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Item 8. Financial Statements and Supplementary Data

2022-03-31 compared with 2020-09-18 · 1578 added, 690 removed, 207 unchanged (92% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BUNKER HILL MINING CORP

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2020 AND 2019

(EXPRESSED IN UNITED STATES DOLLARS)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Bunker Hill Mining Corp.

(formerly Liberty Silver Corp.)

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Bunker Hill Mining Corp.

(the Company) as of June 30, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders’ deficiency for each of the years in the two year period ended June 30, 2020, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2020 and 2019, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two year period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered an accumulated deficit and recurring net losses and does not have sufficient working capital which raises substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

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

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

of Independent Registered Public Accounting Firm – MNP, LLP PCAOB ID:

Consolidated Balance Sheets, December 31, 2021 and 2020

Consolidated Statements of Operations for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2021 and 2020

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Shareholders of Bunker Hill Mining Corp.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Bunker Hill Mining Corp.

(the Company) as at December 31, 2021 and

2020, and the related consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders’ deficiency

for the year ended December 31, 2021, six-month period ended December 31, 2020 and for the year ended June 30, 2020, and the related notes (collectively referred to as the consolidated financial statements).

our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the

Company as at December 31, 2021 and 2020, and the results of its consolidated operations and its consolidated cash flows for the

year ended December 31, 2021, six-month period ended December 31, 2020 and for the year ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Uncertainty Related to Going Concern – See also Critical Audit Matter section below

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the consolidated financial statements, the Company has suffered an accumulated deficit and recurring net losses and does

not have sufficient working capital which raises substantial doubt about its ability to continue as a going concern.

plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Audit Matter Description

Going Concern – see also

Material Uncertainty Related to Going Concern above

As described in

Note 1 of the consolidated financial statements, the Company has been incurring losses and does not have sufficient working capital

needed to meet its current obligations and commitments.

In order to continue as a going concern, the Company must seek additional

Significant assumptions

and judgements on cash flow projections were made by management in estimating future cash flows, which are subject to high degree

of uncertainty.

Refer to Note 1

Nature and Continuance of Operations and Going Concern.

We responded to

this matter by performing audit procedures in relation to the assessment of the ability of the Company to continue as a going concern.

Our audit work in relation to this included, but was not restricted to, the following:

● Evaluated the impact of the Company’s existing financial arrangements and conditions in relation to the ability to continue

as a going concern.

an understanding from management on the Company’s future plans on the operations including financing arrangements.

● Evaluated the assumptions and estimates on cashflow projections used in the forecast incorporating information established from our

understanding above and any materialized arrangements subsequent to the period end.

● Assessed the appropriateness of the related disclosures.

Completeness of Accounts Payables

and Accrued Liabilities

Company had significant exploration expenditures during the year ended December 31, 2021.

Invoices and reconciliation

from vendors are not received on a timely basis.

Estimates may be required to accrue for liabilities.

Due to the uncertainty

of completeness of accounts payable and accrued liabilities we consider this to be a critical audit matter.

Refer to Note 3

Significant Account Policies – Use of Estimates and Assumptions.

We responded to

this matter by performing audit procedures in relation to completeness of accounts payable and accrued liabilities.

Our audit work

in relation to this included, but was not restricted to, the following:

an understanding from management of the Company’s significant vendors.

Obtained confirmations from these vendors of payables

outstanding at year end and reconciled any discrepancies from these confirmations.

selective invoices and payments of expenditures subsequent to the year end to determine if they pertain to current year expenditures.

management’s assessment and estimates of accounts payable and accruals and assessed the reasonableness of assumptions made

in determining the accruals.

● Assessed the appropriateness of the related disclosures.

Audit Matter Description

Environmental

Protection Agency (EPA) Agreement and Accrual

Company signed an amended settlement agreement with the EPA to modify the terms to settle outstanding amounts under the original

agreement and payment amounts related to cost recovery and water treatment costs (the “EPA Costs”).

The effectiveness

of the amended settlement agreement is subject to the Company obtaining financial assurance within a certain period.

from the EPA are not received on a timely basis and estimates are required to accrue for liabilities.

to the uncertainty of completeness of the EPA accrual we consider this to be a critical audit matter.

to Note 3 Significant Account Policies – Use of Estimates and Assumptions, Note 6 Mining Interests and Note 13 Commitments

and contingencies.

responded to this matter by performing audit procedures in relation to accounting for the amended settlement agreement and completeness

of the EPA accrual.

Our audit work in relation to this included, but was not restricted to, the following:

and reviewed the amended settlement agreement with the EPA.

management’s assessment of the accounting treatment of the EPA Costs in relation to the amended settlement agreement and assessed

evidence obtained and the reasonableness of the assumptions made.

invoices received during the year to ensure the appropriateness of the amount of expenditures being recorded.

selective invoices and payments of expenditures subsequent to the year end to determine if they pertain to current year EPA Costs.

management’s estimate of the EPA accrual for ongoing EPA Costs and assessed the reasonableness of assumptions made in determining

the accrued amount, including additional fees that may be charged by the EPA.

the appropriateness of the related disclosures.

The Company had a warrant derivative liability

of $15,518,887 as at December 31, 2021 which was required to be fair valued at each period end.

The calculation of the fair value of the warrant

liability requires management to use an appropriate valuation model and assumptions on volatility rate and life of the warrants as

inputs into the model.

Due to the estimates and assumptions involved

in the determination of fair value we consider this to be a critical audit matter.

Refer to Note 3 Significant Accounting Policies

– Use of Estimates and Assumptions, Note 8 Promissory Notes Payable and Note 10 Capital Stock, Warrants and Stock

We responded to this matter by performing

audit procedures in relation to the derivative liability.

Our audit work in relation to this included, but was not restricted to,

the following:

● Obtained evidence of the issuance including financing documents, warrant certificates and the terms of the warrants.

the classification of the warrants issued.

the appropriateness of the model used by management, the mathematical accuracy of management’s valuation models and the

appropriateness of the assumptions, including volatility rate and life of the warrants, used in the models.

● Assessed the appropriateness of the related

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2014.

Mississauga, ON

September 17, 2020

Bunker Hill Mining Corp.

Consolidated Balance Sheets

(Expressed in United States Dollars)

have served as the Company’s auditor since 2014.

Hill Mining Corp.

Balance Sheets

in United States Dollars)

Current assets

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Short-term deposit

Prepaid mine deposit and acquisition costs (note 6)

Prepaid finance costs

Total current assets

2 unchanged sentences

Right-of-use assets (note 5)

Long term deposit

Long-term deposit (note 6)

Mining interests (note 6)

3 unchanged sentences

Accrued liabilities (notes 6 and 13)

Other liabilities

DSU liability (note 13)

EPA water treatment payable (note 6)

Interest payable (notes 6 and 8)

Convertible loan payable (note 8)

DSU liability (note 12)

Promissory notes payable (note 8)

EPA cost recovery payable (note 6)

Current portion of lease liability (note 9)

5 unchanged sentences

Shareholders’ Deficiency

Preferred shares, $0.000001 par value,

10,000,000 preferred shares authorized;

Nil preferred shares issued and outstanding

Common shares, $0.000001 par value,

750,000,000 common shares authorized;

79,259,940 and 15,811,396 common shares

issued and outstanding, respectively (note 11)

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

Nil preferred shares issued and outstanding (note 10)

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

164,435,442 and 143,117,068 common shares issued and outstanding, respectively (note 10)

Additional paid-in-capital (note 10)

1 unchanged sentence

Deficit accumulated during the exploration stage

( 72,491,150 )

( 66,088,873 )

Total shareholders’ deficiency

( 34,242,368 )

( 31,537,597 )

Total shareholders’ deficiency and liabilities

The accompanying notes are an integral part of these consolidated financial statements.

Bunker Hill Mining Corp.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in United States Dollars)

Year Ended June 30, 2020

Year Ended June 30, 2019

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

Hill Mining Corp.

Statements of Loss and Comprehensive Loss

in United States Dollars)

Operating expenses

1 unchanged sentence

Legal and accounting

Consulting (note 15)

Gain on settlement of accounts payable (note 6)

( 1,787,300 )

Loss from operations

( 18,752,504 )

( 9,454,396 )

( 10,793,823 )

Other income or gain (expense or loss)

Change in derivative liability (notes 8 and 10)

( 18,843,947 )

Gain (loss) on foreign exchange

Accretion expense (notes 7 and 8)

Financing costs (note 9)

Loss on foreign exchange

Interest expense (notes 7 and 8)

Loss on sale of equipment

Financing costs (note 8)

Loss on debt settlement (notes 8 and 10)

( 1,056,296 )

Loss on private placement (note 10)

Share issuance costs (note 10)

Loss on loan extinguishment (note 7)

Loss on debt settlement (note 11)

Loss before income tax

Provision for income taxes

Net loss and comprehensive loss for the year

Net loss per common share - basic and fully diluted

Weighted average number of common shares - basic and fully diluted

The accompanying notes are an integral part of these consolidated financial statements.

Bunker Hill Mining Corp.

Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

Year Ended June 30, 2020

Year Ended June 30, 2019

Net loss and comprehensive

loss for the year

$ ( 6,402,277 )

$ ( 2,164,454 )

$ ( 31,321,791 )

Net loss per common share

- basic and fully diluted

Weighted average number of common shares

- basic and fully

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

Hill Mining Corp.

Statements of Cash Flows

in United States Dollars)

Operating activities

Net loss for the year

$ ( 6,402,277 )

$ ( 2,164,454 )

$ ( 31,321,791 )

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

2 unchanged sentences

Change in fair value of warrant liability

( 12,300,453 )

( 10,503,941 )

Accretion expense

Financing costs

Loss on sale of equipment

Loss on loan extinguishment

Interest expense on lease liability

Imputed interest expense on lease liability (note 9)

Foreign exchange loss (gain) on re-translation of lease (Note 9)

Loss on debt settlement

Foreign exchange gain on re-translation of lease liability

Loss on private placement

Share issuance costs

Changes in operating assets and liabilities:

Accounts receivable

Prepaid mine acquisition costs

Prepaid finance costs

Prepaid expenses

Long term deposit

Accounts payable

( 1,775,211 )

Accrued liabilities

EPA water treatment payable

EPA cost recovery payable

Other liabilities

1 unchanged sentence

Net cash used in operating activities

( 11,372,153 )

( 6,480,725 )

( 3,947,214 )

Investing activities

Deposit on mining interest

( 2,000,000 )

Purchase of machinery and equipment

Proceeds on disposal of equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

( 2,280,701 )

Financing activities

Proceeds from convertible loan payable

Proceeds from issuance of common stock, net of issue costs

Proceeds from issuance of common stock, net

Proceeds from warrants exercised

1 unchanged sentence

Lease payments

Proceeds from promissory notes

Proceeds from promissory note

Repayment of promissory note

( 1,825,920 )

Net cash provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Net change in cash

( 3,082,598 )

Cash, beginning of year

Cash, end of year

Supplemental disclosures

Non-cash activities:

Common stock issued to settle accounts payable, accrued liabilities

and promissory notes

Common stock issued to settle accounts payable, accrued liabilities, interest payable, and promissory notes

Common stock issued to settle convertible loan

Disposal of equipment used to settle accounts payable

Stock options exercised used to settle accrued liabilities

The accompanying notes are an integral part of these consolidated financial statements.

Bunker Hill Mining Corp.

Consolidated Statements of Changes in Shareholders' Deficiency

(Expressed in United States Dollars)

paid-in-capital

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

Hill Mining Corp.

