Bunker Hill Mining Corp. reported the results of a Prefeasibility Study (PFS) for the first phase of the restart of the Bunker Hill mine, located in Kellogg, Idaho, USA. The PFS estimates a $55 million initial capital cost to rapidly restart the mine by the end of 2023, generating more $25 million of annual average free cash flow from an initial 5-year mine plan based on Probable Mineral Reserves to produce more than 315 million lb of zinc, 145 million lb of lead, and 3 million ounces (oz) of silver at an estimated all-in sustaining cost of $0.77/lb of zinc (net of by-products).
“We are very pleased to announce our PFS for Phase 1 of our multi-phase value-generation plan for the Bunker Hill mine outlining how we intend to commence profitable, sustainable, modern operations by the end of 2023,” Bunker Hill CEO Sam Ash said. “As demonstrated in our PFS, Bunker Hill is a sustainable low-risk, high-margin asset with the potential to generate free cash flow of over $25 million per year while contributing to strategic metal production in the United States beginning in 2024 and providing a significant economic boost to our many community partners in the Silver Valley of northern Idaho. We are now focused on driving forward to a formal construction decision while maintaining momentum with ongoing restart activities.”
The PFS was prepared in accordance with National Instrument 43-101. MineTech USA developed the mine infrastructure, capex and opex-related portions of the PFS as well as portions of the mine plan and operating schedules in coordination with Bunker Hill’s team who worked with Patterson & Cooke North America for the tailing backfill components, YaKum Consulting Inc for metallurgy and processing and Barr Engineering for process design and milling.
The majority of the initial capital cost relates to construction of the processing plant at an estimated cost of $26.8 million and harnessing the extensive mill equipment and components from Teck’s Pend Oreille site. These costs include labor, refurbishment of equipment, costs of a new mill building including clearance, geotechnical and foundational work, and costs of additional mechanical equipment and components to ensure all aspects of the processing plant are capable of an 1,800 ton per day (tpd) run rate. The new plant will be located in the main yard where the Bunker Hill maintenance shop currently sits. Costs related to the purchase of the process plant from Teck are not included, nor are the costs associated with its demobilization, as this activity had been completed as of August 2022.
Approximately $6.4 million has been budgeted for capital development, a moderate estimate, Ash explained, considering the extensive, intact, pre-existing infrastructure at the mine and surface including underground workings, surface portals and shaft access points as well as the main mine office and adjacent surface buildings.
As an example, the Kellogg Tunnel adjacent to the main mine office connects horizontally by rail to the underground hoisting facilities on 9-level approximately 9,500 feet from the portal. As such, pre-production capital development primarily relates to the development of an underground decline from the Wardner yard (at the 5-level) to the back of the Kellogg Tunnel (at the 9-level) to provide rubber tire access for mine equipment and all requisite access to initial stopes in readiness for commercial production, and related rehabilitation activities.
Bunker Hill’s long hole stoping method envisions the use of a paste backfill plant to deliver binder-added tailings product to backfill stopes. The paste plant will also deliver both binder-added and non-binder added thickened tailings to open historic mining voids throughout the mine as a means of tailings deposition. Patterson & Cooke, North America investigated several options to handle the backfill and tails placement requirements of the project. The option with the greatest amount of operational flexibility is to locate the plant on surface. The $6.2 million of capital allocated for this will include construction of a tailings thickening plant and a tailings filtration plant immediately adjacent to the building. In addition, a paste plant and pumping station will be constructed at the mine’s 5-level laydown in the Wardner yard.
Construction management (EPCM and related costs) and detailed engineering costs have been estimated at $4 million and $2.8m respectively. The EPCM partner is assumed to be selected and onboarded at the beginning of the capital schedule, enabling a rapid advance after a construction decision. The detailed engineering costs span the remaining engineering work to enable construction across the processing plant (including crusher and loadout facilities), paste plant (all parts) and other infrastructure requirements.
Bunker Hill has been working closely with Avista Utilities to upgrade the electrical supply infrastructure. Avista is currently extending and upgrading three phase power to the Wardner site. Additional capacity will be freed up at the main Kellogg/Bunker Hill substation by redirecting loads to adjacent substations where feasible. Capital costs for these activities are funded by the project up front and then credited back to the operational power bill over the life of the project.
The Newgard/Quill resource was optimized and scheduled using a long-hole open stoping (LHOS) mining method with backfill, whereby stopes are accessed via lateral drifts driven off the Newgard ramp connecting the levels vertically. The ramps and raise systems provide ventilation, utilities, and secondary escapeway, as well as connecting the entire mine for rubber tire access. The LHOS areas are accessed primarily by new excavations and do connect to some existing levels, which will be rehabilitated.
Run-of-mine (ROM) ore will be fed into a mobile jaw crusher located at the surface portal in Wardner. The crushed ROM will be delivered to the secondary crushing circuit via truck haulage. Crushed ore will be fed to a fine ore storage silo ahead of the new concentrator.
The new concentrator will consist of a standard primary ball milling circuit followed by a conventional differential flotation circuit for lead and zinc. A lead concentrate will be produced first, followed by zinc concentrate in conventional flotation cells with three stages of concentrate cleaning for each product. Concentrate dewatering and loadout will take place on the north end of the concentrator to more easily accommodate the receiving and loading of concentrate trucks.
All tailings produced in the concentrator will be filtered and backfilled. No surface tailings storage facility will be required. All process water solution will be recovered and reused in the concentrator. All freshwater makeup for the concentrator will either come from mine water sources or an internally operated water treatment processes facility within the concentrator.
The zinc and lead concentrates are assumed to be transported by truck to the smelting facility owned by Teck Resources in Trail, British Columbia, with Teck exercising its option to acquire 100% of the zinc and lead concentrate production for an initial term of 5 years.