Bunker Hill Upsized and Improved $67 Million Financing Package, Teck Offtake Agreement

0:08 Hi everyone, and welcome to today's live summit with Bunker Hill. I'm pleased to introduce their CEO, Sam Ash, as well as their CFO, David Wienz. The team is going to be reviewing the latest news from Bunker Hill, and after, they're going to be taking questions live. So, as a reminder, if you'd like to participate, please submit your questions using the Q&A panel found on the right-hand side of the screen at any time. And if you'd like to get in touch with the Bunker Hill team, please feel free to fill out the survey that's linked at the top of the chat, again, on the right-hand side of your screen. As always, this event is being recorded and it's gonna be available on demand on six.com in the coming days. So look out for

0:38 that if you wanna refresh. Without further ado, Sam, I'm gonna pass things over to you. Thank you, Cam. And I'll tell you what, this is a really exciting day for Bunker Hill. As everyone knows on our press release yesterday, we've achieved full project financing. Couldn't be happier with that. And that really lets Bunker Hill move forward and build this mine. It's a real lift off moment for the company and the project. I'm gonna just go over the highlights of the financing and then let Dave, our CFO, dive into the details a little bit. All told, $67 million financing package, $46 million from a stream with a $21 million backstop debt facility.

1:23 Really what that enables us to do is move the project forward, build this mine, put it into production on a timeline where production will commence in the second half of 2024. In conjunction with that, tech has exercised the option for offtake on the concentrate. So we have a solid partner and market for the concentrate product when we come into production. And really what we are going to be recommencing full restart activities starting in June with the disbursement of the stream. And in conjunction with that work is already underway to upgrade our listing to the TSX-V. So Dave, do you want to just add a little bit more color to the structure and nature of the financing package? Absolutely, thanks, Sam. So, extremely pleased with this result and thrilled to be working with Sprott Streaming as we have been for the last year and a half. And yesterday's announcement really is the culmination of that final piece that we've been working towards with them for quite some time.

2:26 As it's pretty straightforward, $46 million stream For those familiar with our project finance package already, it's the exact same stream as what was already contemplated, except for the fact that it's $46 million instead of $37 million. It really is that simple. No catch. That, as it says on the slide, materially lower cost of capital for our shareholders. Obviously, that was really our job number 1 as we were working with Sprott here. Great results for both sides. Just quickly and happy to get into more detail in the Q&A for those not as familiar with the existing package, it's a 10% stream on all metals until a minimum quantity is met, goes down to 2% thereafter, and we do have an option 50% buy back at a 1.4 times multiple.

3:15 The $21 million debt facility won't be drawn on day 1. It is a backstop to the full project financing. No standby fee, 10% interest. There is a small royalty that kicks in if we draw that. We have the election to draw that and we'll be assessing that as we go through over time. Series 1 and Series 2 convertible debentures, these were advanced in at the beginning of last year. They are straightforward convertible debentures that had matured in early 2025. Those are being moved out to early 2026 and that just really make sure that we have the breathing room as we move into commercial production and into sustainable free cash flow that we have the breathing room to achieve that and pay those back out of that. Royalty convertible to venture that will now convert into the royalty that was always contemplated.

4:07 That's 1.85% royalty that was announced about a year and a half ago, and it's been outstanding until the stream comes in. So very pleased, You know, certainly like to thanks Broadstreaming. They've been an amazing partner. They've worked with us each step of the way. And this really helps us, really fulfills the objective we've been working towards of financing the project.

4:33 Thank you, Dave. Now let's dive into the project a little bit. Wanna bring everybody up to speed on where we stand right now. So as we know, we have the full processing solution in place. The Pend Oreille mill is sitting in the yard ready for construction. Process plan engineering, 90% complete. And the engineering team, Bar Engineering, is working on just finalizing that over the next few, over the coming weeks. From a mine perspective, in December we had a pretty big milestone. We finished a small piece, 1,800 feet of capital development, which gives us access to the first 3 years of mine life. And so we now have rubber-tired access to the first 3 years of production. It's one of the great aspects of this project is the amount of existing in-place infrastructure, particularly in the underground, that we're able to leverage to really execute a relatively low-cost restart at this operation.