Statements of Changes in Shareholders’ Deficiency

in United States Dollars)

Balance, June 30, 2019

$ ( 32,602,628 )

Stock-based compensation

Units issued at $3.42 per share (i)

Units issued at $0.57 per share (ii)

Units issued at $0.04 per share (iii)

Stock options exercised

Shares to be issued

Warrant valuation

Net loss for the year

Balance, June 30, 2019

$ ( 8,210,510 )

Stock-based compensation

Shares and units issued at $0.04 per share (iii)

Shares and units issued at $ 0.04 per share (i)

Units issued for debt settlement at $ 0.09 per share

Shares issued for debt settlement at $ 0.14 per share

Shares issued at $0.42 per share (iv)

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

Shares issued at $ 0.42 per share (ii)

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

Finder’s units issued

Finder’s warrants issued

Warrants exercised at $0.18 per share (v)

Warrants exercised at $ 0.18 per share (iii)

Warrant valuation

Shares to be issued (note 11)

Shares to be issued

Net loss for the year

( 31,321,791 )

Balance, June 30, 2020

1 unchanged sentence

$ ( 33,241,919 )

(i) Units issued at C$4.50, converted to US at $3.42 (note 11)

(ii) Units issued at C$0.75, converted to US at $0.57 (note 11)

(iii) Shares and units issued at C$0.05, converted to US at $0.04 (note 11)

(iv) Shares issued at C$0.56, converted to US at $0.42 (note 11)

(v) Shares issued upon warrants exercised at C$0.25, converted to US at $0.18 (note 11)

The accompanying notes are an integral part of these consolidated financial statements.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Stock-based compensation

Units issued at $ 0.26 per unit (iv)

and Units issued

Units issued for debt settlement at $ 0.67 per unit

Units issued for debt settlement

Shares issued for debt settlement at $ 0.37 per share (v)

Warrant valuation

( 14,806,090 )

Net loss for the period

( 2,164,454 )

Balance, December 31, 2020

$ ( 66,088,873 )

$ ( 31,537,597 )

Stock-based compensation

Shares issued at $ 0.32 per share (vi)

Shares issued

Shares issued for debt settlement at $ 0.45 per share (vii)

issued for debt settlement

Shares issued for RSUs vested

Warrant valuation

( 3,813,103 )

Net loss for the year

( 6,402,277 )

Balance, December 31, 2021

$ ( 72,491,150 )

$ ( 34,242,368 )

and units issued at C$ 0.05 , converted to US at $ 0.04 (note 10)

issued at C$ 0.56 , converted to US at $ 0.42 (note 10)

issued upon warrants exercised at C$ 0.25 , converted to US at $ 0.18 (note 10)

issued at C$ 0.35 , converted to US at $ 0.26 (note 10)

issued at C$ 0.49 , converted to US at $ 0.37 (note 10)

issued at C$ 0.40 , converted to US at $ 0.32 (note 10)

issued at C$ 0.57 , converted to US at $ 0.45 (note 10)

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

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Nature and continuance of operations and going concern

Bunker 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 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4.

As of the date of this Form 10-K, the Company had two subsidiaries, Bunker Hill Operating LLC, a Colorado corporation that is currently dormant, and American Zinc Corp., an Idaho corporation created to facilitate the work being conducted at the Bunker Hill Mine in Idaho.

The Company was incorporated for the purpose of engaging in mineral exploration activities.

It continues to work at developing its project with a view towards putting it into production.

These consolidated financial statements have been prepared on a going concern basis.

The Company (the "Company") has incurred losses since inception resulting in an accumulated deficit of $61,979,184 and further losses are anticipated in the development of its business.

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

In order to continue to meet its fiscal obligations in the current fiscal year and beyond, the Company must seek additional financing.

This raises substantial doubt about the Company’s ability to continue as a going concern.

Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

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

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

These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves.

These financial statements of the Company for the year ended June 30, 2020 were approved and authorized for issue by the Board of Directors of the Company on September 17, 2020.

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent 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.

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-K, 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.

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

The Company has incurred losses since inception resulting

in an accumulated deficit of $ 72,491,150

and further losses are anticipated in the

development of its business.

Additionally, the Company owes a total of $ 16,417,208

to the EPA (see Note 6) that is classified

as current liability unless the Company can consummate financial assurances that would reclassify $ 11,000,000

of this liability to long-term debt.

does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on

certain current liabilities and/or raising additional funds.

In order to continue to meet its fiscal obligations in the current fiscal

year and beyond, the Company must seek additional financing.

This raises substantial doubt about the Company’s ability to continue

as a going concern.

Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations

in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business

operations when they come due.

The accompanying consolidated financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

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

These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded

assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

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 (“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.

The Russia/Ukraine Crisis:

The Company’s operations could be adversely

affected by the effects of the escalating Russia/Ukraine crisis and the effects of sanctions imposed against Russia or that country’s

retributions against those sanctions, embargos or further-reaching impacts upon energy prices, food prices and market disruptions.

Company cannot accurately predict the impact the crisis will have on its operations and the ability of contractors to meet their obligations

with the Company, including uncertainties relating the severity of its effects, the duration of the conflict, and the length and magnitude

of energy bans, embargos and restrictions imposed by governments.

In addition, the crisis could adversely affect the economies and financial

markets of the United States in general, resulting in an economic downturn that could further affect the Company’s operations and

ability to finance its operations.

Additionally, the Company cannot predict changes in precious metals pricing or changes in commodities

pricing which may alternately affect the Company either positively or negatively.

Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises.

consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the

United States of America applicable to exploration stage enterprises.

The consolidated financial statements are expressed in U.S.

dollars, the functional currency.

The Company’s fiscal year end is June 30.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

the Company’s functional currency.

February 2021, the Company changed its fiscal year from June 30 to December 31.

As a result, in addition to the full calendar year ended

December 31, 2021, the Company is reporting financial information for the transition period from July 1, 2020 to December 31, 2020, and

the preceding full fiscal year of July 1, 2019 to June 30, 2020.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Significant accounting policies

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.

Basis of consolidation

These consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiaries, American Zinc Corp.

and Bunker Hill Operating LLC.

following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.

of consolidation

consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiary, Silver

Valley Metals Corp.

(formerly American Zinc Corp.).

All intercompany transactions and balances have been eliminated on consolidation.

Cash and cash equivalents

Cash and cash equivalents may include highly liquid investments with original maturities of three months or less.

Mineral rights, property and acquisition costs

The Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized any revenues from its planned operations.

and cash equivalents

and cash equivalents may include highly liquid investments with original maturities of three months or less.

rights, property and acquisition costs

Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized any revenues from its planned

It is primarily engaged in the acquisition and exploration of mining properties.

The Company capitalizes acquisition and option costs of mineral rights as intangible assets.

Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights.

If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time.

The costs of acquiring mining properties are capitalized upon acquisition.

Mine development costs incurred to develop and expand the capacity of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property is a commercially mineable property.

Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged to operations.

Company capitalizes acquisition and option costs of mineral rights as intangible assets when there is sufficient evidence to support

probability of generating positive economic returns in the future.

Upon commencement of commercial production, the mineral rights will

be amortized using the unit-of-production method over the life of the mineral rights.

If the Company does not continue with exploration

after the completion of the feasibility study, the mineral rights will be expensed at that time.

costs of acquiring mining properties are capitalized upon acquisition.

Mine development costs incurred to develop and expand the capacity

of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property

is a commercially mineable property.

Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged

to operations.

Costs of abandoned projects are charged to operations upon abandonment.

The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets.

Equipment is stated at cost less accumulated depreciation.

Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which range from 3 to 10 years.

The Company evaluates the carrying value of capitalized

mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever

events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Evaluation of the carrying value of capitalized

costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance

with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets.

is stated at cost less accumulated depreciation.

Depreciation is provided principally on the straight-line method over the estimated

useful lives of the assets, which range from 3 to 10 years.

The cost of repairs and maintenance is charged to expense as incurred.

Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or gain (expense or loss).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment.

If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Significant accounting policies (continued)

Operating lease right of use assets ("ROU") assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments.

Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in operation and administration expenses in the consolidated statements of loss and comprehensive loss.

The Company is required to make additional payments for certain variable costs.

These costs are expensed and included in operation and administration expenses in the consolidated statements of loss and comprehensive loss.

Rental income obtained through subleases is recorded as income over the lease term and is offset against operation and administration expenses.

Impairment of long-lived assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable.

The assets are subject to impairment consideration under FASB ASC 360, Property, Plant and Equipment, if events or circumstances indicate that their carrying amount might not be recoverable.

When the Company determines that an impairment analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities - Mining, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Various factors could impact the Company’s ability to achieve forecasted production schedules.

Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment.

The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

Fair value of financial instruments

The Company adopted FASB ASC 820-10, Fair Value Measurement.

This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.

The three levels are defined as follows:

* Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

* Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

* Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable excluding HST, accounts payable, accrued liabilities, interest payable, convertible loan payable, promissory notes payable, lease liability, and other liabilities, all of which qualify as financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and current market rate of interest.

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.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Significant accounting policies (continued)

Environmental expenditures

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs.

Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable.

The Company’s policy is to meet, or if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits.

Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

No costs have been recognized by the Company for environmental expenditures.

The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes ("FASB ASC 740"), on a tax jurisdictional basis.

sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss

is reflected in other income or gain (expense or loss).

Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives

of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment.

If events and circumstances

warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring

their recoverability.

lease right of use (“ROU”) assets represent the right to use the leased asset for the lease term and operating lease liabilities

are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most leases

do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date

in determining the present value of future payments.

Lease expense for minimum lease payments is amortized on a straight-line basis over

the lease term and is included in operation and administration expenses in the consolidated statements of loss and comprehensive loss.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Company is required to make additional payments for certain variable costs.

These costs are expensed and included in operation and administration

expenses in the consolidated statements of loss and comprehensive loss.

Rental income obtained through subleases is recorded as income

over the lease term and is offset against operation and administration expenses.

of long-lived assets

Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying

amounts may not be recoverable.

The assets are subject to impairment consideration under FASB ASC 360, Property, Plant and Equipment,

if events or circumstances indicate that their carrying amount might not be recoverable.

When the Company determines that an impairment

analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities – Mining,

and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

factors could impact the Company’s ability to achieve forecasted production schedules.

Additionally, commodity prices, capital

expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess

The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves

further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due

to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

value of financial instruments

Company adopted FASB ASC 820-10, Fair Value Measurement.

This guidance defines fair value, establishes a three-level valuation hierarchy

for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.

The three levels are defined

1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that

are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

3 inputs to valuation methodology are unobservable and significant to the fair measurement.

carrying amounts reported in the consolidated balance sheets for cash, accounts receivable excluding HST, accounts payable, accrued liabilities,

interest payable, convertible loan payable, promissory notes payable, lease liability, and other liabilities, all of which qualify as

financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments

and their expected realization and current market rate of interest.

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.

Environmental

operations of the Company have been, and may in the future be, affected from time to time, in varying degrees, by changes in environmental

regulations, including those for future reclamation and site restoration costs.

Both the likelihood of new regulations and their overall

effect upon the Company vary greatly and are not predictable.

The Company’s policy is to meet, or if possible, surpass standards

set by relevant legislation, by application of technically proven and economically feasible measures.

Environmental

expenditures that relate to ongoing environmental and reclamation programs are expensed as incurred or capitalized and amortized depending

on their future economic benefits.

Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably

determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes (“FASB ASC 740”),

on a tax jurisdictional basis.

The Company files income tax returns in the United States.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse.

A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date.

The Company is subject to examination by taxing authorities in jurisdictions such as the United States.

Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements.

The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense.

FSAB ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return.

FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in periods, disclosure and transition.

At June 30, 2018 and June 30, 2017, the Company has not taken any tax positions that would require disclosure under FASB ASC 740.

Basic and diluted net loss per share

The Company computes net loss per share of common stock in accordance with FASB ASC 260, Earnings per Share (“ASC 260”).

Under the provisions of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible loan payable.

