'A lot to prove': Can 'green' boost propel Bunker Hill to reopen as a clean, low-impact mine?

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Jun. 11—KELLOGG — Josh Haynes had a simple explanation for what he was doing below the surface of the Silver Mountain ski hill on an April afternoon, at the dead end of one of the countless tunnels that comprise the historic and, perhaps, future Bunker Hill Mine.

"They paint two lines up," he said over the roar of a generator-powered air-ventilation system, "and I blow a hole right through the middle."

But while Haynes and a small crew were in the process of doing just that — expanding the long-shuttered mine's system of underground shafts with the aid of a massive handheld mining drill known as a jackleg, some explosives and a front-end loader — there was nothing simple about the work he was doing in the bowels of Bunker Hill.

Or about the fact that he was doing it at all.

Kathy Plonka / The Spokesman-Review

For four decades, the Bunker Hill Mine has been known less as a source of precious metals and more as a significant piece of a sprawling environmental disaster.

The U.S. Environmental Protection Agency made the mine part of a Superfund site in 1983, shifting the area's focus from mining to environmental remediation. But untapped mineral riches have tempted a series of investors to try to revive Bunker Hill over the last 40 years.

While those efforts stalled before they started or fizzled without significant success, a new group of mining-industry veterans are making what appears to be the most serious effort yet to get the mine running again.

On the April day when Haynes and a clutch of his fellow contract miners could be found working underground, another 20 or so employees of Bunker Hill Mining Corp. occupied the modest but busy mine office nearby.

There, they were working through seemingly every aspect of the hugely complex job of restarting a partially flooded and polluted mine that puts out some 1,300 to 1,400 gallons per minute of acid mine drainage, according to the EPA.

Sam Ash, Bunker Hill Mining Corp.'s chief executive officer, is leading the effort in Kellogg, and he recently moved to town to oversee it.

He said his presence is part of a broader effort to do things differently than his predecessors. Ash's aim, he said, is to focus on the on-the-ground work of understanding the mine's current conditions and how to make it profitable and sustainable, rather than on drumming up interest in the historical size of the resource and creating unrealistic expectations.

To do so, Ash and his colleagues have focused on transforming the extensive historical information contained in a trove of hand-drawn mine maps into digital information that can be analyzed; on drilling new samples to expand their understanding of the mineral deposit; on understanding the environmental challenges posed by acidic leaching within the tunnels; and on evaluating new technologies that will lower costs in a once labor-intensive, union-heavy industry.

While all of those factors are important to better understand what's available at Bunker Hill and what it will cost to extract it, perhaps the key to unlocking the mine's apparently rich reserves is growing demand for lead, zinc and silver.

And what's driving that demand, in part, is one of the forces that contributed to Bunker Hill's closure in the first place: environmental concern.

As people and companies seek ways to reduce greenhouse gas emissions, they are pursuing new technologies that rely heavily on metals that must be mined.

Zinc is seen as key to storing energy from wind and solar power. Lead can be used to produce solar cells. And silver is vital for the production of electric cars, charging stations and power cables that will move renewable energy.

Ash cited green technology as a driver of an "ever-increasing" worldwide demand for metal.

The conversion from a carbon-based economy, he said, is "going to require significant amounts of metal."

A similar effect is apparently being felt elsewhere in the Silver Valley.

Hecla Mining Co. CEO Phil Baker told The Spokesman-Review in February that his company would "certainly grow our activities" at the Lucky Friday Mine due to rising metals prices resulting in part from a boost in demand for silver in products like solar panels and electric vehicles.

Andy Helkey, Kellogg Remediation Manager with the Idaho Department of Environmental Quality, said "quite a bit of rehabbing" is also underway at the Sunshine Mine, which he said "may reopen."

Tom Henderson, general manager at Sunshine, said while "there has been a fair bit of rehab at the mine" recently, the aim is "principally care and maintenance." At some point in the future, though, he suggested the mine might "start with additional (exploratory) drilling at the property and then look to the future after that."

At the Galena Complex, work is underway to "modernize infrastructure, acquire new mining equipment and develop additional stopes for better operational flexibility," according to the company's website. Efforts to reach Galena were not successful.

The reason for the renewed activity at the valley's mines, Helkey said, is "metal prices picking up."

It's not only mining executives who have tied demand for metals to green technology.

The authors of a recent study in the scientific journal Nature Communications made a similar case.

To combat climate change, wrote Laura J. Sonter and her coauthors, "significant production increases (of renewable energies) must occur to phase out fossil fuel use. However, the production of renewable energies is also material-intensive — much more so than fossil fuels — meaning that future production will also escalate demand for many metals."

Sonter and her coauthors make another important point about where these demands for metals are met.

"When required commodities exist in biodiverse countries that lack strong resource governance," they write, "mining poses serious threats to species and ecosystems."

The United States was among such the countries lacking "strong resource governance" through much of the 20th century. But after the creation of EPA and the passage of enhanced environmental regulations beginning in the 1970s, many American mines closed and extraction increasingly moved to developing parts of the world.