5:34 I want to talk about the mine plan and the mine a little bit because we have been continuing to do a lot of more detailed engineering on that first 18 months of the mine plan. I just wanna remind everybody that may be familiar with the Silver Valley. This mineralization that we are starting up the operation on is a little bit different. It is not narrow vein mining. This is transverse long hole stoping fully mechanized. So you're talking about ore widths of 50 to 100 feet, strike length 7 to 800 feet, and then of course extending 1,800 feet vertically from the 6th level down to the 16th level. So very much suited to high productivity, fully mechanized mining.

6:23 Over the next few months, as we ramp up activity and begin to build this mine, in the process plant, you're gonna see us finalize and finish the engineering, move on to civil construction really quickly. And in the underground, we're going to upgrade the portal, increase the portal size just a little bit. That's going to allow for more productivity coming out of the underground, as well as get the underground electrical infrastructure in place. Those are the first 2 key steps in the underground that'll move quickly into rehabilitation and a little bit of definition drilling with an eye towards both with resource conversion and potentially a little bit of resource expansion along the way as well. All said, this is a shovel-ready project. We are fully ready to go and the Sprott financing package really is the point of liftoff for us, and activity is going to increase pretty dramatically.

7:20 And we're well on track and have a solid plan to deliver this mine into production in the second half of 2024. I wanna talk a little bit about the team and the partners who are going to execute this, because certainly plans are great, but the team that's going to execute it is absolutely critical. Everyone is, by this point, fairly familiar with myself, Richard Williams, our executive chairman, and Dave, our CFO. But I want to take some time to talk about who are the guys on the ground who are really gonna drive this project forward and help us be successful. You know, Tom Francis, our general manager, joined us from Rio Tinto, where he was running the Bingham Canyon open pit mine in Salt Lake City. And Mike Island, our processing manager, former processing manager running all of Barrick's refractory processing in Northern Nevada. 2 very skilled guys, very comfortable with projects of large scale and large complexity.

8:20 In fact, Mike Islan, when he was running the processing facilities in Nevada for Barrick, his annual maintenance budget exceeded the entire project build for the Bunker Hill mine. And we've intentionally set out to build a team of this caliber, not only to make sure that we're capable of delivering Bunker Hill on time and under budget, but because we certainly have an eye towards growth in the company. And what you see here is the foundation of a team that's not only able to execute the Bunker Hill restart, but is able to support a rapidly growing business and mining business, which is the next step for us after Bunker Hill.

9:06 Some of the key partners that we have in place, they're ready to go, primarily local and very high caliber. CMC, our mining contractor and mining partner was able to deliver for us the 1800 feet of initial development. And really that was a great insight into CMC's capability as a team. They delivered that really on schedule and we were able to use the cost information about the driving of that drift to build into our operating plans, which gives us a lot of confidence in the operating cost side of the business plan. Hoffman Manufacturing, if you remember, they demobilized the Pend Oreille Mill, moved it across the Bunker Hill, and achieved that with a spotless safety record ahead of schedule, and most importantly, under budget.

9:56 Mine water continues to be a strong supporter on all of our mine water and mine water discharge activities. And couldn't say enough about our relationship with the Idaho Department of Environmental Quality, the Idaho regulatory agencies that we deal with on a daily basis, fantastic group of people to work with. Mindtech supporting us on the mining front, Barr Engineering of course, delivering the full engineering for the process plant, SGS working on the MET testing, It's really interesting. We still believe that there's additional value to capture by continued MET testing. We have relatively high recovery rates in the mid to high 80s, but we still think with a little bit of optimization there's another percentage or 2 that we can get there.

10:48 And then a whole range of additional partners who are on board

10:53 have been fully supportive this whole time, delivering high quality work and fully committed to the Bunker Hill Restart Team. We have a fantastic team in place to move forward and deliver this project. And man, what a project. You know, certainly the pre-feasibility study indicates a five-year mine life with a $52 million NPV, but that's just the start. We have already identified a lot of upside potential that we're already looking to unlock. We talked a little bit about SGS and the additional MET test work that we think can unlock additional value on the metallurgy side. You know, the processing plant and the engineering is engineered to allow for at the right time an increase in throughput up to 2500 tons a day. That's a significant upside opportunity for us, as well as concepts like ore sorting, where it gives us an opportunity to get more metal units into the processing plant with a limited amount of additional investment.