As of June 30, 2020, 7,580,159 stock options and 37,844,404 warrants were considered in the calculation but not included, as they were anti-dilutive (June 30, 2019 - 287,100 stock options and 13,046,484 warrants).

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Significant accounting policies (continued)

Stock-based compensation

In December 2004, the FASB issued FASB ASC 718, Compensation – Stock Compensation, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.

It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.

FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements.

That cost will be measured based on the fair value of the equity or liability instruments issued.

The Company accounts for stock-based compensation arrangements with non-employees in accordance with ASU 505-50, Equity-Based Payments to Non-Employees, which requires that such equity instruments are recorded at the value on the grant date based on fair value of the equity or goods and services whichever is more reliable.

Restricted share units

For Restricted Share Units ("RSUs"), the Company estimates the grant date fair value using the Company's common shares on the Canadian Securities Exchange at the grant date.

The Company records the value of the RSUs in paid-in capital.

Deferred share units

The Company estimates the grant date fair value of the Deferred Share Units ("DSUs") using the trading price of the Company's common shares on the Canadian Securities Exchange on the day of grant.

The Company records the value of the DSUs owing to its directors as DSU liability and measures the DSU liability at fair value at each reporting date, with changes in fair value recognized as stock-based compensation in profit (loss).

Use of estimates and assumptions

Many of the amounts included in the consolidated financial statements require management to make judgments and/or estimates.

These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of

assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year

in which the differences are expected to reverse.

A valuation allowance is provided against deferred tax assets when it is determined

to be more likely than not that the deferred tax asset will not be realized.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is

more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the

tax position, circumstances, and information available as of the reporting date.

The Company is subject to examination by taxing authorities

in jurisdictions such as the United States.

Management does not believe that there are any uncertain tax positions that would result

in an asset or liability for taxes being recognized in the accompanying consolidated financial statements.

The Company recognizes tax-related

interest and penalties, if any, as a component of income tax expense.

ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement

of a tax position taken, or expected to be taken, in a tax return.

FASB ASC 740 also provides guidance on de-recognition, classification,

interest and penalties, accounting in periods, disclosure and transition.

At December 31, 2021, December 31, 2020, and June 30, 2020,

the Company has not taken any tax positions that would require disclosure under FASB ASC 740.

and diluted net loss per share

Company computes net loss per share in accordance with FASB ASC 260, Earnings per Share (“FASB ASC 260”).

Under the provisions

of FASB ASC 260, basic net loss per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding

during the period.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants

and the conversion of convertible loan payable.

As of December 31, 2021, 9,053,136 stock options, 111,412,712 warrants, and 3,590,907

broker options were considered in the calculation but not included, as they were anti-dilutive (December 31, 2020 – 8,015,159 stock

options, 95,777,806 warrants, and 3,239,907 broker options).

December 2004, FASB issued FASB ASC 718, Compensation – Stock Compensation (“FASB ASC 718”), which establishes standards

for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.

It also addresses transactions

in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity

instruments or that may be settled by the issuance of those equity instruments.

FASB ASC 718 focuses primarily on accounting for transactions

in which an entity obtains employee services in share-based payment transactions.

FASB ASC 718 requires that the compensation cost relating

to share-based payment transactions be recognized in the consolidated financial statements.

That cost will be measured based on the fair

value of the equity or liability instruments issued.

Company accounts for stock-based compensation arrangements with non-employees in accordance with ASU 505-50, Equity-Based Payments to

Non-Employees, which requires that such equity instruments are recorded at the value on the grant date based on fair value of the equity

or goods and services whichever is more reliable.

share units (“RSUs”)

Company estimates the grant date fair value of RSUs using the Company’s common shares at the grant date.

The Company records the

value of the RSUs in paid-in capital.

share units (“DSUs”)

Company estimates the grant date fair value of the DSUs using the trading price of the Company’s common shares on the day of grant.

The Company records the value of the DSUs owing to its directors as DSU liability and measures the DSU liability at fair value at each

reporting date, with changes in fair value recognized as stock-based compensation in profit (loss).

of estimates and assumptions

of the amounts included in the consolidated financial statements require management to make judgments and/or estimates.

These judgments

and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

Actual results may differ from the amounts included in the consolidated financial statements.

Areas of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include:

Going concern

The assessment of the Company's ability to continue as a going concern involves judgment regarding future funding available for its operations and working capital requirements as discussed note 1.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Significant accounting policies (continued)

Use of estimates and assumptions (continued)

Convertible loans, promissory notes and warrants

Estimating the fair value of derivative warrant liability and conversion feature derivative liability requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance.

This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants and conversion feature derivative liability, volatility and dividend yield and making assumptions about them.

The assumptions and models used for estimating fair value of warrants and conversion feature derivative liability are disclosed in notes 8, 9 and 11.

The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated statements of operations.

Assets are reviewed for an indication of impairment at each reporting date.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include:

assessment of the Company’s ability to continue as a going concern involves judgment regarding future funding available for its

operations and working capital requirements as discussed in note 1.

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

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

Actual results may be different.

The Company makes monthly estimates of its

water treatment costs, with a true-up to the annual invoice received from the Idaho Department of Environmental Quality (“IDEQ”).

the actual costs in the annual invoice, the Company then reassesses its estimate for future periods.

Given the nature, complexity and variability of the various actual cost items included in the invoice, the Company

has used the most recent invoice as its estimate of the water treatment costs for future periods.

loans, promissory notes and warrants

the fair value of derivative warrant liability and conversion feature derivative liability requires determining the most appropriate

valuation model, which is dependent on the terms and conditions of the issuance.

This estimate also requires determining the most appropriate

inputs to the valuation model including the expected life of the warrants and conversion feature derivative liability, volatility and

dividend yield and making assumptions about them.

The assumptions and models used for estimating fair value of warrants and conversion

feature derivative liability are disclosed in notes 8 and 10.

fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on

the Company’s balance sheets and the consolidated statements of operations.

Assets are reviewed for an indication of impairment

at each reporting date.

This determination requires significant judgment.

Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in precious metal prices.

Concentrations of credit risk

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

The Company places its cash and cash equivalents with financial institutions of high credit worthiness.

At times, its cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

The Company’s management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.

Risks and uncertainties

The Company operates in the mineralized material exploration industry that is subject to significant risks and uncertainties, including financial, operational, and other risks associated with operating a mineralized material exploration business, including the potential risk of business failure.

Foreign currency transactions

The Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar.

The Company will use its US dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction are reported as gain or loss on foreign exchange.

Segment reporting

FASB ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s consolidated financial statements.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company has one operating segment and reporting unit.

The Company operates in one reportable business segment and is organized and operated as one business.

Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Significant accounting policies (continued)

Convertible loans and promissory notes payable

The Company reviews the terms of its convertible loans and promissory notes payable to determine whether there are embedded derivatives, including the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments.

In circumstances where the convertible debt or the promissory note contains embedded derivatives that are to be separated from the host contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using the binomial model.

The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments being recorded at a discount from their principal amount.

This discount is accreted over the expected life of the instruments to profit (loss) using the effective interest method.

The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method.

The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss).

The Company presents its embedded derivatives and related debenture host contracts as separate instruments on the consolidated balance sheets.

New and recently adopted technical and accounting pronouncements

The Company adopted ASU 2016-02 effective July 1, 2019.

ASU 2016-02 requires lessees to recognize most leases on the balance sheet to reflect the right to use an asset for a period of time and an associated lease liability for payments.

The Company has applied ASU 2016-02 in accordance with the modified retrospective approach only to contracts that were previously identified as leases.

Contracts that were not identified as leases under previous standards were not reassessed for whether there is a lease.

Therefore, the definition of a lease under ASU 2016-02 was applied only to contacts entered into or changed on or after July 1, 2019.

There is no change to the comparative periods or transitional adjustments required as a result of the adoption of this standard using the modified retrospective approach.

The aggregate lease liability recognized in the statement of financial position at July 1, 2019 and Company's operating lease commitment at July 1, 2019 can be reconciled as follows:

Operating lease commitment as at July 1, 2019

Effect of discounting at the incremental borrowing rate

Total lease liability as at July 1, 2019

The weighted average incremental borrowing rate applied to lease liability on July 1, 2019 was 10%.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.

The guidance is effective for fiscal years beginning after December 15, 2019.

The Company is currently evaluating the potential impact of this guidance on the consolidated financial statements.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Equipment consists of the following:

Leasehold improvements

Factors that could trigger an impairment review include, but

are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in

precious metal prices.

Reclassifications

Certain reclassifications have been made to conform

prior year’s data to the current presentation.

The reclassifications have no effect on the results of reported operations or stockholders’

deficit or cash flows.

Concentrations

of credit risk

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

The Company places

its cash with financial institutions of high credit worthiness.

At times, its cash equivalents with a particular financial institution

may exceed any applicable government insurance limits.

The Company’s management also routinely assesses the financial strength

and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are

and uncertainties

Company operates in the mineralized material exploration industry that is subject to significant risks and uncertainties, including financial,

operational, and other risks associated with operating a mineralized material exploration business, including the potential risk of business

currency transactions

Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar.

The Company will use its U.S.

dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction

are reported as gain or loss on foreign exchange.

loans and promissory notes payable

Company reviews the terms of its convertible loans and promissory notes payable to determine whether there are embedded derivatives,

including the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments.

In circumstances where the convertible debt or the promissory note contains embedded derivatives that are to be separated from the host

contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using

the binomial model.

The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments

being recorded at a discount from their principal amount.

This discount is accreted over the expected life of the instruments to profit

(loss) using the effective interest method.

debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method.

embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit

Company presents its embedded derivatives and related debenture host contracts as separate instruments on the consolidated balance sheets.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

consists of the following:

Schedule of Equipment

Equipment, gross

Less accumulated depreciation

Equipment, net

total depreciation expense during the year ended December 31, 2021 was $ 133,526

(six months ended December 31, 2020 - $ 52,784

and the year ended June 30, 2020 - $ 17,577 ).

Right-of-use asset

Right-of-use asset consists of the following:

asset consists of the following:

Schedule of Right-of-use Asset

Less accumulated depreciation

Right-of-use asset, net

total depreciation expense during the year ended December 31, 2021 was $ 106,378 (six months ended December 31, 2020 - $ 54,024 and the

year ended June 30, 2020 - $ 106,378 ).

Mining Interests

Bunker Hill Mine Complex

On November 27, 2016, the Company entered into a non-binding letter of intent with Placer Mining Corp.

(“Placer Mining”), which letter of intent was further amended on March 29, 2017, to acquire the Bunker Hill Mine in Idaho and its associated milling facility located in Kellogg, Idaho, in the Coeur d’Alene Basin (the “Letter of Intent”).

Pursuant to the terms and conditions of the Letter of Intent, the acquisition, which was subject to due diligence, would include all mining claims, surface rights, fee parcels, mineral interests, existing infrastructure, machinery and buildings at the Kellogg Tunnel portal in Milo Gulch, or anywhere underground at the Bunker Hill Mine Complex.

The acquisition would also include all current and historic data relating to the Bunker Hill Mine Complex, such as drill logs, reports, maps, and similar information located at the mine site or any other location.

During the year ended June 30, 2017, the Company made payments totalling $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.

On August 28, 2017, the Company announced that it signed a definitive agreement (the “Agreement”) for the lease and option to purchase the Bunker Hill Mine assets (the “Bunker Assets”).

Under the terms of the Agreement, the Company was required to make a $1 million bonus payment to Placer Mining no later than October 31, 2017, which payment was made, along with two additional $500,000 bonus payments in December 2017.

The 24-month lease commences November 1, 2017 and continues until October 31, 2019.

The lease period can be extended by a further 12 months at the Company’s discretion.

