million is due at closing. Half the total purchase price will be paid over five years in annual instalments from the closing date of the deal. Under the terms of the agreement, Bunker Hill will have the right to purchase the mine at any time before the end of the lease and any extension for a purchase price of $45-million, with purchase payments to be made over a ten-year period to Placer Mining.
Supported by strong fundamentals, including a growing supply gap, the zinc price has improved by about 17% since the start of the year, with London Metals Exchange cash prices closing at $3 113/t on Tuesday.
Reid explained that following the Bunker Hill smelter’s dismal environmental track record, the US Environmental Protection Agency (EPA) has given the green light on Bunker Hill mine, after completing a billion-dollar Superfund clean-up campaign in the region, which historically suffered widespread lead poisoning.
The lead smelter, electrolytic zinc plant and historic mining facilities were demolished about 25 years ago, and no exploration or mining work at the site could be done until clean-up was completed under EPA regulations.
“Bunker Hill is the longest-lived and most significant and profitable in the Silver Valley of Idaho,” Reid stressed.
The mine was the first discovered in Idaho in 1880, and produced for nearly a century – producing 36-million tonnes grading 8.76% lead, 4.54 oz/t silver and 3.67% zinc, for total value of $12-billion. “There are more than 60-billion tons remaining at Bunker Hill,” Reid stated.
Following its creation in 1972, the EPA shuttered the Bunker Hill mine because of its polluting smelter. The mine was highly profitable at the time of the closure, Reid noted.
“The only remaining EPA involvement in the local area is the treatment of the Bunker mine effluent. Bunker Hill Mining will be required to pick up the responsibilities of managing the water treatment plant going forward,” he said.
“The EPA has finished its clean-up of the region and they maintain a water treatment plant at Bunker Hill, which holds the water permit. We will also require a tailings permit, but initial discussions with the EPA have revealed that the EPA has already identified a suitable site for a new tailings management facility,” Reid stated.
He added that the company will also insist on obtaining a ‘consent decree’ from the EPA, indemnifying the company against any legacy claims and historic environmental liabilities.
The Bunker Hill project currently holds US Securities and Exchange Commission- (SEC-) compliant resources, which is not considered on the same confidence level as the more modern Canadian National Instrument (NI) 43-101. As at 1991, the Quill zone held 4.94-million tons grading 2.27% lead, 1.16 g/t silver and 6.28% zinc, while the entire project was estimated to hold 10.93-million tons grading 1.23% lead, 0.58 g/t silver and 5.85% zinc.
Reid advised that the Quill zone represents a priority target, being high-grade in nature and already developed underground.
He said the possibility exists to tap into the historic resource located between the 9 Level and 14 Level, which is readily accessible for near-term mining at an initial rate of 1 500 t/d.
There has been previous mining done on all five levels with nearly 500 000 t of high-grade zinc ore recovered in the late 1970s, and the zone is known to continue from historical drilling at depths above the 2nd level, to below the 22nd level, a vertical height of over 1 200 m.
“The property today still represents the largest zinc/lead/silver development project in the Americas not in production,” Reid stressed. “Historically, the mine never missed declaring a dividend or posting a profit, no matter the economic cycles that have come and gone.”
The area is infrastructure rich, with electricity, water and a quality workforce available. Located on patented ground, Reid explained that patented ground in Idaho is a big deal, since it gives one a lot of freedom and he expects no impediments to mine redevelopment.
“Idaho is an excellent jurisdiction for permitting and operating,” he advised.
The mine is located 500 m south of Interstate 90 and just south of the Town of Kellogg.
The Bunker Hill team has done it before, with this representing the seventh asset, of which five out of the six previous assets are currently in production. The team had also restored the Galena mine, which is located 16 km to the west of Bunker Hill.
“We are not here to empire build, but to de-risk as far as possible, and go into production if we don’t get taken out before that milestone,” Reid said.
He plans to raise about C$20-million in the coming months, with which the company will drill about 60 000 m to develop an NI 43-101-compliant resource estimate at Bunker Hill and develop a modern mine plan.
He said about half the mine is dry and numerous production stopes are exposed above Level 9.
Further, the water treatment plant also represents an opportunity to recover zinc from the effluent, at a rate of about one-million pounds a year, which Reid said could contribute to the cost of maintaining the treatment plant.
Reid added that there are several underutilised mills in the Silver Valley, through which the Bunker Hill operations could toll mill its initial output, as cash reserves build and the mine constructs its own 1 500 t/d mill.
He believes the company can get Bunker Hill back into production within about two years, at a capital price far below the $100-million that some of its US-based rivals need to get into production. He believes that several rival zinc projects are just not far along enough to make a contribution to global supply during the current cycle.
“This is the opportunity of a career. I’ve got to pinch myself to know that I control the Bunker. However, it is not going to be easy, or simple – raising money and putting a mine into production is never easy,” he enthused.