Bunker Hill Mining Corp. 10-K/A

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. BUNKER HILL MINING CORP. (FORMERLY LIBERTY SILVER CORP.) A MENDED AND RESTATED CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2019 AND 2018 (EXPRESSED IN UNITED STATES DOLLARS) 14 15 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Consolidated Balance Sheets (Expressed in United States Dollars) (As restated) (note 5) As at June 30, 2019 (As restated) (note 5) As at June 30, 2018 ASSETS Current assets Cash and cash equivalents $ 28,064 $ 502,660 Accounts receivable 42,864 229,046 Deposit - 90,248 Prepaid expenses 35,172 588,630 Total current assets 106,100 1,410,584 Non-current assets Equipment (note 6 ) 52,050 97,252 Long term deposit 68,939 - Mining interests (note 7 ) 1 1 Total assets $ 227,090 $ 1,507,837 EQUITY AND LIABILITIES Current liabilities Accounts payable (notes 7 and 12 ) $ 3,421,625 $ 771,916 Accrued liabilities (notes 7 and 10 ) 2,896,025 504,186 Other liabilities 57,307 57,417 Interest payable 201,507 3,288 Convertible loan payable (note 8 ) 1,744,327 70,820 Derivative liability - conversion feature (note 8) - 180,353 Total current liabilities 8,320,791 1,587,980 Non-current liabilities Derivative warrant liability (note 9) 116,809 682,903 Total liabilities 8,437,600 2,270,883 Shareholders' Deficiency Preferred shares, $ 0.000001 par value, 10,000,000 preferred shares authorized; Nil preferred shares issued and outstanding (note 9 ) - - Common shares, $ 0.000001 par value, 750,000,000 common shares authorized; 15,811,396 and 3,301,372 common shares issued and outstanding, respectively (note 9 ) 16 3 Additional paid-in-capital (note 9 ) 24,284,765 23,397,259 Shares to be issued (note 1 3 ) 107,337 - Deficit accumulated during the exploration stage (32,602,628) (24,160,308) Totalshareholders'deficiency (8,210,510) (763,046) Totalshareholders'deficiencyandliabilities $ 227,090 $ 1,507,837 The accompanying notes are an integral part of these amended and restated consolidated financial statements. 16 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Consolidated Statements of Loss and Comprehensive Loss (Expressed in United States Dollars) (As restated) (note 5) Year Ended June 30, 2019 (As restated) (note 5) Year Ended June 30, 2018 Operating expenses Operation and administration $ 1,189,226 $ 2,719,746 Exploration 6,416,238 5,641,465 Legal and accounting 240,969 490,362 Consulting 266,998 796,861 Loss from operations (8,113,926) (9,648,434) Other income or gain (expense or loss) Change in derivative liability (notes 8 and 9 ) 1,892,488 3,808,384 Accretion expense (note 8 ) (734,589) (9,373) (Loss) gain on foreign exchange (15,261) 136,104 Interest expense (note 8 ) (256,029) (3,287) Loss on sale of equipment (10,930) - Loss on loan extinguishment (note 8 ) (1,204,073) - Loss before income tax (8,442,320) (5,716,606) Provisionforincometaxes - - Netlossandcomprehensivelossfortheyear $ (8,442,320) $ (5,716,606) Netlosspercommonshare-basicandfullydiluted $ (2.14) $ (2.65) Weightedaveragenumberofcommonshares-basicandfullydiluted 3,951,072 2,157,204 The accompanying notes are an integral part of these amended and restated consolidated financial statements. 17 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Consolidated Statements of Cash Flows (Expressed in United States Dollars) (As restated) (note 5) Year Ended June 30, 2019 (As restated) (note 5) Year Ended June 30, 2018 Operating activities Net loss for the year $ ( 8,442,320) $ ( 5,716,606) Adjustments to reconcile net loss to net cash used in operating activities:: Stock-based compensation 43,403 310,383 Depreciation expense 9,897 7,015 Write-down of mining interest - 300,000 Change in fair value of warrant liability (1,892,488) (3,808,384) Accretion expense 734,589 9,373 Loss on sale of equipment 10,930 - Loss on loan extinguishment 1,204,073 - Changes in operating assets and liabilities: Accounts receivable 186,182 (223,572) Deposit 90,248 (21,666) Prepaid expenses 553,458 (456,079) Long term deposit (68,939) 22,056 Accounts payable 2,670,639 489,917 Accrued liabilities 2,421,011 347,778 Other liabilities (110) 57,417 Interest payable 198,219 3,288 Net cash used in operating activities (2,281,208) (8,679,080) Investing activities Purchase of machinery and equipment (6,555) (95,252) Proceeds on disposal of equipment 10,000 - Net cash provided by (used in) investing activities 3,445 (95,252) Financing activities Proceeds from convertible loan payable 500,000 1,500,000 Proceeds from issuance of common stock, net 1,195,830 7,183,477 Proceeds from stock options exercised - - Shares to be issued 107,337 - Net cash provided by financing activities 1,803,167 8,683,477 Net change in cash and cash equivalents (474,596) (90,855) Cash and cash equivalents, beginning of year 502,660 593,515 Cash and cash equivalents, end of year $ 28,064 $ 502,660 Supplemental disclosures Non-cash activities: Common stock issued to settle convertible loan payable 100,000 - Disposal of equipment used to settle accounts payable 20,930 - Stock options exercised used to settle accrued liabilities 268,930 - The accompanying notes are an integral part of these amended and restated consolidated financial statements. 18 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Consolidated Statements of Changes in Shareholders’ Deficiency (Expressed in United States Dollars) Common stock Shares Amount (note 9) Additional paid-in-capital (note 9) Shares to be issued Deficit accumulated during the exploration stage Total Balance, June 30, 2017 2,488,940 $ 2 $ 19,156,562 $ - $ (18,443,702) $ 712,862 Stock-based compensation - - 310,383 - - 310,383 Issue costs: warrants - - (3,253,162) - - (3,253,162) Issue costs - - (753,497) - - (753,497) Shares issued at $9.77 per share (i) 812,432 1 7,936,973 - - 7,936,974 Net loss for the year - - - - (5,716,606) (5,716,606) Balance, June 30, 2018 (As restated, note 5) 3,301,372 $ 3 $ 23,397,259 $ - $ (24,160,308) $ (763,046) Stock-based compensation - - 43,403 - - 43,403 Units issued at $7.80 per share (ii) 160,408 - 547,333 - - 549,333 Units issued at $0.57 per share (iii) 645,866 1 365,340 - - 365,341 Units issued at $0.04 per share (iv) 11,660,000 12 436,596 - - 436,608 Stock options exercised 43,750 - 268,930 - - 268,930 Issue costs - - (55,452) - - (55,452) Warrant valuation - - (720,644) - - (720,644) Shares to be issued (note 13 ) - - - 107,337 - 107,337 Net loss for the year - - - - (8,442,320) (8,442,320) Balance, June 30, 2019 (As restated, note 5) 15,811,396 $ 16 $ 24,284,765 $ 107,337 $ (32,602,628) $ (8,210,510) (i) Shares issued from proceeds at $12.50 CAD, converted to US at $9.77 (note 9 ) (ii) Units issued from proceeds at $4.50 CAD, converted to US at $3.42 (note 9 ) (iii) Units issued from proceeds at $0.75 CAD, converted to US at $0.57 (note 9) (iv) Units issued from proceeds at $0.05 CAD, converted to US at $0.04 (note 9 ) The accompanying notes are an integral part of these amended and restated consolidated financial statements. 19 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 1. Nature and continuance of operations and going concern Bunker Hill Mining Corp. (formerly Liberty Silver Corp.) (the “Company”) was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp. Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp., and on September 29, 2017 the Company changed its name to Bunker Hill Mining Corp. The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4, and its telephone number is 888-749-4916. As of the date of this Form 10-K, the Company had two subsidiaries, Bunker Hill Operating LLC, a Colorado corporation that is currently dormant, and American Zinc Corp., an Idaho corporation created to facilitate the work being conducted at the Bunker Hill Mine in Idaho. The Company was incorporated for the purpose of engaging in mineral exploration activities. It continues to work at developing its project with a view towards putting it into production. These consolidated financial statements have been prepared on a going concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $ 32,602,628 (restated) and further losses are anticipated in the development of its business. The Company does not have sufficient working capital needed to meet its current fiscal obligations and commitments. In order to continue to meet its fiscal obligations in the current fiscal year and beyond, the Company must seek additional financing. This raises substantial doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management is considering various financing alternatives including, but not limited to, raising capital through the capital markets and debt financing. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves. These financial statements of the Company for the year ended June 30, 2019 were approved and authorized for issue by the Board of Directors of the Company on December 3, 2020 . 2. Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises. The consolidated financial statements are expressed in U.S. dollars, the functional currency. The Company’s fiscal year end is June 30. 3. Significant accounting policies The following is a summary of significant account policies used in the preparation of these consolidated financial statements. Basis of consolidation These consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiaries, American Zinc Corp. and Bunker Hill Operating LLC. All intercompany transactions and balances have been eliminated on consolidation. 20 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 3. Significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents may include highly liquid investments with original maturities of three months or less. Mineral rights, property and acquisition costs The Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. The Company capitalizes acquisition and option costs of mineral rights as intangible assets. Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. The costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred to develop and expand the capacity of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets. Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 5 years. The cost of repairs and maintenance is charged to expense as incurred. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or gain (expense or loss). The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment. If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability. Impairment of long-lived assets The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35, Measurement of an Impairment Loss, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities - Mining, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets. Various factors could impact the Company’s ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically. 21 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 3. Significant accounting policies (continued) Fair value of financial instruments The Company adopted FASB ASC 820-10-50, Fair Value Measurements. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows: * Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. * Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. * Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, interest payable, convertible loan payable, and derivative liability, all of which qualify as financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and current market rate of interest. Environmental expenditures The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet, or if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures. Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries. No costs have been recognized by the Company for environmental expenditures. Income taxes The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes ("FASB ASC 740"), on a tax jurisdictional basis. The Company files income tax returns in the United States. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized. The Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. The Company is subject to examination by taxing authorities in jurisdictions such as the United States. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense. 22 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 3. Significant accounting policies (continued) FSAB ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in periods, disclosure and transition. At June 30, 2019 and June 30, 2018 , the Company has not taken any tax positions that would require disclosure under FASB ASC 740. Basic and diluted net loss per share The Company computes net loss per share of common stock in accordance with FASB ASC 260, Earnings per Share (“ASC 260”). Under the provisions of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible loan payable. As of June 30, 2019, 287,100 stock options and 13,046,484 warrants were considered in the calculation but not included, as they were anti-dilutive (June 30, 2018 - 287,100 stock options and 663,496 warrants). Stock-based compensation In December 2004, the FASB issued FASB ASC 718 “Compensation – Stock Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Use of estimates and assumptions Many of the amounts included in the consolidated financial statements require management to make judgments and/or estimates. These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. Actual results may differ from the amounts included in the consolidated financial statements. Areas of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include: Impairment of mining interests The Company’s fair value measurement with respect to the carrying amount of mining interests is based on numerous assumptions and may differ significantly from actual fair values. The fair values are based, in part, on certain factors that may be partially or totally outside of the Company’s control. This evaluation involves a comparison of the estimated recoverable amount of mining interests to their carrying values. The Company’s fair value estimates are based on numerous assumptions. Convertible loans and warrants Estimating the fair value of warrants and conversion feature derivative liability requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants and conversion feature derivative liability, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value of warrants and conversion feature derivative liability are disclosed in notes 8 and 9 . The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated statements of operations. Assets are reviewed for an indication of impairment at each reporting date. This determination requires significant judgment. Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in precious metal prices 23 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 3. Significant accounting policies (continued) Concentrations of credit risk The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited. Risks and uncertainties The Company operates in the mineralized material exploration industry that is subject to significant risks and uncertainties, including financial, operational, and other risks associated with operating a mineralized material exploration business, including the potential risk of business failure. Foreign currency transactions The Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar. The Company will use its US dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction are reported as gain or loss on foreign exchange. The gain or loss reported by the Company in the consolidated financial statements represents transaction gain or loss. Segment reporting FASB ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s consolidated financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company does not have any reportable segments. Convertible loan payable The Company reviews the terms of its convertible loans payable to determine whether there are embedded derivatives, including the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments. In circumstances where the convertible debt contains embedded derivatives that are to be separated from the host contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using the binomial model. The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments being recorded at a discount from their principal amount. This discount is accreted over the expected life of the instruments to profit (loss) using the effective interest method. The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method. The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss). The Company presents its embedded derivatives and related debenture host contracts as separate instruments on the consolidated balance sheets. 24 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 4. New and recently adopted technical and accounting pronouncements In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires that deferred tax liabilities and assets be classified on our Consolidated Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction. ASU No. 2015-17 is effective for the fiscal year commencing after December 15, 2017. The adoption of ASU No. 2015-17 did not have a material effect on the financial position or the results of operations. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This ASU provides eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for the fiscal year commencing after December 15, 2017. The adoption of ASU 2016-15 did not have on the consolidated statements of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases. This update requires organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosure about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is still assessing the impact that the adoption of ASU 2016-02 will have on the financial position and the results of operations. 5. Restatement of previously issued financial statements In November 2020, it was determined that the Company has underaccrued for invoices issued by the United States Environmental Protection Agency ("EPA") for excess water treatment costs relating to years ended June 30, 2018, 2019 and 2020 and interest payable on the outstanding EPA balance, which resulted in an understatement of liabilities for 2018 and 2019, an understatement of opening deficit for 2019 and closing deficit for 2018 and 2019, and an understatement of exploration expenses and net losses for 2018 and 2019. The following tables present the impact of the restatement adjustments on the Company's previously issued consolidated financial statements for the years ended June 30, 2018 and 2019. Impact to Consolidated Statements of Loss and Comprehensive Loss As previously Year ended June 30, 2018 reported Adjustment As restated Exploration $ 5,094,733 $ 546,732 $ 5,641,465 Loss from operations $ (9,101,702) $ (546,732) $ (9,648,434) Loss before income tax and net loss and comprehensive loss for the year $ (5,169,874) $ (546,732) $ (5,716,606) Net loss per common share - basic and fully diluted $ (2.40) $ (0.25) $ (2.65) As previously Year ended June 30, 2019 reported Adjustment As restated Exploration $ 5,712,238 $ 704,495 $ 6,416,733 Loss from operations $ (7,409,431) $ (704,495) $ (8,113,926) Loss before income tax and net loss and comprehensive loss for the year $ (7,737,825) $ (704,495) $ (8,442,320) Net loss per common share - basic and fully diluted $ (1.96) $ (0.18) $ (2.14) 25 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 5. Restatement of previously issued financial statements (continued) Impact to Consolidated Balance Sheets As previously As at June 30, 2018 reported Adjustment As restated Accounts payable $ 225,184 $ 546,732 $ 771,916 Total current liabilities $ 1,041,248 $ 546,732 $ 1,587,980 Total liabilities $ 1,724,151 $ 546,732 $ 2,270,883 Deficit accumulated during exploration stage $ (23,613,576) $ (546,732) $ (24,160,308) Total shareholders' deficiency $ (216,314) $ (546,732) $ (763,046) As previously As at June 30, 2019 reported Adjustment As restated Accounts payable $ 2,170,398 $ 1,251,227 $ 3,421,625 Total current liabilities $ 7,069,564 $ 1,251,227 $ 8,320,791 Total liabilities $ 7,186,373 $ 1,251,227 $ 8,437,600 Deficit accumulated during exploration stage $ (31,351,401) $ (1,251,227) $ (32,602,628) Total shareholders' deficiency $ (6,959,283) $ (1,251,227) $ (8,210,510) Impact to Consolidated Statements of Cash Flows As previously For the year ended June 30, 2018 reported Adjustment As restated Net loss for the year $ (5,169,874) $ (546,732) $ (5,716,606) Changes in operating assets and liabilities: Accounts payable $ (56,815) $ 546,732 $ 489,917 As previously Year ended June 30, 2019 reported Adjustment As restated Net loss for the year $ (7,737,825) $ (704,495) $ (8,442,320) Changes in operating assets and liabilities: Accounts payable $ 1,966,144 $ 704,495 $ 2,670,639 Impact to Consolidated Statements of Changes in Shareholders' Deficiency As previously reported Adjustment As restated Net loss for the year ended June 30, 2018 $ (5,169,874) $ (546,732) $ (5,716,606) Deficit accumulated during the exploration stage, June 30, 2018 $ (23,613,576) $ (546,732) $ (24,160,308) Balance, Total, June 30, 2018 $ (216,314) $ (546,732) $ (763,046) Net loss for the year ended June 30, 2019 $ (7,737,825) $ (704,495) $ (8,442,320) Deficit accumulated during the exploration stage, June 30, 2019 $ (31,351,401) $ (1,251,227) $ (32,602,628) Balance, Total, June 30, 2019 $ (6,959,283) $ (1,251,227) $ (8,210,510) 26 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 5. Restatement of previously issued financial statements (continued) The circumstances associated with the adjustments also created errors in each of the previously reported quarters in 2018 and 2019, which have also been restated on a quarterly basis as disclosed in note 14. In addition, subsequent to the year end, the Company amended its articles of incorporation to change the authorized capital and the par values, which have been retrospectively applied in these amended and restated consolidated financial statements (note 9). 