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Item 1. Financial Statements

2021-08-16 compared with 2021-05-17 · 731 added, 1093 removed, 304 unchanged (86% of the section changed)

FINANCIAL STATEMENTS

financial statements of Bunker Hill Mining Corp., (“Bunker Hill”, the “Company”, or the “Registrant”)

a Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange

Because certain information and notes normally included in financial statements prepared in accordance with

accounting principles generally accepted in the United States of America (“U.S.”) were condensed or omitted pursuant

to such rules and regulations, these financial statements should be read in conjunction with the audited consolidated financial

statements and notes thereto included in the Company’s Form 10-KT for the six months ended December 31, 2020, and all amendments

Because certain information and notes normally included in financial statements prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.”) were condensed or omitted pursuant to such rules and regulations,

these financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included

in the Company’s Form 10-KT for the six months ended December 31, 2020, and all amendments thereto.

HILL MINING CORP.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2021

INTERIM CONSOLIDATED FINANCIAL

AND SIX MONTHS ENDED

IN UNITED STATES DOLLARS)

Hill Mining Corp.

Bunker Hill Mining Corp.

Interim Consolidated Balance Sheets

in United States Dollars)

and cash equivalents

current assets

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Total current assets

Non-current assets

Equipment (note 3)

Right-of-use assets (note 4)

Long term deposit (note 5)

Mining interests (note 5)

EQUITY AND LIABILITIES

assets (note 4)

term deposit (note 5)

interests (note 5)

AND LIABILITIES

payable (notes 5 and 14)

liabilities (notes 5 and 13)

liability (note 11)

portion of lease liability (note 8)

current liabilities

Accounts payable (notes 5 and 14)

Accrued liabilities (notes 5 and 13)

DSU liability (note 11)

Current portion of lease liability (note 8)

Total current liabilities

Non-current liabilities

Lease liability (note 8)

Derivative warrant liability (notes 7 and 9)

Total liabilities

Shareholders’

Preferred shares, $0.000001 par value, 10,000,000 preferred shares authorized;

liability (note 8)

warrant liability (notes 7 and 9)

Shareholders’

shares, $ 0.000001

par value, 10,000,000

preferred shares authorized;

Nil 0 preferred shares issued and outstanding (note 9)

Common shares, $0.000001 par value, 750,000,000 common shares authorized;163,548,480 and 143,117,068 common shares issued and outstanding, respectively (note 9)

Additional paid-in-capital (note 9)

Deficit accumulated during the exploration stage

shares, $ 0.000001 par value, 750,000,000 common shares authorized;

163,781,537 and 143,117,068 common shares

issued and outstanding,

respectively (note 9)

paid-in-capital (note 9)

accumulated during the exploration stage

( 60,206,008 )

( 66,088,873 )

Total shareholders’

shareholders’ deficiency

( 22,370,235 )

( 31,537,597 )

Total shareholders’

deficiency and liabilities

shareholders’ deficiency and liabilities

accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Hill Mining Corp.

Interim Consolidated Statements of Income and Comprehensive Income

in United States Dollars)

Bunker Hill Mining Corp.

Interim Consolidated Statements of Income (loss) and Comprehensive Income (loss) (Expressed in United States Dollars)

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Operating expenses

3 unchanged sentences

Loss from operations

( 5,295,557 )

( 3,589,361 )

( 9,919,531 )

( 4,952,321 )

Other income or gain (expense or loss)

Change in derivative liability (notes 7 and 9)

( 19,060,232 )

( 8,214,828 )

Accretion expense (notes 6 and 7)

Financing costs (note 7)

Gain (loss) on foreign exchange

2 unchanged sentences

Loss on debt settlement (note 9)

Net income and comprehensive income for the period

Net income per common share - basic (note 12)

Net income per common share - fully diluted (note 12)

Weighted average number of common shares - basic (note 12)

Weighted average number of common shares - fully diluted (note 12)

Net income (loss) and comprehensive income (loss) for the period

$ ( 22,882,575 )

$ ( 13,580,978 )

Dilutive effect of warrant

$ ( 175,816 )

$ ( 520,066 )

Diluted net income (loss)

and comprehensive income (loss) for the period (Note 12)

$ ( 130,760 )

$ ( 22,882,575 )

$ ( 13,580,978 )

Net income (loss) per common share (note 12)

- fully diluted (note 12)

Weighted average number of common shares (note 12)

- fully diluted

accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Hill Mining Corp.

Bunker Hill Mining Corp.

Interim Consolidated Statements of Cash Flows

in United States Dollars)

Operating activities

Net income for the period

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

Depreciation expense

Change in fair value of warrant liability

income (loss) for the period

$ ( 13,580,978 )

to reconcile net loss to net cash used in operating activities:

in fair value of warrant liability

( 15,712,168 )

Accretion expense

Loss on loan extinguishment

Interest expense on lease liability

Foreign exchange gain on re-translation of lease liability

Loss on debt settlement

Changes in operating assets and liabilities:

on loan extinguishment

expense on lease liability

exchange gain on re-translation of lease liability

on debt settlement

in operating assets and liabilities:

Accounts receivable

Prepaid expenses

Accounts payable

Accrued liabilities

Interest payable

Net cash used in operating activities

Investing activities

Purchase of machinery and equipment

Net cash used in investing activities

Financing activities

Proceeds from issuance of common stock

Shares to be issued

Lease payments

Proceeds from promissory note

Repayment of promissory note

Net cash provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures

Non-cash activities:

Units issued to settle accrued liabilities

Common stock issued to settle convertible loan

cash used in operating activities

( 7,040,266 )

( 2,520,973 )

of machinery and equipment

cash used in investing activities

from issuance of common stock

from warrants exercised

from promissory note

of promissory note

cash provided by financing activities

change in cash and cash equivalents

( 1,191,272 )

and cash equivalents, beginning of period

and cash equivalents, end of period

issued to settle accounts payable, accrued liabilities and promissory notes

stock issued to settle convertible loan

accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Hill Mining Corp.

Interim Consolidated Statements of Changes in Shareholders’

Bunker Hill Mining Corp.

Interim Consolidated Statements of Changes in Shareholders’ Deficiency

in United States Dollars)

Deficit accumulated during

the exploration

paid-in-capital

Balance, December 31, 2019

accumulated during the

December 31, 2019

$ ( 50,343,441 )

$ ( 23,334,737 )

Stock-based compensation

Shares issued at $0.42 per share (i)

Shares issued for debt settlement at $0.42 per share (i)

Finder’s units issued

Finder’s warrants issued

Shares to be issued

Net income for the period

Balance, March 31, 2020

issued at $0.42 per share (i)

Units issued at $0.32 per unit (iii)

Units issued at $0.32 per share, shares

issued for debt settlement at $0.42 per share (i)

Units issued for debt settlement at $0.45 per unit (iv)

Units issued for debt settlement at $0.42 per share, shares

Shares issued for RSUs vested

Shares issued for RSUs vested, shares

warrants issued

exercised at $0.18 per share (ii)

loss for the period

( 13,580,978 )

Balance, December 31, 2020

June 30, 2020

$ ( 63,924,419 )

$ ( 33,241,919 )

Stock-based compensation

Units issued at $0.32 per unit (ii)

Units issued for debt settlement at $0.45 per

Shares issued for RSUs vested

Warrant valuation

Net income for the period

Balance, March 31, 2021

December 31, 2020

$ ( 66,088,873 )

$ ( 31,537,597 )

Shares issued at C$0.56, converted to US at $0.42 (note 9)

Units issued at C$0.40, converted to US at $0.32 (note 9)

(iii) Units issued at $0.57,

converted to US at $0.45 (note 9)

issued at $0.32 per unit (iii)

issued for debt settlement at $0.45 per unit (iv)

issued for RSUs vested

( 3,813,103 )

income for the period

income (loss) for the period

June 30, 2021

$ ( 60,206,008 )

$ ( 22,370,235 )

issued at C$0.56, converted to US at $0.42 (note 9)

(ii) Shares issued upon warrants exercised at C$0.25, converted to US at $0.18 (note 9)

issued at C$0.40, converted to US at $0.32 (note 9)

issued at C$0.57, converted to US at $0.45 (note 9)

accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

1 unchanged sentence

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

and continuance of operations and going concern

Nature and continuance of operations and going concern

Hill Mining 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

82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1.

As of the date of this Form 10-Q, the Company had one subsidiary,

Silver Valley Metals Corp.

(formerly American Zinc Corp.), an Idaho corporation created to facilitate the work being conducted

at the Bunker Hill Mine in Idaho.

(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 82 Richmond Street East,

Toronto, Ontario, Canada, M5C 1P1.

As of the date of this Form 10-Q, the Company had one subsidiary, Silver Valley Metals Corp.

American Zinc Corp.), an Idaho corporation created to facilitate the work being conducted at the Bunker Hill Mine in Idaho.

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.

It continues to work at developing its project

with a view towards putting it into production.

unaudited condensed interim consolidated financial statements have been prepared on a going concern basis.

The Company has incurred

losses since inception resulting in an accumulated deficit of $60,251,064 and further losses are anticipated in the development

of its business.

The Company has incurred losses

since inception resulting in an accumulated deficit of $ 60,206,008 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

condensed interim consolidated financial statements do not include any adjustments that might result from the outcome of

this uncertainty.

is considering various financing alternatives including, but not limited to, raising capital through the capital markets and debt

These condensed interim 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 as a going concern.

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.

Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of epidemics,

pandemics, or other health crises, including the recent outbreak of respiratory illness caused by the novel coronavirus (“COVID19”).

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 condensed interim consolidated

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

is considering various financing alternatives including, but not limited to, raising capital through the capital markets and debt financing.

These condensed interim 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

as a going concern.

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.

Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of epidemics, pandemics,

or other health crises, including the recent outbreak of respiratory illness caused by the novel coronavirus (“COVID19”).

The Company cannot accurately predict the impact COVID19 will have on its operations and the ability of others to meet their obligations

with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease,

the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries.

In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis

that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could

further affect the Company’s operations and ability to finance its operations.

with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration

of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries.

In addition, a significant

outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies

and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and

ability to finance its operations.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

1 unchanged sentence

accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange

Commission for interim financial information.

Accordingly, they do not include all the information and footnotes necessary for

a comprehensive presentation of financial position, results of operations, shareholders’

deficiency or cash flows.

It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been

made which are necessary for a fair financial statement presentation.

The unaudited condensed interim consolidated financial statements

should be read in conjunction with the Company’s Annual Report on Form 10-K/T, which contains the annual audited consolidated

financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the six months ended

December 31, 2020.

The interim results for the period ended March 31, 2021 are not necessarily indicative of the results for the

full fiscal year.

The unaudited interim condensed consolidated financial statements are presented in USD, which is the functional

generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission

for interim financial information.

Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation

of financial position, results of operations, shareholders’ equity or cash flows.

It is management’s opinion, however, that all

material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

The unaudited condensed interim consolidated financial statements should be read in conjunction

with the Company’s Annual Report on Form 10-K/T, which contains the annual audited consolidated financial statements and notes

thereto, together with the Management’s Discussion and Analysis, for the six months ended December 31, 2020.

The interim results

for the period ended June 30, 2021 are not necessarily indicative of the results for the full fiscal year.

