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Bunker Hill Builds ‘Made in America’ Silver Platform | Richard Williams · Kitco MINING

• 0:06
  SPEAKER_00: Hello and welcome to Kitco Mining with me, Paul Harris.
• 0:09
  SPEAKER_00: Today is Thursday, the 26th of August, and we're talking about MA in the silver space.
• 0:14
  SPEAKER_00: Joining me is Richard Williams, Executive Chair of Bunker Hill Mining, which has just announced the takeover of Silver 47.
• 0:21
  SPEAKER_00: Richard, welcome to Kitco.
• 0:23
  SPEAKER_01: Thank you very much.
• 0:24
  SPEAKER_01: Great to have you.
• 0:25
  SPEAKER_01: Great to be on your show.
• 0:26
  SPEAKER_01: And I'm calling you from uh the Bunker Hill Mine site right now, so hence the high vis uh and everything else that's going on down here.
• 0:34
  SPEAKER_01: So if there's noise in the background, it's an active mine.
• 0:38
  SPEAKER_00: Excellent.
• 0:38
  SPEAKER_00: It's always good to see executive chairs getting their hands dirty metaphorically, so to speak, actually at the mine site.
• 0:44
  SPEAKER_00: So hopefully we'll be able to get some good insights from you about what's going on there.
• 0:48
  SPEAKER_00: As mentioned, Bunker Hill is buying Silver 47 at a 38% premium to create a US silver player.
• 0:55
  SPEAKER_00: It is paying 67 cents per share in a 163 million US dollar all-share deal to obtain about 247 million ounces of silver equivalent.
• 1:05
  SPEAKER_00: The combined company will be renamed Bunker Hill Silver and it will hold four US silver projects with about 390 million ounces of silver in all resource categories, including the Bunker Hill mine, the ramping up mine in Idaho, where Richard is presently, one of the biggest silver developer inventories in the silver space.
• 1:26
  SPEAKER_00: Richard, first question, obviously, why now?
• 1:29
  SPEAKER_00: What is the opportunity that you see, and over what time frame do you anticipate being able to realize that opportunity?
• 1:38
  SPEAKER_01: Well, you know, opportunity doesn't wait for anybody, does it, really?
• 1:43
  SPEAKER_01: Um, we've been talking to um Galen and his team from Silver 47 and prior to that at Sumersilver for a few years now.
• 1:53
  SPEAKER_01: Uh, and in our view, combining the cash engine that Bunker Hill will be with their US-based resource uh expiration profile, three assets, along with an interesting opportunity for tailings retreatment in Nevada, um, will create a new uh American, as we call it, made in America silver focused uh company with a really great pipeline of opportunities in Alaska, New Mexico, uh, Idaho, and and uh um as I said, uh Nevada.
• 2:33
  SPEAKER_01: So we've got um this remarkable opportunity to get on with things now as we ramp up the mine, uh combine the teams, and then give to all of our shareholders, both on the Silver 47 side and on the Bunker Hill side, exposure to really great uh American silver and critical metals opportunities.
• 2:55
  SPEAKER_00: Richard, I want to ask you to get an update about the Bunker Hill mine um in just a moment, but before then, let's talk a bit more about the pipeline.
• 3:03
  SPEAKER_00: You outlined some of the projects in the US that you'll be getting through the Silver 47 acquisition.
• 3:09
  SPEAKER_00: The main one of those, I believe, is Red Mountain, and that's potentially got a production start date of sort of 2031.
• 3:16
  SPEAKER_00: Um, how do you see the sort of pipeline fitting into what you've already got?
• 3:20
  SPEAKER_00: What will the combined exploration approach be?
• 3:24
  SPEAKER_01: Yeah, okay.
• 3:25
  SPEAKER_01: Well, I'll start with um uh Bunker Hill and give you a bit of an update on where we are now because um putting a series of expiration assets uh and uh uh soon-to-be um properly producing asset together means that you've got a cash engine um which will allow all of our shareholders uh to have exposure to increasing amounts of uh expiration results, but not as a result of uh um more and more uh equity or other um uh cash being injected.
• 4:01
  SPEAKER_01: Effectively, we'll be funding our expiration from cash flow.