12:00 Huge upside potential in the amount of inferred resource available for conversion for us. 7 million tons of inferred resource that was actually a reserve that was in production before the mine went into closure. Now we have a little bit more work to do on that to bring it to convert and bring that in to met the measured and indicated category, but we feel highly confident that we're going to convert that inferred resource at a high rate. That represents a significant mine life extension. And that's just really, you know, what's right in front of us for value creation. That doesn't take into account any of the upside potential for exploration. The mine operated for 100 years and there was never any exploration done at depth because there never needed to be. They were always able to replace reserves and have 5 years worth of reserves within the existing mine footprint.

12:50 That's a tremendously exciting opportunity, particularly with the additional silver and leverage to silver and higher silver grades that comes at depth. All that being said, that's on the in the existing mine footprint that is really just a third of the full mineral endowment and claims package that we control. And we have some significant opportunity

13:16 for exploration in that larger claim block. Some of the geophysical work that we've done and are looking at indicates that there is the potential for significant duplicate mineral deposits within the claim block. Very much looking forward to advanced exploration in the larger claim package. And really, you know, just to wrap up, you know, to summarize the journey that we've come forward on, look, 3 years ago, Bunker Hill was a dormant company, didn't own an asset, and it was really going nowhere. What we saw was the opportunity to do something very special, restart the Bunker Hill mine and make the Bunker Hill mine a cornerstone asset of a growth-focused, multi-metal, multi-operation mining company.

14:08 So we came in and I think the

14:10 results speak for themselves. We completely revamped the company. We've published 2 PEAs, 343-101 compliant resources, a high quality, robust pre-feasibility outlining a pathway to free cashflow generation. And we put the asset in a state where it is shovel ready and really ready to bring into production. Look, as we go forward, we're just hitting our stride now. You're going to see us report on a regular basis the progress towards project completion, where you're going to see us upgrade onto the TSX-V listing.

14:53 And we have a really bright future. Couldn't be happier about where we're going. And just to reiterate what Dave said, couldn't be happier with the support and the partnership with Sprott Streaming, with Tech Resources, and with all of the stakeholders and partners that have helped us get to this point. So look, it's great to talk to you today and you're going to see great things coming from Bunker Hill over the next year, culminating in bringing this iconic mine back into production. And I think with that, Cam, I think we're ready to take some questions. Yeah, absolutely, Sam. David, appreciate you going through the great presentation. And just as a reminder to everyone in the audience, now's the time.

15:38 If you'd like to participate in the Q&A session, feel free to submit your questions to the Q&A chat found on the right-hand side of your screen. Let's dive right in though. Ryan has this question. Could you go over the debentures and repayment plans that are there? Absolutely. So we've got 2 convertible debentures. Well, 3 technically. We're about to have 2 because the royalty convertible debenture, which has been on the books until now, is about to convert into a royalty. So what we'll be left with is what we call the Series 1 and the Series 2 convertible debentures. The first one's 6 million, the second one is 15 million. As part of this package with Sprott, All 21 million of that maturity will be extended out through March 31st of 2026.

16:22 The conversion price on those is 29 cents on the Series 2 and 30 cents on the Series 1. So we think, certainly with the trajectory of the company here, that those likely will convert into equity at that roughly 30 cent level in 2026. However, clearly, you know, we'll have the ability to be leveraging the free cash flow coming from the mine, having been in commercial production for some time, if it comes to that repayment in cash at March 31, 2026. Okay, great. We have another question from Mark. Would you prefer that you didn't trigger any of the 0.5% gross royalty tranches on the 21 million backstop debt facility so that you could tell us whether development is still tracking inside the main 46 million dollar facility?

17:12 Yeah, great question Mark. So we agree with you. We would also prefer not to trigger those gross revenue royalties. And we made sure to sort of, it's a little bit buried in the news release, but we do have the option working collaboratively with Sprott and Tech to potentially replace that $21 million facility with offtake financing. So we've mentioned that in previous news releases that we are speaking with offtake financers. I've got several term sheets that I'm going through. I've been a little bit busy lately getting this deal across the line, but That's certainly something we'll be evaluating over time. In terms of the question on whether we are able to fully finance the mine with the 46, we will need the 20, the 2021 being transparent. And so it's a question of whether we draw on the facility that's available from Sprott or whether there's something else that is acceptable to both Sprott and Tech that we can replace that with. The good news is that we've got the benefit of time to work through that. We've got 40 million dollars coming in the door, roughly speaking, in a few weeks all going well and able to recommence project activities and then that final transfer able to evaluate over time.