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

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Mining interests (continued)

Bunker Hill Mine Complex (continued)

The 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 million with purchase payments to be made over a ten-year period to Placer Mining.

Under terms of the agreement, there is a 3% net smelter return royalty (“NSR”) on sales during the Lease and a 1.5% NSR on the sales after the purchase option is exercised, which post-acquisition NSR is capped at $60 million.

On October 2, 2018, the Company announced that it was in default of its Lease with Option to Purchase Agreement with Placer Mining.

The default arose as a result of missed lease and operating cost payments, totalling $400,000, which were due at the end of September and on October 1, 2018.

As per the Agreement, the Company had 15 days, from the date notice of default was provided (September 28, 2018), to remediate the default by making the outstanding payment.

While Management worked with urgency to resolve this matter, Management was ultimately unsuccessful in remedying the default, resulting in the lease being terminated.

On November 13, 2018, the Company announced that it was successful in renewing the lease, effectively with the original Agreement intact, except that monthly payments are reduced to $60,000 per month for 12 months, with the accumulated reduction in payments of $140,000 per month (“deferred payments”) being accrued.

As at June 30, 2020, the Company has accrued for a total of $1,847,300 (June 30, 2019 - $1,373,000), which is included in accounts payable.

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

On October 22, 2019, the Company signed a further amendment to the Agreement.

The key terms of this amended agreement are as follows:

* The lease period has been extended for an additional period of nine months to August 1, 2020, with the option to extend for a further 6 months based upon payment of a 1 time $60,000 extension fee (extended subsequent to June 30, 2020, see note 18).

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

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

The purchase price also includes the negotiable EPA costs of $20 million.

The amended lease 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 one-time, non-refundable 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.

In addition to the payments to Placer Mining, and pursuant to an agreement with the United States Environmental Protection Agency (“EPA”) whereby for so long as Bunker leases, owns and/or occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the current owner in satisfaction of the EPA’s claim for cost recovery.

These payments, if all are made, will total $20 million.

The agreement calls for payments starting with $1 million 30 days after a fully ratified agreement was signed followed by a payment schedule detailed below:

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Mining interests (continued)

Bunker Hill Mine Complex (continued)

Hill Mine Complex

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”).

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”).

Under 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 24-month lease commenced November 1, 2017.

During the term of the lease, the Company was to make

$ 100,000 monthly mining lease payments, paid quarterly.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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 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

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 one-time, non-refundable 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.

This extension

expires on August 1, 2022 .

November 20, 2020, the Company signed a further amendment to the Amended Agreement.

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 , 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.

the Company recorded a gain on settlement of accounts payable of $ 1,787,300 ;

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

purchase right, the advance payment of $ 2,000,000 will be repaid to the Company within twelve months from the date of such election.

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.

As at December 31, 2021 and 2020, the Company

accrued for a total of $nil for each year (June 30, 2020 - $ 1,847,300 ), which was included in accounts payable.

These monthly payments

will be waived should the Company choose to exercise its option.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

of the Bunker Hill Mine:

December 2021, the Company announced its intention to purchase the mine complex, which was consummated subsequent to the close

of the period.

With the execution of the EPA settlement agreement amendment described below and the expected receipt of $ 8,000,000

proceeds from the Royalty Convertible Debenture,

the Company has contracted to purchase the Bunker Hill Mine from Placer Mining Corp.

and a definitive agreement has been signed by both

The terms of the purchase were modified to a purchase price of $ 7,700,000 , with $ 300,000 of previous lease payments and a

deposit of $ 2,000,000 applied to the purchase, resulting in cash paid at closing of approximately $ 5,400,000

in cash, from $ 3,400,000

of cash and $ 2,000,000

of common shares in the Company.

of the mine consists of over 400 patented mining claims and 5,800

acres of private land.

of the transaction occurred in January 2022, concurrent with funding of the Royalty Convertible Debenture, approval of the transaction

by Placer Mining Corp.

shareholders, and satisfaction of other closing conditions.

See Note 16, Subsequent Events.

Environmental

Protection Agency Agreement:

addition to the payments to Placer Mining described above, 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:

Schedule of Payments for Mining

Within 30 days of the effective date

6 unchanged sentences

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 costs of maintaining the water treatment facility that treats the water being discharged from the Bunker Hill Mine.

Of these, the December 1, 2018, and June 1, 2019 payments were not made, totalling $960,000 outstanding.

The Company is having discussions with the EPA to amend and defer these payments.

The Company has included all unpaid EPA payments in accounts payable and accrued liabilities amounting to $5,960,000 (June 30, 2019 - $2,560,000).

total unpaid EPA cost recovery payments under the agreement was $ 11,000,000 at December 31, 2021 (December 31, 2020 - $ 8,000,000 and

June 30, 2020 - $ 5,000,000 , respectively).

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

The Company also has received invoices from the EPA for additional water treatment charges for the periods from December 2017

to May 2021, and has accrued costs for estimated water treatment costs through December 31, 2021.

A total of $ 5,110,706

was outstanding as at December 31, 2021 (December

31, 2020 - $ 3,136,050

and June 30, 2020 - $ 2,309,388 ,

respectively).

In December 2021, the Company entered into a Settlement Amendment, described below, under which a payment of $ 2,963,111

would be made toward

water treatment liabilities, representing the balance of liabilities owed for the 2020 and earlier invoices, net of payments made

through the end of September 2021.

In consultation with the EPA, the Company has committed to meet this obligation by 180 days from the

effective date of the Amended Settlement Agreement.

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

on investments of the EPA Hazardous Substance Superfund, which was 0.10 %

at December 31, 2021.

As at December 31, 2021, the interest accrued on the unpaid EPA balance was $ 306,502

(December 31, 2020 - $ 162,540

and June 30, 2020 - $ 89,180 ,

respectively).

the year ended December 31, 2021, the Company has accrued an estimate for additional water treatment charges based on an invoice received

covering the period of November 2019 to October 2020 and a further invoice covering the period of November 2020 to May 2021.

believes that the charges in this latter invoice, of approximately $ 165,000

per month, represent the best estimate of unbilled

charges for the period of June 2021 to December 2021, and has accrued for these charges accordingly.

Net of a total of $ 880,000

cash payments made to the EPA during the year,

the total accrual for EPA water treatment charges is $ 5,110,706

as of December 31, 2021, before consideration

of unpaid cost recovery payments.

The Company has included all unpaid and accrued EPA payments and accrued interest in accounts payable

and accrued liabilities, totaling $ 16,417,208

due to the EPA at December 31, 2021 (December

31, 2020 - $ 11,298,594

and June 30, 2020 - $ 7,915,235 ,

respectively).

For the year ended December 31, 2021, water treatment costs of $ 5,998,615 were recognized as part of exploration expense

(six months ended December 31, 2020 – $ 3,873,359 , year ended June 30, 2020 – $ 5,905,235 ).

Settlement Agreement Amendment:

December 2021, in conjunction with its intention to purchase the mine complex, the Company entered into an amended Settlement Agreement

(the “Amendment”) between the Company, Idaho Department of Environmental Quality, US Department of Justice and the EPA,

modifying the payment schedule and payment terms for recovery of historical environmental response costs at Bunker Hill Mine incurred

With the purchase of the mine subsequent to the end of the period, the remaining payments of the EPA cost recovery liability

would be assumed by the Company, resulting in a total of $ 19,000,000

liability to the Company, an increase of

$ 8,000,000 .

The new payment schedule includes a $ 2,000,000

payment to the EPA within 30 days of execution

of this amendment, which was paid subsequent to December 31, 2021.

The remaining $ 17,000,000

will be paid on the following dates:

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Schedule of Payments for Mining

November 1, 2024

November 1, 2025

November 1, 2026

November 1, 2027

November 1, 2028

November 1, 2029

$ 2,000,000 plus accrued interest

resumption of payments in 2024 were agreed in order to allow the Company to generate sufficient revenue from mining activities at the

Bunker Hill Mine to address remaining payment obligations from free cash flow.

addition to the cost recovery payments outlined above, the Amendment includes payment for outstanding water treatment costs that have

been incurred over the period from 2018 through October 2020.

This approximately $ 2,900,000

payment would be made within 90 days

of the execution of the Amendment.

On March 22, 2022, the Company reported that in consultation with the EPA, it has committed to

meet the approximately $ 2,900,000 and Financial Assurance obligations by 180 days from the effective date of the Amended Settlement Agreement.

The changes in payment

terms and schedule, are contingent upon the Company securing Financial Assurance in the form of performance bonds or letters of credit

deemed acceptable to the EPA totaling $ 17,000,000 .

These assurances correspond to the Company’s cost recovery obligations to be paid in 2024 through 2029 as outlined above.

Should the Company fail to make its scheduled payment, the EPA can draw against this financial assurance.

The amount of the bonds or

letters of credit will decrease over time as individual payments are made.

If the Company fails to post the Final Financial Assurance

within 180 days of the execution of the Amendment, the terms of the original agreement as described above will be reinstated.

at December 31, 2021, the Company had not secured the interim financial assurance, and therefore the contingency had not been removed

or satisfied.

Further, as of the date of this filing, the financial assurance has not been secured, and as a result, the liability to

the EPA is accounted for with no effectivity of the Amendment, with the liabilities each reflected as current liabilities.

Subsequent Events.

Convertible loan payable

On June 13, 2018, the Company entered into a loan and warrant agreement with Hummingbird Resources PLC (“Hummingbird”), an arm’s length investor, for an unsecured convertible loan in the aggregate sum of $1,500,000, bearing interest at 10% per annum, maturing in one year.

Contemporaneously, the Company agreed to issue 229,464 share purchase warrants, entitling the lender to acquire 229,464 common shares of the Company, at a price of C$8.50 per share, for two years.

Under the terms of the loan agreement, the lender may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of the Company at a price per share equal to C$8.50.

In the event that a notice of conversion would result in the lender holding 10% or more of the Company’s issued and outstanding shares, then, in the alternative, and under certain circumstances, the Company would be required to pay cash to the lender in an amount equal C$8.50 multiplied by the number of shares intended to be issued upon conversion.

Further, in the event that the lender holds more than 5% of the issued and outstanding shares of the Company subsequent to the exercise of any of its convertible securities held under this placement, it shall have the right to appoint one director to the board of the Company.

Lastly, among other things, the loan agreement further provides that for as long as any amount is outstanding under the convertible loan, the investor retains a right of first refusal on any Company financing or joint venture/strategic partnership/disposal of assets.

In August 2018, the amount of the Hummingbird convertible loan payable was increased to $2 million from its original $1.5 million loan, net of $45,824 of debt issue costs.

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

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.

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

Under the terms of the Amended and Restated Loan Agreement, Hummingbird may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of Bunker as follows:

(i) $1,500,000, being the original principal amount (“Principal Amount”), the Principal Amount may be converted at a price per share equal to C$8.50;

(ii) 229,464 common shares may be acquired upon exercise of warrants at a price of C$8.50 per warrant for a period of two years from the date of issuance;

(iii) $500,000, being the additional principal amount (“Additional Amount”), may be converted at a price per share equal to C$4.50;

and (iv) 116,714 common shares may be acquired upon exercise of warrants at a price of C$4.50 per warrant for a period of two years from the date issuance.

In the event that Hummingbird would acquire common shares in excess of 9.999% through the conversion of the Principal Amount or Additional Amount, including interest accruing thereon, or on exercise of the warrants as disclosed herein, the Company shall pay to Hummingbird a cash amount equal to the common shares exercised in excess of 9.999%, multiplied by the conversion price.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Convertible loan payable (continued)

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

This was accounted for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment of $1,195,880.

In June 2019, the Company settled $100,000 of the Additional Amount by issuing 2,660,000 shares, which resulted in the recording of a net loss on loan extinguishment of $8,193.

In February 2020, the Company settled $300,000 of the Additional Amount by issuing 696,428 shares, which resulted in the recording of a net loss on loan extinguishment of $9,407.

