What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-16 · 139 added, 117 removed, 381 unchanged (40% of the section changed)

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The November 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.

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.

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

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Company has two employees in executive positions.

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

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

Work and Future Plan of Operations

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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 warrant.

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

February 24, 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 $6,618,069 (C$7,830,544).

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

purchase warrant.

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.

This 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”).

This 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

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

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from its exploration program.

June 16, 2021, the Company announced that it was initiating an extensive ground geophysical survey spanning approximately 1,500 acres

of previously un-explored ground immediately to the south and south-west of historic underground workings, conducted as a high-resolution

3D IP (DCIP) survey method.

The coverage area will extend to a depth of approximately 1,300 feet, with the objective of identifying near-surface

drilling targets that are directly accessible from existing workings.

The program is scheduled for the third quarter of 2021.

September 23, 2021, the Company announced that it has completed an extensive ground geophysical survey spanning approximately

1,200 acres of previously un-explored ground immediately to the south and south-west of historic underground workings, conducted as a

high-resolution 3D IP (DCIP) survey method.

The coverage area will extend to a depth of approximately 1,300 feet, with the objective

of identifying near-surface drilling targets that are directly accessible from existing workings.

The program was completed during the

third quarter of 2021 and finalized data from the geophysics is expected in November 2021.

used to calculate Ag Eq are as follows:

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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.

restart 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.

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

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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,

i) low up-front capital costs through utilization of existing infrastructure, potentially enabling a rapid production re-start;

Hill Mine Restart Developments and Preliminary Economic Assessment

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

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 restart 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 restart,

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

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

iii) underground processing and tailings deposition with

potential for high recovery rates;

iii) underground processing and tailings deposition

with potential for high recovery rates;

iv) development of a sustainable operation with minimal environmental footprint;

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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.

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.

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.

On September 20, 2021,

the Company reported the results of its new PEA for the Mine.

The PEA contemplates a $44 million initial capital cost (including 20%

contingency) to rapidly restart the Mine, generating approximately $25 million of annual average free cash flow over a 11-year mine

life, and producing over 591 million pounds of zinc, 323 million pounds of lead, and 8 million ounces of silver at all-in sustaining

costs of $0.47 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.

The PEA 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 6.4Mt, 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 September 20, 2021 on EDGAR, SEDAR and the Company’s website www.bunkerhillmining.com .

There were no material differences between the key results,

assumptions and estimates contained in the report filed on June 4, 2021 and the news release dated April 20, 2021.

Mining District Joint Venture

October 4, 2021, the Company announced its intention to enter into a joint venture with MineWater Finance LLC to explore the mineral

potential of the London gold mine, and the surrounding district, in Colorado, USA.

London Mining District produced gold and silver from

1875 to 1942, including over 650,000 gold ounces from the London Mine.

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 June 30, 2021 as compared to the three months ended June 30,

results of operation and financial condition for the three and nine months ended September 30, 2021 as compared to the three and

nine months ended September 30, 2020.

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

dollars, which is the functional currency of the Company.

of the three and six months ended June 30, 2021 and June 30, 2020

the three and six months ended June 30, 2021 and June 30, 2020, the Company generated no revenue.

the three months ended June 30, 2021, the Company reported total operating expenses of $5,295,557 as compared to $3,589,361 during the

three months ended June 30, 2020, an increase of $1,706,196 or approximately 48%.

increase in total operating expenses during the three months ended June 30, 2021 was primarily due to an increase in exploration expense

of $1,662,352 ($4,123,735 in the three months ended June 30, 2021 compared to $2,461,383 in the three months ended June 30, 2020) mostly

due to significant additional accrual for water treatment charges from the EPA resulting from a higher than expected invoice received

in July 2021.

The decrease in operation and administration expenses ($447,463 in the three months ended June 30, 2021 compared to $850,015

in the three months ended June 30, 2020) was mostly due to lower stock based compensation expensed during the three months

ended June 30, 2021.