6 . Equipment Equipment consists of the following: June 30, June 30, 2019 2018 Leasehold improvements $ 59,947 53,392 Equipment 9,050 50,910 68,997 104,302 Less accumulated depreciation (16,947) (7,050) Equipment, net $ 52,050 $ 97,252 7 . Mining interests (restated) Bunker Hill Mine Complex On November 27, 2016, the Company entered into a non-binding letter of intent with Placer Mining Corp. (“Placer Mining”), which letter of intent was further amended on March 29, 2017, to acquire the Bunker Hill Mine in Idaho and its associated milling facility located in Kellogg, Idaho, in the Coeur d’Alene Basin (the “Letter of Intent”). Pursuant to the terms and conditions of the Letter of Intent, the acquisition, which was subject to due diligence, would include all mining claims, surface rights, fee parcels, mineral interests, existing infrastructure, machinery and buildings at the Kellogg Tunnel portal in Milo Gulch, or anywhere underground at the Bunker Hill Mine Complex. The acquisition would also include all current and historic data relating to the Bunker Hill Mine Complex, such as drill logs, reports, maps, and similar information located at the mine site or any other location. During the fiscal year ended June 30, 2017, the Company made payments totaling $300,000 as part of this Letter of Intent. These amounts were initially capitalized and subsequently written off during fiscal 2018 and are included in exploration expenses. On August 28, 2017, the Company announced that it signed a definitive agreement (the “Agreement”) for the lease and option to purchase the Bunker Hill Mine assets (the “Bunker Assets”). Under the terms of the Agreement, the Company was required to make a $1 million bonus payment to Placer Mining no later than October 31, 2017, which payment was made, along with two additional $500,000 bonus payments in December 2017. The 24-month lease commences November 1, 2017 and continues until October 31, 2019. The lease period can be extended by a further 12 months at the Company’s discretion. During the term of the lease, the Company must make $100,000 monthly mining lease payments, paid quarterly. The Company has an option to purchase the Bunker Assets at any time before the end of the lease and any extension for a purchase price of $45 million with purchase payments to be made over a ten-year period to Placer Mining. Under terms of the agreement, there is a 3% net smelter return royalty (“NSR”) on sales during the Lease and a 1.5% NSR on the sales after the purchase option is exercised, which post-acquisition NSR is capped at $60 million. 27 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 7. Mining interests (restated) (continued) Bunker Hill Mine Complex (continued) On October 2, 2018, the Company announced that it was in default of its Lease with Option to Purchase Agreement with Placer Mining. The default arose as a result of missed lease and operating cost payments, totaling $400,000, which were due at the end of September and on October 1, 2018. As per the Agreement, the Company had 15 days, from the date notice of default was provided (September 28, 2018), to remediate the default by making the outstanding payment. While Management worked with urgency to resolve this matter, Management was ultimately unsuccessful in remedying the default, resulting in the lease being terminated. On November 13, 2018, the Company announced that it was successful in renewing the lease, effectively with the original Agreement intact, except that monthly payments are reduced to $60,000 per month for 12 months, with the accumulated reduction in payments of $140,000 per month (“deferred payments”) added to the purchase price of the mine should the Company choose to exercise its option. As at June 30, 2019, the Company has accrued for $1,373,000 of the deferred payments and is included in accounts payable. In addition to the payments to Placer Mining, and pursuant to an agreement with the United States Environmental Protection Agency (“EPA”) whereby for so long as Bunker leases, owns and/or occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the current owner in satisfaction of the EPA’s claim for cost recovery. These payments, if all are made, will total $20 million. The agreement calls for payments starting with $1 million 30 days after a fully ratified agreement was signed followed by payment schedule detailed below: Date Amount Action Within 30 days of the effective date $1,000,000 Paid November 1, 2018 $2,000,000 Not paid November 1, 2019 $3,000,000 November 1, 2020 $3,000,000 November 1, 2021 $3,000,000 November 1, 2022 $3,000,000 November 1, 2023 $3,000,000 November 1, 2024 $2,000,000 In addition to these cost recovery payments, the Company is to make semi-annual payments of $480,000 on June 1 and December 1 of each year, to cover the EPA’s costs of operating and maintaining the water treatment facility that treats the water being discharged from the Bunker Hill Mine. Of these, $560,000 is outstanding as at June 30, 2019 (June 30, 2018 - $80,000). The Company also has received invoices from the EPA for water treatment charges for the periods from December 2017 to October 2019. This was for a total of $3,749,388, with $1,209,530 additional accruals required as at June 30, 2019 (June 30, 2018 - $546,125). The Company is having discussions with the EPA to review and, where appropriate, have the additional water treatment charges amended. The unpaid EPA balance is subject to interest at the rate specified for interest on investments of the EPA Hazardous Substance Superfund. As at June 30, 2019, the interest accrued on the unpaid EPA balance is $13,061 (June 30, 2018 - $607). Trinity Project On August 31, 2017, the Company and Renaissance Exploration Inc. signed a notice of termination and release of exploration Earn-In Agreement. Upon signing this agreement, the Company has terminated the March 29, 2010 Earn-In Agreement. 28 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 8. Convertible loan payable On June 13, 2018, the Company entered into a loan and warrant agreement with Hummingbird Resources PLC (“Hummingbird”), an arm’s length investor, for an unsecured convertible loan in the aggregate sum of $1,500,000, bearing interest at 10% per annum, maturing in one year. Contemporaneously, the Company agreed to issue 229,464 share purchase warrants, entitling the lender to acquire 229,464 common shares of the Company, at a price of C$8.50 per share, for two years. Under the terms of the loan agreement, the lender may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of the Company at a price per share equal to C$8.50. In the event that a notice of conversion would result in the lender holding 10% or more of the Company’s issued and outstanding shares, then, in the alternative, and under certain circumstances, the Company would be required to pay cash to the lender in an amount equal C$8.50 multiplied by the number of shares intended to be issued upon conversion. Further, in the event that the lender holds more than 5% of the issued and outstanding shares of the Company subsequent to the exercise of any of its convertible securities held under this placement, it shall have the right to appoint one director to the board of the Company. Lastly, among other things, the loan agreement further provides that for as long as any amount is outstanding under the convertible loan, the investor retains a right of first