In a June 14 research note, Brock Salier reported that Sprott Equity Research initiated coverage on Bunker Hill Mining Corp. (BNKR:CSE; BHLL:OTCMKTS), a "USA lead-zinc miner with silver optionality," with a Buy recommendation and a CA$0.60 per share target price.
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"With high-grade brownfield silver optionality, a domestic location and an ex-Barrick management team, this under-the-radar name has all the right ingredients to grab investor attention in coming years," Salier wrote.
Salier highlighted that Bunker Hill Mining is a turnaround story, thanks to new management appointed in 2020: ex-Barrick chief operating officer Richard Williams as chair, ex-general manager Sam Ash as CEO and ex-head of closure/rehabilitation Brad Barnett as vice president of sustainability. Since coming onboard, the new team improved the balance sheet, broke off ties with previous investors and, most recently, got the caveat emptor warning removed from the company's stock such that it now can trade in the U.S.
The company's first priority is restarting the Bunker Hill mine, Salier noted, "one of the few domestic mining assets in the USA that require no major permits" that will provide "attractive upfront margins driven by the quick ramp-up and high grades."
With a resource of 5,000,000 tons grading 9% of zinc equivalent (60% zinc, 25% lead and 15% silver), the Q2/21 preliminary economic assessment outlined a modern underground mine producing about 41,000 tons of zinc equivalent per year over 10 years at an all-in sustaining cost of at US$0.86 per pound, Salier relayed. The project requires US$42 million (US$42M) in initial capex. The estimated post-tax net present value at an 8% discount is projected to be US$78M.
Salier also pointed out that Bunker Hill Mining aims to expand its flagship project and grow the company by capitalizing on the abundant silver and mining assets (four mills, for example) in northern Idaho's Silver Valley. To do so, the team plans to add high-grade silver veins to the Bunker Hill project and pursue consolidation and/or acquisitions in the region. This prospect, of "building a company around a mine," to be executed by group of mining savvy individuals, offers upside, Salier wrote.
Next from Bunker Hill Mining, Salier wrote, investors can expect these catalysts in H2/21: results of resource expansion and silver exploration drilling, uplisting of the company to the TSX Venture Exchange and results of additional technical studies.
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