On March 22, 2021, Bunker Hill Mining Corp. (BNKR:CSE; BHLL:OTCMKTS) showed us how much metal remains at the old Bunker Hill mining complex. It's an exciting rejuvenation of one of the most storied mines in U.S. history.
The Bunker Hill Mine went into production in 1885 and ran until 1991. It produced 42.8 million tons of ore that ran 8.4% lead, 4.5% zinc and 3.5 ounces of silver per ton. It produced around 42% of all the lead, 41% of the zinc and 15% of the silver produced in the iconic Coeur d'Alene Mining District in Idaho. The mine spent the last two decades in various stages of clean up and maintenance.
In 2020, a new management and board came in to study the opportunities around the historic workings. The new team, mostly former executives from Barrick Gold Corp., have the knowledge and experience to execute on their plan to restart the mine at low cost.
They are already setting new standards for exploration. The company analyzed 261 drill holes and nearly six miles' worth of core. They compiled 5,720 lead, zinc and silver assays. And they incorporated thousands of historical samples from the old mine data. That information was enough to convert 77% of the resource to the indicated category. The result was a massive updated resource estimate.
It's impressive, to say the least:
- Zinc Indicated and Inferred Resources: 1.1 billion pounds
- Lead Indicated and Inferred Resources: 536 million pounds
- Silver Indicated and Inferred Resources: 11.3 million ounces
That's just the easily found resources, which will underpin the preliminary economic assessment (PEA). We should see that document by the end of June, if not sooner.
However, the share price of Bunker Hill isn't responding as if the company holds over a billion pounds of zinc and 11.3 million ounces of silver. As you can see in the chart below, its shares bottomed out recently around C$0.32:
This looks like a huge opportunity for investors looking to add a new silver name to their portfolio. Because Bunker Hill isn't just upgrading their existing resources; they have new tools to find more of the high-grade material that made the mine famous in the past.
The exploration group digitized all the historical workings and developed a 3D model of the rocks. The historic workings showed that the silver production came from specific galena-quartz veins that formed in the Revett Formation. Large faults cut the veins and moved the ore bodies around.
Historically, the miners thought these faults controlled the ore placement. When they hit a fault, they figured the metal was gone. It wasn't until the 1960s that the geologists recognized that wasn't true. The ore hadn't ended, it had moved. The question was, how far.
That's where the modern digital modeling comes in. The new team believes that there is a lot more of those veins left untouched. According to their latest press release:
The Cate Fault was the limit of most early mining in the upper parts of Bunker Hill, and it wasn't until the 1960's that it was recognized as having post-mineral offset. A few of the first core holes ever drilled in Bunker Hill in 1898 from the 5 Level were directed past the Cate and Buckeye Faults, with impressive results including 12' @ 42.7% Pb and 18.6 opt Ag in DH-4, but mining largely shifted to below the 9 level after the Kellogg Tunnel was completed, and these holes were never followed up on.
That's critical, because it means there is high grade potential in the undrilled regions around the mine. The company has drill rigs on these targets right now. The exciting part is that the material in these holes will be:
"…an entirely new vein system for Bunker Hill, not defined, named, mined or incorporated in any prior mine plans or resource estimates."
This drill program already hit incredibly high-grade material in hole 7056: 1.2 meters of 1,195 grams per ton silver. That works out to 37 ounces of silver per ton of rock.
The new material is within the area of the PEA study. That means the PEA will include the results. Investors are eagerly awaiting more news from this drilling program.
On March 29, 2021, the company reported high-grade results from a channel sampling. This is a surface program used to follow up on the results from the 3D digitization program. The latest press release confirms the silver potential of an area called the Deadwood vein in a part of the historic underground mine workings. Chip samples across the exposed part of the vein hit bonanza grade silver and lead:
Selected Results from Channel Samples of Deadwood Vein |
||||
Channel |
Width |
Silver Grade |
Lead Grade |
Zinc Grade |
1 |
0.9 meters |
56.8 g/6 |
8.2% |
0% |
2 |
1.2 meters |
497 g/t |
20.9% |
0% |
3 |
0.6 meters |
312 g/t |
22.5% |
0% |
3 |
0.6 meters |
940 g/t |
21.5% |
0% |
4 |
1.2 meters |
336 g/t |
19.6% |
0% |
5 |
0.9 meters |
549 g/t |
20.6% |
0% |
6 |
0.9 meters |
581 g/t |
20.5% |
0% |
6 |
0.9 meters |
377 g/t |
21.4% |
0.1% |
7 |
1.2 meters |
206 g/t |
16.8% |
0% |
7 |
0.9 meters |
288 g/t |
19.4% |
0% |
8 |
0.9 meters |
343 g/t |
20.0% |
0% |
9 |
0.6 meters |
1,100 g/t |
60.3% |
0% |
Data from Bunker Hill press release |
||||
Today, Bunker Hill is a C$54.4 million company. That means we can buy its current resources for 3¢ per pound of lead and zinc…and get the silver for free. This can't last. As we get closer to the PEA, shares will continue to creep upward. Particularly if they put out more positive drill results over the next three months.
The company plans a webinar on Wednesday March 31 at 8:00 am Pacific Time to discuss the results:
Link: https://6ix.com/event/high-grade-silver-mineralization-results-what-does-this-mean-and-whats-next/
This little silver company is worth a whole lot more than its current price. It looks like a fantastic speculation for folks looking to play the junior silver space.
--Matt Badiali
Reach Matt Badiali at www.mattbadiali.net.
Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.
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