refusal on any Company financing or joint venture/strategic partnership/disposal of assets. In August 2018, the amount of the Hummingbird convertible loan payable was increased to $2 million from its original $1.5 million loan, net of $45,824 of debt issue costs, of which $25,750 was incurred in the current period. Under the terms of the Amended and Restated Loan Agreement, Hummingbird may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of Bunker as follows: (i) $1,500,000, being the original principal amount (“Principal Amount”), the Principal Amount may be converted at a price per share equal to C$8.50; (ii) 229,464 common shares may be acquired upon exercise of warrants at a price of C$8.50 per warrant for a period of two years from the date of issuance; (iii) $500,000, being the additional principal amount (“Additional Amount”), the Additional Amount may be converted at a price per share equal to C$4.50; and (iv) 116,714 common shares may be acquired upon exercise of warrants at a price of C$4.50 per warrant for a period of two years from the date issuance. In the event that Hummingbird would acquire common shares in excess of 9.999% through the conversion of the Principal Amount or Additional Amount, including interest accruing thereon, or on exercise of the warrants as disclosed herein, the Company shall pay to Hummingbird a cash amount equal to the common shares exercised in excess of 9.999%, multiplied by the conversion price. In March 2019, Hummingbird agreed to extend the scheduled maturity date of the loan to June 30, 2020. This was accounted for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment of $1,195,880. In June 2019, the Company repaid $100,000 of the Additional Amount, which resulted in the recording of a net loss on loan extinguishment of $8,193. The Company has accounted for the conversion features and warrants in accordance with ASC Topic 815. The conversion features and warrants are considered derivative financial liabilities as they are convertible into common shares at a conversion price denominated in a currency other than the Company’s functional currency of the US dollar. The estimated fair value of the conversion features and warrants was determined on the date of issuance and marks to market at each financial reporting period. 29 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 8. Convertible loan payable (continued) At June 30, 2019, the fair value of the conversion features was estimated using the Binomial model to determine the fair value of conversion features using the following assumptions: Principal Amount June 30, 2018 June 30, 2019 Expected life 345 days 365 days Volatility 100% 100% Risk free interest rate 2.04% 1.75% Dividend yield 0% 0% Share price $6.46 $0.05 Fair value $180,353 $0 Change in derivative liability $180,353 Additional Amount August 9, 2018 June 30, 2019 Expected life 365 days 365 days Volatility 100% 100% Risk free interest rate 2.11% 1.75% Dividend yield 0% 0% Share price $4.70 $0.05 Fair value $205,444 $0 Change in derivative liability $205,444 The fair value of the warrants were estimated using the Binomial model to determine the fair value of the derivative warrant liabilities using the following assumptions: Principal Amount June 30, 2018 June 30, 2019 Expected life 714 days 349 days Volatility 100% 100% Risk free interest rate 2.04% 1.95% Dividend yield 0% 0% Share price $6.46 $0.05 Fair value $326,909 $0 Change in derivative liability $326,909 Additional Amount August 9, 2018 June 30, 2019 Expected life 730 days 405 days Volatility 100% 100% Risk free interest rate 2.11% 1.84% Dividend yield 0% 0% Share price $4.70 $0.05 Fair value $221,256 $0 Change in derivative liability $221,256 The residual value of the Principal Amount was deemed to be $61,448, net of $20,074 of expenses, and the residual value of the Additional Amount was deemed to be $34,850, net of $38,449 of expenses. The residual value of the loan after the loan extension was deemed to be $1,800,000, net of $200,000 of expenses. Accretion expense for the year ended June 30, 2019 were $734,589 (year ended June 30, 2018 - $9,373) based on effective interest rates of 32% for the Principal Amount, 26% for the Additional Amount, and 17% after the loan extension. Interest expense for the year ended June 30, 2019 were $198,219 (year ended June 30, 2018 - $3,287). 30 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 8. Convertible loan payable (continued) Amount Balance, June 30, 2017 $ - Proceeds on issuance 1,500,000 Debt issue costs (20,074) Conversion feature valuation (605,118) Warrant valuation (813,361) Accretion expense 9,373 Balance, June 30, 2018 $ 70,820 Proceeds on issuance 500,000 Debt issue costs (238,455) Conversion feature valuation (205,444) Warrant valuation (221,256) Accretion expense 734,589 Loss on loan extinguishment 1,204,073 Partial extinguishment (100,000) Balance, June 30, 2018 $ 1,744,327 9 . Capital stock, warrants and stock options (restated) Authorized The total authorized capital is as follows: * 750,000,000 common shares with a par value of $ 0.000001 per common share; and * 10,000,000 preferred shares with a par value of $ 0.000001 per preferred share On May 23, 2019, the Company affected a consolidation of its issued and outstanding share capital on the basis of one (1) post-consolidation share for each ten (10) pre-consolidation common shares, which has been retrospectively applied in these financial statements. On July 19, 2019, the Company amended its articles of incorporation to change the total authorized capital and the par values which have been retrospectively applied in these amended and restated consolidated financial statements. Issued and outstanding In December 2017, the Company closed a private placement led by Red Cloud Klondike Strike Inc. and including Haywood Securities Inc. (collectively, the “Agents”) to raise gross proceeds of C$10,155,400 (the “Offering”). Pursuant to the Offering, the Company issued 812,432 units (the "Units") at a price of CDN$12.50 per Unit. Each Unit was comprised of one common share of the Company (a "Common Share") and one half of one transferable common share purchase warrant (a "Warrant"), each Warrant having a three-year life and entitling the holder thereof to acquire one Common Share at a price of C$20.00. In August 2018, the Company closed a private placement, issuing 160,408 Units to Gemstone 102 Ltd. (“Gemstone”) at a price of C$4.50 per Unit, for gross proceeds of C$721,834 ($549,333) and incurring financing costs of $25,750. Each Unit entitles Gemstone to acquire one common share (“Unit Share”) and one common share purchase warrant (“Unit Warrant”), with each Unit Warrant entitling Gemstone to acquire one common share of the Company at a price of C$4.50 for a period of three years. Prior to the issuance of the Units, Gemstone held 400,000 common shares of the Company and 200,000 warrants (“Prior Warrants”) exercisable at a price of C$20.00 per share. Immediately prior to closing, the Prior Warrants were early terminated by mutual agreement of the Company and Gemstone. Upon issuance of the 160,408 Units to Gemstone, Gemstone beneficially owns or exercises control or direction over 560,408 common shares of the Company. Assuming exercise of the Unit Warrants, Gemstone would hold 720,816 of the outstanding common shares of the Company. Gemstone’s participation in the Offering constitutes a "related party transaction" under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). 