• 4:06
  SPEAKER_01: And so at the moment at Bunker Hill, we're ramping up and on track to be at commercial production by the end of this year, uh, and then we'll be issuing guidance for 2027, which is gonna be materially different in an upside way for that which we've um put into our PFS, uh, which we built this mine on of a few years ago.
• 4:30
  SPEAKER_01: And the reason it's gonna be materially uh better is uh because of a recent discovery in the upper parts of the mine called the K-tate vein system.
• 4:41
  SPEAKER_01: We've already got development drifts into the K-tate vein system, and not only are we bringing in expiration results, but we're bringing in sampling from that development.
• 4:52
  SPEAKER_01: And we believe we can start mining that uh in a small way uh from this year and trending into next.
• 5:00
  SPEAKER_01: And what's really significant about that for us, uh, it's a galena system and comes with silver and lead grades that are significantly higher than our reserve grade.
• 5:12
  SPEAKER_01: And so we'll be seeing that come into resource and then come into reserves by the end of this year.
• 5:18
  SPEAKER_01: And that's gonna give Bunker Hill um quite a lot more cash going um through 2027 than we originally envisaged.
• 5:26
  SPEAKER_01: The second thing we're working on at Bunker Hill is the plan to uh deal with what is our only bottleneck on the mine site, or our primary bottleneck on the mine site, which is the single portal uh through which all the ore must come out and into which all the paste and miners and equipment must go.
• 5:45
  SPEAKER_01: And that constrains us to an 1800 tonne a day operation.
• 5:49
  SPEAKER_01: We're working at the moment on putting a second portal in closer to where our processing facility is, and we call that the Deadwood Project, named after the gulch where the where the portal uh will enter the mountain.
• 6:03
  SPEAKER_01: That should, pending further studies and obviously engineering work and investment, get to 2,500 tons a day through the end of 2027.
• 6:13
  SPEAKER_01: And the combination of increasing grade and increasing tonnage into a processing plant that can deal with both that grade and those tons, which is what we have here ramping up at the moment, will deliver significantly more cash than we expected even a year ago.
• 6:32
  SPEAKER_01: Now, where are we going to allocate that cash?
• 6:34
  SPEAKER_01: Bearing in mind we've now got this wonderful exploration opportunities coming together.
• 6:39
  SPEAKER_01: Well, Red Mountain is very compelling with 168 million ounces of silver equivalent.
• 6:46
  SPEAKER_01: It's a VMS belt, and think of Flynn Flon and so on, equivalent, in Alaska, uh, in an area that uh is judged by all of us to be very friendly or positive for mining.
• 7:02
  SPEAKER_01: It's beyond, you know, that um it needs infrastructure to turn it into a mine, and specifically it needs roads and so on over 30 kilometers to do that.
• 7:11
  SPEAKER_01: So it's quite a serious project.
• 7:14
  SPEAKER_01: But at the moment, um we're seeing um uh from our Silver 47 colleagues and future partners uh some really exciting results there.
• 7:24
  SPEAKER_01: And I think it's most likely that what we'll be doing with that is uh exploring it as a district play and then being in the business of potentially issuing um PEAs with respect to development uh through 2027.
• 7:40
  SPEAKER_01: And so from there you'll see us developing quite a lot of value and optionality uh in Red Mountain over the next year or so.
• 7:50
  SPEAKER_01: Now, Mogollan or Mogolin down in New Mexico, I'm never very good at saying it, 32 million ounces, this epithermal opportunity, um, where the mineral resource only covers two and a half of the 77 kilometers that we've got there, is giving us some really excellent metallurgical recoveries, as was reported and we've seen in the data room, 97% silver and 98% gold.
• 8:15
  SPEAKER_01: And what's interesting there to really take this further, it's engagement with the Bureau of Land Management, which we have very close connections with at a federal level, with the Department of Interior, and courtesy of the fact that at Bunker Hill, we are the first mine to come into production in an environmental cleanup site known as a Superfund site here in the United States.
• 8:39
  SPEAKER_01: And as a result, we've built very deep relationship with the Environmental Protection Agency, the Department of Interior, and other departments that we would have to engage with to ensure permitting and projects advance at the right timetable.
• 8:54
  SPEAKER_01: And so those are two areas.