The unaudited interim condensed

consolidated financial statements are presented in USD, which is the functional currency.

consists of the following:

1 unchanged sentence

Equipment, net

total depreciation expense during the three months ended March 31, 2021 was $29,830 (three months ended March 31, 2020 - $2,281).

total depreciation expense during the three and six months ended June 30, 2021 was $ 34,566 and $ 64,396 , respectively (three and six months

ended June 30, 2020 - $ 14,392 and $ 16,673 , respectively).

Right-of-use asset

asset consists of the following:

of Right-of-Use Asset

Less accumulated depreciation

Right-of-use asset, net

total depreciation expense during the three months ended March 31, 2021 was $26,595 (three months ended March 31, 2020 - $25,932).

total depreciation expense during the three and six months ended June 30, 2021 was $ 26,594 and $ 53,189 , respectively (three and six months

ended June 30, 2020 - $ 27,430 and $ 53,362 , respectively).

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

2 unchanged sentences

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 (as amended, the “Letter of Intent”).

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.

(“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 (as amended, 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.

the 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 were included in exploration expenses.

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”).

These amounts were initially

capitalized and subsequently written off during fiscal 2018 and were included in exploration expenses.

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”).

the terms of the Agreement, the Company was required to make a $ 1,000,000 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 24month lease commenced

November 1, 2017.

The 24month lease commenced November 1, 2017.

During the term of the lease, the Company was to make $ 100,000 monthly mining lease payments, paid quarterly.

Company had an option to purchase the Bunker Assets at any time before the end of the lease and any extension for a purchase price

of $45,000,000 with purchase price payments to be made over a ten-year period to Placer Mining.

Under the 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 $60,000,000.

Company had an option to purchase the Bunker Assets at any time before the end of the lease and any extension for a purchase price of

$ 45,000,000 with purchase price payments to be made over a ten year period to Placer Mining.

Under the 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 $ 60,000,000 .

October 2, 2018, the Company announced that it was in default of the Agreement.

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 Agreement being terminated.

November 13, 2018, the Company announced that it was successful in renewing the Agreement, effectively with the original Agreement

intact, except that monthly payments were reduced to $60,000 per month for 12 months, with the accumulated reduction in payments

of $140,000 per month (“deferred payments”) being accrued.

As at March 31, 2021, the Company has accrued for a total

of $nil (December 31, 2020 - $nil), which is included in accounts payable.

These deferred payments will be waived should

the Company choose to exercise its option.

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 Agreement being terminated.

November 13, 2018, the Company announced that it was successful in renewing the Agreement, effectively with the original Agreement intact,

except that monthly payments were reduced to $ 60,000 per month for 12 months, with the accumulated reduction in payments of $ 140,000

per month (“deferred payments”) being accrued.

As at June 30, 2021, the Company has accrued for a total of $ nil (December

31, 2020 - $ nil ), which is included in accounts payable.

These deferred payments will be waived should the Company choose to exercise

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

interests (continued)

Mining interests (continued)

Hill Mine Complex (continued)

November 1, 2019, the Agreement was amended (the “Amended Agreement”).

The key terms of the Amended Agreement are

lease period was extended for an additional period of nine months to August 1, 2020,

with the option to extend for a further six months based upon payment of a one-time $60,000

extension fee (extended);

Company will make monthly care and maintenance payments to Placer Mining of $60,000 until

exercising the option to purchase;

purchase price is set at $11,000,000 for 100% of the Bunker Assets to be paid with $6,200,000

in cash, and $4,800,000 in common shares.

The purchase price also includes the negotiable

United States Environmental Protection Agency (“EPA”) costs of $20,000,000.

The Amended Agreement provides for the elimination of all royalty payments that were

to be paid to the mine owner.

Upon signing the Amended Agreement, the Company paid a

onetime, nonrefundable cash payment of $300,000 to the mine owner.

This payment will

be applied to the purchase price upon execution of the purchase option.

the Company elects not to exercise the purchase option, the payment shall be treated

as an additional care and maintenance payment.

November 1, 2019, the Agreement was amended (the “Amended Agreement”).

The key terms of the Amended Agreement are as follows:

lease period was extended for an additional period of nine months to August 1, 2020, with the option to extend for a further six

months based upon payment of a one-time $ 60,000 extension fee (extended);

Company will make monthly care and maintenance payments to Placer Mining of $ 60,000 until exercising the option to purchase;

purchase price is set at $ 11,000,000 for 100 % of the Bunker Assets to be paid with $ 6,200,000 in cash, and$ 4,800,000 in common shares.

The purchase price also includes the negotiable United States Environmental Protection Agency (“EPA”) costs of $ 20,000,000 .

The Amended Agreement provides for the elimination of all royalty payments that were to be paid to the mine owner.

Upon signing the

Amended Agreement, the Company paid a onetime, nonrefundable cash payment of $ 300,000 to the mine owner.

This payment will be applied

to the purchase price upon execution of the purchase option.

In the event the Company elects not to exercise the purchase option,

the payment shall be treated as an additional care and maintenance payment.

July 27, 2020, the Company extended the lease with Placer Mining for a further 18 months for a $ 150,000 extension fee.

3 unchanged sentences

Under the terms of this amendment:

Company will continue to make monthly care and maintenance payments to Placer Mining

of $60,000 until exercising the option to purchase;

purchase price was reduced to $7,700,000 in cash, with $5,700,000 payable in cash (with

an aggregate of $300,000 to be credited toward the purchase price of the Bunker Assets

as having been previously paid by the Company and an aggregate of $5,400,000 payable

in cash outstanding) and $2,000,000 in common shares.

The reference price for the payment

in common shares will be based on the common share price of the last equity raise before

the option is exercised;

Company’s contingent obligation to settle $1,787,300 of accrued payments due to

Placer Mining has been waived.

As a result, the Company recorded a gain on settlement

of accounts payable of $1,787,300 during the six months ended December 31, 2020;

Company is to make an advance payment of $2,000,000 (paid) to Placer Mining which shall

be credited toward the purchase price if and when the Company elects to exercise its

purchase right.

Company will continue to make monthly care and maintenance payments to Placer Mining of $ 60,000 until exercising the option to purchase ;

purchase price was reduced to $ 7,700,000 in cash, with $ 5,700,000 payable in cash (with an aggregate of $ 300,000

to be credited toward the purchase price of the Bunker Assets as having been previously paid by the Company and an aggregate of $ 5,400,000

payable in cash outstanding) and $ 2,000,000 in common shares.

The reference price for the payment in common shares will be based

on the common share price of the last equity raise before the option is exercised;

Company’s contingent obligation to settle $ 1,787,300 of accrued payments due to Placer Mining has been waived.

As a result, the Company

recorded a gain on settlement of accounts payable of $ 1,787,300 during the six months ended December 31, 2020;

Company is to make an advance payment of $ 2,000,000 (paid) to Placer Mining which shall be credited toward the purchase price if

and when the Company elects to exercise its purchase right.

In the event that the Company irrevocably elects not to exercise its

1 unchanged sentence

twelve months from the date of such election.

The amount has been recorded as a long

term deposit.

This payment had the effect of decreasing the remaining amount payable

to purchase the Bunker Assets to an aggregate of $3,400,000 payable in cash and $2,000,000

The amount has been recorded as a long term deposit.

This payment had the effect of

decreasing the remaining amount payable to purchase the Bunker Assets to an aggregate of $ 3,400,000 payable in cash and $ 2,000,000

in Common Shares of the Company.

1 unchanged sentence

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

interests (continued)

Mining interests (continued)

Hill Mine Complex (continued)

addition to the payments to Placer Mining, and pursuant to an agreement with the 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.

addition to the payments to Placer Mining, and pursuant to an agreement with the 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 $ 20,000,000 .

The agreement calls for payments

starting with $1,000,000 30 days after a fully ratified agreement was signed followed by a payment schedule detailed below:

Within 30 days of the effective date

November 1, 2018

November 1, 2019

November 1, 2020

November 1, 2021

November 1, 2022

November 1, 2023

November 1, 2024

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.

The Company also has received invoices from the EPA for additional water treatment charges

for the periods from December 2017 to October 2019.

A total of $2,309,388 was outstanding as at March 31, 2021 (December 31, 2020

- $2,309,388).

The Company received the supporting details from the EPA and began the process of reconciling and reviewing these

invoices in September 2020.

The unpaid EPA balance is subject to interest at the rate specified for interest on investments of

the EPA Hazardous Substance Superfund.

As at March 31, 2021, the interest accrued on the unpaid EPA balance is $210,522 (December

31, 2020 - $162,540).

of March 31, 2021, the Company has accrued an estimate for additional water treatment charges based on 2018 and 2019 invoices

received from the EPA, for a total of an additional annual accrual of $640,000.

The Company has included all unpaid and accrued

EPA payments and accrued interest in accounts payable and accrued liabilities amounting to $11,506,577 (December 31, 2020 - $11,298,594).

The agreement calls for payments starting with $ 1,000,000

30 days after a fully ratified agreement was signed followed by a payment schedule detailed below:

of Payments for Mining

30 days of the effective date

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.

Prior to July 2021, the Company had received invoices from the EPA for water treatment charges for the periods

from December 2017 to October 2019.

The Company received the supporting details from the EPA and began the process of reconciling and

reviewing these invoices in September 2020.

to June 30, 2021, the Company received an invoice from the EPA for water treatment charges for the period from November 2019 to October

2020, in the amount of approximately $ 2,500,000 .

Based on preliminary review, the Company believes that this increase in water treatment

charges is not consistent with the EPA’s cost to treat water from the Mine, and plans to initiate a discussion with the EPA in

A material increase in water treatment charges had not been anticipated, and the Company had therefore been accruing $ 133,000

per month for water treatment charges from the November 2019 to March 2021 period, consistent with the invoice relating to the November

2018 to October 2019 period.

As a result of the new estimate based on the invoice received in July 2021, an additional accrual

of approximately $ 1,309,000 has been made to exploration expense.

An additional $ 630,000

has been accrued for the three months ending June 30, 2021.

total of $ 4,977,186 for water treatment charges, net

of payments made, was accrued for as at June 30, 2021 (December 31, 2020 - $ 3,136,055 ).

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, 2021, the interest accrued

on the unpaid EPA balance is $ 258,154 (December 31, 2020 - $ 162,540 ).

The Company has included all unpaid and accrued EPA payments and

accrued interest in accounts payable and accrued liabilities amounting to $ 13,235,340 (December 31, 2020 - $ 11,298,594 ).

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

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%

Convertible loan payable

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 common 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 to 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.

August 2018, the amount of the Hummingbird convertible loan payable was increased to $2,000,000 from its original $1,500,000 loan,

net of $45,824 of debt issue costs.

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 common 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 to 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

August 2018, the amount of the Hummingbird convertible loan payable was increased to $ 2,000,000 from its original $ 1,500,000 loan, net

of $ 45,824 of debt issue costs.

An additional 116,714 warrants with each warrant exercisable at C$ 4.50 were issued.

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 (the “Principal Amount”), may be converted at a price per share equal to C$8.50;

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

(iii) $500,000, being the additional principal 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 the 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.

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 (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 (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 the 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.

the year ended June 30, 2019, Hummingbird agreed to extend the scheduled maturity date of the loan to June 30, 2020 .

accounted for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment.

This was accounted

for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment.

June 2019, the Company settled $ 100,000 of the Additional Amount by issuing 2,660,000 common shares, which resulted in the recording

3 unchanged sentences

June 2020, Hummingbird agreed to extend the scheduled maturity date of the loan to July 31, 2020 .