31 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 9. Capital stock, warrants and stock options (restated) (continued) Issued and outstanding (continued) Given the urgent need to secure financing to meet the new lease obligations, Bunker’s Board approved an equity private placement of Units to be sold at C$0.75 per Unit with each Unit consisting of one common share and one common share purchase warrant. On November 28, 2018, the Company closed on a total of 645,866 Units for gross proceeds of C$484,400 ($365,341) and incurring financing costs of $10,062, with each purchase warrant exercisable into a Common Share at C$1.00 per Common Share for a period of thirty-six months. On June 27, 2019, the Company closed the first tranche ("First Tranche") of a non-brokered private placement, issuing 11,660,000 units ("June 2019 Unit") at a price of C$0.05 per June 2019 Unit for gross proceeds of C$583,000 ($436,608) and incurring financing costs of $19,640. Each June 2019 Unit consists of one common share of the Company and one common share purchase warrant ("June 2019 Warrant"). Each whole June 2019 Warrant entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years. As a part of the First Tranche, Hummingbird Resources PLC ("Hummingbird") has acquired 2,660,000 June 2019 Units for C$133,000 ($100,000) which was applied to reduction of the principal amount owing under the convertible loan facility (see note 8) . For each financing, the Company has accounted for the warrant liability in accordance with ASC Topic 815. The warrants are considered derivative instruments as they were issued in a currency other than the Company’s functional currency of the US dollar. The estimated fair value of warrants accounted for as liabilities was determined on the date of issue and marks to market at each financial reporting period. The change in fair value of the warrant is recorded in the consolidated statement of operations and comprehensive loss as a gain or loss and is estimated using the Binomial model. The fair value of the warrant liabilities related to the various tranches of warrants issued during the year were estimated using the Binomial model to determine the fair value using the following assumptions on the day of issuance and as at June 30, 2019: August 9, 2018 June 30, 2019 Expected life 1,095 days 771 days Volatility 100% 100% Risk free interest rate 2.09% 1.59% Dividend yield 0% 0% Share price $4.70 $0.05 Fair value $355,751 $0 Change in derivative liability $355,751 November 28, 2018 June 30, 2019 Expected life 1,095 days 882 days Volatility 100% 100% Risk free interest rate 1.22% 1.47% Dividend yield 0% 0% Share price $0.90 $0.05 Fair value $265,105 $1,875 Change in derivative liability $263,250 June 27, 2019 June 30, 2019 Expected life 730 days 727 days Volatility 100% 100% Risk free interest rate 1.80% 1.47% Dividend yield 0% 0% Share price $0.05 $0.05 Fair value $99,788 $114,934 Change in derivative liability ($15,146) 32 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 9. Capital stock, warrants and stock options (restated) (continued) Issued and outstanding (continued) The warrant liability as a result of the December 2017 private placement was revalued as at June 30, 2019 and June 30, 2018 using the Binomial model and the following assumptions: June 30, 2018 June 30, 2019 Expected life 1,095 days 532 days Volatility 100% 100% Risk free interest rate 1.97% 1.66% Dividend yield 0% 0% Share price $4.70 $0.05 Fair value $355,994 $0 Change in derivative liability $355,994 At June 30, 2019, there were 15,811,396 common shares issued and outstanding. Warrants Number of warrants Weighted average exercise price (C$) Balance, June 30, 2017 - $ - Issued 663,496 16.02 Balance, June 30, 2018 663,496 $ 16.02 Issued 12,582,988 0.38 Cancelled (200,000) 20.00 Balance, June 30, 2019 13,046,484 $ 0.88 As of June 30, 2019, the Company had 13,046,484 warrants outstanding, with exercise prices from C$0.25 to C$20.00, expiring from June 13, 2020 to November 28, 2021. Expiry date Exercise price (C$) Number of warrants Number of warrants exercisable December 5, 2020 20.00 227,032 227,032 December 13, 2020 20.00 7,000 7,000 June 13, 2020 8.50 229,464 229,464 August 9, 2021 4.50 116,714 116,714 August 9, 2021 4.50 160,408 160,408 November 28, 2021 1.00 645,866 645,866 June 27, 2021 0.25 11,660,000 11,660,000 13,046,484 13,046,484 33 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 9. Capital stock, warrants and stock options (restated) (continued) Stock options The following table summarizes the stock option activity during the periods ended June 30, 2019 and 2018: Number of stock options Weighted average exercise price Balance, June 30, 2017 229,100 $ 7.60 Granted (i)(ii) 58,000 7.50 Balance, June 30, 2018 287,100 $ 7.50 Granted (iii) 43,750 8.00 Exercised (43,750) 8.00 Balance, June 30, 2019 287,100 $ 7.50 (i) On December 6, 2017, 10,000 options were granted to a consultant with a five-year life and an exercise price of C$16.50. These options vested immediately and, using the Black-Scholes option pricing method, had a value of $103,815, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss. (ii) On June 19, 2018, the Company granted incentive stock options to purchase up to an aggregate of 48,000 common shares, exercisable for 5 years at a strike price of C$8.50. These options vested immediately and, using the Black-Scholes option pricing method, had a value of $206,489, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss. (iii) On September 27, 2018, 43,750 fully-vested stock options were issued to a consultant to whom C$350,000 was due and payable and reflected in accrued liabilities at September 30, 2018. These options had a 5-year life and were exercisable at C$8.00 per share. On October 3, 2018, these options were exercised in full, with consideration received being the liability already on the Company’s books, extinguishing the liability in full. The vesting of these options resulting in stock-based compensation of $43,893, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss. The fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following underlying assumptions: Year Risk free interest rate Dividend yield Volatility Stock price Weighted average life 2017 2.30% 0% 100% C$13.70 5 years 2018 2.77% 0% 100% C$7.70 5 years 2019 2.32% 0% 100% C$2.30 5 years The following table reflects the actual stock options issued and outstanding as of June 30, 2019: Exercise price (C$) Weighted average remaining contractual life (years) Number of options outstanding Number of options vested (exercisable) 1.875 0.64 5,600 5,600 7.60 2.84 223,500 223,500 12.80 3.46 10,000 10,000 6.40 3.97 48,000 48,000 287,100 287,100 34 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 10 . Commitments and contingencies (restated) Effective June 1, 2017, the Company has a lease agreement for office space at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4. The 5-year lease provides for a monthly gross rent of C$29,005 for the first two years, increasing to C$29,545 per month for years three through five. The monthly rental expenses are offset by rental income obtained through a series of subleases held by the Company. As stipulated by the agreements with Placer Mining as described in note 7, the Company is required to make monthly payment of $60,000 for care and maintenance and a lease extension fee of $60,000. Including the previously accrued payments, a total of $1,373,000 is payable until the Company decides to acquire the mine at which time these payments will be waived. As stipulated in the agreement with the EPA and as described in note 7, the company is required to make two payments to the EPA, one for cost-recovery, and the other for water treatment. As at June 30, 2019, $3,811,227 payable to the EPA has been included in accounts payable and accrued liabilities. The Company is now engaged with the EPA to amend and defer these payments. 