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

An extension of the loan is being negotiated and the loan has not been repaid.

The Company has accounted for the conversion features and warrants in accordance with ASC Topic 815.

The conversion features and warrants are considered derivative financial liabilities as they are convertible into common shares at a conversion price denominated in a currency other than the Company’s functional currency of the US dollar.

The estimated fair value of the conversion features and warrants was determined on the date of issuance and marks to market at each financial reporting period.

At June 30, 2020, the fair value of the conversion features were estimated using the Binomial model to determine the fair value of conversion features using the following assumptions:

Principal Amount

June 30, 2019

June 30, 2020

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Additional Amount

June 30, 2019

June 30, 2020

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Convertible loan payable (continued)

The fair value of the warrants were estimated using the Binomial model to determine the fair value of the derivative warrant liabilities using the following assumptions:

Principal Amount

June 30, 2019

June 30, 2020

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Additional Amount

June 30, 2019

June 30, 2020

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Accretion expense for the year ended June 30, 2020 was $146,266 (year ended June 30, 2019 - $734,589) based on effective interest rate of 16% after the loan extension.

Interest expense for the year ended June 30, 2020 was $179,726 (year ended June 30, 2019 - $198,219).

As at June 30, 2020, the Company has an outstanding interest payable of $381,233 (June 30, 2019 - $201,507).

Balance, June 30, 2018

Proceeds on issuance

Debt issue costs

Conversion feature valuation

Warrant valuation

Accretion expense

Loss on loan extinguishment

Partial extinguishment

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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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

This was accounted

for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment of $ 1,195,880 .

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

of a net loss on loan extinguishment of $ 8,193 .

February 2020, the Company settled $ 300,000 of the Additional Amount by issuing 696,428 common shares, which resulted in the recording

of a net loss on loan extinguishment of $ 9,407 .

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.

As a result, the Company recorded a gain on debt settlement of $ 23,376 on the consolidated

statements of loss and comprehensive loss.

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 marks to market at each financial reporting period.

As at December 31, 2020, the fair values

of the conversion feature and warrants were $nil (June 30, 2020 - $nil).

expense for the six months ended December 31, 2020 was $ nil (year ended June 30, 2020 - $ 146,266 ) based on an effective interest rate

of 16 % after the loan extension.

expense for the six months ended December 31, 2020 was $ 118,767 (year ended June 30, 2020 - $ 179,726 ).

As at December 31, 2020, the Company

has an outstanding interest payable of $ nil (June 30, 2020 - $ 381,233 ).

Schedule of Convertible Loan Outstanding Interest Payable

Balance, June 30, 2019

3 unchanged sentences

Balance, June 30, 2020

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Loan extinguishment

( 1,600,000 )

Balance, December 31, 2020

Promissory notes payable

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

The note is unsecured, bears 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.

On 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.

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.

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 .

The warrants expire on November 13, 2021 .

This was accounted for as a loan modification.

The 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 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:

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

(C$ 288,000 ), which included interest payable of $ 28,939 , in full by issuing 822,857 August 2020 Units (as defined in note 10), recognizing

a loss on debt settlement of $ 335,467 .

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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.

Schedule of Fair Value of Derivative Warrant Liability Assumptions

November 2019 issuance

December 31, 2020

November 13, 2021

June 30, 2020

Expected life

3 unchanged sentences

April 2020 issuance

April 24, 2020

June 30, 2020

December 31, 2020

November 13, 2021

Expected life

2 unchanged sentences

Change in derivative liability

Accretion expense for the year ended June 30, 2020 was $155,001 (year ended June 30, 2019 - $nil) based on effective interest rate of 11% after the loan extension.

Interest expense for the year ended June 30, 2020 was $22,700 (year ended June 30, 2019 - $nil).

As at June 30, 2020, the Company has an outstanding interest payable of $22,700 (June 30, 2019 - $nil).

expense for the year ended December 31, 2021 was $ nil compared to $ 51,522 for the six months ended December 31, 2020 and $ 155,001 for

the year ended June 30, 2020 based on an effective interest rate of 16 % after the loan extension.

expense for the year ended December 31, 2021 was $ nil compared to $ 5,600 for the six months ended December 31, 2020 and $ 22,700 for the

year ended June 30, 2020.

Schedule of Promissory Notes Outstanding Interest Payable

Balance, June 30, 2019

3 unchanged sentences

Balance, June 30, 2020

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Promissory notes payable (continued)

(ii) On December 31, 2019, the Company issued a promissory note in the amount of $82,367 (C$107,000).

The note bears no interest and is due on demand.

This promissory note has been repaid.

(iii) On January 29, 2020, the Company issued a promissory note in the amount of $75,727 (C$100,000).

The note bears no interest and is due on demand.

This promissory note has been repaid.

(iv) On 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.

The note bears no interest is due on demand after 90 days after the issue date.

Subsequent to June 30, 2020, C$288,000 was settled by shares and the remaining balance was repaid in full.

Accretion expense for the year ended June 30, 2020 was $41,453 (year ended June 30, 2019 - $nil) based on effective interest rate of 7%.

(v) On 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.

The note bears no interest is due on demand after 90 days after the issue date.

The promissory note was settled in full by shares issued subsequent to June 30, 2020 (see note 18).

Accretion expense for the year ended June 30, 2020 was $16,547 (year ended June 30, 2019 - $nil) based on effective interest rate of 8%.

(vi) On June 30, 2020, the Company issued a promissory note in the amount of $75,000 ($103,988), net of $15,000 of debt issue costs.

The note bears no interest and is due on demand.

The promissory note was repaid in full subsequent to June 30, 2020.

Financing cost for the year ended June 30, 2020 was $15,000 (year ended June 30, 2019 - $nil).

(vii) On June 30, 2020, the Company issued a promissory note in the amount of $75,000 ($103,988) to a director of the Company.

The note bears no interest and is due on demand.

The promissory note was repaid in full subsequent to June 30, 2020.

Financing cost for the year ended June 30, 2020 was $15,000 (year ended June 30, 2019 - $nil).

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Accretion expense

Debt settlement

Balance, December 31, 2020

On December 31, 2019, the Company issued a promissory note in the amount of $ 82,367 (C$ 107,000 ).

The note bore no interest and was due

This promissory note was repaid during the year ended June 30, 2020.

On January 29, 2020, the Company issued a promissory note in the amount of $ 75,727 (C$ 100,000 ).

The note bore no interest and was due

This promissory note was repaid during the year ended June 30, 2020.

On 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.

note 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 six months ended December 31, 2020 was $ 47,737 (year ended June 30, 2020 - $ 41,453 )

based on effective interest rate of 7 %.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

On 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.

note 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 (see note 10).

As a result, the Company recorded a loss on debt

settlement of $ 291,203 on the consolidated statements of loss and comprehensive loss.

Accretion expense for the six months ended December

31, 2020 was $ 19,129 (year ended June 30, 2020 - $ 16,547 ) based on an effective interest rate of 8 %.

On 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 six months ended December 31, 2020 was $ nil (year ended June 30, 2020 - $ 15,000 ).

On 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

six months ended December 31, 2020 was $ nil (year ended June 30, 2020 - $ 15,000 ).

On July 13, 2020, the Company issued a promissory note in the amount of $ 1,200,000 , net of $ 360,000 debt issue costs.

The note bore no

interest and was due on August 31, 2020.

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

cost for the six months ended December 31, 2020 was $ 360,000 (year ended June 30, 2020 - $ nil ).

On September 22, 2021, the Company issued a non-convertible promissory note in the amount of $ 2,500,000

bearing interest of 15 %

per annum and payable at maturity.

The promissory note was scheduled to mature on the earlier of March

however, the note holder agreed

to accept $ 500,000

payment by April 15, 2022, and the remaining

principal and interest was deferred to June 20, 2022.

See Note 16 Subsequent Events concerning a financing anticipated to close on March

The Company purchased a land parcel

for approximately $ 200,000

subsequent to December 31, 2021,

which may be used as security for the promissory note.

Interest expense for the year ended December 31, 2021 was $ 102,740 ,

which is reflected in Interest payable on the Company’s balance sheet at December 31, 2021.

Project Finance Package

December 20, 2021, the Company executed a non-binding term sheet with Sprott Resource Streaming and Royalty (“SRSR”) and

other investors outlining a $ 50,000,000

project finance package that the Company expects

to fulfill the majority of its funding requirements to restart the mine and reach commercial production in mid-2023.

The package consists

of an $ 8,000,000

Royalty Convertible Debenture, a $ 5,000,000

Convertible Debenture, and a multi-metals stream of up to $ 37,000,000

(collectively, the “Stream”).

to settlement of definitive documentation with SRSR, the $ 8,000,000

was advanced under the Royalty Convertible Debenture

in January 2022.

These proceeds funded the purchase of the Bunker Hill Mine and near-term working capital requirements, including a $ 2,000,000

payment to the EPA in January 2022.

Convertible Debenture will initially bear interest at an annual rate of 9.0 %,

payable in cash or shares at the Company’s option, until such time that SRSR elects to convert it into a Royalty, with such conversion

option expiring at the earlier of advancement of the Stream or 18 months.

In the event of conversion, the Royalty Convertible Debenture

will cease to exist and the Company will grant a Royalty for 1.85 %

of life-of-mine gross revenue from mining claims considered to be historically worked, contiguous to current accessible underground development,

and covered by the Company’s 2021 ground geophysical survey.

A 1.35% rate will apply to claims outside of these areas.

Convertible Debenture will initially be secured by a share pledge of the Company’s operating subsidiary, until such time that a

full security package is put in place.

In the event of non-conversion, the principal of the Royalty Convertible Debenture will be repayable

to settlement of definitive documentation with SRSR and other investors, the $ 5,000,000

was increased to $ 6,000,000 ,

and was advanced under the Convertible Debenture, also in January 2022.

These proceeds will fund capital expenditures and working capital

requirements in Q1 2022.

The Convertible Debenture will bear interest at an annual rate of 7.5 %,

payable in cash or shares at the Company’s option, and a maturity of 18 months from the closing of the Royalty Convertible Debenture.

Until the closing of the Stream, the Convertible Debenture is convertible into shares of the Company at a share price of CAD 0.30

Alternatively, SRSR may elect to retire

the Convertible Debenture with the cash proceeds of the Stream.

The Company may elect to re-pay the Convertible Debenture early;

elects not to exercise its conversion option at such time, a minimum of 12 months of interest would apply.

to SRSR internal approvals, further technical and other diligence (including confirmation of full project funding by an independent engineer

appointed by SRSR), and satisfactory definitive documentation, the Company expects to close the Stream concurrent with a formal construction

decision being made by Q2 2022.

A minimum of $ 27,000,000

and a maximum of $ 37,000,000

(the “Stream Amount”) will be

made available under the Stream, at the Company’s option, once the conditions for availability of the Stream have been satisfied.

Assuming the maximum funding of $37,000,000

is drawn, the Stream would apply to 10% of payable metals sold until a minimum quantity of metal is delivered consisting of, individually,

55 million pounds of zinc, 35 million pounds of lead, and 1 million ounces of silver.

the Stream would apply to 2% of payable metals sold.

If the Company elects to draw less than $37,000,000 under the Stream, the

percentage and quantities of payable metals streamed will adjust pro-rata.

The delivery price of streamed metals will be 20% of the applicable

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Company may buy back 50% of the Stream Amount at a 1.40x multiple of the Stream Amount between the second and third anniversary of

the date of funding, and at a 1.65x multiple of the Stream Amount between the third and fourth anniversary of the date of funding.

The Company will be permitted to incur additional indebtedness of $ 15,000,000 and

a cost over-run facility of $ 13,000,000 from

other financing counterparties.

Royalty Convertible Debenture and Convertible Debenture closed subsequent to the end of the year.