The increase in legal and accounting ($318,110 in the three months ended June 30, 2021 compared to $123,798

in the three months ended June 30, 2020), and consulting ($406,249 in the three months ended June 30, 2021 compared to $154,165 in the

three months ended June 30, 2020) were due to increased activity at the Mine, and legal, professional and consulting expenses related

to completion of the PEA.

the six months ended June 30, 2021, the Company reported total operating expenses of $9,919,531 as compared to $4,952,321 during the

three months ended June 30, 2020, an increase of $4,967,210 or approximately 100%.

increase was due to additional exploration expenses resulting from the Company’s drilling activities, significant

additional accrual for water treatment charges from the EPA as a result of a higher than expected invoice received in July

2021, and additional legal and consulting expenses related to the completion of the PEA.

dollars, which is the functional

currency of the Company.

of the Three and Nine Months Ended September 30, 2021 and September 30, 2020

the three and nine months ended September 30, 2021 and September 30, 2020, the Company generated no revenue.

the three months ended September 30, 2021, the Company reported total operating expenses of $2,464,945 as compared to $6,105,916

during the three months ended September 30, 2020, a decrease of $3,640,971 or approximately 60%.

decrease in total operating expenses during the three months ended September 30, 2021 was primarily due to a decrease in exploration

expense of $3,745,464 ($1,465,157 in the three months ended September 30, 2021 compared to $5,210,621 in the three months ended September

30, 2020) due to lower drilling activity and related expenses.

The decrease in operation and administration expenses ($221,451 in the

three months ended September 30, 2021 compared to $552,789 in the three months ended September 30, 2020) was mostly due to lower stock-based

compensation expensed during the three months ended September 30, 2021.

The increase in legal and accounting, and consulting

in the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was due to increased corporate activity,

and legal, professional and consulting expenses related to completion of the updated PEA.

the nine months ended September 30, 2021, the Company reported total operating expenses of $12,384,474 as compared to $11,058,237

during the nine months ended September 30, 2020, an increase of $1,326,237 or approximately 12%.

increase was due to significant additional accrual for water treatment charges from the EPA and additional exploration expenses resulting

from the Company’s drilling activities in the first half of 2021, and additional legal and consulting expenses related to the

completion of the updated PEA.

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

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expense or consulting expense on the statement of operations.

Incomes and Comprehensive Income

Company reported net income and comprehensive income of $45,056 for the three months ended June 30, 2021, compared to net loss and comprehensive

loss of $22,882,575 for the three months ended June 30, 2020, an increase of $22,927,631.

The Company also reported net income and comprehensive

income of $5,882,865 for the six months ended June 30, 2021, compared to net loss and comprehensive loss of $13,580,978 for the

six months ended June 30, 2020.

The increase in net income and comprehensive income was primarily due to a gain related to the change

in derivative liability of $5,236,792 for the three months ended June 30, 2021 and $15,712,168 for the six months ended June 30, 2021,

as compared to a loss of $19,060,232 for the three months ended June 30, 2020, and a loss of $8,214,828 for the six month ended June

The gain in the three and six months ended June 30, 2021 related mostly to a decrease in the fair value of the Company’s

outstanding warrants due to a decrease in the Company’s share price.

The Company’s share price decreased from $0.52 per Common

Share on December 31, 2020 to C$0.35 per Common Share on March 31, 2021 to C$0.28 per Common Share on June 30, 2021.

Conversely, the

loss in the three months ended June 30, 2020 related mostly to an increase in the fair value of the Company’s outstanding warrants

due to an increase in the Company’s share price.

The Company’s share price increased from C$0.55 on December 31, 2019 to

C$0.68 per Common Share on March 31, 2020 to C$1.00 per Common Share on June 30, 2020.

Income and Comprehensive Income

Company reported net income and comprehensive income of $3,960,630 for the three months ended September 30, 2021, compared to

net loss and comprehensive loss of $267,859 for the three months ended September 30, 2020, an increase of $4,228,489.

also reported net income and comprehensive income of $9,843,495 for the nine months ended September 30, 2021, compared to net

loss and comprehensive loss of $13,848,837 for the nine months ended September 30, 2020.

The increase in net income and comprehensive

income was primarily due to a gain related to the change in derivative liability of $6,460,513 for the three months ended September 30,

2021, and $22,172,681 for the nine months ended September 30, 2021, as compared to a gain of $9,311,304 for the three months ended

September 30, 2020, and a gain of $1,096,476 for the nine months ended September 30, 2020.

The gain in the three and nine months ended

September 30, 2021 related mostly to the fair value decrease of the Company’s outstanding warrants due to a decrease in the Company’s

OF FINANCIAL CONDITION

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

Management is considering various financing alternatives including, but

not limited to, raising capital through the capital markets, debt financing and royalty/streaming arrangements.

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 cash

proceeds of C$7,830,544.

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.

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

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

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.

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.