11 . Income taxes (restated) As at June 30, 2019 and 2018, the Company had no accrued interest and penalties related to uncertain tax positions. The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 26.9% (2018 - 26.9%) to pretax loss from operations for the years ended June 30, 2019 and 2018 due to the following: Year Ended June 30, 2019 Year Ended June 30, 2018 Loss before income taxes $ 8,442,320 $ 5,716,606 Expected income tax recovery (2,271,000) (1,880,800) Tax rate changes and other adjustments - 1,653,380 True-up - (197,110) Other permanent difference 563,070 115,400 Change in valuation allowance 1,707,930 309,130 Total $ - $ - Deferred tax assets and the valuation account are as follows: Year Ended June 30, 2019 Year Ended June 30, 2018 Deferred tax asset: Net operating loss carry forward $ 4,285,020 $ 4,391,740 Other deferred tax assets 3,392,290 1,587,680 Valuation allowance (7,687,200) (5,979,420) Unrealized foreign exchange loss 8,870 - Equipment 1,020 - Total $ - $ - 35 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 11. Income taxes (restated) (continued) Year Ended June 30, 2019 Year Ended June 30, 2018 Deferred tax assets: Non-capital losses carried forward $ 1,530,460 $ 1,022,400 Deferred tax liabilities: Convertible debt (1,530,460) (1,022,400) Net deferred tax asset $ - $ - The potential income tax benefit of these losses has been offset by a full valuation allowance. As of June 30, 2019, and 2018, the Company has an unused net operating loss carry-forward balance of $ 22,094,056 and $ 19,987,152 , respectively, that is available to offset future taxable income. The US non-capital loss carryforwards generated before 2018 expire between 2031 and 2037. The losses generated after 2018 do not expire. The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012. 12. Related party transactions During the year ended June 30, 2019, Julio DiGirolamo (Former CFO) billed $70,000, Howard Crosby (Former director and Former Executive Vice President) billed $20,000, and John Ryan (Director and Interim CEO) billed $50,000 for services to the Company. Mr. Julio DiGirolamo resigned his position in May 2019 and Mr. Crosby resigned his positions in November 2018. Through November 2017, each of Messrs. Bruce Reid (Former CEO), Julio DiGirolamo (Former CFO), Howard Crosby (Former Executive Vice President) and John Ryan (Director and current Interim CEO) received $5,000 per month for services to the Company. Commencing December 1, 2017, commensurate with the increased activities in the Company, Messrs. Reid and DiGirolamo’s pay increased to $20,000 and $15,000 per month, respectively. Commencing September 2018, Mr. DiGirolamo agreed to a reduced fee for services. In early December 2017, the Board approved and ratified compensation to Mr. Reid for unaccrued and unpaid salary and bonus, including for risk-capital sums advanced by Mr. Reid to the Company in order that the Company could complete many of its obligations and initiatives during 2017. The payment, totaling $500,000 was accrued at December 31, 2017 and was paid in January 2018. The Company also incurred $200,000 of debt issue costs to Wayne Parsons (CFO) for extension of the Hummingbird loan, which was settled by shares subsequent to year end. At June 30, 2019, $37,547 is owed to Mr. DiGirolamo, $23,032 to Mr. Crosby, $49,399 to Mr. Ryan, and $200,000 to Mr. Parsons, all amounts included in accounts payable and accrued liabilities. Mr. Bruce Reid (Former CEO) earned $29,287 for consulting services rendered and including reimbursed expenses of $4,287, which amount is included in accounts payable at June 30, 2019. 13 . Subsequent events On August 1, 2019, the Company closed the second and final tranche ("Tranche Two") of the non-brokered private placement, issuing 6,042,954 units ("August 2019 Units") at C$0.05 per August 2019 Unit for gross proceeds of C$302,148 ($228,202) and incurring financing costs of $36,468. Each August 2019 Unit consists of one common share of the Company and one common share purchase warrant, which entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years. The Company also issued 16,962,846 August 2019 Units to settle $640,556 of debt at a deemed price of C$0.09 based on the fair value of the shares issued. 36 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 13. Subsequent events (continued) On August 23, 2019, the Company closed the first tranche (the "First Tranche") of the non-brokered private placement, issuing 27,966,002 common shares of the Company at C$0.05 per share for gross proceeds of C$1,398,300 ($1,049,974) and incurring financing costs of $28,847. The Company also issued 2,033,998 common shares to settle $77,117 of debt at a deemed price of C$0.18 based on the fair value of the shares issued. On August 30, 2019, the Company closed the second and final tranche (the "Second Tranche") of the non-brokered private placement, issuing 1,000,000 common shares at C$0.05 per share for gross proceeds of C$50,000 ($37,550). 14. Quarterly financial data (unaudited) The Company restated its consolidated financial statements as of and for the quarterly periods ended September 30, 2018, December 31, 2018 and 2017, and March 31, 2019 and 2018 to correct misstatements, as discussed in note 5 describing the restatement of annual periods. The misstatements did not impact the quarterly period ended September 30, 2017. The following tables summarize the impact of the restatement on the Company's unaudited condensed interim consolidated financial statements. Impact to Condensed Interim Consolidated Statements of Loss and Comprehensive Loss As previously Three months ended December 31, 2017 reported Adjustment As restated Lease payments and exploration $ 2,168,676 $ 42,387 $ 2,211,063 Total operating expenses and loss from operations $ (3,467,459) $ (42,387) $ (3,509,846) Loss before income tax and net loss and comprehensive loss for the period $ (2,991,909) $ (42,387) $ (3,034,296) Net loss per common share - basic and fully diluted (*) $ (1.10) $ (0.02) $ (1.12) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Six months ended December 31, 2017 reported Adjustment As restated Lease payments and exploration $ 2,174,892 $ 42,387 $ 2,217,279 Total operating expenses and loss from operations $ (3,875,739) $ (42,387) $ (3,918,126) Loss before income tax and net loss and comprehensive loss for the period $ (3,394,196) $ (42,387) $ (3,436,583) Net loss per common share - basic and fully diluted (*) $ (1.30) $ (0.02) $ (1.32) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Three months ended March 31, 2018 reported Adjustment As restated Lease payments and exploration $ 674,554 $ 151,437 $ 825,991 Loss from operations $ (1,618,052) $ (151,437) $ (1,769,489) Loss before income tax and net loss and comprehensive loss for the period $ (1,583,056) $ (151,437) $ (1,734,493) Net income (loss) per common share - basic and fully diluted (*) $ (0.48) $ (0.05) $ (0.53) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. 