• 8:56
  SPEAKER_01: Now, when it comes to Nevada, which is the Tonopah project, which again everybody knows a lot about historically, the bit which we're very interested in, I mean, I'm talking Bunker Hill, in addition to just expanding the resource in an area that is rather like Bunker Hill, famous in the history of American mining, is looking at a tailings project that Silver 47 has evolved and has been working with the US Department of Energy to fund that we could bring into production potentially as early as late 2027 or early 2028.
• 9:30
  SPEAKER_01: And so what you'll see us doing with the cash that we're generating, net of all expenses, is prioritizing investments to give us the highest bang for our buck across all three of those non-Bunker Hill projects, while at the same time enhancing uh the opportunities here at Bunker to generate significant cash.
• 9:53
  SPEAKER_01: And that's really why the combination is making a lot of sense.
• 9:56
  SPEAKER_01: What would we be doing with our cash to generate really good value if we were on a standalone basis?
• 10:02
  SPEAKER_01: In our view, it's worth something, quite clearly, but putting it together with these remarkable American exploration uh opportunities in Alaska, Nevada, and New Mexico combined with Idaho, uh, gives us uh, I think, a pretty unique and compelling set of opportunities.
• 10:23
  SPEAKER_00: It is a very powerful recipe, as you say, Richard.
• 10:26
  SPEAKER_00: Um, I want to bring in some other aspects there.
• 10:28
  SPEAKER_00: You you mentioned the expansion of the Bunker Hill mine up to potentially 2,500 tons a day by putting in that second portal.
• 10:36
  SPEAKER_00: Um, you've got uh support from the US government, US Exim Bank has provided what up to$150 million in support there.
• 10:43
  SPEAKER_00: Um I want to use that as a to ask your question about sort of critical minerals.
• 10:48
  SPEAKER_00: You mentioned the the you've got some um lead potential there.
• 10:52
  SPEAKER_00: You're in Idaho Silver Valley, other mines in the region.
• 10:56
  SPEAKER_00: The Idaho Silver Valley has been a big producer of antimony over the years.
• 11:00
  SPEAKER_00: Some of the other companies in the Silver Valley are looking at producing or are actively producing antimony as well.
• 11:06
  SPEAKER_00: There's copper there.
• 11:07
  SPEAKER_00: So, what other sort of critical minerals potential do you see there for Bunker Hill?
• 11:14
  SPEAKER_01: Well, uh again, the the US definition of um uh critical minerals or critical metals includes silver.
• 11:22
  SPEAKER_01: And that came in in the last 12 months.
• 11:24
  SPEAKER_01: But at Bunker Hill, like many silver mines, uh we are polymetallic.
• 11:29
  SPEAKER_01: Um we produce a lot of zinc, um, which is uh you know priced at$1.80 right now, which is a nice high, um, and lead and silver.
• 11:39
  SPEAKER_01: Our mineralization is primarily um uh zinc sulfide, spherolite and galena.
• 11:45
  SPEAKER_01: We have a very small amount of uh tetrahedrite, which characterizes the other tetrahedrite primarily characterizes the high grade portions of the other mines in the Silver Valley.
• 11:56
  SPEAKER_01: Uh galena, owned by America's Gold and Silver, Sunshine by Tom Kaplan, and Electrum, and Heckler uh by my friend's uh company.
• 12:06
  SPEAKER_01: Uh that's Rob Krishnorff.
• 12:07
  SPEAKER_01: We used to work together at Barrack at Heckler at the far end of what is a 20-mile-long valley that produced 1.2 billion ounces of silver, a really remarkable place to be operating.
• 12:18
  SPEAKER_01: But from there, you mentioned Antimony.
• 12:20
  SPEAKER_01: Antimony is really a byproduct of um, if we simplify the language, of mining tetrahedrite.
• 12:27
  SPEAKER_01: And uh and so you see America's gold and silver in discussions to build an antimony plant.
• 12:34
  SPEAKER_01: You also get um uh Sunshine interested in doing the same.
• 12:38
  SPEAKER_01: And so the Silver Valley um will be producing critical metals, primary critical metals, silver, lead, zinc, copper, uh, but will also produce some of these specialist critical metals like antimony.
