Bunker Hill Mining (CNSX: BNKR; US-OTC: BHLL) has updated a preliminary economic assessment (PEA) for its zinc-lead-silver Bunker Hill mine project in northern Idaho.
The Bunker Hill mine is located in the Coeur d'Alene silver district, in Kellogg, Idaho, and was a past-producer for almost century, operating from 1885 until 1981. After finally being shut down in 1991, it was eventually acquired by the company, which began an exploration program last year.
The PEA foresees a 10-year life for the underground mine, with total zinc equivalent production of 912 million lbs. at a zinc equivalent grade of 9.3%. This includes 556 million lbs. of zinc, 290 million lbs. of lead and 7.4 million oz. of silver.
Average annual zinc production in the first five years is forecast to be 65 million lbs., dropping to 44 million lbs. in the last five years. Average annual lead production is expected to reach 22 million lbs. in the first five years, increasing to 35 million lbs. for the next five years, while annual silver production in the first half of the mine's life is pegged at 488,000 oz., rising to 970,000 oz. for the last five years. The early stage study outlined recovery rates of 92% for zinc, 91% for lead and 89% for silver, and estimated all-in sustaining costs of US65 ? per payable lb. of zinc, net of by-products.
The company says the initial capital cost expenditures to restart the mine will come to about US$42 million (which includes a 20% contingency) over a 15-month period. The PEA estimates the mine would generate approximately US$20 million of average free cash flow annually over the course of its 10-year lifetime.
The updated PEA was based on a resource estimate of 4.4 million indicated tonnes grading 5.52% zinc, 2% lead and 0.69 oz. silver per tonne, and inferred resources of 5.6 million tonnes grading 4.88% zinc, 2.77% lead and 1.48 oz. silver per tonne.
"Our PEA confirms that by maximizing the use of existing resources, partnerships and infrastructure, the Bunker Hill mine has the potential to be restarted rapidly as a low-cost, long life, sustainable operation," Sam Ash, the company's CEO, said in a press release.
The CEO also noted that the company can fund exploration internally and grow the company based on the annual average free cash flow of US$20 million outlined in the PEA and at metal prices below spot levels.
The company also believes that the project can have a positive economic impact locally, with development and operations generating between 150 and 200 new jobs in Shoshone county, where the mine is situated, and has the potential to reduce unemployment in the county by more than 10%, according to the company.
Additionally, the company says the project will have a low environmental footprint with minimal surface disturbance and long-term water management. Management plans for the Bunker Hill mine to achieve carbon neutrality in year one of its operations. All waste and tailings are to be deposited underground in order to minimize the project's environmental footprint, and sulfide and pyrite-rich mineralization will be sealed with a low porosity paste made from tailings. This will substantially reduce production of acid rock drainage, according to the company.
At presstime, Bunker Hill was trading at 35 ? within a 52-week range of 28 ? and $1.01. The company has 164 million common shares outstanding for a market capitalization of $56.4 million.