The Bunker Hill Lead/Zinc Mine

Silver Stock Report

by Jason Hommel, October 12, 2007

Lead prices are up 900% in just a few years, and guess who owns an option on one of the most productive lead mines in Idaho, the Bunker Hill?

Azteca Gold Corp (AZG.V, AZGFF.PK) (Symbols work at Yahoo! Finance)
Shares: 98,574,802
Warrants & Options: 40,025,906
Stock Price: C0.85/share
Fully Diluted Market Cap (USD): $114,627,908

Azteca recently acquired an option on the Bunker Hill mine.

Azteca needs to raise $46 million to exercise the option on the Bunker Hill.  I thought they would wait a year, but I learned this evening that they are discussing financing right now.  They are trying to decide whether to raise the full amount by issuing shares, or by spinning off the Bunker Hill project as a separate company.  I told management that I'd prefer they spin it off, to avoid excessively diluting the shares of the company, and that's what management is leaning towards doing, but they are currently asking for shareholder input.

The financiers are probably eager to conclude a deal soon, because Azteca is hitting great results on their other properties in Mexico, and drill results from those should be out soon, and the major financiers probably don't want to have to pay much more for Azteca shares after those come out.

I do know that Strategic Nevada Resources was also bidding for the Bunker Hill mine a while back.  Interestingly, I found this quote referencing the huge size of the Bunker Hill mine in one of their  press releases here:

Strategic Nevada Resources, Welcomes Thomas F. Fudge Former VP of Operations for Hecla Mining and Former President of Hecla's Venezuelan Subsidiaries to the Board of Directors

Mr. Thomas Fudge was quoted as saying:

"I know from personal experience that the Crescent Mine sits right in the middle of elephant country, with the Sunshine Mine on one side and the Bunker Hill on the other side."

So, I know that the Bunker Hill mine is a huge former lead/zinc/silver mine, but little more.

At the Silver Summit, I asked around to see what people's opinions were about the famous Bunker Hill mine, which is one of the most prolific and productive of all the mines in the Silver Valley, next to the Sunshine mine. 

One knowledgeable man in the industry gave a wild guess that it could take somewhere around $50 million to put it back into production.  Another man noted that the former railroad infrastructure is no longer in place, and wondered about the potential replacement cost.  Another man said that the entire deal is such a flip of a coin, depending entirely on EPA whims.  Another industry fellow guessed that Azteca stock should soar to about $6/share based on this acquisition, and although I greatly respect that man's knoweldge of the Bunker Hill mine, I don't know how much he knows about stock prices.

David Bond wrote up Bob Hopper, the Bunker Hill, and Azteca, a few months back, here:

The Bunker Hill is primarily a lead/zinc mine.  In the latest geologists report by Azteca:

I could find no information on historic annual production levels, which is unfortunate. 

The Reserves seem low, at only about 59 million pounds of lead.  But other, informal second hand rumors suggest that there could be 30 billion pounds of lead in that mountain.  Whether that can be extracted profitably, and at what rate, remains to be seen. 

Azteca plans to use their own expertise to do some drilling and work on a feasibility study to determine the potential profitability and mining plan over the next 18 months to 2 years!

Lead prices are up 900% in 3 years!

What I do know is that lead prices are hitting all time highs, up about 900% from just a few years ago.  Lead prices bottomed out at about $.18/pound in 2003, while hitting $1.80/lb. just this week. 

Lead prices are now more expensive than zinc, which is now more expensive than aluminum, and it all used to be the other way around, with aluminum being the most expensive, and lead being the cheapest!

What seems to be driving lead prices?  China's economic development, and the U.S. war.  It seems it's about Batteries and Bullets.

Iraq war affecting ammo supplies
Wednesday, October 10, 2007

Ammo used to take about a month to arrive.  Now, it takes from 9 months to a year!  I'd say that's a shortage!

The U.S. is spending about a billion bullets per year in the war.

China "e" bikes silently drive lead demand
October 10, 2007

"a 48-volt bike battery uses just under 10 kilograms of lead, similar to that used by a medium-sized car like a Toyota Camry. They last for about a year, compared with over three years for a typical car battery."

"China produced 19 million battery driven bikes in 2006"

(China's e-bikes use up car-sized batteries, 3 times as fast as cars!)

I own 1,481,600 shares of Azteca Gold, purchased with my own money, with a current market value of $1,297,239.

(I will admit that I sold about 200,000 shares of Azteca Gold this week to lock in profits from my purchase of 2 million shares at $.15/share in January, 2007, and to do so prior to writing up the stock, so as to avoid being accused of "pump and dump".  I have now sold enough shares to receive back my original capital, and a small profit.  And I will not sell any Azteca shares next week.)

Al Korelin recently gave me an opportunity to clear my name against numerous "pump and dump" and "frontrunning" accusations.  Thank you Al.  Listen to this radio report here:

I own 50,000 shares of SNS Silver, purchased with my own money, with a current market value of $61,804.

Neither company has paid me to produce this report.