Ash was among a large number of American mining engineers whose careers mirrored these developments.

He has spent much of his career working oversees with Barrick Gold Corp., most recently overseeing operations at the Lumwana copper mine in Zambia.

Other top officials at Bunker Hill also spent time with Barrick, including Richard Williams, Bunker Hill's executive chairman, who previously served as Barrick's chief operating officer.

Bradley Barnett, Bunker Hill's vice president of sustainability, spent time leading Barrick's division of closure, rehabilitation and asset development. In that role, he oversaw the cleanup of five Superfund sites, he said, while also working at a number of overseas operations.

Barnett's international experience also included a stint as chief executive officer of Centar Ltd., an investment company that inked controversial deals with the Afghan government to mine for copper and gold.

Stars and Stripes reported in 2019 that those deals were compromised "amid fears of insecurity and with allegations of corruption still dogging the company."

Barnett pushed back on the allegations at the time and told The Spokesman-Review they were "baseless and determined to have no merit."

"The contracts were completely legitimate," Barnett said. "The projects ultimately did not move forward because the environment in Afghanistan with all its associated risks and added costs made the projects too difficult to fully fund."

According to Ash, it was experiences in "risky jurisdictions" that helped drive him and his colleagues to seek a mine with high mineral potential in a favorable jurisdiction and one that was a "distressed" asset available for a good price, with an opportunity to "create value not only for the shareholders but for the stakeholders across the spectrum."

A global search led the group to Kellogg, in part because Idaho is "better and friendlier" than other jurisdictions, Barnett said.

His colleagues in the mining industry agree, according to an annual industry survey from the Fraser Institute. The Gem State ranked No. 1 on the 2020 survey's Policy Perception Index, which offers a " 'report card' to governments on the attractiveness of their mining policies," according to the Fraser Institute.

And while the mine's status as a Superfund site complicates matters, a 2018 consent decree finally spelled out the future obligations of the mine's owner, Nevada-based Placer Mining Corp., and Bunker Hill Mining Corp., which leases the site with an option to purchase it next year.

The decree allows the mine to reopen but compels Bunker Hill Mining to pay up to $20 million, including almost $1 million a year for the treatment of acid mine drainage that has long contaminated Bunker Creek and the South Fork of the Coeur d'Alene River.

The company can get off the hook for those water-treatment costs, though, if it can find an alternative method to treat the wastewater discharged from the mine.

Barnett said he and his colleagues are already working to find such a method.

"There's a lot that you can do about it," he said. "There's a lot that we're already doing about it."

While leading a pair of visitors through the mine, Barnett explained Bunker Hill Mining Corp.'s early efforts to clean the water before it even reaches the approximately $50 million treatment plant that currently discharges cleaned wastewater into the South Fork.

Engineers are working to consolidate the flow of acidic water within the mine and to treat it with lime, he said. They are also experimenting with methods of covering exposed rock with a "paste" they hope will stop acid from leaching in the first place.

The goal, according to Barnett, is to create "high-quality water that requires little or no treatment" and to figure out "beneficial uses" of that water instead of putting it in the river.

He pointed to shafts that he said once contained waist-high water and that were now completely dry. Barnett also stopped to test the metals content and acidity of standing pools of maroon water.

Barnett noted the company has created a real-time feed of data about water leaving the mine.

"The facts need to speak for themselves," he said.

While EPA hasn't done a formal analysis of water quality since the company's pre-treatment efforts began, Mark MacIntyre, an agency public information officer, said there are signs the efforts are working.

"Anecdotally, EPA's routine sampling of mine water influent to the Central Treatment Plant has recently seen a decrease in metals concentration and acidity levels," he said. "The cause of this minor improvement in water quality from the mine may indeed be the result of pretreatment actions taken by Bunker Hill Mining Co., although more study would be needed to confirm that."

But though the company is eager to improve the water quality and lessen the cost of treating it, Helkey, with Idaho DEQ, said they will have to slow down.

"At this point in time, we don't want them doing anything with the water because we're optimizing the (water-treatment) plant and we need (the discharge) to be consistent," Helkey said.

While he noted "there are options for them down the road, definitely," Helkey said mine engineers will have to wait to implement them.

Helkey, who said state environmental regulators meet weekly with Bunker Hill officials, has seen "a number of groups" try to get it going again.

While the current team has gotten farther in the process than anyone else, Helkey noted that they "still have a very long ways to go to get that point where we're going to see the doors open."

He's not alone in his caution.

Mac Pooler, the 79-year-old mayor of Kellogg, has seen his hometown when Bunker Hill was running full-tilt and has guided it through the arduous Superfund cleanup. While he said he tries to "be as positive as possible," he's also taking a wait-and-see approach.

"If it happens, we'd be more than glad," Pooler said. "But we've been there and heard different ones talk. But now it's up to them to figure out how to go about it."

Terry Harwood, executive director of the Basin Environmental Improvement Commission, which helps coordinate remediation in the area, said the job of restarting the mine is a formidable one, with a number of environmental, economic and logistical challenges. But he also said the new team behind Bunker Hill Mining appears serious and knowledgeable to perhaps overcome those obstacles.