See Note 16 Subsequent

In support of plans to rapidly restart the Mine,

the Company worked systematically through 2020 and 2021 to delineate mineral resources and conduct various technical studies.

this strategy may require securing additional financing, which may include additional indebtedness of $ 15,000,000 and a cost over-run

facility of $ 13,000,000 .

Lease liability

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

Below is a summary of the Company's lease liability as of June 30, 2020:

Balance, June 30, 2019

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

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

December 31, 2021:

Schedule of Operating Lease Liability

Balance, December 31, 2019

Interest expense

1 unchanged sentence

Foreign exchange gain

Balance, June 30, 2020

current portion

Long-term lease liability

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

Balance, December 31, 2020

Interest expense

Lease payments

Foreign exchange loss

Balance, December 31, 2021

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

Schedule of Lease Obligations

Less than 1 year

Additional rent

The monthly rental expenses are offset by rental income obtained through a series of subleases held by the Company.

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

Capital stock, warrants and stock options

The total authorized capital is as follows:

total authorized capital is as follows:

common shares with a par value of $ 0.000001 per common share;

preferred shares with a par value of $ 0.000001 per preferred share

On May 23, 2019, the Company affected a consolidation of its issued and outstanding share capital on the basis of one (1) post-consolidation share for each ten (10) pre-consolidation common shares, which has been retrospectively applied in these consolidated financial statements.

On July 19, 2019, the Company amended its articles of incorporation to change the total authorized capital and the par values, which have been retrospectively applied in these consolidated financial statements.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

Issued and outstanding

In August 2018, the Company closed a private placement, issuing 160,408 Units to Gemstone 102 Ltd.

(“Gemstone”) at a price of C$4.50 per Unit, for gross proceeds of C$721,834 ($549,333) and incurring financing costs of $25,750.

Each Unit entitles Gemstone to acquire one common share (“Unit Share”) and one common share purchase warrant (“Unit Warrant”), with each Unit Warrant entitling Gemstone to acquire one common share of the Company at a price of C$4.50 for a period of three years.

Prior to the issuance of the Units, Gemstone held 400,000 common shares of the Company and 200,000 warrants (“Prior Warrants”) exercisable at a price of C$20.00 per share.

Immediately prior to closing, the Prior Warrants were early terminated by mutual agreement of the Company and Gemstone.

Upon issuance of the 160,408 Units to Gemstone, Gemstone beneficially owns or exercises control or direction over 560,408 common shares of the Company.

Assuming exercise of the Unit Warrants, Gemstone would hold 720,816 of the outstanding common shares of the Company.

Gemstone’s participation in the Offering constitutes a "related party transaction"

under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").

Given the urgent need to secure financing to meet the new lease obligations, Bunker’s Board approved an equity private placement of Units to be sold at C$0.75 per Unit with each Unit consisting of one common share and one common share purchase warrant.

On November 28, 2018, the Company closed on a total of 645,866 Units for gross proceeds of C$484,400 ($365,341) and incurring financing costs of $10,062, with each purchase warrant exercisable into a Common Share at C$1.00 per Common Share for a period of thirty-six months.

On June 27, 2019, the Company closed the first tranche ("First Tranche") of a non-brokered private placement, issuing 11,660,000 units ("June 2019 Unit") at a price of C$0.05 per June 2019 Unit for gross proceeds of C$583,000 ($436,608) and incurring financing costs of $19,640.

Each June 2019 Unit consists of one common share of the Company and one common share purchase warrant ("June 2019 Warrant").

Each whole June 2019 Warrant entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years.

As a part of the First Tranche, Hummingbird Resources PLC ("Hummingbird") has acquired 2,660,000 June 2019 Units for C$133,000 ($100,000) which was applied to reduction of the principal amount owing under the convertible loan facility (see note 8).

On August 1, 2019, the Company closed the second and final tranche ("Tranche Two") of the non-brokered private placement, issuing 6,042,954 units ("August 2019 Units") at C$0.05 per August 2019 Unit for gross proceeds of C$302,148 ($228,202) and incurring financing costs of $36,468.

Each August 2019 Unit consists of one common share of the Company and one common share purchase warrant, which entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years.

The Company also issued 16,962,846 August 2019 Units to settle $640,556 of debt at a deemed price of C$0.09 based on the fair value of the shares issued.

As a result, the Company recorded resulting in loss on debt settlement of $858,495.

On August 23, 2019, the Company closed the first tranche (the "First Tranche") of the non-brokered private placement, issuing 27,966,002 common shares of the Company at C$0.05 per share for gross proceeds of C$1,398,300 ($1,049,974) and incurring financing costs of $28,847.

The Company also issued 2,033,998 common shares to settle $77,117 of debt at a deemed price of C$0.18 based on the fair value of the shares issued.

As a result, the Company recorded a loss on debt settlement of $197,800.

On August 30, 2019, the Company closed the second and final tranche (the "Second Tranche") of the non-brokered private placement, issuing 1,000,000 common shares at C$0.05 per share for gross proceeds of C$50,000 ($37,550).

On 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 share for gross proceeds of C$1,675,000 ($1,256,854) and incurring financing costs of $16,067 and 239,284 broker warrants.

July 19, 2019, the Company amended its articles of incorporation to change the total authorized capital and the par values, which have

been retrospectively applied in these consolidated financial statements.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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 8).

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

Issued and outstanding (continued)

On May 12, 2020, the Company closed a non-brokered private placement, issuing 107,143 common shares of the Company at C$0.56 per share for gross proceeds of C$60,000 ($44,671).

During the year ended June 30, 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.

As at June 30, 2020, the Company received cash proceeds of $549,363 for a private placement that closed subsequent to June 30, 2020 (see note 18).

For 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 US dollar.

The estimated fair value of warrants accounted for as liabilities was determined on the date of issue and marks to market at each financial reporting period.

The change in fair value of the warrant is recorded in the consolidated statement of operations and comprehensive loss as a gain or loss and is estimated using the Binomial model.

The fair value of the warrant liabilities related to the various tranches of warrants issued during the 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, 2020:

August 2019 issuance

August 1, 2019

June 30, 2020

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 7).

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.

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 in the consolidated statements of loss 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 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, “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 $ 154,630

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.

change in fair value of the warrant is recorded in the consolidated statement of operations and comprehensive loss as a gain or loss

and is estimated using the Binomial model.

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 December 31, 2021:

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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

February 2021 issuance

February 9 and 16

December 31, 2021

Expected life

1 unchanged sentence

Dividend yield

$ 0.27 and $ 0.29

Change in derivative liability

$ ( 329,358 )

The warrant liabilities as a result of the December 2017, August 2018, November 2018, and June 2019 private placements were revalued as at June 30, 2020 and June 30, 2019 using the Binomial model and the following assumptions:

December 2017 issuance

June 30, 2019

June 30, 2020

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

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

August 2020 issuance

December 31, 2020

December 31, 2021

Expected life

2 unchanged sentences

Change in derivative liability

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

Issued and outstanding (continued)

$ ( 7,703,052 )

August 2018 issuance

June 30, 2019

June 30, 2020

December 31, 2020

December 31, 2021

Expected life

3 unchanged sentences

November 2018 issuance

June 30, 2019

June 30, 2020

December 31, 2020

December 31, 2021

Expected life

2 unchanged sentences

Change in derivative liability

June 2019 issuance

June 30, 2019

June 30, 2020

June 2019 issuance (i)

December 31, 2020

December 31, 2021

Expected life

2 unchanged sentences

Change in derivative liability

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

$ ( 1,371,346 )

(i) During the six

months ended December 31, 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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

August 2019 issuance (ii)

December 31, 2020

December 31, 2021

Expected life

213 - 1,826 days

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 2,744,785 )

(ii) During the six

months ended December 31, 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.

Schedule of Warrant Activity

exercise price

Balance, June 30, 2019

Exercised (i)

( 2,332,900 )

Balance, June 30, 2020

(i) During the year 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.

December 5, 2020

December 13, 2020

August 9, 2021

November 28, 2021

June 27, 2021

August 1, 2021

November 13, 2021

August 1, 2021

Balance, December 31, 2020

( 4,359,174 )

Balance, December 31, 2021

(i) During the year

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 .

(ii) During the six

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

2025 for 3,315,200 finder’s warrants.

As a result, the Company recognized stock-based compensation of $ 210,839 , which is included

in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

December 31, 2021, the following warrants were outstanding:

Schedule of Warrants Outstanding Exercise Price

February 26, 2022

August 31, 2023

December 31, 2025

February 9, 2026

February 16, 2026

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

Stock options

The following table summarizes the stock option activity during the years ended June 30, 2020:

stock options

the year ended December 31, 2021, 160,408 August 2018 warrants expired, 2,752,900 August 2019 warrants expired, 645,866 November 2018

warrants expired, 400,000 November 2019 warrants expired, and 400,000 April 2020 loan extension warrants expired.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

December 31, 2021, the following broker options were outstanding:

Schedule of Broker Options

exercise price

Balance, June 30, 2020

Issued - August 2020 Compensation Options

Balance, December 31, 2020

Issued – February 2021 Compensation Options

Balance, December 31, 2021

(i) The grant date

fair value of the August 2020 and February 2021 Compensation Options were estimated at $ 521,993 and $ 68,078 , respectively, using the

Black-Scholes valuation model with the following underlying assumptions:

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

interest rate

Dividend yield

February 2021

Schedule of Warrants Outstanding Broker Option Exercise Prices

broker options

Fair value ($)

August 31, 2023 (i)

February 16, 2024 (ii)

(i) Exercisable into

one August 2020 Unit

(ii) Exercisable into

one February 2021 Unit

following table summarizes the stock option activity during the year ended December 31, 2021, the six months ended December 31, 2020

and the year ended June 30, 2020:

Schedule of Stock Options

exercise price

stock options

Balance, June 30, 2019

Granted (i)(ii)

Balance, June 30, 2020

(i) On September 27, 2018, 43,750 fully-vested stock options were issued to a consultant to whom C$350,000 was due and payable and reflected in accrued liabilities at September 30, 2018.

These options had a 5-year life and were exercisable at C$8.00 per share.

On October 3, 2018, these options were exercised in full, with consideration received being the liability already on the Company’s books, extinguishing the liability in full.

The grant date fair value of the options was estimated at $43,893.

The vesting of these options resulted in stock-based compensation of $nil for the year ended June 30, 2020 (year ended June 30, 2019 - $43,893), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(ii) 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.

Granted (iii)(iv)

Balance, December 31, 2020

Balance, December 31, 2021

(i) 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 .

The vesting of these options resulted in stock-based compensation of $309,211 for the year ended June 30, 2020 (year ended June 30, 2019 - $nil), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(iii) 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 topions were estimated at $1,536,764.

The vesting of these options results in stock-based compensation of $162,855 (year ended June 30, 2019 - $nil), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

The fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following underlying assumptions:

The vesting of these options resulted

in stock-based compensation of $ 50,909 for the year ended December 31, 2021, $ 74,949 for the six months ended December 31, 2020 and $ 309,211

for the year ended June 30, 2020, which is included in operation and administration expenses on the consolidated statements of loss and

comprehensive loss.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

(ii) 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 $ 531,925 for the year ended December 31, 2021, $ 403,456 for the six months ended December 31,

2020 and $ 162,855 for the year ended June 30, 2020, which is included in operation and administration expenses on the consolidated statements

of loss and comprehensive loss.

(iii) 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 $ 32,651 for the year ended December 31, 2021, $ 20,259 for the six months ended December 31, 2020, and $ nil for the year ended June

30, 2020, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(iv) On October 30,

2020, 235,000 stock options were issued to a former director.

Each stock option entitles the holder to acquire one common share of the

Company at an exercise price of C$ 0.50 .

The stock options vested immediately and expire on December 31, 2022 .

