Bunker Hill unveils US$15 million dept financing
Bunker Hill Mining Corp. [BNKR-CSE, BHLL-OTCQB] said Monday it has executed the closing of a new US$15 million convertible debenture financing with Sprott Private Resources Streaming and Royalty Corp.
Bunker Hill CEO Sam Ash said the financing represents an increase in the company’s project financing package with Sprott to US$66 million.
Under new Idaho-based leadership, Bunker Hill has said it intends to develop the Bunker Hill Mine as a first step in consolidating a portfolio of North American precious metal assets with a focus on silver.
Production at the historical Bunker Hill Mine began in 1885 and ran for 95 years. It was a lead metal mine with silver and zinc produced as a by-product. The mine produced over 42 million tonnes, yielding more than 165 million ounces of silver, 3.0 million tonnes of lead and 1.3 million tonnes of zinc.
During its long history, over 40 separate mineralized zones were exploited. Of those, 13 were high grade silver orebodies.
The mine is situated in the Coeur d’Alene Mining District, a region that has yielded historic silver production of over 1.2 billion ounces, with the Bunker Hill Mine accounting for nearly 15% of the historic silver production.
In September, 2021, Bunker Hill released the results of a preliminary economic assessment (PEA), which contemplated a US$44 million initial capital cost (including 20% contingency) to rapidly restart the mine over an 18-month period. The PEA envisaged generating approximately $25 million of annual average free cash flow over an extended 11-year-mine life while producing nearly 1.0 billion zinc equivalent pounds of metal, including over 8.0 million ounces of silver.
The company said the majority of the initial capital costs  are related to the cost of the process plant, shaft and tunnel rehabilitation. It predicted that production could commence six months after the start of construction at a rate of 200 tons per day, ramping up to 1,000 tons per day within six months.
“The ramp up allows for infrastructure components to be completed and commissioned to ensure the mine is adequately developed to maintain consistent production while taking advantage of toll milling for pre-production revenue generation,” the company said in a press release.
Commenting Monday on the closing of the US$15 million convertible debenture, Ash said the funds materially improves the company’s working capital position, enabling it to meet its financial assurance obligation with the EPA, and funds several key workstreams over the coming months, including completion of the underground decline, demobilization of the Pend Oreille mill, and further engineering optimization in preparation for the mine restart.
The Series 2 convertible debentures bear interest at an annual rate of 10.5%, payable in cash or shares at the company’s option, and mature on March 31, 2025. Repayments shall be made a the end of each calendar quarter, starting on June 30, 2024.
The debentures are convertible into shares of the company at 29 cents a share until the maturity date.
On Monday, Bunker Hill shares were priced at 24.5 cents and currently trade in a 52-week range of 42 cents and 17 cents.