• 12:49
  SPEAKER_01: Now, with respect to Bunker Hill, what makes us interesting to the US government from a critical metal supply chain perspective is um uh is the three principal metals that we produce anyway, which is zinc, lead, and silver, which produced in concentrate will be refined at Tech's, our larger shareholders at Trail Smelter in British Columbia, with a considerable portion of it and byproducts such as germanium coming back into the US supply chain.
• 13:18
  SPEAKER_01: Now, Red Mountain is also polymetallic, um, a lot of uh zinc and it like all VMS deposits are.
• 13:27
  SPEAKER_01: And we would look at Alaska, which is a strategic state uh for the US in terms of metals and in terms of global positioning, uh, being something that really does attract uh quite a lot of US government attention.
• 13:40
  SPEAKER_01: And to bring you into the ex in point, uh, but we have a letter of intent, many people have letters of intent from US Export Import Bank to expand our production using$150 million of their debt, but also to use a portion of that$150 million, approximately half of it, to retire expensive debt that we've uh built up on our balance sheet uh to fund our construction.
• 14:04
  SPEAKER_01: Now we're not going to be in the business of taking that from LOI through to executed cash until the start of next year when we're in commercial production.
• 14:15
  SPEAKER_01: The underwriting process to release that money is a lot easier when we're a producer with a record of production and a go forward plan in the ways that I've just outlined that shows increasing amounts of cash flow.
• 14:28
  SPEAKER_01: So we see the US government as a partner to us, but we haven't had to, at this stage, rely on a single dollar of US government money to get us to where we've got to.
• 14:39
  SPEAKER_01: Um, we've just simply wanted to be prioritized when it comes to engagement with the EPA and other, so we say, permitting or above-ground uh activities.
• 14:49
  SPEAKER_01: Um and the US government, along with anybody involved in mining in the US right now, uh, is very in there's a that there's a great interest in what we're all doing uh to help them uh restructure their supply chains.
• 15:03
  SPEAKER_01: So um we see us we see our ourselves playing a part in that uh and and um uh and the US market being a market for our metals uh that is going to be increasing in significance uh over time, not decreasing.
• 15:19
  SPEAKER_00: Thank you, Richard.
• 15:20
  SPEAKER_00: Now, being in Idaho's Silver Valley, you're certainly in the right place at the right time.
• 15:25
  SPEAKER_00: You mentioned some of the other companies there, such as uh Dr.
• 15:28
  SPEAKER_00: Thomas Kaplan Sunshine Silver.
• 15:30
  SPEAKER_00: My colleague Jeremy Safron recently did an interview with him, which uh you can see on the Kitco YouTube channel, and of course, America's Gold and Silver at Galena.
• 15:40
  SPEAKER_00: Both of those also contemplate uh having smelting and refining capacity.
• 15:46
  SPEAKER_00: So, Richard, I want to ask you more a little bit about the agreement you have with tech.
• 15:51
  SPEAKER_00: Uh you truck your silver, lead and zinc concentrates, or you will truck them to tech's trowel smelter in British Columbia, given that there will be refining, smelting and refining capacity in the valley, and within the overall context of the uh growing trade war between Canada and the US, um are you perhaps looking at uh at some point in the future sending those concentrates locally rather than sending them into Canada?
• 16:17
  SPEAKER_01: Well, we've got an agreement with tech.
• 16:19
  SPEAKER_01: Um they I mean our relationship with tech, like I should talk about, started some time ago.
• 16:23
  SPEAKER_01: Um when uh I think I lose track of time.
• 16:27
  SPEAKER_01: We've been doing this for six years now, um, which is quite fast, by the way, bring a dead mine into production in six years, um, particularly one that had to deal with the pressures of COVID and all that that did to the market, as well as one that has been seen to be an environmental challenge.
• 16:45
  SPEAKER_01: And so um, anyway, that's uh hats off to the team for doing that.
• 16:49
  SPEAKER_01: But but if you just go back to the COVID period where money was incredibly tight for development projects, and we were seen to be more base metals than silver back then because we hadn't discovered K-8 and we hadn't done this Silver 47 deal, um, we had to be uh um looking on the lookout for opportunities to build the mine in ways that um would be as economical as possible.