October 2020, the Company settled the full amount of the outstanding loan by issuing 5,572,980 common shares at a deemed price

of C$0.49 based on the fair value of the shares issued.

October 2020, the Company settled the full amount of the outstanding loan by issuing 5,572,980 common shares at a deemed price of C$ 0.49

based on the fair value of the shares issued.

As a result, the Company recorded a gain on debt settlement.

1 unchanged sentence

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

loan payable (continued)

Convertible loan payable (continued)

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 U.S.

The estimated fair value of the conversion features

and warrants was determined on the date of issuance and marked to market at each financial reporting period.

expense for the three months ended March 31, 2021 was $nil (three months ended March 31, 2020 - $37,713) based on effective interest

rate of 16% after the loan extension.

expense for the three months ended March 31, 2021 was $nil (three months ended March 31, 2020 - $43,616).

As at March 31, 2021,

the Company has an outstanding interest payable of $nil (December 31, 2020 - $nil).

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 U.S.

The estimated fair value of the conversion features and warrants

was determined on the date of issuance and marked to market at each financial reporting period.

expense for the three and six months ended June 30, 2021 was $ nil and $ nil , respectively (three and six months ended June 30, 2020 -

$ 37,380 and $ 75,093 , respectively) based on effective interest rate of 16 % after the loan extension.

expense for the three and six months ended June 30, 2021 was $ nil and $ nil , respectively (three and six months ended June 30, 2020 -

$ 40,329 and $ 83,945 , respectively).

As at June 30, 2021, the Company has an outstanding interest payable of $ nil (December 31, 2020 -

of Convertible Loan Outstanding Interest Payable

Balance, December 31, 2019

3 unchanged sentences

Loan extinguishment

Balance, December 31, 2020 and March 31, 2021

notes payable

( 1,600,000 )

Balance, December 31, 2020 and June 30, 2021

Promissory notes payable

On November 13, 2019, the Company issued a promissory note in the amount of $ 300,000 .

The note was unsecured, bore interest of

1% monthly, and is due on demand after 90 days from issuance.

In consideration for the loan, the Company issued 400,000 common

share purchase warrants to the lender.

Each whole warrant entitles the lender to acquire one common share of the Company at a

price of C$0.80 per share for a period of two years.

The note was unsecured, bore interest of 1 % monthly,

and is due on demand after 90 days from issuance.

In consideration for the loan, the Company issued 400,000 common share purchase warrants

to the lender.

Each whole warrant entitles the lender to acquire one common share of the Company at a price of C$ 0.80 per share for a

period of two years .

April 24, 2020, the Company extended the maturity date of the promissory note payable to August 1, 2020 .

In consideration, the

Company issued 400,000 common share purchase warrants to the lender at an exercise price of C$0.50.

In consideration, the Company

issued 400,000 common share purchase warrants to the lender at an exercise price of C$ 0.50 .

The warrants expire on November 13, 2021 .

1 unchanged sentence

the six months ended December 31, 2020, the Company repaid $ 110,658 of the promissory note and settled the remaining balance of $ 218,281

$218,281 (C$288,000), which included interest payable of $28,939, in full by issuing 822,857 August 2020 Units (as defined in

(C$ 288,000 ), which included interest payable of $ 28,939 , in full by issuing 822,857 August 2020 Units (as defined in note 9).

Company has accounted for the warrants in accordance with ASC Topic 815.

The 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 warrants was determined on the date of issuance and marks to market

at each financial reporting period.

The estimated fair value of the warrants was determined on the date of issuance and marks to market at each

financial reporting period.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

notes payable (continued)

Promissory notes payable (continued)

(i) (continued)

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:

of Fair Value of Derivative Warrant Liability Assumptions

November 2019 issuance

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

4 unchanged sentences

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

2 unchanged sentences

Change in derivative liability

expense for the three months ended March 31, 2021 was $nil (three months ended March 31, 2020 - $70,537) based on an effective

interest rate of 11% after the loan extension.

expense for the three months ended March 31, 2021 was $nil (three months ended March 31, 2020 - $9,000).

As at March 31, 2021,

the Company has an outstanding interest payable of $nil (December 31, 2020 - $nil).

expense for the three and six months ended June 30, 2021 was $ nil , respectively (three and six months ended June 30, 2020 -

$ 48,379 and $ 118,916 , respectively) based on an effective interest rate of 11 % after the loan extension.

expense for the three and six months ended June 30, 2021 was $ nil , respectively (three and six months ended June 30, 2020 -

$ 9,600 and $ 18,600 , respectively).

As at June 30, 2021, the Company has an outstanding interest payable of $ nil (December 31, 2020 -

May 12, 2020, the Company issued a promissory note in the amount of $ 362,650 (C$ 500,000 ), net of $ 89,190 of debt issue costs.

bore no interest and was due on demand after 90 days after the issue date.

This promissory note was repaid during the six months ended

December 31, 2020.

Accretion expense for the three and six months ended June 30, 2021 was $ nil (three and six months ended June 30, 2020

- $ 41,453 ) based on effective interest rate of 7 %.

May 12, 2020, the Company issued a promissory note in the amount of $ 141,704 (C$ 200,000 ), net of $ 35,676 of debt issue costs.

bore no interest and was due on demand after 90 days after the issue date.

During the six months ended December 31, 2020, the Company

settled the promissory note in full by issuing 714,285 common shares.

Accretion expense for the three and six months ended June 30, 2021

was $ nil (three and six months ended June 30, 2020 - $ 16,547 ) based on effective interest rate of 8 %.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

Promissory notes payable (continued)

June 30, 2020, the Company issued a promissory note in the amount of $ 75,000 , net of $ 15,000 of debt issue costs.

The note bore no interest

and was due on demand.

This promissory note was repaid in full during the six months ended December 31, 2020.

Financing cost for the

three and six months ended June 30, 2021 was $ nil (three and six months ended June 30, 2020 - $ 15,000 ).

June 30, 2020, the Company issued a promissory note in the amount of $ 75,000 to a director of the Company.

The note bore no interest

and was due on demand.

This promissory note was repaid in full during the six months ended December 31, 2020.

Financing cost for the

three and six months ended June 30, 2021 was $ nil (three and six months ended June 30, 2020 - $ 15,000 ).

Lease liability

Company has an operating lease for office space that expires in 2022.

Below is a summary of the Company’s lease liability

as of March 31, 2021:

Below is a summary of the Company’s lease liability as of June

of Operating Lease Liability

Balance, December 31, 2019

6 unchanged sentences

Foreign exchange loss

Balance, March 31, 2021

Balance, June 30, 2021

current portion

Long-term lease liability

addition to the minimum monthly lease payments of C$13,504, the Company is required to make additional monthly payments amounting

to C$12,505 for certain variable costs.

The schedule below represents the Company’s obligations under the lease agreement

in Canadian dollars.

addition to the minimum monthly lease payments of C$ 13,504 , the Company is required to make additional monthly payments amounting to

C$ 12,505 for certain variable costs.

The schedule below represents the Company’s obligations under the lease agreement in Canadian dollars.

of Lease Obligations

Less than 1 year

3 unchanged sentences

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

4 unchanged sentences

and outstanding

February 26, 2020, the Company closed a non-brokered private placement, issuing 2,991,073 common shares of the Company at C$0.56

per common share for gross proceeds of C$1,675,000 ($1,256,854) and incurring financing costs of $95,763, and issuing 239,284

broker warrants.

Each broker warrant entitles the holder to acquire one common share at a price of C$0.70 per common share for

a period of two years.

The Company also issued 696,428 common shares for $300,000 which was applied to reduce the principal amount

owing under the convertible loan facility (see note 6).

the three months ended March 31, 2020, the Company issued 1,403,200 June 2019 Units and 1,912,000 August 2019 Units at a deemed

price of C$0.05 as finder’s fees with a total value of C$165,760 ($125,180) to a shareholder of the Company.

May 12, 2020, the Company closed a non-brokered private placement, issuing 107,143 common shares of the Company at C$0.56 per

common share for gross proceeds of C$60,000 ($44,671).

August 14, 2020, the Company closed the first tranche of a brokered private placement of units of the Company (the “August

2020 Offering”), issuing 35,212,142 units of the Company (“August 2020 Units”) at C$0.35 per August 2020 Unit

for gross proceeds of $9,301,321 (C$12,324,250).

Each August 2020 Unit consisted of one common share of the Company and one common

share purchase warrant of the Company (each, an “August 2020 Warrant”), which entitles the holder to acquire a common

share of the Company at C$0.50 per common share until August 31, 2023.

In connection with the first tranche of the August 2020

Offering, the Company incurred share issuance costs of $709,488 (C$849,978) and issued 2,112,729 compensation options (the “August

2020 Compensation Options”).

Each August 2020 Compensation Option is exercisable into one August 2020 Unit at an exercise

price of C$0.35 until August 31, 2023.

August 25, 2020, the Company closed the second tranche of the August 2020 Offering, issuing 20,866,292 August 2020 Units at C$0.35

per August 2020 Unit for gross proceeds of $5,510,736 (C$7,303,202).

In connection with the second tranche of the August 2020

Offering, the Company incurred share issuance costs of $237,668 (C$314,512) and issued 1,127,178 August 2020 Compensation Options.

February 26, 2020, the Company closed a non-brokered private placement, issuing 2,991,073 common shares of the Company at C$ 0.56 per

common share for gross proceeds of C$ 1,675,000 ($ 1,256,854 ) and incurring financing costs of $ 95,763 , and issuing 239,284 broker warrants.

Each broker warrant entitles the holder to acquire one common share at a price of C$ 0.70 per common share for a period of two years .

The Company also issued 696,428 common shares for $ 300,000 which was applied to reduce the principal amount owing under the convertible

loan facility (see note 6).

the three months ended March 31, 2020, the Company issued 1,403,200 June 2019 Units and 1,912,000 August 2019 Units at a deemed price

of C$ 0.05 as finder’s fees with a total value of C$ 165,760 ($ 125,180 ) to a shareholder of the Company.

May 12, 2020, the Company closed a non-brokered private placement, issuing 107,143 common shares of the Company at C$ 0.56 per common

share for gross proceeds of C$ 60,000 ($ 44,671 ).

August 14, 2020, the Company closed the first tranche of a brokered private placement of units of the Company (the “August 2020

Offering”), issuing 35,212,142 units of the Company (“August 2020 Units”) at C$ 0.35 per August 2020 Unit for gross

proceeds of $ 9,301,321 (C$ 12,324,250 ).

Each August 2020 Unit consisted of one common share of the Company and one common share purchase

warrant of the Company (each, an “August 2020 Warrant”), which entitles the holder to acquire a common share of the Company

at C$ 0.50 per common share until August 31, 2023.

In connection with the first tranche of the August 2020 Offering, the Company incurred

share issuance costs of $ 709,488 (C$ 849,978 ) and issued 2,112,729 compensation options (the “August 2020 Compensation Options”).

Each August 2020 Compensation Option is exercisable into one August 2020 Unit at an exercise price of C$ 0.35 until August 31, 2023.

August 25, 2020, the Company closed the second tranche of the August 2020 Offering, issuing 20,866,292 August 2020 Units at C$ 0.35 per

August 2020 Unit for gross proceeds of $ 5,510,736 (C$ 7,303,202 ).