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Assets and Total Assets

of June 30, 2021, the Company’s balance sheet reflects that the Company had:

i) total current assets of $2,788,508, compared to

total current assets of $4,045,618 at December 31, 2020, a decrease of $1,257,110 or approximately 31%;

of September 30, 2021, the Company’s balance sheet reflects that the Company had:

i) total current assets of $2,930,905 compared

to total current assets of $4,045,618 at December 31, 2020, a decrease of $1,114,713 or approximately 28%;

and ii) total assets of $5,510,252,

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was mostly impacted by the decrease in cash and cash equivalents, primarily due to the Company’s spending related to exploration

partially offset by proceeds from the non-brokered private placement closed on February 24, 2021.

Current Liabilities and Liabilities

of June 30, 2021, the Company’s balance sheet reflects that the Company had total current liabilities of $15,692,077

and total liabilities of $27,799,249, compared to total current liabilities of $14,178,553 and total liabilities of $38,246,613 as of

December 31, 2020.

The increase in current liabilities is impacted by increased accruals related to water treatment charges from the

The decrease in total liabilities is primarily due to a decrease in derivative warrant liability as a result of a decrease

in the Company’s share price over the six months ended June 30, 2021 .

of June 30, 2021, the Company had negative working capital of $12,903,569 compared to negative working capital of $10,132,935 as of December

The increase in negative working capital was due to the decrease in cash and cash equivalents primarily related to exploration

activity, and additional liability accrued in relation to water treatment charges from the EPA.

the six months ended June 30, 2021, cash was primarily used to fund activities at the Mine operations including exploration and property

The Company reported a net decrease in cash of $1,191,272 during the six months ended June 30, 2021 compared to a net decrease

of $20,585 during the six months ended June 30, 2020.

The decrease in cash during the six months ended June 30, 2021 as a result of $7,040,266

of net cash used in operating activities, $94,693 used in investing activities , and $5,943,687 of net cash provided by financing activities

including the non-brokered private placement closed on February 24, 2021.

partially offset by proceeds of $6,008,672 from the non-brokered private placement closed on February 24, 2021, and $2,500,000

of proceeds from the Company’s promissory note issued on September 22, 2021.

Current Liabilities and Total Liabilities

of September 30, 2021, the Company’s balance sheet reflects that the Company had total current liabilities of $17,949,659

and total liabilities of $23,596,319, compared to total current liabilities of $14,178,553 and total liabilities of $38,246,613

as of December 31, 2020.

The increase in current liabilities is impacted by the new promissory note issued in September and accruals

related to water treatment charges from the EPA.

The decrease in non-current and total liabilities is primarily due to a decrease in

derivative warrant liability as a result of a decrease in the Company’s share price over the nine months ended September 30, 2021.

of September 30, 2021, the Company had negative working capital of $15,018,754 compared to negative working capital of $10,132,935

as of December 31, 2020.

The increase in negative working capital was due to the decrease in cash and cash equivalents primarily related

to exploration activity, and additional liability accrued in relation to water treatment charges from the EPA.

the nine months ended September 30, 2021, cash was primarily used to fund activities at the Mine operations including exploration and

property payments.

The Company reported a net decrease in cash of $1,055,412 during the nine months ended September 30, 2021 compared

to a net increase of $8,555,910 during the nine months ended September 30, 2020.

The decrease in cash during the nine months ended September

30, 2021 is a result of $9,372,253 of net cash used in operating activities, $94,693 used in investing activities, and $8,411,534 of

net cash provided by financing activities including the non-brokered private placement closed on February 24, 2021 and proceeds from

the promissory note issued on September 22, 2021.

unaudited interim condensed consolidated financial statement filings have been prepared on the going concern basis, which assumes that

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ACCOUNTING ESTIMATES

preparation of the interim condensed consolidated financial statements in conformity with U.S, GAAP requires management to make estimates

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

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in these assumptions affect the fair value estimates.

Warrants and accrued liabilities

Estimating the fair value of derivative warrant

liability requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance.

This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants

and conversion feature derivative liability, volatility and dividend yield and making assumptions about them.

The Company has to make estimates to accrue for

certain expenditures due to delay in receipt of third party vendor invoices.

These accruals are made based on trends, history and knowledge

of activities.

and accrued liabilities

the fair value of derivative warrant liability requires determining the most appropriate valuation model, which is dependent on the terms

and conditions of the issuance.

This estimate also requires determining the most appropriate inputs to the valuation model including

the expected life of the warrants and conversion feature derivative liability, volatility and dividend yield and making assumptions about

Company has to make estimates to accrue for certain expenditures due to delay in receipt of third party vendor invoices.

These accruals

are made based on trends, history and knowledge of activities.

Actual results may be different.

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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 2. Management’s Discussion and Analysis