• 17:14
  SPEAKER_01: And one of the opportunities, as we found in with tech's closed mine sites in Ponderé in Washington, uh 120 kilometers or so away from uh where I'm sitting at the moment, is they had a uh processing facility that they were about to dismantle as part of their closure obligations that we could make use of.
• 17:33
  SPEAKER_01: So we bought it from them, paid them equity and a little bit of cash, and that got them to around about a 10% holding in Bunker Hill.
• 17:41
  SPEAKER_01: And when we did that, we also said, look, when we're up and running, uh we'll be sending uh our concentrates to you at trail, and we did a deal with them uh on that basis.
• 17:51
  SPEAKER_01: Now we moved their processing facility to site, we refurbished those elements of it which would be useful and where um we needed to buy new, we bought new, and we now have this integrated processing solution and at the back end uh tailings filter press that deals with the tailings solution in a closed circuit.
• 18:11
  SPEAKER_01: Very modern, very large, largest by a long way, by the way, uh 1800 to 2,500 tons a day processing facility here in the Silver Valley.
• 18:20
  SPEAKER_01: Lots of synergies to be unlocked there, but I get distracted on that for now.
• 18:24
  SPEAKER_01: Your questions about uh smelting.
• 18:26
  SPEAKER_01: So we had a long-term relationship with tech and a commitment to send them uh our zinc concentrate and our lead concentrate uh along the way.
• 18:37
  SPEAKER_01: Now, um at no time has the uh various uh discussions, politically motivated discussions between uh um uh the US and Canada uh so-called trade war impacted us uh at all.
• 18:52
  SPEAKER_01: And I think, uh not that I have any um deep insight into this, I think for both the US and the Canadian governments, the integrated nature of the metal supply chain within the North American continent means that actually when the people are starting to throw stones at each other, uh, that integrated metal supply chain um will uh for a period of time not be effective and in our affected, and in our view, not be affected at all.
• 19:20
  SPEAKER_01: But I can't guarantee that.
• 19:22
  SPEAKER_01: Now, here in America, there is a lot of investment going in to build uh refineries and smelting and downstream capabilities for rare earths as well as every other metals.
• 19:33
  SPEAKER_01: And that's thoroughly sensible because the history of Bunker Hill and the history of American mining and the history of American refining are intertwined.
• 19:43
  SPEAKER_01: Bunker Hill used to be a vertically integrated operation with its own lead smelter and zinc plant, and it produced all the products, refined products that everybody would uh need today, and more actually, Antimony being but one part of it, because it was a sufficiently large operation that it took feed from multiple other mines uh within Idaho and across the US.
• 20:07
  SPEAKER_01: But the problem was that along with a lot of US mining and a lot of US industrial activity, they couldn't keep up with the very, very good environmental laws passed in the 1970s under the President Richard Nixon, Environmental Protection Act, Clean Air Act, Clean Water Act, and so on.
• 20:26
  SPEAKER_01: And that shut down all of the smelting operations in the US and shut down Bunker Hill's smelting operation and thereby Bunker Hill the company.
• 20:36
  SPEAKER_01: And these areas were tidied up, and it's only been 40 plus years later that people like us are jumping back in again and restoring mining.
• 20:46
  SPEAKER_01: But the refining hasn't been built.
• 20:47
  SPEAKER_01: The refining all went offshore, not exclusively, but a lot to China to take advantage of their demands.
• 20:54
  SPEAKER_01: And America from the 1980s till very recently benefited from the economies of scale buying their metal on the global market, much of which had been refined in China at the lowest price.
• 21:06
  SPEAKER_01: And that was fine until very recently when it wasn't.
• 21:09
  SPEAKER_01: And so America is having to reset that by investing in refining and smelting and processing technology here in the continental US or within allied, so-called allied or friendly states as they define them globally, and Canada would be one of those.
• 21:26
  SPEAKER_01: So I'm in answer to your question, do we, as we look out over a time period, say 10 years, uh think that we could be sending our concentrate to somewhere else driven by national security or trade war concerns?
• 21:44
  SPEAKER_01: It's possible, um, but I think everybody would lose out.
• 21:48
  SPEAKER_01: Both tech would lose out, they get our nice clean concentrate locally, replacing what Ponderé had.