In connection with the second tranche of the August 2020 Offering, the

Company incurred share issuance costs of $ 237,668 (C$ 314,512 ) and issued 1,127,178 August 2020 Compensation Options.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

1 unchanged sentence

and outstanding (continued)

the August 2020 Offering, the fair value of warrants, which are treated as a liability and fair value accounted for, were greater

than gross proceeds.

the August 2020 Offering, the fair value of warrants, which are treated as a liability and fair value accounted for, were greater than

gross proceeds.

As a result, a loss of $ 940,290 has been recognized and $ 947,156 of total share issue costs were also expensed.

Company also issued 2,205,714 August 2020 Units to settle $177,353 of accounts payable, $55,676 of accrued liabilities, $28,300

of interest payable, and $344,185 of promissory notes payable at a deemed price of $0.67 based on the fair value of the units

As a result, the Company recorded a loss on debt settlement of $899,237.

October 9, 2020, the Company issued 5,572,980 common shares at a deemed price of C$0.49 based on the fair value of the common

shares issued to settle $1,600,000 of convertible loan payable and $500,000 of interest payable.

As a result, the Company recorded

a gain on debt settlement of $23,376.

February 2021, the Company closed a non-brokered private placement of units of the Company (the “February 2021 Offering”),

issuing 19,576,360 units of the Company (“February 2021 Units”) at C$0.40 per February 2021 Unit for gross proceeds

of $6,168,069 (C$7,830,544).

Each February 2021 Unit consisted of one common share of the Company and one common share purchase

warrant of the Company (each, an “February 2021 Warrant”), which entitles the holder to acquire a common share of

the Company at C$0.60 per common share for a period of five years.

In connection with the February 2021 Offering, the Company

incurred share issuance costs of $159,397 and issued 351,000 compensation options (the “February 2021 Compensation Options”).

Each February 2021 Compensation Option is exercisable into one February 2021 Unit at an exercise price of C$0.40 for a period

of three years.

Company also issued 417,720 February 2021 Units to settle $132,000 of accrued liabilities at a deemed price of $0.45 based on

the fair value of the units issued.

Company also issued 2,205,714 August 2020 Units to settle $ 177,353 of accounts payable, $ 55,676 of accrued liabilities, $ 28,300 of interest

payable, and $ 344,185 of promissory notes payable at a deemed price of $ 0.67 based on the fair value of the units issued.

the Company recorded a loss on debt settlement of $ 899,237 .

October 9, 2020, the Company issued 5,572,980 common shares at a deemed price of C$ 0.49 based on the fair value of the common shares

issued to settle $ 1,600,000 of convertible loan payable and $ 500,000 of interest payable.

As a result, the Company recorded a gain on

debt settlement of $ 23,376 .

February 2021, the Company closed a non-brokered private placement of units of the Company (the “February 2021 Offering”),

issuing 19,576,360 units of the Company (“February 2021 Units”) at C$ 0.40 per February 2021 Unit for gross proceeds of $ 6,168,069

(C$ 7,830,544 ).

Each February 2021 Unit consisted of one common share of the Company and one common share purchase warrant of the Company

(each, an “February 2021 Warrant”), which entitles the holder to acquire a common share of the Company at C$ 0.60 per common

share for a period of five years .

In connection with the February 2021 Offering, the Company incurred share issuance costs of $ 159,397

and issued 351,000 compensation options (the “February 2021 Compensation Options”).

Each February 2021 Compensation Option

is exercisable into one February 2021 Unit at an exercise price of C$ 0.40 for a period of three years.

Company also issued 417,720 February 2021 Units to settle $ 132,000 of accrued liabilities at a deemed price of $ 0.45 based on the fair

value of the units issued.

As a result, the Company recorded a loss on debt settlement of $ 56,146 .

each financing, the Company has accounted for the warrants 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 U.S.

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 condensed interim consolidated statements

of income and comprehensive income as a gain or loss and is estimated using the Binomial model.

The warrants are considered derivative instruments

as they were issued in a currency other than the Company’s functional currency of the U.S.

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.

change in fair value of the warrant is recorded in the condensed interim consolidated statements of income (loss) and comprehensive income

(loss) as a gain or loss and is estimated using the Binomial model.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

1 unchanged sentence

and outstanding (continued)

fair value of the warrant liabilities related to the various tranches of warrants issued during the period were estimated using

the Binomial model to determine the fair value using the following assumptions on the day of issuance and as at March 31, 2021:

fair value of the warrant liabilities related to the various tranches of warrants issued during the period 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, 2021:

of Estimated Using the Binomial Model to Determine the Fair Value of Warrant Liabilities

February 2021 issuance

February 9 and

March 31, 2021

June 30, 2021

Expected life

3 unchanged sentences

Change in derivative liability

warrant liabilities as a result of the August 2018, November 2018, June 2019, August 2019, and August 2020 private placements

were revalued as at March 31, 2021 and December 31, 2020 using the Binomial model and the following assumptions:

warrant liabilities as a result of the August 2018, November 2018, June 2019, August 2019, and August 2020 private placements were revalued

as at June 30, 2021 and December 31, 2020 using the Binomial model and the following assumptions:

August 2018 issuance

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

4 unchanged sentences

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

4 unchanged sentences

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

3 unchanged sentences

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

2 unchanged sentences

Change in derivative liability

In December 2020, the Company amended the exercise price to C$0.59 per common share and extended the expiry date to December 31,

2025 for 11,660,000 warrants.

(i) In December 2020,

the Company amended the exercise price to C$ 0.59

per common share and extended the expiry date

31, 2025 for 11,660,000

August 2019 issuance (ii)

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

4 unchanged sentences

Change in derivative liability

In December 2020, the Company amended the exercise price to C$0.59 per common share and extended the expiry date to December 31,

2025 for 17,920,000 warrants.

(ii) In December 2020,

the Company amended the exercise price to C$ 0.59 per common share and extended the expiry date to December 31, 2025 for 17,920,000 warrants.

The terms of the remaining 2,752,900 warrants remain unchanged.

1 unchanged sentence

December 31, 2020

March 31, 2021

June 30, 2021

Expected life

4 unchanged sentences

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

exercise price

Schedule of Warrant Activity

Weighted average exercise price

Weighted average grant date

Balance, December 31, 2019

Balance, March 31, 2020

Exercised (i)

( 2,332,900 )

Balance, June 30, 2020

Balance, December 31, 2020

Balance, March 31, 2021

Balance, June 30, 2021

(i) During the six

months ended June 30, 2020, 2,332,900 warrants were exercised at C$ 0.25 per warrant for gross proceeds of C$ 583,225 ($ 417,006 ).

In conjunction

with the exercise of warrants, the Company recognized a change in derivative liability of $ 871,710 .

of Warrants Outstanding Exercise Price

Exercise price (C$)

Number of warrants

August 1, 2021

10 unchanged sentences

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

exercise price

Balance, December 31, 2019 and March 31, 2020

of Broker Options

Weighted average

broker options

exercise price (C$)

Balance, December 31, 2019 and June 30, 2020

Balance, December 31, 2020

Issued - February 2021 Compensation Options

Balance, March 31, 2021

The grant date fair value of the February 2021 Compensation Options were estimated at $68,078 using the Black-Scholes valuation

model with the following underlying assumptions:

free interest rate

Balance, June 30, 2021

The grant date fair value of the February 2021 Compensation Options were estimated at $ 68,078 using the Black-Scholes valuation model

with the following underlying assumptions:

of Estimated Using Black-Scholes Valuation Model for Fair Value of Broker Options

Risk free interest rate

Dividend yield

Weighted average life

of Warrants Outstanding Broker Option Exercise Prices

broker options

2 unchanged sentences

February 16, 2024 (ii)

Exercisable into one August 2020 Unit

Exercisable into one February 2021 Unit

(i) Exercisable into

one August 2020 Unit

(ii) Exercisable into

one February 2021 Unit

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

Three and Six Months Ended June 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

following table summarizes the stock option activity during the periods ended March 31, 2021:

exercise price

following table summarizes the stock option activity during the periods ended June 30, 2021 and 2020:

of Stock Options

stock options

Balance, December 31, 2019 and March 31, 2020

Average exercise price (C$)

Balance, December 31, 2019

Balance, March 31, 2021

On October 24, 2019, 1,575,000 stock options were issued to directors and officers of the Company.

These options have a 5-year

life and are exercisable at C$0.60 per share.

The grant date fair value of the stock options was estimated at $435,069.

of these options resulted in stock-based compensation of $23,813 for the three months ended March 31, 2021 (three months ended

March 31, 2020 - $85,891), which is included in operation and administration expenses on the condensed interim consolidated

statements of income and comprehensive income.

On April 20, 2020, 5,957,659 stock options were issued to certain directors of the Company.

Each stock option entitles the holder

to acquire one common share of the Company at an exercise price of C$0.55.

The stock options vest in one fourth increments upon

each anniversary of the grant date and expire in 5 years.

The grant date fair value of the stock options was estimated at $1,536,764.

The vesting of these options results in stock-based compensation of $197,342 (three months ended March 31, 2020 - $nil), which

is included in operation and administration expenses on the condensed interim consolidated statements of income and comprehensive

On September 30, 2020, 200,000 stock options were issued to a consultant.

Each stock option entitles the holder to acquire one

common share of the Company at an exercise price of C$0.60.

The stock options vest 50% at 6 months and 50% at 12 months from the

grant date and expire in 3 years.

The grant date fair value of the options was estimated at $52,909.

The vesting of these options

resulted in stock-based compensation of $19,460 for the three months ended March 31, 2021 (three months ended March 31, 2020 -

$nil), which is included in operation and administration expenses on the condensed interim consolidated statements of income

and comprehensive income.

On February 19, 2021, 1,037,977 stock options were issued to an officer of the Company, of which 273,271 stock options vest immediately

and the balance of 764,706 stock options shall vest on December 31, 2021.

These options have a 5-year life and are exercisable

at C$0.335 per common share.

Granted (i)(ii)

Balance, June 30, 2020

Balance, December 31, 2020

Balance, June 30, 2021

October 24, 2019, 1,575,000 stock options were issued to directors and officers of the Company.

These options have a 5 -year life and are exercisable at C$ 0.60 per share.

The grant date

fair value of the stock options was estimated at $ 435,069 .

The vesting of these options resulted

in stock-based compensation of $ 13,946 and $ 37,759 , respectively for the three and six months

ended June 30, 2021 (three and six months ended June 30, 2020 - $ 55,550 and $ 141,441 , respectively),

which is included in operation and administration expenses on the condensed interim consolidated

statements of income (loss) and comprehensive income (loss).

April 20, 2020, 5,957,659 stock options were issued to certain directors of the Company.

Each stock option entitles the holder to acquire one common share of the Company at an exercise

price of C$ 0.55 .

The stock options vest in one fourth increments upon each anniversary of

the grant date and expire in 5 years.

The grant date fair value of the stock options was

estimated at $ 1,536,764 .

The vesting of these options results in stock-based compensation

of $ 124,802 and $ 322,144 , respectively (three and six months ended June 30, 2020 - $ 155,681

and $ 155,681 , respectively), which is included in operation and administration expenses on

the condensed interim consolidated statements of income (loss) and comprehensive income (loss).

(iii) On September 30,

2020, 200,000

stock options were issued to a consultant.

stock option entitles the holder to acquire one common share of the Company at an exercise price of C$ 0.60 .

The stock options vest 50 %

at 6 months and 50 %

at 12 months from the grant date and expire in 3

The grant date fair value of the options

was estimated at $ 52,909 .