18:27 Great, okay. Another question that we have is essentially what's the big walk away? What's the What's the most exciting elements to this news release that each of you has regarding everything you've talked about today? What's the one thing? I'll start with that, Cam. And I think the biggest news today is that the project is financed and we're able to build this mine and put it into production. And we're ready to do that. The funding was the last major hurdle. We've got fantastic partners, stakeholders,

19:03 and we're ready to execute and we've got the team to do it. I might save my answer just for the end here because I think we've had a couple more questions come in. Yeah, for sure. Larry has this question. So this is regarding the deal with tech. What happens if Glencore succeeds with the takeover? Short answer there, and certainly neither of us should be speculating about whether that happens or not, but regardless, the deal with tech and whatever happens there is on. It's a legal agreement that we're working towards. Certainly don't wanna speak for Glencore if that were to happen, but whoever owns that trail smelter, this is a good deal for both sides And it's a long-term sustainable revenue source for us. And there's been certainly no change in the appetite of both parties to move forward with this.

19:57 OK, great. Tim has this question. As you move to production, how many miners and headings will be required to maintain a 200 tons per day production? Also, what are your plans to deal with waste disposal? Yeah, absolutely. Good question, Tim. So when the mine is in production at the 1800 ton a day throughput when we go into production, that's going to represent in the neighborhood right around 200 to 220 full time employees here at the mine site. And that's that includes miners all the way through the process facility and the technical staff and the on-site GNA. So what does it take to, how many headings does it take? At any given time, we're going to have 4 to 5 stopes that are online and in some phase of production.

20:53 So the production can range from development to definition drilling, to drill and blast, to excavation, mucking of the ore, and the paste fill cycle. And the paste, that ties into your question around waste disposal. So the tailing solution of Bunker Hill is somewhat innovative. Because we have a historic mine, there's a lot of existing open voids in the underground. So we have opportunity to dispose of tailings in really 3 ways that we'll be building with this mine. First and foremost, the tails is going to be extremely important to the mining process itself. We're going to be using a paste tailings disposal into the stokes that we've mined. That's going to allow for to increase the extraction percentage and that will be geotechnical in nature. So it's actually part and parcel and integrated into the geotechnical ground support regime. That's gonna take roughly 50% of the tailings waste disposal. The remaining 50% is going to be split and handled in 2 manners. 1, surface dry stack tails and 2, filling of historic mine voids in the underground mine.

22:18 Okay, great. David's question is this, when does commercial production begin? Commercial production now is scheduled to begin in Q4 of 2025. And you'll see it. Sorry, that was a mistake. Not 2025. Q4 of 2024. And you'll see us ramping up in the second half of the year and being very close, if not at commercial production, before the end of 2024. Okay, great. Ryan has a question. What does the quarterly cap X schedule look like during a 16 month build? Well, certainly as you can imagine, you know the the cap X schedule is going to be relatively high at first, as you see us begin to acquire some of the long lead time procurement and make spend commitments. Spend commitments, and then tapering off into 2024.

23:22 And by mid-2024, I'd say halfway through 2024, you're going to see that come down to a relatively low rate as we transition and make the transition into production. On a general basis, you know, there's some months that are as high as 4, 4.5 million dollars of capital spend projected. I think if you averaged, you know, if you averaged it out over the quarter, you know, you could see capital expenditure in some 0.25 in the as high as 12, 15 million and then other quarter, depending on the activity that is scheduled and the activities we'll be doing, you know, could be as low as a 6 to 8 million. Okay. Well listen, Sam, David, that looks like all the questions that we've received for today at this point. So I want to thank you for coming on, going through such a great presentation. And of course I want to thank everyone in our audience who's joined us, especially those who've asked questions. But before we wrap up for the day, I want to pass things over to you guys for any closing remarks you might have. And David, you can also speak to the prior question.

24:29 I'll let Sam wrap up. But look, I think I speak for everybody, you know, on the ground in Idaho and myself that we're just thrilled to be moving forward with this project. I feel personally very honored to have been part of this journey and contributed to it over the last 2.5 years that I've been here. And I'm excited for all the value that's gonna get created for everybody. And I certainly want to parallel what Dave is saying, thank everyone, our shareholders, our partners, our stakeholders. We've come a long ways and really this is the lift-off moment. This is what we've been working for for 3 years and can't be more excited about moving forward into the phase that this team is really built for, which is execution and operation.

25:27 So thank you all for your support And from here at site, we're ready to roll our sleeves up and get busy. ♪♪