The grant date fair value

of the options was estimated at $ 46,277 .

The vesting of these options resulted in stock-based compensation of $ 46,277 for the six months

ended December 31, 2020, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive

February 19, 2021, 1,037,977

options were issued to an officer of the Company, of which 273,271

options vested immediately and the balance of 764,706

options vested on December 31, 2021.

These options have a 5 -year

life and are exercisable at C$ 0.335

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 $ 204,213

the year ended December 31, 2021, which is included in operation and administration expenses

on the consolidated statements of income (loss) and comprehensive income (loss).

fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following

underlying assumptions:

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

Risk free interest rate

Dividend yield

Weighted average life

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

Stock options (continued)

The following table reflects the actual stock options issued and outstanding as of June 30, 2020:

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

Schedule of Stock Option Issued and Outstanding

Weighted average

1 unchanged sentence

fair value ($)

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Restricted share units

Effective March 25, 2020, the Board of Directors approved a Restricted Share Unit ("RSU") Plan to grant grant RSUs to its officers, directors, key employees and consultants.

The following table summarizes the RSU activity during the years ended June 30, 2020:

Unvested as at June 30, 2018 and June 30, 2019

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 year ended December 31, 2021, the six months ended December 31, 2020, and the

year ended June 30, 2020:

Schedule of Restricted Share Units

Unvested as at June 30, 2019

Granted (i)(ii)

Unvested as at June 30, 2020

(i) 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 and expire in 5 years.

The vesting of these RSUs results in stock-based compensation of $17,384 (year ended June 30, 2019 - $nil), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(ii) 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 and expire in 5 years.

The vesting of these RSUs results in stock-based compensation of $8,274 (year ended June 30, 2019 - $nil), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

Granted (iii)(iv)

Unvested as at December 31, 2020

( 1,516,299 )

Unvested as at December 31, 2021

(i) On April 14, 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 resulted in stock-based compensation of $ 71,829 for the year ended December 31, 2021, $ 55,135

for the six months ended December 31, 2020, and $ 23,073 for the year ended June 30, which is included in operation and administration

expenses on the consolidated statements of loss and comprehensive loss.

(ii) 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 resulted in stock-based compensation of $ 24,659 for the year ended December 31, 2021, $ 18,703

for the six months ended December 31, 2020, and $ 7,217 for the year ended June 30, 2020, which is included in operation and administration

expenses on the consolidated statements of loss and comprehensive loss.

(iii) 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 resulted in stock-based compensation of $ 30,510 for the year ended December 31, 2021, and

$ 3,998 for the six months ended December 31, 2020, which is included in operation and administration expenses on the consolidated statements

of loss and comprehensive loss.

(iv) 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 resulted in stock-based compensation of $ 58,740 for the year ended December 31, 2021, and $ 29,304 for the six months ended

December 31, 2020, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive

January 1, 2021, the Company granted 735,383

RSUs to a consultant of the Company.

RSUs vested immediately with the remaining RSUs vesting in one twelfth increments per month.

During the year ended 2021, a total of 490,258

RSUs vested, and in July 2021, the consultant forfeited the remaining 245,125

unvested RSUs, resulting in a reversal of share-based compensation of $ 64,870 .

The vesting of these RSUs resulted in stock-based

compensation of $ 199,542

for the year ended December 31, 2021, which is included in operation and administration expenses on the consolidated statements of

loss and comprehensive loss.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

(vi) On July 1, 2021,

the Company granted 17,823 RSUs to a consultant of the Company, vesting immediately.

The vesting of these RSUs resulted in stock-based

compensation of $ 4,026 for the year ended December 31, 2021, which is included in operation and administration expenses on the consolidated

statements of loss and comprehensive loss.

(vii) On August 5, 2021,

the Company granted 595,228 RSUs to consultants of the Company, vesting immediately.

The vesting of these RSUs resulted in stock-based

compensation of $ 100,022 for the year ended December 31, 2021, which is included in operation and administration expenses on the consolidated

statements of loss and comprehensive loss.

Deferred share units

Effective 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.

Upon 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.

The following table summarizes the DSU activity during the years ended June 30, 2020:

Unvested as at June 30, 2018 and June 30, 2019

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 years ended December 31, 2021 and 2020:

Schedule of Deferred Share Units

Unvested as at June 30, 2019

( 1,875,000 )

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

( 1,875,000 )

Unvested as at December 31, 2021

(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.

The vesting of these DSUs results in stock-based compensation of $549,664 (year ended June 30, 2019 - $nil), which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

The DSUs vest in one fourth increments

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

During the year ended December

31, 2021, the Company recognized $ 421,284 stock-based compensation related to the DSUs (six

months ended December 31, 2020 - $ 560,461 and the year ended June 30, 2020 - $ 549,664 ), which

is included in operation and administration expenses on the consolidated statements of loss

and comprehensive loss.

The fair value at December 31, 2021 was $ 1,531,409

Commitments and contingencies

As stipulated by the agreements with Placer Mining as described in note 7, the Company is required to make monthly payment of $60,000 for care and maintenance and a lease extension fee of $60,000.

Including the previously accrued payments, a total of $1,847,300 is payable until the Company decides to acquire the mine at which time these payments will be waived.

As stipulated in the agreement with the EPA and as described in note 7, the company is required to make payments to the EPA.

As at June 30, 2020, $5,960,000 payable to the EPA has been included in accounts payable and accrued liabilities.

The 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 subleases held by the Company.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

As at June 30, 2020 and 2019, the Company had no accrued interest and penalties related to uncertain tax positions.

stipulated by the agreements with Placer Mining as described in note 6, the Company is required to make a monthly payment of $ 60,000

for care and maintenance for the mine, up

to the date of acquisition.

stipulated in the agreement with the EPA and as described in Note 6, the Company is required to make two types of payments to

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

The EPA invoices the Company on an annual basis for the actual

water treatment costs, which may exceed the recognized estimated costs significantly.

When the Company receives the water treatment invoices,

it records any liability for actual costs over and above any estimates made, and adjusts future estimates as required based on these

actual invoices received.

The Company is required to pay for the actual costs regardless of the periodic required estimated accruals

and payments made each year.

As at December 31, 2021, $ 16,417,208

payable to the EPA has been included in accounts

payable and accrued liabilities (December 31, 2020 - $ 11,298,594

and June 30, 2021 – $ 7,915,235 ,

respectively).

An amended agreement has been signed

to modify the payment amounts and terms to settle amounts outstanding under the original agreement.

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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

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 September 3, 2021, the plaintiff responded to the motion to dismiss and

agreed that Placer Mining should be dismissed for lack of jurisdiction.

The Company, as well as other named defendants, filed replies

in support of the motions to dismiss and argued that Placer Mining is an indispensable party and with dismissal of Placer Mining the

lawsuit should be dismissed.

The US District Court has not ruled on the motions to dismiss but the Company believes the motion to dismiss

will be granted and the lawsuit dismissed.

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 acid mine drainage (“AMD”) in the Crescent Mine.

The plaintiff has

requested unspecified damages.

On September 20, 2021, the Company filed a motion to dismiss Crescent’s claims against it, contending

that such claims are facially deficient.

On March 2, 2022, Chief US District Court Judge, David C.

Nye granted in part and denied

in part the Company’s motion to dismiss.

The court granted the Company’s motion to dismiss Crescent’s Cost Recovery

claim under CERCLA Section 107(a), Declaratory Judgment, Tortious Interference, Trespass, Nuisance and Negligence claims.

were dismissed without prejudice.

The court demined the motion to dismiss filed by Placer Mining Corp.

for Crescent’s trespass,

nuisance and negligence claims.

If Crescent seeks to amend its complaint, it must do so within 30 days of the court’s judgement

on March 2, 2022.

The Company believes Crescent Mining LLC’s lawsuit against Placer Mining Corp.

is without merit and intends to

defend Placer Mining Corp.

vigorously pursuant to the Company’s indemnification of Placer Mining Corp in the Sale and Purchase

agreement executed between the companies for Bunker Hill Mine on December 15, 2021.

Company believes the claims in both lawsuits, as they relate to Bunker Hill, are without merit and intends to defend them vigorously.

at December 31, 2021, December 31, 2020, and June 30, 2020, the Company had no accrued interest and penalties related to uncertain tax

The income tax provision differs from the amount of income tax determined by applying the U.S.

federal and state income tax rates of 26.9% (2019 - 26.9%) to pretax loss from operations for the years ended June 30, 2020 and 2019 due to the following:

federal tax rate of 21.0 %

(December 31, 2020 – 21.0%)

pretax loss from operations for the periods ended December 31, 2021 and December 31, 2020 and year ended June 30, 2020 due to the following:

Schedule of Income Tax Provision

Loss before income taxes

Expected income tax recovery

Other permanent difference

( 1,344,478 )

( 6,577,576 )

Change in estimates in respect of prior periods

Change in tax rate

Change in fair value of derivative liability

State and local taxes, net of federal benefit

Share issuance costs

Stock based compensation

Loss on loan extinguishment

Change in valuation allowance

Deferred tax assets and the valuation account are as follows:

tax assets and the valuation account are as follows:

Schedule of Deferred Tax Assets

Deferred tax asset:

Net operating loss carry forward

Net operating loss carry forwards

Mineral interest purchase option

Other deferred tax assets

Valuation allowance

( 17,886,174 )

( 14,115,010 )

( 14,832,531 )

Unrealized foreign exchange loss

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

Schedule of Components of Deferred Tax Assets and Liabilities

Deferred tax asset:

Non-capital losses carried forward

Net operating loss carryforwards

Lease liabilities

Deferred tax liabilities:

Convertible debt

Unrealized foreign exchange gain

Right of use assets and lease obligations

Net deferred tax asset

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As of June 30, 2020, and 2019, the Company has an unused net operating loss carry-forward balance of $23,735,515 and $20,842,829, respectively, that is available to offset future taxable income.

The US non-capital loss carryforwards generated before 2018 expire between 2031 and 2037.

The losses generated after 2018 do not expire.

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2020, 2019, 2018, 2017, 2016, 2015, 2014, and 2013.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

potential income tax benefit of these losses has been offset by a full valuation allowance.

of December 31, 2021, December 31, 2020 and June 30, 2020, the Company has an unused net operating loss carryforward balance of $ 26,356,908 ,

and $ 19,775,710 ,

respectively, that is available to offset future taxable income.

net operating loss carryforwards generated before 2018 expire between 2031 and 2037.

The losses generated in 2018 and later tax years

do not expire.

Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly

increase or decrease within the next 12 months.

tax years that remain subject to examination by major taxing jurisdictions are those for the year ended December 31, 2021, period

ended December 31, 2020 and years ended June 30, 2020, 2019, 2018, 2017, 2016, 2015, and 2014.

Related party transactions

During the year ended June 30, 2020, John Ryan (Director and former CEO) billed $51,500, Wayne Parsons (Director and CFO) billed $136,045, Hugh Aird (Director) billed $9,774, Richard Williams (Director and Executive Chairman) billed $134,927, and Sam Ash (President and CEO) billed $60,000 for services to the Company.

At June 30, 2020, $121,161 is owed to Mr.

Williams and $60,000 is owed to Mr.

Ash with all amounts included in accounts payable and accrued liabilities.

Financial instruments

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 years ended June 30, 2020 and 2019.

Foreign currency risk

Foreign 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 dollar.

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

Concentration of credit risk

Concentration 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.

The Company places its cash and cash equivalents with financial institutions of high credit worthiness.

At times, its cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

Liquidity risk

Liquidity 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.

Bunker Hill Mining Corp.

Notes to Consolidated Financial Statements

Years Ended June 30, 2020 and 2019

(Expressed in United States Dollars)

During the year ended December 31, 2021, John Ryan (Director and former CEO) billed $ nil (six months ended December 31, 2020 - $ 13,500 ,

year ended June 30, 2020 - $ 51,500 , respectively) for consulting services to the Company.