• 21:54
  SPEAKER_01: The US would lose out because tech's trail smelter is the primary supplier of germanium and gallium.
• 22:00
  SPEAKER_01: The US Department of War today.
• 22:02
  SPEAKER_01: So they probably wouldn't want to put that at risk.
• 22:05
  SPEAKER_01: But actually, if suddenly there was a lower cost solution that we could get into with the agreement of tech, of course we would use it.
• 22:13
  SPEAKER_01: So it's a very dynamic changing situation.
• 22:16
  SPEAKER_01: But it won't really affect us, I believe, unless there is trade, so-called trade war.
• 22:22
  SPEAKER_01: I think it's an exaggerated definition of these things, gets worse and worse to the point at which, I don't know, you have to pay some kind of tariff for transporting your concentrate across the trail.
• 22:35
  SPEAKER_01: And then the US government has to pay some kind of tariff to get the critical metals it needs for its Department of War.
• 22:43
  SPEAKER_01: We'll see how it goes.
• 22:44
  SPEAKER_01: But at the moment, my eyes and ears are open, but we're getting on with producing the concentrate and think that over the long term this will all settle down.
• 22:56
  SPEAKER_00: Thank you, Richard.
• 22:57
  SPEAKER_00: I imagine that if there are alternative processing routes available that could potentially help you get better terms from or more competitive terms from tech.
• 23:06
  SPEAKER_00: While we're on the subject of money, let's talk finances.
• 23:09
  SPEAKER_00: I was looking at your second quarter financial results this morning.
• 23:12
  SPEAKER_00: You had uh$6.6 million in cash, a$12 million US dollar working capital deficit, and about$100 million in long-term debt.
• 23:22
  SPEAKER_00: You mentioned that that potential$150 million XIM finance, half of that, you would probably use to pay down some of that debt.
• 23:30
  SPEAKER_00: Um Silver 42nd 47 has about uh$40 million Canadian in in working capital.
• 23:37
  SPEAKER_00: And as part of the deal announcement, it mentioned that Silver 47 will be uh will try and get a$5 million unsecured debt facility as well.
• 23:46
  SPEAKER_00: Talk me through all that, unpick all that.
• 23:49
  SPEAKER_00: What's the financial situation of Bunker Hill like?
• 23:53
  SPEAKER_00: Um, you know, that debt's obviously a concern.
• 23:55
  SPEAKER_00: You're looking at a route to pay down some of that, or or the most onerous part of that at least.
• 24:00
  SPEAKER_00: Um, so within that scheme of things, why is Silver 47 looking to raise five million dollars in debt?
• 24:08
  SPEAKER_01: Yeah, no, well, um let's, you know, we're in a very for anyone that's been uh uh bringing a mine into production where you finance it in a combination of uh equity, debt, and other instruments, in our case uh royalties and previously stream finance, um, you uh go into production encumbered, unfortunately.
• 24:30
  SPEAKER_01: Um and the sooner you can get to um commercial production, which in our case is cash flow positive, uh the better for obvious reasons.
• 24:43
  SPEAKER_01: And we anticipate being in that position by the end of this year.
• 24:50
  SPEAKER_01: Now, as you know, um, and watchers of this show will know, um, all ramp-ups from start, you know, the commissioning uh process extends through this from start to commercial production is not linear.
• 25:06
  SPEAKER_01: Um you're bringing people uh into an operation that need to be trained, and you're bringing a system into play uh that needs to be tested and adjusted under real loads and real conditions.
• 25:18
  SPEAKER_01: Theory is meeting reality, and you have to keep on adjusting things.
• 25:22
  SPEAKER_01: Actually, we're doing pretty well.
• 25:24
  SPEAKER_01: Um uh we're we're selling concentrate, which is getting of a better quality uh over time, and we're ahead of where I want to be.
• 25:32
  SPEAKER_01: So I'm very confident that we're gonna get to our commercial production target by the end of this year.
• 25:38
  SPEAKER_01: But money, as you quite clearly point out from Q2, is very, very tight.
• 25:43
  SPEAKER_01: And the sooner we can be making as much revenue as possible, uh, the easier it is down here from a uh stress and reality and business reality perspective.
• 25:52
  SPEAKER_01: But we always had in place uh a$10 million standby facility from tech that we're drawing down on.