37 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 14. Quarterly financial data (unaudited) (continued) As previously Nine months ended March 31, 2018 reported Adjustment As restated Lease payments and exploration $ 2,849,446 $ 193,824 $ 3,043,270 Loss from operations $ (5,493,791) $ (193,824) $ (5,687,615) Loss before income tax and net loss and comprehensive loss for the period $ (4,977,252) $ (193,824) $ (5,171,076) Net loss per common share - basic and fully diluted (*) $ (1.76) $ (0.07) $ (1.83) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Three months ended September 30, 2018 reported Adjustment As restated Exploration $ 810,265 $ 216,622 $ 1,026,887 Total operating expense and loss from operations $ (1,611,333) $ (216,622) $ (1,827,955) Loss before income tax and net loss and comprehensive loss for the period $ (636,490) $ (216,622) $ (853,112) Net loss per common share - basic and fully diluted (*) $ (0.19) $ (0.06) $ (0.25) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Three months ended December 31, 2018 reported Adjustment As restated Exploration $ 3,003,911 $ 184,947 $ 3,188,858 Total operating expense and loss from operations $ (3,393,071) $ (184,947) $ (3,578,018) Loss before income tax and net loss and comprehensive loss for the period $ (3,290,293) $ (184,947) $ (3,475,240) Net loss per common share - basic and fully diluted (*) $ (0.88) $ (0.05) $ (0.93) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Six months ended December 31, 2018 reported Adjustment As restated Exploration $ 3,814,176 $ 401,569 $ 4,215,745 Total operating expense and loss from operations $ (5,004,404) $ (401,569) $ (5,405,973) Loss before income tax and net loss and comprehensive loss for the period $ (3,926,783) $ (401,569) $ (4,328,352) Net loss per common share - basic and fully diluted (*) $ (1.10) $ (0.11) $ (1.21) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. 38 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 14. Quarterly financial data (unaudited) (continued) As previously Three months ended March 31, 2019 reported Adjustment As restated Exploration $ 999,602 $ 151,018 $ 1,150,620 Total operating expense and loss from operations $ (1,239,839) $ (151,018) $ (1,390,857) Loss before income tax and net loss and comprehensive loss for the period $ (1,826,405) $ (151,018) $ (1,977,423) Net loss per common share - basic and fully diluted (*) $ (0.44) $ (0.04) $ (0.48) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. As previously Nine months ended March 31, 2019 reported Adjustment As restated Exploration $ 4,813,778 $ 552,587 $ 5,366,365 Total operating expense and loss from operations $ (6,244,243) $ (552,587) $ (6,796,830) Loss before income tax and net loss and comprehensive loss for the period $ (5,753,188) $ (552,587) $ (6,305,775) Net loss per common share - basic and fully diluted (*) $ (1.53) $ (0.15) $ (1.68) (*) Adjusted for 10-to-1 share consolidation on May 23, 2019. Impact to Condensed Interim Consolidated Balance Sheets As previously As at December 31, 2017 reported Adjustment As restated Accounts payable $ 213,436 $ 42,387 $ 255,823 Total current liabilities $ 822,569 $ 42,387 $ 864,956 Total liabilities $ 3,626,582 $ 42,387 $ 3,668,969 Deficit accumulated during exploration stage $ (21,837,898) $ (42,387) $ (21,880,285) Total shareholders' equity $ 1,353,359 $ (42,387) $ 1,310,972 As previously As at March 31, 2018 reported Adjustment As restated Accounts payable $ 65,108 $ 193,824 $ 258,932 Total current liabilities $ 228,435 $ 193,824 $ 422,259 Total liabilities $ 3,004,653 $ 193,824 $ 3,198,477 Deficit accumulated during exploration stage $ (23,420,954) $ (193,824) $ (23,614,778) Total shareholders' deficiency $ (229,697) $ (193,824) $ (423,521) 39 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 14. Quarterly financial data (unaudited) (continued) As previously As at September 30, 2018 reported Adjustment As restated Accounts payable $ 237,781 $ 763,354 $ 1,001,135 Total current liabilities $ 1,170,752 $ 763,354 $ 1,934,106 Total liabilities $ 1,430,374 $ 763,354 $ 2,193,728 Deficit accumulated during exploration stage $ (24,250,066) $ (763,354) $ (25,013,420) Total shareholders' equity (deficiency) $ (641,462) $ (763,354) $ (1,404,816) As previously As at December 31, 2018 reported Adjustment As restated Accounts payable $ 975,401 $ 948,301 $ 1,923,702 Total current liabilities $ 3,975,689 $ 948,301 $ 4,923,990 Total liabilities $ 4,101,195 $ 948,301 $ 5,049,496 Deficit accumulated during exploration stage $ (27,540,359) $ (948,301) $ (28,488,660) Total shareholders' deficiency $ (3,572,758) $ (948,301) $ (4,521,059) As previously As at March 31, 2019 reported Adjustment As restated Accounts payable $ 1,785,489 $ 1,099,319 $ 2,884,808 Total current liabilities $ 5,618,921 $ 1,099,319 $ 6,718,240 Total liabilities $ 5,744,427 $ 1,099,319 $ 6,843,746 Deficit accumulated during exploration stage $ (29,366,764) $ (1,099,319) $ (30,466,083) Total shareholders' deficiency $ (5,399,163) $ (1,099,319) $ (6,498,482) Impact to Condensed Interim Consolidated Statements of Cash Flows As previously Six months ended December 31, 2017 reported Adjustment As restated Net loss for the period $ (3,394,196) $ (42,387) $ (3,436,583) Changes in operating assets and liabilities: Accounts payable $ (48,489) $ 42,387 $ (6,102) As previously Nine months ended March 31, 2018 reported Adjustment As restated Net loss for the period $ (4,977,252) $ (193,824) $ (5,171,076) Changes in operating assets and liabilities: Accounts payable $ (196,817) $ 193,824 $ (2,993) 40 Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) Amended and Restated Notes to Consolidated Financial Statements Years Ended June 30, 2019 and 2018 (Expressed in United States Dollars) 14. Quarterly financial data (unaudited) (continued) As previously Three months ended September 30, 2018 reported Adjustment As restated Net loss for the period $ (636,490) $ (216,622) $ (853,112) Changes in operating assets and liabilities: Accounts payable $ 12,597 $ 216,622 $ 229,219 As previously Six months ended December 31, 2018 reported Adjustment As restated Net loss for the period $ (3,926,783) $ (401,569) $ (4,328,352) Changes in operating assets and liabilities: Accounts payable $ 770,563 $ 401,569 $ 1,172,132 As previously Nine months ended March 31, 2019 reported Adjustment As restated Net loss for the period $ (5,753,188) $ (552,587) $ (6,305,775) Changes in operating assets and liabilities: Accounts payable $ 1,581,235 $ 552,587 $ 2,133,822 41 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Effective September 2, 2014, the Company appointed the firm of MNP, LLP, Chartered Professional Accountants, as the Company’s principal independent accountant to audit the Company’s financial statements. The Company has had no disagreements with its accountants, that would require disclosure pursuant to Item 304 of Regulation S-K.