U.S. Report Struggling Bunker Hill reports loss for 1989

Despite strong base metal prices, Bunker Hill Mining (TSE) continues to struggle with losses at its lead-zinc-silver mine near Kellogg, Idaho. The company reported a 1989 loss of US$906,743 on revenues of US$9.4 million. Comparisons with 1988 are not representative as mining operations at the company’s Bunker Hill mine did not begin until September, 1988. The loss for 1988 amounted to US$3.8 million on revenues of US$1.2 million.

Direct mining and milling costs were reported at US$7.1 million for the 266,367 tons of ore processed to the end of 1989. Overhead costs including property taxes, general and administrative, insurance and other recurring costs (not including depreciation) totalled US$2.7 million. Total costs per ton were therefore about US$38, versus revenues of about US$35.

As the mine gears up to full production — expected to be 3,000 tons per day, five days a week — overhead costs will have less of an impact on a per-ton basis. Reserves are sufficient to support the operation for over 10 years, even at the increased production rate.

Proven, probable and possible reserves total 10.9 million tons with an average grade of 4.6% zinc, 2.3% lead, and 1.2 oz. silver.

Bunker Hill’s 1989 annual report shows a working capital deficit of about US$3 million. The company notes that a number of solutions to the deficit are under review, including additional bank financing or some form of equity financing. Bunker Hill has long-term debt of US$1.01 million.

The Bunker Hill property has been designated a “superfund cleanup site” by the Environmental Protection Agency (EPA). This designation is the result of past mining and metal refining operations conducted on site. The concern is that levels of lead, zinc, and other metals in the soil may present health and environmental risks.

Although in theory the past owners of the mine (which was active from 1885 to 1981) are liable, Bunker Hill Mining has been named along with others as potentially liable for cleanup costs. The extent and cost of a cleanup cannot be determined at this time.