During the year ended December 31, 2021, Wayne Parsons (Director and former CFO) billed $ 120,127

(six months ended December 31, 2020 - $ 71,390 ,

year ended June 30, 2020 - $ 136,045 ,

respectively) for consulting services to the Company.

During the year ended December 31, 2021, Hugh Aird (former Director) billed $ nil (six months ended December 31, 2020 - $ 18,223 , year

ended June 30, 2020 - $ 9,774 , respectively) for consulting services to the Company.

During the year ended December 31, 2021, Richard Williams (Director and Executive Chairman) billed $ 179,605 (six

months ended December 31, 2020 - $ 78,201 ,

year ended June 30, 2020 - $ 134,927 ,

respectively) for consulting services to the Company.

At December 31, 2021, $ 108,719

Williams (December 31, 2020 - $ 45,000

June 30, 2020 - $ 121,161 ,

respectively) with all amounts included in accounts payable and accrued liabilities.

the six months ended December 31, 2020, the Company issued 214,286 August 2020 Units at $ 0.67 to settle $ 56,925 of debt owed to Mr.

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

The promissory

note has been repaid in full.

See Note 8(vii).

During the year ended December 31, 2021, the Company incurred $ 250,000 in payroll expense for Sam Ash (President and CEO) (six

months ended December 31, 2020 - $ 125,000 ,

year ended June 30, 2020 - $ 60,000 ,

respectively) for services to the Company.

At December 31, 2021, $ 62,500 is payable and included in accrued liabilities.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2021, Six Months Ended December 31, 2020 and Year Ended June 30, 2020

in United States Dollars)

the six months ended December 31, 2020, the Company issued 77,143 August 2020 Units at a deemed price of $ 0.67 to settle $ 20,000 of debt

During the year ended December 31, 2021, Pam Saxton (Director) billed $ 37,669

(six months ended December 31, 2020 - $ 7,000 ,

year ended June 30, 2020 - $nil) for consulting services to the Company.

During the year ended December 31, 2021, Cassandra Joseph (Director) billed $ 37,494 (six months ended December 31, 2020 - $ 11,290 , year

ended June 30, 2020 - $ nil ) for consulting services to the Company.

During the six months ended December 31, 2020, the Company issued 300,000 August 2020 Units at a deemed price of $ 0.67 to settle $ 77,696

(C$ 105,000 ) of debt owed to a shareholder of the Company.

(ix) During the year ended December 31, 2021,

the Company incurred $ 276,315 in payroll expense for David Wiens (CFO) (six months ended December 31, 2021, $nil, year ended June 30,

2020 - $nil) for services to the Company.

At December 31, 2021, $ 108,335 is payable, including reimbursable expenses, and included in accrued liabilities.

During the year ended December 31, 2021, 1,037,977

stock options were issued to Mr.

Wiens, of which 273,271 stock options vested immediately and the balance of 764,706 stock options vested

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 $ 204,213 for the year ended

December 31, 2021.

Subsequent events

On July 15, 2020 the Company has entered into a loan agreement with an arm’s length third party for an unsecured loan facility of $1,200,000 (the “July 2020 Loan”) due August 31, 2020.

As consideration for the July 2020 Loan, the Company has agreed to pay the lender a one-time origination fee of $360,000.

The Company repaid the July 2020 Loan in full on maturity.

On August 12, 2020, the Company announced that it has extended the lease with Placer Mining for further 18 months for a $150,000 extension fee, in addition to the 6 month extension available for a $60,000 extension fee (see note 7).

This extension expires on August 1, 2022.

On August 14, 2020, the Company closed the first tranche of the brokered private placement of units of the Company ("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 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 (“August 2020 Warrant”) a common share of the Company at C$0.50 per common share of the Company until August 31, 2023.

In connection with the first tranche, the Company paid cash compensation of C$739,455 and issued 2,112,729 compensation options ("August 2020 Compensation Options").

Each compensation option is exercisable into one August 2020 Unit until August 31, 2023.

On 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 C$7,303,352.

In connection with the second tranche, the Company paid cash compensation of C$314,512 and issued 1,127,178 August 2020 Compensation Options.

The Company also issued 2,205,714 August 2020 Units to settle $772,000 of debt.

the approval of the transaction by Placer Mining Corp.

shareholders and satisfaction of other closing conditions, the purchase of the

Bunker Hill Mine closed on January 7, 2022.

Concurrently, definitive documentation and all closing conditions were met for the $ 8,000,000

Royalty Convertible Debenture.

The Royalty Convertible Debenture funds the purchase of the Bunker Hill Mine, a $ 2,000,000

payment to the EPA, and near-term

working capital requirements.

$ 8,000,000 Royalty Convertible Debenture will initially bear interest at an annual rate of 9.0 % payable in cash or Common Shares

at the Company’s option, until such time that SRSR elects to convert to a royalty, with such conversion option expiring at the

earlier of advancement of the Stream or 18 months.

In the event of conversion, the Royalty Convertible Debenture will cease to exist

and the Company will grant a royalty for 1.85 % of life-of-mine gross revenue from mining claims considered to be historically worked,

contiguous to current accessible underground development, and covered by the Company’s 2021 ground geophysical survey.

rate will apply to claims outside of these areas.

The Royalty Convertible Debenture will initially be secured by a share pledge of

the Company’s operating subsidiary, Silver Valley, until such time that a full security package is put in place.

the event of non-conversion, the principal of the Royalty Convertible Debenture will be repayable in cash.

January 2022, the Company also closed the

$ 6,000,000 Convertible Debenture , which was increased from a previously-announced

$ 5,000,000 .

The Convertible Debenture funds near-term working capital requirements, mine

development, and the advancement of its Prefeasibility Study, including engineering studies for the demobilization and construction of

the Pend Oreille Process Plant at Bunker Hill.

The $ 6,000,000

Convertible Debenture will initially bear interest at an annual rate of 7.5 %,

payable in cash or shares at the Company’s option, and a maturity of 18 months from the closing of the Royalty Convertible Debenture.

Until the closing of the Stream, the Convertible Debenture is convertible into Common Shares at a price of C$ 0.30

per Common Share, subject to stock exchange approval.

Alternatively, SRSR

may elect to retire the Convertible Debenture with the cash proceeds from the Stream.

The Company may elect to repay the Convertible

Debenture early;

if SRSR elects not to exercise its conversion option at such time, a minimum of 12 months of interest would apply.

On January 7, 2022, the

Company closed the purchase of the Bunker Hill Mine.

See Note 6 Mining Interests.

Mine assets were purchased for $ 7,700,000 ,

with $ 300,000

of previous lease payments and a deposit of $ 2,000,000

applied to the purchase, resulting in cash paid at closing of approximately $ 5,400,000 .

The EPA obligation of $ 19,000,000

was assumed by Bunker Hill as part of the acquisition.

The restructuring of the EPA Settlement payment stream under the

Amendment does not occur unless and until the Company puts the financial assurances in place.

On March 22, 2022, the Company reported

that in consultation with the EPA, it has committed to meet the approximately $ 2,900,000

and Financial Assurance obligations by 180 days from the effective date of the Amended Settlement Agreement.

On January 31, 2022, the Company entered into

a non-binding Memorandum of Understanding (“MOU”) with Teck Resources Limited (“Teck”) for the purchase of

a comprehensive package of equipment and parts inventory from its Pend Oreille site (the “Pend Oreille Process Plant”) in

eastern Washington State.

package comprises substantially all processing equipment of value located at the site, including complete crushing, grinding and flotation

circuits The MOU outlines a purchase price under two scenarios,

at Teck’s option:

an all-cash $ 2,750,000

purchase price, or a $ 3,000,000

purchase price comprised of cash and Bunker Hill shares.

Each option includes a $ 500,000

non-refundable deposit, which has been paid by the Company subsequent to the end of the year.

On March 7, 2022, the Company announced

the signing of an Asset Purchase agreement for the purchase of the Pend Oreille Process Plant.

Closing of the transaction remains subject

to certain conditions, including payment of the remaining purchase price by May 15, 2022.

On March 3, 2022, the Company closed the purchase

of a 225-acre surface land parcel for a cash payment of approximately $ 200,000 .

March 9, 2022, the Company entered into an agreement with a syndicate of agents led by Echelon Wealth Partners Inc.

(collectively, the

“Agents”), which have agreed to act as agents for and on behalf of the Company, on a commercially reasonable “best

efforts” agency basis, without underwriter liability, in connection with a proposed private placement (the “Offering”)

of up to C$ 15,000,000

of special warrants of the Company (the “Special Warrants”) which

will entitle the holders to receive up to 50,000,000

units of the Company at a price of C$ 0.30

(the “Issue Price”) per Special Warrant, subject to adjustment

in certain events.

Special Warrant shall be exercisable, for no additional consideration and with no further action on the part of the holder thereof, into

one unit (each, a “Unit”) of the Company, subject to adjustment described below, on the earlier of:

(i) the third business

day after the date upon which both (A) a receipt for a (final) prospectus (the “Qualification Prospectus”) qualifying the

distribution of the Units issuable upon exercise of the Special Warrants has been issued by the applicable securities regulatory authorities

in the Canadian jurisdictions in which purchasers of the Special Warrants are resident (the “Canadian Jurisdictions”), and

(B) the registration statement (the “Registration Statement”) of the Company filed with the Securities and Exchange Commission

(the “SEC”) registering the Units issuable upon exercise of the Special Warrants has been declared effective by the SEC;

and (ii) the date that is six months following the Closing Date , which is expected to close on March 31, 2022.

Unit will consist of one common share of the Company (a “Common Share”) and one common share purchase warrant (each whole

common share purchase warrant, a “Warrant”).

Each Warrant will entitle the holder to acquire one Common Share for C$ 0.37

for a period of 36 months following the Closing Date.

The Warrants shall also be exercisable on a cashless basis in the event the Registration

Statement has not been made effective by the SEC prior to the date of exercise.

In the event that a receipt for the Qualification Prospectus

has not been obtained and the Registration Statement has not been deemed effective on or before 5:00 p.m.

(EST) on the date that is 60

days following the Closing Date, each unexercised Special Warrant will thereafter entitle the holder thereof to receive, upon the exercise

thereof, at no additional cost , 1.1 Units (instead of one Unit).

Company has also granted to the Agents an option (the “Agents’ Option”) which shall allow the Agents to sell up to

an additional 15.0 % of the Special Warrants sold pursuant to the Offering at the Issue Price.

The Agent’s Option may be exercised

in whole or in part as determined by the Agents upon written notice to the Company at any time up to 48 hours prior to the Closing Date.

In consideration for their services, subject to the terms of the agreement with the Agents and adjustments in certain circumstances,

the Agents will receive a cash commission equal to 6.0 % of the gross proceeds of the Offering (including the Agents’ Option), and

shall be issued that number of compensation options (the “Compensation Options”) as is equal to 6.0 % of the number of Special

Warrants sold pursuant to the Offering (including the Agents’ Option).

Each Compensation Option shall be exercisable to acquire

one Unit at the Issue Price for a period of 24 months from the closing date of the Offering, subject to adjustment in certain events.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective September 2, 2014, the Company appointed the firm of MNP, LLP, Chartered Professional Accountants, as the Company’s principal independent accountant to audit the Company’s financial statements.

The Company has had no disagreements with its accountants, that would require disclosure pursuant to Item 304 of Regulation S-K.

September 2, 2014, the Company appointed the firm of MNP, LLP, Chartered Professional Accountants, as the Company’s principal independent

accountant to audit the Company’s financial statements.

The Company has had no disagreements with its accountants that would require

disclosure pursuant to Item 304 of Regulation S-K.

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-K

Item 8. Financial Statements and Supplementary Data