The vesting of these options resulted in stock-based compensation of $ 6,596

and $ 26,056 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ nil

respectively), which is included in operation and administration expenses on the condensed interim consolidated statements of income

(loss) and comprehensive income (loss).

February 19, 2021, 1,037,977 stock options were issued to an officer of the Company, of which

273,271 stock options vest immediately and the balance of 764,706 stock options shall vest

on December 31, 2021.

These options have a 5 -year life and are exercisable at C$ 0.335 per

common share.

The grant date fair value of the options was estimated at $ 204,213 .

The vesting of these options

resulted in stock-based compensation of $73,346 for the three months ended March 31, 2021 (three months ended March 31, 2020 -

$nil), which is included in operation and administration expenses on the condensed interim consolidated statements of income

and comprehensive income.

of these options resulted in stock-based compensation of $ 43,463 and $ 116,809 , respectively

for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020

- $ nil and $ nil , respectively), which is included in operation and administration expenses

on the condensed interim consolidated statements of income (loss) and comprehensive income

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

3 unchanged sentences

underlying assumptions:

free interest rate

following table reflects the actual stock options issued and outstanding as of March 31, 2021:

Weighted average

(exercisable)

of Estimated Using Black-Scholes Valuation Model for Fair value of Stock Options

Risk free interest rate

Dividend yield

Weighted average life

following table reflects the actual stock options issued and outstanding as of June 30, 2021:

of Stock Option Issued and Outstanding

Exercise price

Weighted average remaining

contractual life (years)

of options outstanding

Number of options

vested (exercisable)

fair value ($)

1 unchanged sentence

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

Restricted share units

March 25, 2020, the Board of Directors approved a Restricted Share Unit (“RSU”) Plan to grant RSUs to its officers,

directors, key employees and consultants.

following table summarizes the RSU activity during the periods ended March 31, 2021:

Unvested as at December 31, 2019 and March 31, 2020

March 25, 2020, the Board of Directors approved a Restricted Share Unit (“RSU”) Plan to grant RSUs to its officers, directors,

key employees and consultants.

following table summarizes the RSU activity during the periods ended June 30, 2021 and 2020:

Schedule of Restricted Share Units

Unvested as at December 31, 2019

Unvested as at March 31, 2021

On April 20, 2020, the Company granted 400,000 RSUs to a certain officer of the Company.

The RSUs vest in one fourth increments

upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation of $26,968 for the three

months ended March 31, 2021 (three months ended March 31, 2020 - $nil), which is included in operation and administration expenses

on the condensed interim consolidated statements of income and comprehensive income.

On April 20, 2020, the Company granted 200,000 RSUs to a certain director of the Company.

The RSUs vest in one fourth increments

upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation of $9,148 for the three

months ended March 31, 2021 (three months ended March 31, 2020 - $nil), which is included in operation and administration expenses

on the condensed interim consolidated statements of income and comprehensive income.

On November 16, 2020, the Company granted 168,000 RSUs to certain directors of the Company.

The RSUs vest in one fourth increments

upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation of $7,996 for the three

months ended March 31, 2021 (three months ended March 31, 2020 - $nil), which is included in operation and administration expenses

on the condensed interim consolidated statements of income and comprehensive income.

On December 6, 2020, the Company granted 220,990 RSUs to a consultant of the Company.

The RSUs vest in one sixth increments per month.

The vesting of these RSUs results in stock-based compensation of $49,112 for the three months ended March 31, 2021 (three months ended

March 31, 2020 - $nil), which is included in operation and administration expenses on the condensed interim consolidated statements

of income and comprehensive income.

On January 1, 2021, the Company granted 735,383 RSUs to a consultant of the Company.

Of the 735,383 RSUs, 245,128 RSUs vested

immediately, and the remaining 490,255 RSUs vested in 1/12 increments per month.

The vesting of these RSUs results in stock-based

compensation of $212,878 for the three months ended March 31, 2021 (three months ended March 31, 2020 - $nil), which is included

in operation and administration expenses on the condensed interim consolidated statements of income and comprehensive income.

Granted (i)(ii)

Unvested as at June 30, 2020

Unvested as at December 31, 2020

Unvested as at June 30, 2021

(i) On April 20, 2020,

the Company granted 400,000

RSUs to a certain officer of the Company.

RSUs vest in one fourth increments upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation

and $ 43,160 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ 23,073 ),

which is included in operation and administration expenses on the condensed interim consolidated statements of income (loss) and comprehensive

income (loss).

(ii) On April 20, 2020,

the Company granted 200,000

RSUs to a certain director of the Company.

RSUs vest in one fourth increments upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation

and $ 14,933 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ 7,217 ),

which is included in operation and administration expenses on the condensed interim consolidated statements of income (loss) and comprehensive

income (loss).

(iii) On November 16,

2020, the Company granted 168,000

RSUs to certain directors of the Company.

RSUs vest in one fourth increments upon each anniversary of the grant date.

The vesting of these RSUs results in stock-based compensation

and $ 16,081 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ nil ),

which is included in operation and administration expenses on the condensed interim consolidated statements of income (loss) and comprehensive

income (loss).

(iv) On December 6,

2020, the Company granted 220,990

RSUs to a consultant of the Company.

vest in one sixth increments per month.

The vesting of these RSUs results in stock-based compensation of $ 9,628

and $ 58,740 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ nil ),

which is included in operation and administration expenses on the condensed interim consolidated statements of income (loss) and

comprehensive income (loss).

As at June 30, 2021, these RSUs were fully exercised and settled in Common Shares of the Company.

(v) On January 1, 2021,

the Company granted 735,383

RSUs to a consultant of the Company.

Of the 735,383

RSUs, 245,128

RSUs vested immediately, and the remaining 490,255

RSUs vested in 1/12 increments per month.

vesting of these RSUs results in stock-based compensation of $ 52,223

and $ 265,101 ,

respectively for the three and six months ended June 30, 2021 (three and six months ended June 30, 2020 - $ nil ),

which is included in operation and administration expenses on the condensed interim consolidated statements of income (loss) and comprehensive

income (loss).

As at June 30, 2021, 449,400

of these RSU’s were exercised and settled in Common Shares of the Company.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

Deferred share units

April 21, 2020, the Board of Directors approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its directors.

The DSU Plan permits the eligible directors to defer receipt of all or a portion of their retainer or compensation until termination

of their services and to receive such fees in the form of cash at that time.

vesting of the DSUs or termination of service as a director, the director will be able to redeem DSUs based upon the then market

price of the Company’s common share on the date of redemption in exchange for cash.

following table summarizes the DSU activity during the periods ended March 31, 2021:

Unvested as at December 31, 2019 and March 31, 2020

Unvested as at December 31, 2020 and March 31, 2021

7,500,000 (i)

On April 21, 2020, the Company granted 7,500,000 DSUs.

The DSUs vest in one fourth increments upon each anniversary of the grant

date and expire in 5 years.

During the three months ended March 31, 2021, the Company recognized $85,535 recovery of stock-based

compensation related to the DSUs (three months ended March 31, 2020 - $nil), which is included in operation and administration

expenses on the condensed interim consolidated statements of income and comprehensive income.

April 21, 2020, the Board of Directors approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its directors.

Plan permits the eligible directors to defer receipt of all or a portion of their retainer or compensation until termination of their

services and to receive such fees in the form of cash at that time.

vesting of the DSUs or termination of service as a director, the director will be able to redeem DSUs based upon the then market price

of the Company’s common share on the date of redemption in exchange for cash.

following table summarizes the DSU activity during the periods ended June 30, 2021:

of Deferred Share Units

Unvested as at December 31, 2019

Unvested as at June 30, 2020, December 31, 2020 and June 30, 2021

(i) On April 21, 2020,

the Company granted 7,500,000

The DSUs vest in one fourth increments

upon each anniversary of the grant date and expire in 5

During the three and six months ended

June 30, 2021, the Company recognized $ 54,186

and $ 139,721 ,

respectively recovery of stock-based compensation related to the DSUs (three and six months ended June 30, 2020 - $ 549,664

of stock-based compensation expensed),

which is included in operation and administration expenses on the condensed interim consolidated statements of income and comprehensive

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

1 unchanged sentence

dilutive securities include convertible loan payable, warrants, broker options, stock options, RSUs and DSUs.

Diluted income per

share reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method.

Net income and comprehensive income for the period

Basic income per share

Weighted average number of common shares - basic

Net income per share - basic

Diluted income per share

reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method.

Schedule of Income per Share

Six Months Ended

Net income (loss) and comprehensive income (loss) for the period

$ ( 22,882,575 )

$ ( 13,580,978 )

Basic income (loss) per share Weighted average number of common shares - basic

Net income (loss) per share – basic

Net income (loss) and comprehensive income (loss) for the period

$ ( 22,882,575 )

$ ( 13,580,978 )

Dilutive effect of warrants on net income

Diluted net income (loss) and comprehensive income (loss) for the period

$ ( 130,760 )

$ ( 22,882,575 )

$ ( 13,580,978 )

Diluted income (loss) per share

Weighted average number of common shares - basic

1 unchanged sentence

Warrants, broker options, and stock options

Weighted average number of common shares - fully diluted

Net income per share - fully diluted

Weighted average number of common shares

- fully diluted

Net income (loss) per share - fully diluted

Commitments and contingencies

stipulated by the agreements with Placer Mining as described in note 5, the Company is required to make monthly payment of $60,000

for care and maintenance.

stipulated in the agreement with the EPA and as described in note 5, the Company is required to make two payments to the EPA,

one for cost-recovery, and the other for water treatment.

As at March 31, 2021, $11,506,577 payable to the EPA has been included

in accounts payable and accrued liabilities.

The Company is now engaged with the EPA to discuss an amendment to or deferral of

these payments.

stipulated by the agreements with Placer Mining as described in note 5, the Company is required to make monthly payment of $ 60,000 for

care and maintenance.

stipulated in the agreement with the EPA and as described in note 5, 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, 2021, $ 13,235,340 payable to the EPA has been included in accounts payable

and accrued liabilities.

The Company is now engaged with the EPA to discuss an amendment to or deferral of these payments.

Company has entered into a lease agreement which expires in May 2022 .

Monthly rental expenses are approximately C$26,000 and are

offset by rental income obtained through a series of short term subleases held by the Company.

Monthly rental expenses are approximately C$ 26,000 and are offset

by rental income obtained through a series of short term subleases held by the Company.

On or about June 14, 2021, a lawsuit was filed

in the US District Court for the District of Idaho brought by a purported personal representative of the estate of a minority shareholder

of Placer Mining.

The named defendants include Placer Mining, certain of Placer Mining’s shareholders, the Company, and certain

of the Company’s shareholders.

The lawsuit alleges that Placer Mining entered into a series of transactions, including amendments

to the Company’s lease with Placer Mining, in breach of an agreement dated August 31, 2018, which allegedly restricted the sale

of shares in Placer Mining by certain shareholders.

On August 13, 2021, the Company filed a motion to dismiss the claim for lack of jurisdiction

and standing.

On July 28, 2021, a lawsuit was filed in the US

District Court for the District of Idaho brought by Crescent Mining, LLC (“Crescent”).

The named defendants include Placer

Mining, Robert Hopper Jr., and the Company.

The lawsuit alleges that Placer Mining and Robert Hopper Jr.

intentionally flooded the Crescent

Mine during the period from 1991 and 1994, and that the Company is jointly and severally liable with the other defendants for unspecified

past and future costs associated with the presence of AMD in the Crescent Mine.