"I think these guys have got a better chance than any of the ones that have down the pike so far," Harwood said. "You visit with them and they're technologically capable and they want to cooperate on the treatment plant and within the correct environmental regulations."

And while Harwood is no stranger to the devastating legacy of Bunker Hill's previous incarnations, he said it served a vital function that he hopes will return.

"What we've done in the past in this country is sent the mess-making part of our economy overseas," Harwood said.

As mining has moved elsewhere, he said, so has the environmental devastation it often produces. That has only perpetuated the industry's ugly environmental history while also leaving the U.S. "dependent on these other countries," Harwood argued.

With the U.S. rapidly adopting new technologies that increasingly rely on minerals extracted overseas, Harwood believes the country is in a vulnerable position.

"We've got to have mining," he said, "but we've got to have it so it's not such a big mess."

Ash, the Bunker Hill Mining CEO, agrees.

He said the company "recognizes and acknowledge" Bunker Hill's "absolutely atrocious" and "unconscionable" environmental history.

But Ash believes history doesn't have to repeat itself.

"We can do this and have a very, very different outcome," he said.

Ash said the mine will be carbon neutral, fully electric and completely sustainable.

"What you will see is nothing and no impact," he said.

Even skiers on Silver Mountain, he said, "will have no idea that 3,000 feet underneath you there's an active mine in production."

But before Ash and his colleagues can pursue their vision of a low-impact, environmentally friendly Bunker Hill Mine, they have to get it open. And that won't be easy.

Most importantly, they have to raise an estimated $42 million in initial capital costs, according to a recently published preliminary economic assessment of the project. And a number of other obstacles exist, including getting permits from the state, hiring qualified workers and finding somewhere to ship the ore for processing.

To raise the required money, Ash said the company is looking at a number of options, including tapping into hedge funds and private investors and issuing stocks.

The upside is that the mine is expected to generate "approximately $20 million of annual average free cash flow over a 10-year mine life, and (produce) over 550 million pounds of zinc, 290 million pounds of lead, and 7 million ounces of silver," according to a company news release touting the assessment's conclusions.

But Barnett said the report doesn't capture the full range of possibilities at the mine, which include "areas of major opportunity" that fall outside the bounds of the preliminary economic assessment. He noted that the mine is one of shallowest in the Silver Valley and that it could have a significantly larger footprint than the existing workings.

He said the company would "almost certainly" find large deposits below and outside the existing labyrinth of mine tunnels that could extend its life to 40 or 50 years and increase the potential revenue the mine generates.

If and when financing is complete, he added, the restart could begin within 18 and 24 months.

Meanwhile, Barnett said, the company plans to begin hiring and training some 100 workers later this year to prepare for that restart. He anticipates some 150 to 200 people will ultimately work at Bunker Hill and earn around $80,000 a year, which is almost four times the median individual income in Shoshone County, according to the U.S. Census Bureau.

While unions have long had a strong foothold in the mines of Silver Valley, Bunker Hill plans to rely on contract miners, according to Barnett.

And the company expects the mine's operations to be high tech, meaning the workforce will have to be "highly skilled and highly educated" and that the operations will be "digitally enabled" to reduce the need for manpower, according to Ash.

If the company's plans are realized, Bunker Hill will be open again but in a very different form than the mine operation that extracted some 40 million tons of lead, zinc and silver ore from the bowels of Silver Mountain between 1885 and 1981.

"The reason that we're here at Bunker Hill is that we all firmly believe that the mining industry is changing and changing in an important way," Ash said. "And we believe that there is opportunity to come in and mine in an environmentally and socially responsible way, and that as an outcome that we will improve the environment and improve the environmental conditions of assets that were distressed at one time or another."

If they're successful in Kellogg, Ash and Barnett said they plan to do the same thing at distressed mines all across the continent.

"We see this as the cornerstone asset for the largest silver company in North America," Barnett said of Bunker Hill.

That company, Ash said, will "ride the wave to what the future of the mining industry is going to be." That future industry, he said, will have no or even a positive environmental impact, will "have an enduring positive impact on the local communities" and will meet the demand for metals in a global economy based on renewable energy.

Meanwhile, though, much work remains to be done in Kellogg.

And Haynes, who was drilling underground in April, was happy to do it.

He grew up in Kellogg. And while his father and grandfather both worked in Bunker Hill mine during a century-long streak that made it one of the world's most productive sources of lead, zinc and silver, it has been closed since before the 35-year-old was born.

So while the self-described "tramp miner" caught gold fever that has taken him underground all over the country, it was hard for Haynes to imagine he'd ever have the chance to drill in his hometown. But now that he was doing it, Haynes' excitement about the work was obvious.

"When things are going good like this," Haynes said, "we can really go."

Whether Bunker Hill Mining Corp. can maintain its progress remains an open question, as even Ash acknowledges.

"We had a lot to prove," Ash said. "And we still have a lot to prove."

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