• 26:00
  SPEAKER_01: And we put in place, in addition, an additional$10 million facility for motion partners, um, who is uh uh one of the groups that um trading groups that we will push, well is the trading group that we'll push our lead concentrate to.
• 26:16
  SPEAKER_01: And in addition to that, um Silver 47, when they're looking at uh the and we're discussing with them, um, they said, well, look, if you need to, uh we could make some of our balance sheet available between now and the time the deal closes.
• 26:32
  SPEAKER_01: Because what you don't want to be doing is announcing a deal when you're going into production and then suddenly saying, wow, I need to raise some equity, which we don't think we need to do, but things could go wrong, if you like, or twist and turn on the path to commercial production, and you're suddenly short of uh of the money you need.
• 26:52
  SPEAKER_01: So it's in the spirit of partnership with Silver 47 that they are making five million dollars of their balance sheet available to us should we need it.
• 27:02
  SPEAKER_01: Frankly, um, using if the tech facility and potentially some of the ocean partners facility will mean it's highly, highly unlikely, uh uh given the trajectory I see in front of me that we're going to need um any of Silver 47's money.
• 27:17
  SPEAKER_01: But when we come together in uh um, God willing, November, I mean, because there's the process you've got to go through to get there, it always takes a little bit longer than I'd like, but it's say November time.
• 27:30
  SPEAKER_01: Bunker Hill will also, um, and the combined company, Bunker Hill Silver, uh, will have um the cash that is on Silver 47's balance sheet, uh, and by then the cash that we have generated from operations uh as our uh as our starting position.
• 27:46
  SPEAKER_01: Now, what we want to do is working together uh is to restructure or replace the existing debt that's on the balance sheet that we that's priced according to uh the market to take account of the fact that we're bringing a mine into production with a PFS and so on and so forth, different price.
• 28:05
  SPEAKER_01: So as we go into 2027, US U using US XIM or other sources, our real focus from a balance sheet perspective, looking on the negative side, looking on the on the debt side, is to restructure and replace some of that debt, so it's at lower cost, uh, to allow the mine uh to not just uh um generate um maximize the cash it generates free cash it generates before it reallocates that to uh expiration, uh, but also just to strengthen the balance sheet uh along the way.
• 28:39
  SPEAKER_01: So we're in a pretty standard position for a mine going into production, which is typically not done in a single asset basis from pure equity, but is done from a combination of equity, stream, royalty, and debt.
• 28:53
  SPEAKER_01: And we do have some debt that's more expensive than we'd like, and we'd like to replace it.
• 28:58
  SPEAKER_00: Thank you, Richard.
• 28:59
  SPEAKER_00: Now, looking at your debt, you've got convertible notes, you've got a sprout debt facility, but the big item seems to be the silver loan, and that's pretty much for the same value as you're mentioning, that 75 million potentially from the US Exim Bank.
• 29:13
  SPEAKER_00: Is that the bit that you'd look to pay off?
• 29:14
  SPEAKER_00: Is that the most expensive bit?
• 29:16
  SPEAKER_01: Totally.
• 29:17
  SPEAKER_01: That's the most expensive, and the piece that we would want to remove uh as a product priority.
• 29:22
  SPEAKER_01: The other two are relatively speaking easily manageable.
• 29:26
  SPEAKER_01: And we feel, actually, um, and our stakeholders and shareholders feel, uh, which is why, um, as you'll note, uh when we announced the deal, um, uh the support was given by tech, uh, was given by Ocean Partners, who's a shareholder at large shareholder of ours, and is given by Sprout Streaming Resources for the deal, because they actually see the combination of these two companies are going to be of a scale and a size and a market profile to have better access to both the debt and the equity market, credit in the equity markets, uh, such that we can uh deal with that silver value, silver loan, forgive me, silver value loan, silver loan as uh as soon as possible and at the right price in the early part of 2027.
• 30:08
  SPEAKER_01: And that, frankly, once the deal is closed, is the catalyst of all catalysts.
• 30:13
  SPEAKER_01: And um uh we will be doing an awful lot in terms of um showing to the market and showing to investors the resource that we have bought, those three assets, and the potential within Bunker Hill.