The plaintiff has requested unspecified damages.

The Company believes the claims in both lawsuits,

as they relate to Bunker Hill, are without merit and intends to defend them vigorously.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

1 unchanged sentence

of key management personnel

Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities

of the Company and consists of the Company’s executive management team and management directors.

Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities

of the Company and consists of the Company’s executive management team and management directors.

of Related Party Transactions

Three Months Ended

Six Months Ended

Consulting fees

March 31, 2021, $171,223 is owed to key management personnel (December 31, 2020 - $45,000) with all amounts included in

accounts payable and accrued liabilities.

June 30, 2021, $ 69,835 is owed to key management personnel (December 31, 2020 - $ 45,000 ) with all amounts included in accounts

payable and accrued liabilities.

subscriptions

the three months ended March 31, 2021, the CEO of the Company subscribed for 208,860 units in the February 2021 Offering.

the three months ended March 31, 2021, the Company issued 208,860 February 2021 Units at a deemed price of $0.45 to settle $66,000

the six months ended June 30, 2021, the CEO of the Company subscribed for 208,860 units in the February 2021 Offering.

the six months ended June 30, 2021, the Company issued 208,860 February 2021 Units at a deemed price of $ 0.45 to settle

$ 66,000 of debt owed to the CFO.

the three months ended March 31, 2021, the Company issued 208,860 February 2021 Units at a deemed price of $0.45 to settle $66,000

of debt owed to a consultant that is deemed to be a related party.

the six months ended June 30, 2021, the Company issued 208,860 February 2021 Units at a deemed price of $ 0.45 to settle $ 66,000 of debt

owed to a consultant that is deemed to be a related party.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

Months Ended March 31, 2021

and Six Months Ended June 30, 2021

in United States Dollars)

Financial instruments

carrying amounts reported in the condensed interim consolidated balance sheets for cash and cash equivalents, accounts

receivable excluding HST, accounts payable, accrued liabilities, DSU liability and lease liability, all of which are 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.

The Company measured its DSU liability at fair value on recurring

basis using level 1 inputs and derivative warrant liabilities at fair value on recurring basis using level 3 inputs.

no transfers of financial instruments between levels 1, 2, and 3 during the period ended March 31, 2021 and year ended December

carrying amounts reported in the condensed interim consolidated balance sheets for cash and cash equivalents, accounts receivable excluding

HST, accounts payable, accrued liabilities, DSU liability and lease liability, all of which are 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.

The Company measured its DSU liability at fair value on recurring basis using level 1 inputs and

derivative warrant liabilities at fair value on recurring basis using level 3 inputs.

There were no transfers of financial instruments

between levels 1, 2, and 3 during the period ended June 30, 2021 and year ended December 31, 2020.

currency risk

currency risk is the risk that changes the rates of exchange on foreign currencies will impact the financial position of cash

flows of the Company.

The Company is exposed to foreign currency risks in relation to certain activities that are to be settled

in Canadian dollars.

Management monitors its foreign currency exposure regularly to minimize the risk of an adverse impact on

its cash flows.

currency risk is the risk that changes the rates of exchange on foreign currencies will impact the financial position of cash flows of

The Company is exposed to foreign currency risks in relation to certain activities that are to be settled in Canadian dollars.

Management monitors its foreign currency exposure regularly to minimize the risk of an adverse impact on its cash flows.

Concentration

2 unchanged sentences

of credit risk is the risk of loss in the event that certain counterparties are unable to fulfill its obligations to the Company.

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and

cash equivalents.

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.

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.

risk is the risk that the Company’s consolidated cash flows from operations will not be sufficient for the Company to continue

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.

risk is the risk that the Company’s consolidated cash flows from operations will not be sufficient for the Company to continue

operating and discharge its liabilities.

The Company is exposed to liquidity risk as its continued operation is dependent upon

its ability to obtain financing, either in the form of debt or equity, or achieving profitable operations in order to satisfy

its liabilities as they come due.

The Company is exposed to liquidity risk as its continued operation is dependent upon its ability

to obtain financing, either in the form of debt or equity, or achieving profitable operations in order to satisfy its liabilities as

they come due.

NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

statements in this report, including statements in the following discussion, are what are known as “forward looking statements”,

which are basically statements about the future.

For that reason, these statements involve risk and uncertainty since no one can

accurately predict the future.

Words such as “plans,”

“intends,”

“will,”

“hopes,”

“seeks,”

“anticipates,”

“expects “and the like often identify such forward looking statements,

but are not the only indication that a statement is a FORWARD-LOOKING statement.

Such forward looking statements include statements

concerning THE COMPANY’S plans and objectives with respect to the present and future operations of the Company, and statements

which express or imply that such present and future operations will or may produce revenues, income or profits.

Numerous factors

and future events could cause the Company to change such plans and objectives or fail to successfully implement such plans or

achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits.

the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors

contained in this report and in the Company’s other filings with the UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”).

NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE

MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), the “Company”

refers to Bunker Hill Mining Corp.

and its consolidated subsidiaries, except where the context requires otherwise.

read this discussion in conjunction with the Company’s consolidated financial statements, the related MD&A and the discussion

of our Business and Properties in its report on Form 10-KT for the six months ended December 31, 2020, filed with the SEC.

results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Special

Note of Caution Regarding Forward-Looking Statements”

above for further discussion).

References to “Notes”

Notes included in the Company’s Notes to Interim Condensed Consolidated Financial Statements (Unaudited).

Coronavirus Pandemic Response and Impact

the outbreak of the COVID-19 coronavirus global pandemic (“COVID-19”) in early 2020, in March 2020 the U.S.

for Disease Control issued guidelines to mitigate the spread and health consequences of COVID-19.

The Company implemented changes

to its operations and business practices to follow the guidelines and minimize physical interaction, including using technology

to allow employees to work from home when possible.

As long as they are required, the operational practices implemented could

have an adverse impact on our results.

The negative impact of COVID-19 remains uncertain, including on overall business and market

There is uncertainty related to the potential additional impacts COVID-19 could have on our operations and financial

results for the year.

Company was incorporated under the laws of the State of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.

On February 11, 2010, the Company changed its name to Liberty Silver Corp and subsequently, 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 82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1, and

its telephone number is 416-477-7771.

The Company’s website is www.bunkerhillmining.com.

Information appearing on the website

is not incorporated by reference into this report.

Company was incorporated for the purpose of engaging in sustainable mineral exploration, development and mining activities.

Company’s sole focus is the Bunker Hill mine and assets related thereto (the “Mine”), as described below.

August 28, 2017, the Company announced that it signed a definitive agreement with Placer Mining Corporation (“Placer Mining”),

the current owner of the Mine, for the lease and option to purchase the Mine in Idaho (the “Lease and Option Agreement”).

November 1, 2019, the Lease and Option Agreement was amended (the “Amended Agreement”).

Under the terms of the Amended

Agreement, the Company has an option to purchase the marketable assets of the Mine for a purchase price of $11,000,000 at any

time prior to the expiration of the Amended Agreement, payable $6,200,000 in cash, and $4,800,000 in unregistered Common Shares

of the Company (calculated using the market price at the time of exercise of the purchase option).

Upon signing the Amended Agreement,

the Company paid a one-time, non-refundable cash payment of $300,000 to Placer Mining.

This payment will be applied to the cash

portion of the purchase price upon execution of the purchase option.

In the event the Company elects not to exercise the purchase

option, the payment shall be treated as an additional care and maintenance payment.

An additional term of the Amended Agreement

provides for the elimination of all royalty payments that were to be paid to Placer Mining.

the terms of the Amended Agreement, during the term of the lease, the Company must make care and maintenance payments in the amount

of $60,000 monthly plus other expenses, i.e., taxes, utilities and mine rescue payments.

July 27, 2020, the Company announced that it secured, for a $150,000 cash payment, a further extension to the Lease and Option,

Amended and Extension Agreements to purchase the Mine from Placer Mining (the “Second Extension”).

The Second Extension

is for a further 18 months and is in addition to the 6-month extension.

This Second Extension expires on August 1, 2022.

November 20, 2020, the Company successfully renegotiated the Amended Agreement.

Under the new terms, the purchase price has been

decreased from $11,000,000 to $7,700,000, with $5,700,000 payable in cash (with an aggregate of $300,000 to be credited toward

the purchase price of the Mine as having been previously paid by the Company and an aggregate of $5,400,000 payable in cash outstanding)

and $2,000,000 in Common Shares of the Company.

The reference price for the payment in Common Shares will be based on the share

price of the last equity raise before the option is exercised.

The Company will continue to make a monthly care and maintenance

payment of $60,000 to the Lessor in return for on-going technical support to the Company.

Under this amendment to the Amended

Agreement, the Company’s contingent obligation to settle $1,787,300 of accrued payments due to the Lessor has been waived.

Further, under the amendment to the Amended Agreement, the Company is to make an advance payment of $2,000,000 to Placer Mining,

which shall be credited toward the purchase price of the Mine when the Company elects to exercise its purchase right.

that the Company irrevocably elects not to exercise its purchase right, the advance payment of $2,000,000 will be repaid to the

Company within twelve months from the date of such election.

The Company made this advance payment, which had the effect of decreasing

the remaining amount payable to purchase the Mine to an aggregate of $3,400,000 payable in cash and $2,000,000 in Common Shares

of the Company.

a part of the purchase price, the Amended Agreement also requires payments pursuant to an agreement with the U.S.

Environmental

Protection Agency (“EPA”) whereby for so long as the Company leases, owns and/or occupies the Mine, the Company will

make payments to the EPA on behalf of Placer Mining in satisfaction of the EPA’s claim for cost recovery.

These payments,

if all are made, will total $20,000,000.

The agreement calls for payments starting with $1,000,000 30 days after a fully ratified

agreement was signed (which payment was made) followed by $2,000,000 on November 1, 2018 and $3,000,000 on each of the next 5

anniversaries with a final $2,000,000 payment on November 1, 2024.

In addition to these 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 estimated costs of maintaining and treating

water at the water treatment facility with a true-up to be paid by the Company once the actual costs are determined.

1, 2018, December 1, 2018, June 1, 2019, November 1, 2019 and November 1, 2020 payments, totaling $8,960,000, were not made, and

concurrent with discussions concerning the long-term water management solutions the Company is having discussions with the EPA

in an effort to reschedule these payments in ways that enable the sustainable operation of the Mine as a viable long-term business.

believes the Amended Agreement will provide the Company time to complete exploratory drilling, engineering studies, produce a

mine plan and raise the money needed to move forward.

Management continues to push forward and advance the timeline to realizing

shareholder value.

Mine remains the largest single producing mine by tonnage in the Coeur d’Alene lead, zinc and silver mining district in

Northern Idaho.

Historically and according to the Bunker Hill Mines Annual Report 1980, the Mine produced over 35,000,000 tonnes

of ore grading on average 8.76% lead, 3.67% zinc, and 155 g/t silver.

The Mine is the Company’s only focus, with a view

to raising capital to rehabilitate the mine and put it back into production.

Company believes that there are numerous exploration targets of opportunity left in the Mine from surface, in parallel to known

and mined mineralization and at depth, below existing workings.

In addition to the zinc-rich zones, these also include high-grade

lead-silver veins which are currently the primary focus of the Company’s exploration programs.

Mine is a lead-silver-zinc Mine.

When back in production, the Company intends to mill mineralized material on-site or at a local

third-party mill to produce both lead-silver and zinc concentrates which will then be shipped to third party smelters for processing.

Company will continue to explore the property with a view to proving additional resources.

Infrastructure

acquisition of the Mine includes all mining rights and claims, surface rights, fee parcels, mineral interests, easements, existing

infrastructure at Milo Gulch, and the majority of machinery and buildings at the Kellogg Tunnel portal level, as well as all equipment

and infrastructure anywhere underground at the Bunker Hill Mine Complex.

The acquisition also includes 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.

Regulation and Approval

current exploration activities and any future mining operations are subject to extensive laws and regulations governing the protection

of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species.

Company has made, and expects to make in the future, significant expenditures to comply with such laws and regulations.

changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an

adverse impact on the Company’s financial condition or results of operations.

It is anticipated that it may be necessary

to obtain the following environmental permits or approved plans:

● Reclamation

and Closure Plan

Discharge Permit

Quality Operating Permit

Water Rights for Operations

Amended Agreement includes mineral rights to approximately 440 patented mining claims covering over 5700 acres.

Of these claims,

35 include surface ownership of approximately 259 acres.

The transaction also includes certain parcels of fee property which includes

mineral and surface rights but not patented mining claims.

Mining claims and fee properties are located in Townships 47, 48 North,

Range 2 East, Townships 47, 48 North, Range 3 East, Boise Meridian, Shoshone County, Idaho.

Amended Agreement specifically excludes the following:

the Machine Shop Building and Parcel number 21 including all fixed equipment

located inside the building and personal property located upon this parcel;

unmilled ore located at the Mine yard;

lead/zinc ore mined and broken, but not removed from the Mine.

rights were originally owned by various previous owners of the claims until the acquisition of the properties by Bunker Limited

Partners (“BLP”).

BLP sold off surface rights to various parties over the years while maintaining access to conduct

mining operations and exploration activities as well as easements to a cross over and access other of its properties containing

mineral rights.

Said rights were reserved to its assigns and successors in continuous perpetuity.

Idaho Law also allows mineral

right holders access to mine and explore for minerals on properties to which they hold minerals rights.

to all patented mining claims included in the transaction was transferred from Bunker Hill Mining Co.

Deed in 1992.

The sale of the property was approved of by the U.S.

Trustee and U.S.

Bankruptcy Court.

90% of surface ownership of patented mining claims not owned by Placer Mining is owned by different landowners.

These include:

Stimpson Lumber Co.;

Riley Creek Lumber Co.;

C & E Tree Farms;

and Northern Lands LLC.

mining claims in the State of Idaho do not require permits for underground mining activities to commence on private lands.

permits associated with underground mining may be required, such as water discharge and site disturbance permits.

The water discharge

is being handled by the EPA at the existing CTP.

The Company expects to take on the water treatment responsibility in the future

and obtain an appropriate discharge permit.

Company competes with other mining and exploration companies in connection with the acquisition of mining claims and leases on

zinc and other base and precious metals prospects as well as in connection with the recruitment and retention of qualified employees.

Many of these companies are much larger than the Company, have greater financial resources and have been in the mining business

for much longer than it has.

As such, these competitors may be in a better position through size, finances and experience to acquire

suitable exploration and development properties.

The Company may not be able to compete against these companies in acquiring new

properties and/or qualified people to work on its current project, or any other properties that may be acquired in the future.

the size of the world market for base precious metals such as silver, lead and zinc, relative to the number of individual producers

and consumers, it is believed that no single company has sufficient market influence to significantly affect the price or supply

of these metals in the world market.

Company has three employees in executive positions.

The balance of the Company’s operations is contracted for as consultants.

Work and Future Plan of Operations

as of January 12, 2021, the Board appointed Mr.

David Wiens to the role of Chief Financial Officer and Corporate Secretary of

the Company, replacing Mr.

Wayne Parsons, who continues to serve on the Board.

February 24, 2021, the Company closed a non-brokered private placement of 19,994,080 Units of the Company at $0.40 per Unit for

gross proceeds of approximately C$8,000,000.

Each Unit consists of one Common Share of the Company and one Common Share purchase

Each whole warrant entitles the holder to acquire one Common Share of the Company at a price of C$0.60 per Common Share

for a period of five years.

Pursuant to the offering, certain directors and officers of the Company acquired 626,580 Units.

issuance of such Units in connection with the offering was considered a “related party transaction”

as such term is

defined under Multilateral Instrument 61-101 –

Protection of Minority Security Holders in Special Transactions (“MI

61-101”).

Resources and Exploration

with the digitization work, and since March 2020, the Company has been working systematically to bring a number of mineralized

zones into accordance with National Instrument 43-101 –

Standards of Disclosure for Mineral Projects (“NI 43-101”)

through drilling and channel sampling of the open stopes.

This work focused upon the mineralization that is closest to the existing

infrastructure and above the current water-level.

March 19, 2021, the Company announced an updated mineral resources estimate consisting of a total of 4.4 million tons in the Indicated

category, containing 3.0 million ounces of silver, 487 million pounds of zinc, and 176 million pounds of lead;

and a total of

5.6 million tons in the Inferred category, containing 8.3 million ounces of silver, 548 million pounds of zinc, and 312 million

pounds of lead.

May 3, 2021, the Company filed a technical report entitled “Technical Report for the Bunker Hill Mine, Coeur d’Alene

Mining District, Shoshone County, Idaho, USA”

with an effective date of March 22, 2021 prepared in accordance with NI 43-101

in support of such mineral resources estimate.

Further details regarding the Company’s mineral resources estimate, including

estimation methodologies, can be found in the technical report filed on EDGAR and SEDAR.

should be noted that mineral resources as stated above, including those delineated in the Inferred, Measured and Indicated categories,

are not mineral reserves as defined by SEC guidelines, and do now show demonstrated economic viability.

Due to the uncertainty

that may be attached to Inferred mineral resources, it cannot be assumed that all or any part of an Inferred mineral resource

will be upgraded to an Indicated or Measured mineral resource as a result of continued exploration.

Company currently anticipates that its 2021 drilling program will comprise approximately 32,000 feet to 39,000 feet of drilling

Silver-Focused

the completion of exploration drilling related to the updated mineral resources estimate as announced on March 19, 2021 (as described

above), the Company’s exploration strategy has been focused on high-grade silver targets within the upper areas of the Mine

that have been identified by the data review and digitization process.

The aim of this program is to identify, develop and add

high-grade silver resources in ways that materially increase the relative quantity of silver resources relative to lead and zinc.

with that strategy and concurrent with the announcement of the updated mineral resources estimate, the Company announced the identification

of a new silver exploration opportunity in the hanging wall of the Cate Fault which it intends to include in its ongoing drilling

In conjunction with this drilling campaign, continued digitization, geologic modeling and interpretation will continue

to focus on identifying additional high grade silver exploration targets.

March 29, 2021, the Company announced multiple high-grade silver mineralization results through chip-channel sampling of newly

accessible areas of the Mine identified through the Company’s proprietary 3D digitization program, and as part of its ongoing

silver-focused drilling program.

An area was identified on the 9-level that resulted in ten separate chip samples greater than

900 g/t AgEq (1) , each with minimum 0.6m length.

Mineralization remains open up dip, down dip and along strike from

the sampling location.

The Company also reported drill results including a 3.8m intercept with a grade of 996.6 g/t AgEq (1) ,

intersected at the down-dip extension of the UTZ zone at the 5-level.

The Company will continue to report mineralized drill intercepts

concurrent with its ongoing exploration program that is currently envisaged to comprise 10,000 to 12,000 feet in 2021.

used to calculate Ag Eq are as follows:

and Ag=$20/oz.

Management Optimization

EPA currently provides mine water treatment services for the Mine to ensure compliance with existing discharge standards.

is done via its management of the EPA’s Central Treatment Plant (“CTP”), located adjacent and downstream to

Although it also treats other contaminated water collected from other sources in the vicinity, with respect to its service

to the Mine, this facility treats all the water that exits the Kellogg Tunnel before it is discharged into the South Fork of the

Coeur D’Alene River.

September 2020, the Company began its water management program with the goal of improving the understanding of the Mine’s

water system and enacting immediate improvement in the water quality of effluent leaving the mine for treatment at the CTP.

by historical research provided by the EPA, the Company initiated a study of the water system of the mine to:

i) identify of the

areas where sulphuric acid (Acid Mine Drainage, or “AMD”) is generated in the greatest and most concentrated quantities,

and ii) understand the general flow paths of AMD on its way through and out of the mine as it travels to the CTP.

its improved understanding through this study, on February 11, 2021, the Company announced the successful commissioning of a water

pre-treatment plant located within the Mine, designed to significantly improve the quality of Mine water discharge, which in turn

would support a rapid re-start of the Mine.

Specifically, the water pre-treatment plant achieves this goal by reducing significantly

the amount of treatment required at the CTP, and the associated costs, before the Mine water is discharged into the south fork

of the Coeur D’Alene River, removing over 70% of the metals from water before it leaves the Mine, with the potential for

further improvements.

an effort to improve transparency to all stakeholders with regard to the results of this system, the Company launched a water

quality tracking platform on its website on March 15, 2021, which uploads real-time data every five minutes and provides an interactive

database to allow detailed historical analysis.

Infrastructure

Mine main level is termed the nine level and is the largest level in the Mine.

It is connected to the surface by the approximately

12,000 foot-long Kellogg Tunnel.

Three major inclined shafts with associated hoists and hoistrooms are located on the nine level.

These are the No.

1 shaft, which is used for primary muck hoisting in the main part of the Mine;

2 shaft, which is a primary

shaft for men and materials in the main part of the Mine;

3 Shaft, which is used for personnel, materials and muck

hoisting for development in the northwest part of the Mine.

top stations of these shafts and the associated hoistrooms and equipment have all been examined by Company personnel and are in

moderately good condition.

The Company believes that all three shafts remain in a condition that they are repairable and can be

bought back into good working order over the next few years.

water level in the Mine is held at approximately the ten level of the Mine, roughly 200 feet below the nine level.

historically developed to the 27 level, although the 25 level was the last major level that underwent significant development

and past mining.

Each level is approximately 200 feet vertically apart.

southeastern part of the Mine was historically serviced by the Cherry Raise, which consisted of a two-compartment shaft with double

drum hoisting capability that ran at an incline up from the nine level to the four level.

The central part of the Mine was serviced

upward by the Last Chance Shaft from the nine level to the historic three or four level.

Neither the Cherry Raise or the Last

Chance shaft are serviceable at this time.

However, the upper part of the Mine from eight level up to the four level has been

developed by past operators by a thorough-going rubber tire ramp system, which is judged to be about 65% complete.

Company has repaired the first several thousand feet of the Russell Tunnel, which is a large rubber-tire capable tunnel with an

entry point at the head of Milo Gulch.

This tunnel will provide early access to the UTZ Zone, and Quill and Newgard Zones, following

ramp and access development.

The Company has made development plans to provide interconnectivity of the ramp system from the Russell

Tunnel at the four level down to the eight level, with further plans to extend the ramp down to the nine level.

Thus rubber-tired

equipment will be used for mining and haulage throughout the upper Mine mineral zones, which have already been identified, and

for newly found zones.

Kellogg Tunnel will be used as a tracked rail haulage tunnel for supply of personnel and materials into the Mine and for haulage

of mined material out of the Mine.