• 30:26
  SPEAKER_01: But it's actually getting that silver loan into a point replaced, repaid, or into a place that uh is more um uh sustainable uh is going to give uh all of our equity holders uh access to much more cash uh on a per share basis uh than they would be getting with its existence.
• 30:48
  SPEAKER_00: Thank you, Richard, and that gives me a nice segue into sort of my next question.
• 30:52
  SPEAKER_00: Um, what do you anticipate the key catalyst being and that our viewers should watch out for in the 12 months following the closure of the transaction in November?
• 31:03
  SPEAKER_01: Yeah, thanks.
• 31:04
  SPEAKER_01: Uh from so we take it from November.
• 31:06
  SPEAKER_01: So we've closed it in November and uh we're going forward.
• 31:12
  SPEAKER_01: Well, the guidance we're going to issue for 2027, I would say, is the first one.
• 31:17
  SPEAKER_01: Incorporating, um uh, where we've done a resource and reserve statement, probably would be the first one.
• 31:23
  SPEAKER_01: Incorporating those resources and thereby reserves uh into our 2027 mine plan and issuing guidance on silver, zinc, and lead for Bunker Hill that's going to be materially above uh what we um planned on in the PFS.
• 31:40
  SPEAKER_01: We think that's going to be a very compelling um catalyst.
• 31:44
  SPEAKER_01: Then, in addition from that, you're going to see, and again, our business planning for 2027 combined with Silver 47 is yet to be concluded.
• 31:54
  SPEAKER_01: You're then going to see a series of uh expiration uh results uh from the high payoff uh zones in Alaska, New Mexico, and Nevada.
• 32:07
  SPEAKER_01: But the big catalyst through the first half of next year that you're going to see is dealing with wrestling that silver loan into a place whereby it's we're now getting more cash for shareholders.
• 32:21
  SPEAKER_01: Now I can list multiple others, but we're into the operation space there.
• 32:26
  SPEAKER_01: So we should be, the moment the market believes in all of this, and we all know there's a lag in that, we should be moving from where we've previously been valued as a single asset base metal developer into being a silver producer at some point next year.
• 32:47
  SPEAKER_01: The market typically takes six to twelve months from commercial production to start valuing you properly as a producer.
• 32:54
  SPEAKER_01: And again, the market is being fair in that.
• 32:57
  SPEAKER_01: So we will be putting out quarterly results as producers, and everyone's familiar with how that works.
• 33:03
  SPEAKER_01: And having been a former chief operating officer of Barrett Gold, I know we all lived and died by hitting, uh, which we always did when I was there, by the way, hitting those quarterly results.
• 33:13
  SPEAKER_01: And we want our new team down here to be hitting the Q1, Q2, Q3, Q4 results in ways that gives the market true belief in the ability of the Bunker Hill mine to operate as a reliable producer of silver, uh, lead, and zinc.
• 33:31
  SPEAKER_01: So you've got this great balance.
• 33:32
  SPEAKER_01: We're moving from being judged on expiration and development results to being judged on operating results and expiration results, and at a corporate level, our ability to strengthen the balance sheet over that period of time to give our shareholders greater access to both the resource and then the amount of cash that we're producing.
• 33:53
  SPEAKER_01: So I actually think the next 12 months, 2027, is going to be a very, very exciting year for us, and we've got a lot to do.
• 34:01
  SPEAKER_01: Uh, and um I've got a very small team, and we need to expand that a bit um to make sure that we can cover all of those requirements and the associated risks as well as anybody.
• 34:14
  SPEAKER_00: Excellent.
• 34:15
  SPEAKER_00: Well, congratulations once again on the transaction.
• 34:17
  SPEAKER_00: Richard, uh, we'll follow up with you at some point next year to get an update.
• 34:21
  SPEAKER_00: Unfortunately, that's all we have time for today.
• 34:24
  SPEAKER_00: So, Richard, thank you very much for joining me today.
• 34:27
  SPEAKER_01: Wonderful.
• 34:28
  SPEAKER_01: Thanks very much again for having me.
• 34:29
  SPEAKER_00: And of course, if you like what you see, don't forget to hit that subscribe button.
• 34:33
  SPEAKER_00: I'm Paul Harris for Kitco Mining.