Historically, the Kellogg Tunnel was used in this manner when the Mine was producing upwards

of 3,000 tons per day of mined material.

The Company has inspected the Kellogg Tunnel for its entire length and has determined

that significant timbered sections of the tunnel will need extensive repairs.

These are areas that intersect various faults passing

through the Kellogg Tunnel at normal to oblique angles and create unstable ground.

Company has determined that all of the track, as well as spikes, plates and ties holding the track will need to be replaced, and

has started that process in support of the on-going exploration program.

Additionally, the water ditch that runs parallel to the

track will need to be thoroughly cleaned out and new timber supports and boards that keep the water contained in its path will

need to be installed.

All new water lines, compressed air lines and electric power feeds will also need to be installed.

cost estimate for this Kellogg Tunnel work is still in process as of the date hereof, but the time estimate for these repairs

is approximately twelve months.

Hill Mine Re-start Developments and Preliminary Economic Assessment

November 2020, the Company launched a Preliminary Economic Assessment (“PEA”) to assess the potential for a rapid

re-start of the Mine for minimal capital by focusing on the de-watered upper areas of the Mine, utilizing existing infrastructure,

and based on truck haulage and toll milling methods.

support the Company’s strategy of targeting a rapid production re-start as outlined above, development drilling subsequent

to November 2020 focused on targets in the upper levels of the Mine located in close proximity to existing infrastructure, aimed

at expanding the resource base for the PEA.

January 2021, the Company reported continued progress towards completing a PEA and further detailed the potential parameters of

the re-start, including:

i) low up-front capital costs through utilization of existing infrastructure, potentially enabling a

rapid production re-start;

ii) a staged approach to mining, potentially supporting a long-life operation;

iii) underground processing

and tailings deposition with potential for high recovery rates;

iv) development of a sustainable operation with minimal environmental

and v) potential increase in the existing resource base.

April 20, 2021, the Company reported the results of its PEA for the Mine.

The PEA contemplates a $42 million initial capital cost

(including 20% contingency) to rapidly restart the Mine, generating approximately $20 million of annual average free cash flow

over a 10-year mine life, and producing over 550 million pounds of zinc, 290 million pounds of lead, and 7 million ounces of silver

at all-in sustaining costs of $0.65 per payable pound of zinc (net of by-products).

The PEA contemplates a low environmental footprint,

long-term water management solution, and significant positive economic impact for the Shoshone County, Idaho community.

is based on the mineral resources estimate described above and published on March 22, 2021, following the drilling program conducted

in 2020 and early 2021 to validate the historical reserves.

The PEA includes a mining inventory of 5.5Mt, which represents a portion

of the 4.4Mt Indicated mineral resource and 5.6Mt Inferred mineral resource.

Further details regarding the PEA can be found in

the news release dated April 20, 2021 on EDGAR, SEDAR and the Company’s website www.bunkerhillmining.com.

PEA is preliminary in nature and includes Inferred mineral resources that are considered too speculative geologically to have

the economic considerations applied to them that would enable them to be categorized as mineral reserves.

There is no certainty

that the project described in the PEA will be realized.

Mineral resources that are not mineral reserves do not have demonstrated

economic viability.

April 27, 2021, the Company announced that it had engaged Cutfield Freeman & Co.

to provide independent advice on all aspects

of restart mining finance related to the Mine.

should be noted that mineral resources as stated above, including those delineated in the Inferred, Measured and Indicated categories,

are not mineral reserves as defined by SEC guidelines, and do now show demonstrated economic viability.

Due to the uncertainty

that may be attached to Inferred mineral resources, it cannot be assumed that all or any part of an Inferred mineral resource

will be upgraded to an Indicated or Measured mineral resource as a result of continued exploration.

of Operations

following discussion and analysis provides information that the Company believes is relevant to an assessment and understanding

of its results of operation and financial condition for the three months ended March 31, 2021 as compared to the three months

ended March 31, 2020.

Unless otherwise stated, all figures herein are expressed in U.S.

dollars, which is the functional currency

of the Company.

of the three months ended March 31, 2021 and March 31, 2020

the three months ended March 31, 2021 and March 31, 2020, the Company generated no revenue.

the three months ended March 31, 2021, the Company reported total operating expenses of $4,623,974 as compared to $1,362,960 during

the three months ended March 31, 2020, an increase of $3,261,014 or approximately 239%.

increase in total operating expenses was primarily due to an increase in exploration expense of $2,172,561 ($3,088,302 in the

three months ended March 31, 2021 compared to $915,741 in the three months ended March 31, 2020) due to increased exploration

activities aimed at expanding the resource base for the PEA.

Increases in operating and administration ($837,945 in the three

months ended March 31, 2021 compared to $183,724 in the three months ended March 31, 2020), legal and accounting ($219,108 in

the three months ended March 31, 2021 compared to $62,408 in the three months ended March 31, 2020), and consulting ($478,619

in the three months ended March 31, 2021 compared to $201,087 in the three months ended March 31, 2020) were due to increased

corporate activities, including professional and consulting expense related to the most recent financing and support for completion

financial accounting purposes, the Company reports all direct exploration expenses under the exploration expense line item of

the Condensed Interim Consolidated Statements of Income and Comprehensive Income.

Certain indirect expenses may be reported as

operation and administration expense or consulting expense on the statement of operations.

Net Incomes and Comprehensive Income

Company reported net income and comprehensive income of $5,837,809 for the three months ended March 31, 2021, compared to net

income and comprehensive income of $9,301,597 for the three months ended March 31, 2020, a decrease of $3,463,788 or approximately

The decrease in net income and comprehensive income was primarily due to an increase in operating expenses and a lower gain

related to the valuation of derivative liabilities in the three months ended March 31, 2021, relative to the three months ended

March 31, 2020.

Company reported a gain related to the change in derivative liability of $10,475,376 in the three months ended March 31, 2021,

as compared to a gain of $10,845,404 in the three months ended March 31, 2020.

The gains in each three-month period related to

a decrease in the fair value of the Company’s outstanding warrants due to a significant decrease in the Company’s

The Company’s share price decreased from C$0.52 on December 31, 2020 to C$0.35 on March 31, 2021.

OF FINANCIAL CONDITION

and Capital Resources

Company does not have sufficient working capital needed to meet its current fiscal obligations and commitments, including commitments

associated with the acquisition of the Mine.

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.

Management is considering various financing alternatives including, but not limited

to, raising capital through the capital markets and debt financing.

noted previously, the Company has engaged Cutfield Freeman & Co.

to provide independent advice on all aspects of restart mining

finance related to the Mine, including the acquisition of the Mine.

Company is also working to secure adequate capital to continue making lease payments, payments to the EPA, conduct exploration

activities on site and cover general and administrative expenses associated with managing a public company.

February 2021, the Company closed a non-brokered private placement of 19,994,080 units of the Company at C$0.40 per unit for gross

proceeds of C$7,997,632.

Each 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$0.60 per Common Share for a period of five years.

In connection with the

financing, the Company paid a cash commission of C$140,400 and issued 351,000 finder options, which are exercisable into units

at an exercise price of C$0.40 for a period of three years.

Pursuant to the offering, certain directors and officers of the Company

acquired 626,580 Units.

This issuance of such Units in connection with the offering was considered a “related party transaction”

as such term is defined under MI 61-101.

Company has accounted for the warrants issued through units issuance in accordance with ASC Topic 815.

These warrants issued through

units issuance are considered derivative instruments as they were issued in a currency other than the Company’s functional

currency of the U.S.

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 liability is recorded in the interim

condensed consolidated statements of income and comprehensive income as a gain or loss and is estimated using the Binomial model.

Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious

disease, including the current outbreak of respiratory illness caused by COVID-19.

The Company cannot accurately predict the impact

COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties

relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length

of travel and quarantine restrictions imposed by governments of affected countries.

In addition, a significant outbreak of contagious

diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial

markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability

to finance its operations.

Assets and Total Assets

of March 31, 2021, the Company’s balance sheet reflects that the Company had:

i) total current assets of $6,012,261, compared

to total current assets of $4,045,618 at December 31, 2020, an increase of $1,966,643 or approximately 49%;

and ii) total assets

of $8,619,234, compared to total assets of $6,709,016 at December 31, 2020, an increase of $1,910,218 or approximately 28%.

increase in current assets was impacted by the increase in cash and cash equivalents, primarily due to proceeds from the non-brokered

private placement which closed on February 24, 2021.

Current Liabilities and Liabilities

of March 31, 2021, the Company’s balance sheet reflects that the Company had total current liabilities of $13,939,595 and

total liabilities of $31,315,245, compared to total current liabilities of $14,178,553 and total liabilities of $38,246,613 as

of December 31, 2020.

The decrease in total liabilities is reflective of a decrease in derivative warrant liability as a result

of a decrease in the Company’s share price.

of March 31, 2021, the Company had negative working capital of $7,927,334 compared to negative working capital of $10,132,935

as of December 31, 2020.

The decrease in negative working capital is due the increase in cash and cash equivalents primarily related

to the proceeds of the non-brokered private placement in February 2021, noted previously.

the three months ended March 31, 2021, cash was primarily used to fund activities at the Mine operations.

The Company reported

a net increase in cash of $1,944,737 during the three months ended March 31, 2021 as a result of net proceeds of $6,008,672 from

the non-brokered private placement which closed on February 24, 2021, offset by cash flows of $4,031,935 used in operating and

financing activities.

unaudited interim condensed consolidated financial statement filings have been prepared on the going concern basis, which assumes

that adequate sources of financing will be obtained as required and that the Company’s assets will be realized, and liabilities

settled in due course of business.

Accordingly, the interim condensed consolidated unaudited financial statements do not include

any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should

the Company not be able to continue as a going concern.

The going concern assumption is discussed in the financial statements

Note 1 –

Nature and Continuance of Operations and Going Concern .

ACCOUNTING ESTIMATES

The preparation of the interim condensed

consolidated financial statements in conformity with U.S, GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts

of expenses during the reporting period.

Estimates and judgments are continuously evaluated and are based on management’s

experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Actual outcomes can differ from these estimates.

The key sources of estimation uncertainty that have a significant risk of causing

material adjustment to the amounts recognized in the financial statements are:

Share-based payments

Management determines costs for share-based

payments using market-based valuation techniques.

The fair value of the share awards and warrant liabilities are determined at

the date of grant using generally accepted valuation techniques and for warrant liabilities at each balance sheet date thereafter.

Assumptions are made and judgment used in applying valuation techniques.

These assumptions and judgments include estimating the

future volatility of the stock price and expected dividend yield.

Such judgments and assumptions are inherently uncertain.

in these assumptions affect the fair value estimates.

Sheet Arrangements

Company has no off-balance sheet arrangements.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

For that reason, these statements involve risk and uncertainty since no one can accurately

predict the future.

Words such as “plans,” “intends,” “will,” “hopes,” “seeks,”

“anticipates,” “expects “and the like often identify such forward looking statements, but are not the only indication

that a statement is a FORWARD-LOOKING statement.

Such forward looking statements include statements concerning THE COMPANY’S plans

and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present

and future operations will or may produce revenues, income or profits.

Numerous factors and future events could cause the Company to

change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future

operations to fail to produce revenues, income or profits.

Therefore, the reader is advised that the following discussion should be considered

in light of the discussion of risks and other factors contained in this report and in the Company’s other filings with the UNITED

STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”).

NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED

AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements