Bunker Hill Mining Corp. 10-K

ITEM 2. PROPERTIES Office Space Effective June 1, 2017, the Company has a lease agreement for office space at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4. The 5-year lease provides for a monthly base rent of CDN$12,964 for the first two years, increasing to CDN$13,504 per month for years three through five. The Company has signed sub-leases with other companies that cover 100% of the monthly lease amount. The Bunker Hill Mine The Mine is one of the most well-known base metal and silver mines in American history. Initial discovery and development of the Mine property began in 1885, and from that time until the Mine closed in 1981, it produced over 35.8 million tons of ore at an average mined grade of 8.76% lead, 4.52 ounces per ton silver, and 3.67% zinc, which represented 162Moz of silver, 3.16M lbs. of lead and 1.35M lbs. of zinc (Bunker Limited Partnership, 1985). Throughout the 95-year operating history of the mine, there were over 40 different orebodies discovered and mined, consisting of lead-silver-zinc mineralization. Although known for its significant lead and zinc production, 45-50% of the Net Smelter Value of its historical production came from its silver. The Company and Sullivan Mining Company had a strong history of regular dividend payments to shareholders from the time the Company went public in 1905 until it was acquired in a hostile takeover by Gulf Resources in 1968. When the Mine first closed in 1981, it was estimated to still contain significant resources (Bunker Limited Partnership, 1985). The Mine and Smelter Complex were closed in 1981 when Gulf Resources was not able to continue to comply with new regulatory structures brought on by the passage of environmental statutes and as then enforced by the EPA. The Bunker Hill Lead Smelter, Electrolytic Zinc Plant and historic milling facilities were demolished about 25 years ago, and the area became part of the “National Priority List” for cleanup under EPA regulations, thereby pausing development of the Mine for over 30 years. The cleanup of the old smelter, zinc plant, and associated sites has now been completed and the Mine is now poised for development and an eventual return to production. The Company has been in contact with government officials and other local stakeholders who have expressed strong support and cooperation for the Company in its efforts to return the mine to a productive, modern and sustainable mining asset. 19 Geology and Mineralization Geology The Coeur d’Alene Mining District is one of the most prolific mining districts in North America. It has been in constant production since its discovery in the 1880s, historically is the second largest silver-producing area in the world, and is one of the largest zinc and lead producers, as well. Over 100 mines historically have reached commercial production in the District, which currently hosts two major mines, the Lucky Friday/Gold Hunter owned by Hecla Mining Company, and the Galena Mine, owned by America’s Silver. A number of other mines including the Sunshine, the Crescent, and the Coeur Mine have the potential to be re-started should silver prices rise sufficiently to justify reactivation. The geology of the Silver Valley district occurs within the Precambrian meta-sedimentary rocks of the Belt-Purcell Supergroup, a Middle Proterozoic sedimentary basin occurring primarily in western Montana, Idaho and Southeastern British Columbia. In the Coeur d’Alene region these comprise a 21,000’ thick sequence of clastic, (argillites, siltites, and quartzites) and carbonate sedimentary rocks. These rocks have been metamorphosed and strongly deformed by compressional tectonics during the Sevier Orogenic event of the cretaceous age. Following this, later in the cretaceous age, the Bitterroot Lobe of the Idaho Batholith was emplaced to the south of the Coeur d’Alene district which was accompanied by dike emplacement. The mining district lies within the west-central part of a regional tectonic lineament known as the Lewis and Clark line, a major fault system, consisting of numerous faults that display strike slip, normal and reverse movements over a protracted geological history. The Bunker Hill deposit occurs within the Revett and St Regis formations of the Ravalli Group, with the quartzites and siltites of the Middle Revett formation dominating. Most significant, and the common host to the larger Bunker Hill ore bodies is the M2 Unit of the Middle Revett formation, which is the thickest and most continuous quartzite package in the formation. The Mine area lies on the north limb of an anticline fold in these rocks, which establishes a west-northwest to northeast trend for bedding planes. With the axis of this anticline inclined southwesterly, the formations on the north limb dip steeply upright to the northwest or are overturned steeply to the south or southwest. The structural features that dominate the broad framework in which the Mine is located are the Osburn Fault to the North, which has a right-lateral offset of several miles bringing the older Prichard formation rocks opposite the mine formations, the Alhambra Fault to the east, and the large Anticline to the west and south. The structure of the Bunker Hill deposits is associated with this anticline and are hosted by the fold-generated fractures and brecciation in the quartzite beds created in the hinge and near-hinge limbs of the broad flexure. Fold-associated elements include sphalerite-pyrite-siderite filled reverse shears, replacement mineralization of stratiform-like fabric composed of both sphalerite and galena, and principally sphalerite replacement as fine “crackle breccia” and irregular dense soaking. The development of these various fabrics appears to be dependent on location relative to the hinge, lithology of the host unit, and the stratigraphic horizon in the Revett formation Mineralization Mineralization is hosted by parallel mesothermal veins related to metamorphic/hydrothermal events that sourced metals from the Belt sediments. This consists of wide veins with variable proportions of sphalerite, galena and tetrahedrite in either a quartz or siderite gangue. The individual deposits that form the Mine are numerous and relatively large with strike lengths up to 900 ft (274 m) with plunge lengths up to 3,000 ft (914 m) with many open at depth. Wall rock alteration associated with veining consists of changes in carbonate mineralogy plus sulfidation and silicification. Pyritization of wall rocks is locally strong. Bleached halos resulting from destruction of hematite by hydrothermal fluids are also characteristic. The mineralization is partly oxidized to a depth of approximately 1,800 ft (549 m). There are three distinct types of mineralization at the Mine: ● The NW trending Bluebird mineral zones are zinc rich and consist of sphalerite in excess of galena with variable amount of pyrite in a gangue of greyish quartz and minor siderite. This mineralized material is commonly localized in smaller parasitic folds, broken by reverse shears (Meyer, 1982). ● The Jersey type mineral bodies consist principally of veins containing galena with lesser amounts of sphalerite, chalcopyrite and tetrahedrite (Meyer, 1981). These NE to N trending veins are referred to as “link” veins as they extend between the NW trending Cate and Dull faults, or other faults in the mine. Gangue minerals are primarily white quartz with lesser siderite. ● “Hybrid” mineral bodies comprise the third type and are associated with zones of brecciation located at the junctions of major faults. These are multi-stage systems where “Bluebird” type fracture zones were reopened and brecciated prior to flooding by galena from the newly opened “link” veins. The galena penetrated and partially replaced the previous minerals and filled remaining open spaces (Meyer, 1981). 20 Many of the deposits, and especially those of the Bluebird system, may have originally comprised a parallel set of only four or five persistent fracture sets. However, extremely complex post-mineralization shearing has segmented and displaced the deposits. Mine and Mill Operations Starting with the original Bunker Hill and Sullivan claims, the Mine eventually encompassed 620 patented mining claims totaling 6,200 acres. From the discovery cuts some 3600 feet above sea level, over 20 major ore zones were mined to nearly 1600 feet below sea level, a vertical distance of about one mile. Four major mining methods were historically employed in the Mine. The oldest is square set or cut and fill. These methods employ support of the stope where the vein is mined with sets of timbers and/or rock bolts, and then sand-fill is pumped from the surface as the mining activity moves to a higher elevation. The broken ore was scraped into chutes by compressed air powered slushers and dropped into ore pockets on the level below. The second method called shrink stoping is similar to the above, but no ground support is required. Instead, the broken ore is used as both ground support and a mining floor and the full mining cut is completed prior to withdrawing the ore from the stope. Air powered slushers or compressed air operated mucking machines on rubber tires were historically used. A third mining method is known as room and pillar mining. In this operation, no timber is required but pillars of ore are left in place as supports until the stoping moves to a higher elevation, at which time sand fill is pumped in to provide the floor for the next cut. As the ore is broken, rubber tired, compressed air operated mucking machines picked it up putting it into a box on the back of the loader. It was then transported to a chute in the stope where it dropped into the ore pocket on a lower level. The fourth method is sublevel blasthole stoping. Diesel powered equipment cuts horizontal slices every forty feet in the ore zones. Then long holes are drilled in the pillars between horizontal slices. The holes are blasted allowing the ore to fall to the bottom slice and scooped up by diesel powered loaders and transported to ore passes. This method was used above the Kellogg Tunnel, and ore was transported by gravity to the tunnel and hauled out by train to the surface. From the ore pockets on the various levels of the mine below the Kellogg Tunnel, ore trains powered by battery driven locomotives transported the ore to ore pockets located at the shaft. In the shaft, large steel buckets, called skips, were loaded and hoisted to the Kellogg Tunnel level where the ore was dumped into two large concrete bins. Drawn from these storage areas by gravity, the ore was next transported two miles to the surface in 22-car ore trains pulled by trolley and diesel locomotives. Blasthole stoping, cut and fill, and shrinkage stoping methods are likely to be employed in the re-start of the Mine. The main improvement and productivity gain over historic operations will be the widespread use of rubber-tired equipment, which will be used for mucking and transport of the broken mineralized material. The upper part of the Mine is largely already developed with ramps, which will be used by the Company for rubber-tired access. Most of these ramps were completed by the Bunker Hill Company and ramp expansion also occurred during the BLP mine reopening. Company engineers have already inspected many portions of the ramp system in the upper part of the Mine and the ramps are generally in very good shape and will only require minor repair and clean-up. Historically, the Mine ore was milled in the milling facility located approximately 2,000 yards from the main Kellogg Tunnel portal and the concentrate was treated at the nearby smelting and refining complex, which was located approximately one mile to the west of the mill. The milling facility and smelting complex have all been razed and remediation of these sites has been largely completed. An existing water treatment plant, the CTP, which was originally built by the Bunker Hill Company remains in operation and is operated by the EPA through a local contractor. This plant has received numerous upgrades and capacity improvements in the last twenty-five years. All mine water which is discharged from the Mine has been treated by the EPA during the ownership of the mine by Placer Mining. 21 Index of Geologic and Mining Terms TERM DEFINITION Argillite A fine-grained sedimentary rock composed predominantly of indurated muds and oozes. Breccia A rock composed of broken fragments of minerals or rock cemented together by a fine-grained matrix, which can be either similar to or different from the composition of the fragments. Chalcopyrite A major ore mineral containing copper, iron, and sulfur. Cretaceous A geologic period from 145 to 65 million years ago. Dikes A type of sheet intrusion referring to any geologic body that cuts discordantly across rock structures. Galena The natural mineral form of lead sulfide. Hydrothermal Relating to or produced by hot water, especially water heated underground by the Earth’s internal heat. Mineral A mineral is a naturally occurring solid chemical substance having characteristic chemical composition, highly ordered atomic structure, and specific Mineralization The act or process of mineralizing. Ore Mineralized material that can be mined and processed at a positive cash flow. Oxidized A process whereby the sulfur in a mineral has been removed and replaced by oxygen. Pyrite A very common sulfide mineral consisting of iron and sulfur found in a wide variety of geological occurrences. Commonly known as “Fools Gold” Quartzite A hard metamorphic rock which was originally sandstone Silicification A hydrothermal or metamorphic process involving the introduction of, alteration to, or replacement by silica. Sphalerite A mineral containing zinc and sulfur. Sulfides Sulfide minerals are a class of minerals containing sulfur with sulfide (S 2− ) as the major anion. Tetrahedrite A sulfosalt mineral containing copper, antimony, and sulfur. Completed Work and Future Development Plans Mineral Resources and Exploration Concurrent with the digitization work, and since March 2020, the Company has been working systematically to bring a number of mineralized zones into accordance with NI 43-101 through drilling and channel sampling of the open stopes. This work focused upon the mineralization that is closest to the existing infrastructure and above the current water-level. In doing so, the Company’s first objective was to validate in accordance with NI 43-101 standards up to 9 million tons of primarily zinc ore contained within the UTZ, Quill and Newgard Ore Bodies. This was conducted between April and July 2020, and involved over 9,000 feet of drilling from Underground and extensive sampling from the many open stopes above the water-level. These zones could provide the majority of the early feed if the Company were to achieve a re-start of the Mine. On September 28, 2020, the Company announced its maiden mineral resources estimate consisting of a total of 8.9 million tons in the Inferred category, containing 11 million ounces of silver, 880 million pounds of zinc, and 410 million pounds of lead, which represented the result of the Company’s extensive drilling and sampling efforts conducted between April and July 2020. Following the program as described above, through February 2021 the Company conducted approximately 10,000 feet of additional drilling, primarily focused on expanding and upgrading its maiden mineral resources estimate in support of its intention to target a rapid re-start of the Mine, as announced on November 12, 2020. On March 19, 2021, the Company announced an updated mineral resources estimate consisting of a total of 4.4 million tons in the Indicated category, containing 3.0 million ounces of silver, 487 million pounds of zinc, and 176 million pounds of lead; and a total of 5.6 million tons in the Inferred category, containing 8.3 million ounces of silver, 548 million pounds of zinc, and 312 million pounds of lead. Further details regarding the Company’s mineral resources as noted above, including estimation methodologies, can be found in the news releases dated September 28, 2020, and March 19, 2021 on EDGAR, SEDAR and the Company’s website www.bunkerhillmining.com. It should be noted that mineral resources as stated above, including those delineated in the Inferred, Measured and Indicated categories, are not mineral reserves as defined by SEC guidelines, and do now show demonstrated economic viability. Due to the uncertainty that may be attached to Inferred mineral resources, it cannot be assumed that all or any part of an Inferred mineral resource will be upgraded to an Indicated or Measured mineral resource as a result of continued exploration. Exploration activities will focus on high-grade lead-silver mineralization targets, in the upper levels of the mine and identified by the data review and digitization process. Consistent with that strategy, on March 19, 2021, the Company announced the identification of a new silver exploration opportunity in the hanging wall of the Cate Fault which it intends to include in its ongoing drilling campaign. 22 On March 29, 2021, the Company announced multiple high-grade silver mineralization results through chip-channel sampling of newly accessible areas of the Mine identified through the Company’s proprietary 3D digitization program, and as part of its ongoing silver-focused drilling program. An area was identified on the 9-level that resulted in ten separate chip samples greater than 900 g/t AgEq (1) , each with minimum 0.6m length. Mineralization remains open up dip, down dip and along strike from the sampling location. The Company also reported drill results including a 3.8m intercept with a grade of 996.6 g/t AgEq (1) , intersected at the down-dip extension of the UTZ zone at the 5-level. The Company will continue to report mineralized drill intercepts concurrent with its ongoing exploration program that is currently envisaged to comprise 10,000 to 12,000 feet in 2021. (1) Prices used to calculate Ag Eq are as follows: Zn=$1.16/lb; Pb=$0.92/lb; and Ag=$20/oz, which are the prices used in the March 2021 technical report On December 29, 2021, the Company filed a technical report entitled “Technical Report And Preliminary Economic Assessment For Underground Milling And Concentration Of Lead, Silver And Zinc At The Bunker Hill Mine, Bunker Hill Mine, Coeur d’Alene Mining District, Shoshone County, Idaho, USA” (the “Technical Report” or “Bunker Hill Technical Report”) in support of the updated MRE that it announced on November 30, 2021 (as described above). This technical report was prepared in accordance with the requirements of the SEC Mining Modernization Rules and NI-43-101 and is filed as an exhibit to the Registration Statement of which this prospectus is a part. On February 25, 2022, the Company announced the filing of an amended technical report for the Bunker Hill Mine to address comments from the Ontario Securities Commission (the “OSC Staff”) as a result of a voluntary application by the Company for a review of its technical disclosure by the OSC Staff. The Amended Technical Report addresses comments requesting clarification, formatting and additional disclosure in a number of areas, including the property description, treatment of historical estimates, and sampling and verification methods. It also includes updated disclosure reflecting the Company’s ownership of the Bunker Hill Mine, which did not become effective until after the December 2021 Technical Report had been published. The Mineral Resource Estimate and financial assumptions in the Preliminary Economic Assessment are unchanged from the December 2021 Technical Report. The Amended Technical Report is titled “Technical Report and Preliminary Economic Assessment For Underground Milling and Concentration of Lead, Silver and Zinc at the Bunker Hill Mine, Coeur d’Alene Mining District, Shoshone County, Idaho, USA”, with an effective date of January 7, 2022. Technical Report Summary The following summary is extracted from the Technical Report filed on February 25, 2022. The following information does not purport to be a complete summary of the Bunker Hill Technical Report, is subject to all the assumptions, qualifications and procedures set out in the Bunker Hill Technical Report and is qualified in its entirety with reference to the full text of the Bunker Hill Technical Report. Each of the authors of the Bunker Hill Technical Report is independent qualified person under NI 43-101 (each a “ Qualified Person ”, and together the “ Qualified Persons ”) and have approved the summary of the Bunker Hill Technical Report below. The effective date of the technical report was January 7, 2022. Summary The Bunker Hill Technical Report describes the mining and processing operations at the Bunker Hill Mine located near the town of Kellogg Idaho, for the Company. The Company has the exclusive rights to acquire 100% ownership of the Bunker Hill Mine. The Bunker Hill Technical Report considers a processing approach at Bunker Hill Mine where lead (“ Pb ”), silver (“ Ag ”) and zinc (“ Zn ”) mineralization is mined and processed entirely underground. Mineralized material would be conventionally milled and then concentrated by flotation of PbAg followed by flotation of ZnAg. Metal rich concentrates could then be sold to smelters in North America or overseas. Mill tailings will be deposited underground in the historic mining voids located throughout the Bunker Hill Mine. The only envisioned surface facilities would be offices, warehouses and loading docks. Highlights of the Bunker Hill Technical Report, including the preliminary economic assessment (“ Technical Report PEA ”), are listed in Table 1-2 and Table 1-3. Table 1-1 lists the Mineral Resource estimate for the Bunker Hill Mine. Mineral Resources are reported according to the CIM Definition Standards of May 10, 2014 (“ CIM ”). The guidance and definitions of CIM are incorporated by reference in NI 43-101. Mineral Resources are geologically constrained and defined at economic cutoff grades that demonstrate reasonable prospects of eventual economic extraction. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. 23 Resource Estimate Geostatistics and estimates of mineralization were prepared by Mr. Scott Wilson, C.P.G., SME. Industry accepted grade estimation techniques were used to develop global mineralization block models for the Newgard, Quill and UTZ zones. The Mineral Resource estimate considers underground mining and mill processing as a basis for reasonable prospects of eventual economic extraction. The total Mineral Resource estimate for the Bunker Hill Mine is listed in Table 1-1 at a cutoff grade of NSR 70 $/ton. Table 1-1 Bunker Hill Mine Mineral Resource Estimate – NSR $70/ton cut off – Ag selling price of $20/oz (troy), Lead selling price of $0.90/lb, Zn selling price of $1.15/lb. Effective date of November 29, 2021) (1) The Qualified Person for the above estimate is Scott Wilson, C.P.G., SME; effective November 29, 2021 (2) Measured, Indicated and Inferred classifications are based on the 2014 CIM Definition Standards. The Company has chosen to no longer classify Mineral Resources as “ZnAg Resources” or “PbAg Resources”, as was done for the Mineral Resource Update effective March 22, 2021 (3) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability (4) Net smelter return (NSR) is defined as the return from sales of concentrates, expressed in US$/t, ie: NSR = (Contained metal) * (Metallurgical recoveries) * (Metal Payability %) * (Metal prices) – (Treatment, refining, transport and other selling costs). For the Mineral Resource Estimate, NSR values were calculated using updated open-cycle metallurgical results including recoveries of 92%, 82% and 88% for Zn, Ag and Pb respectively, and concentrate grades of 54.7% Zn in zinc concentrate, and 59.7% Pb and 14.18 oz/ton Ag in lead concentrate. All other relevant assumptions are as described in Table 16-1 of the Company’s Updated PEA filed on SEDAR on November 3, 2021 (5) The Qualified Person for the above metallurgical data is Deepak Malhotra, SME of Pro Solv LLC Mineral Resources are estimated using a zinc price of $1.15 per pound, silver price of $20.00 per ounce, and lead price of $0.90 per pound. (6) Historic mining voids, stopes and development drifting have been accounted for in the mineral resource estimate (7) Columns may not add up due to rounding Preliminary Economic Assessment The summary of the current projected financial performance of the Bunker Hill Mine is listed in Table 1-2. Sensitivities are summarized in Table 1-3. The preliminary economic assessment is preliminary in nature, and there is no certainty that the reported results will be realized. The Mineral Resource estimate used for the Technical Report PEA includes Inferred Mineral Resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the projected economic performance will be realized. The purpose of the Technical Report PEA is to demonstrate the economic viability of the Bunker Hill Mine, and the results are only intended as an initial, first-pass review of the Bunker Hill Mine economics based on preliminary information. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability . Estimated Bunker Hill production for Life of Mine Metal Pr’ Zinc ($/lb) 1.15 Lead ($/lb) 0.90 Silver ($/oz) 20.00 Mine Plan Ore mined (kt) 6,377 Average annual mineralized material mined (kt) Ill 580 Zinc grade (%) 5.0 % Lead grade (%) 2.8 % Silver grade (oz/t) 1.5 Zinc eq grade (%) (2i 8.7 % Silver eq grade (oz/t) j3i 10.0 Zinc produced - Zn conc (klbs) 591,140 Lead produced - Pb conc (klbs) 323,116 Silver produced - Pb conc (koz) 8,418 Zinc eq produced (klbs) t21 990,416 Silver eq produced (koz) 43) 56,949 Key Cost Met Opex - total ($/t) 62 Sustaining capex ($/t) 10 Cash costs: by-product ($/lb Zn payable) 0.33 AISC: by-product ($/lb Zn payable) 0.47 Cash costs: co-product ($/lb Zn payable) 0.69 AISC: co-product ($/lb Zn payable) 0.77 EBITDA $’000 383,378 Pre-tax free cash flow lsi $’000 284,999 Free cash flow isl $’000 233,310 NPV (5%) 143,471 NPV (8%) 107,790 IRR (%) 35.2 % Payback (years) 2.6 (1) Annualize averages excluded the first and last years of mine life (2) Zinc equivalency calculated using metal prices shown above. (3) Silver equivalency calculated using metal prices shown above. (4) Includes zinc produced in zinc concentrate, lead and silver produced in lead concentrate (5) Life of mine (“ LOM ”) includes initial capital expenditure Note: Cash Cost Includes mining, processing, G&A, smelter charges and freight. 24 Table 1-3 Economic Sensitivity to Zinc Price, Opex and Capex Property Description and Ownership The Bunker Hill Mine is located in the cities of Kellogg and Wardner of Shoshone County, Idaho. On August 17, 2017, Bunker Hill and Placer Mining, entered into a two-year Mining Lease with Option to Purchase (together, the “ Lease ”). The Lease became effective on November 1, 2017. The lease provides that Bunker Hill will operate the Bunker Hill Mine and make certain improvements on the Mine along with making monthly $60,000 payments to Placer Mining over the term of the lease. On November 1, 2019, Bunker Hill and the current owner signed an amendment to its Lease for the Bunker Hill Mine. Under the new amended agreement, the lease period has been extended for an additional period of nine months through August 1, 2020. On July 27, 2020, this Lease was further extended until August 1, 2022. On November 20, 2020, the parties amended the Lease. Under the amended terms, the purchase price was decreased to $7,700,000, with $5,700,000 payable in cash (with an aggregate of $300,000 to be credited toward the purchase price of the Mine as having been previously paid by Bunker Hill and an aggregate of $5,400,000 payable in cash outstanding) and $2,000,000 in common shares of Bunker Hill. Further, under the amendment to the Lease, Bunker Hill was to make an advance payment of $2,000,000 to Placer Mining, which shall be credited toward the purchase price of the Bunker Hill Mine when Bunker Hill elects to exercise its purchase right. Bunker Hill made this advance payment, which had the effect of decreasing the remaining amount payable to purchase the Mine to an aggregate of $3,400,000 payable in cash and $2,000,000 in common shares of Bunker Hill. On January 7, 2022, the Company closed the purchase of the Bunker Hill Mine. 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. Geology and Mineralization The Northern Idaho Panhandle Region in which the Bunker Hill Mine is located is underlain by the Middle Proterozoic-aged Belt-Purcell Supergroup of fine-grained, dominantly siliciclastic sedimentary rocks which extends from western Montana (locally named the Belt Supergroup) to southern British Columbia (locally named the Purcell Supergroup) and is collectively over 23,000 feet in total stratigraphic thickness. Mineralization at the Bunker Hill Mine is hosted almost exclusively in the Upper Revett formation of the Ravalli Group, a part of the Belt Supergroup of Middle Proterozoic-aged, fine-grained sediments. Geologic mapping and interpretation progressed by leaps and bounds following the recognition of a predictable stratigraphic section at the Bunker Hill Mine and enabled the measurement of specific offsets across major faults, discussed in the following section. From an exploration and mining perspective, there were two critical conclusions from this research: all significant mineralized shoots are hosted in quartzite units where they are cut by vein structures, and the location of the quartzite units can be projected up and down section, and across fault offsets, to target extensions and offsets of known mineralized shoots and veins. Mineralization at Bunker Hill Mine falls in four categories, described below from oldest to youngest events: Bluebird Veins (BB): W—NW striking, SW-dipping (Fig. 7-11), variable ratio of sphalerite-pyrite-siderite mineralization. Thick, tabular cores with gradational margins bleeding out along bedding and fractures. Detailed description in Section 7.2.2. Stringer/Disseminated Zones: Disseminated, fracture controlled and bedding controlled blebs and stringer mineralization associated with Bluebird Structures, commonly as halos to vein-like bodies or as isolated areas where brecciated quartzite beds are intersected by the W-NW structure and fold fabrics. Galena-Quartz Veins (GQ): E to NE striking, S to SE dipping (Fig. 7-11), quartz-argentiferous galena +/-siderite-sphalerite-chalcopyrite-tetrahedrite veins, sinuous-planar with sharp margins, cross-cut Bluebird Veins. Detailed description in Section 7.2.2. Hybrid Zones: Formed at intersections where GQ veins cut BB veins (Fig. 7-11), with open space deposition of sulfides and quartz in the vein refraction in quartzite beds, and replacement of siderite in the BB vein structure by argentiferous galena from the GQ Vein. Environmental Studies and Permitting Because the mine is on patented mining claims (privately-owned land), only a limited number of permits are required for mining and milling operations. These relate to: (1) air quality and emissions from crushing, milling and processing and (2) any refurbishment of surface buildings that may require construction permits. The Bunker Hill Mine is located within the Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921). Cleanup activities have been completed in Operable Unit 2 of the Bunker Hill Superfund Site where the mine is located though water treatment continues at the Central Treatment Plant (the “ CTP ”) located near Bunker Hill Mine. The CTP is owned by the EPA and is operated by its contractors. 25 Bunker Hill entered into a Settlement Agreement and Order on Consent with the EPA on May 15, 2018. This agreement limits the Company’s exposure to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) liability for past environmental damage to the mine site and surrounding area to obligations that include: ● Payment of $20,000,000 for historical water treatment cost recovery for amount paid by the EPA from 1995 to 2017. ● Payment of for water treatment services provided by the EPA at the CTP in Kellogg, Idaho until such time that Bunker Hill either purchases or leases the CTP or builds a separate EPA-approved water treatment facility. ● Conducting a work program as described in the Ongoing Environmental Activities section of this study In 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 by the EPA. 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 included a $2,000,000 payment to the EPA within 30 days of execution of this amendment, which was made. The remaining $17,000,000 will be paid on the following dates: Date Amount November 1, 2024 $ 3,000,000 November 1, 2025 $ 3,000,000 November 1, 2026 $ 3,000,000 November 1, 2027 $ 3,000,000 November 1, 2028 $ 3,000,000 November 1, 2029 $ 2,000,000 plus accrued interest The 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. In addition to the cost recovery payments outlined above, the Amendment includes an inital payment for outstanding water treatment costs that have been incurred over the period from 2018 through 2021. This approximately $2,900,000 settlement payment would be made within 90 days of the execution of the Amendment. 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 does not post an Interim Financial Assurance within 90 days of execution of the Amendment, or fail to post the Final Financial Assurance within 180 days of the execution of the Amendment, the terms of the original agreement will be reinstated. As 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. On March 22, 2022, the Company reported that in consultation with the EPA, it has committed to meet the $2,900,000 payment and Financial Assurance obligations by 180 days from the effective date of the Amended Settlement Agreement. Bunker Hill will initiate a full Environmental, Social and Health Impact Assessment for the activities described in this Technical Report PEA and for its business model as a whole in 2021. This study is projected for completion in 2022. Metallurgical Testing RDi initiated metallurgical test work on three samples designated Newgard, Quill and Utz with the primary objective of determining the process flowsheet and the metal recoveries and concentrate grades. The test work is on-going, and the highlights of the results so far indicate the following: ● The composite samples assayed 2.9% to 8.6% Zn, 1.6% to 4.9% Pb and 21 g/mt to 69 g/mt Ag ● The sample had ±66% of sulfur present as sulfide sulfur ● Bond’s ball mill work index for the composite samples ranged from 13.73 to 15.58 thereby indicating the rock to be relatively hard ● Rougher flotation tests indicated that P80 of 150 mesh to 200 mesh was optimum for flotation of desired minerals ● The sequential flotation scheme employed historically is amenable for production of Pb/Ag and Zn concentrates Mining Method Long-hole stoping with fill (LHOS), cut-and-fill and possibly room-and-pillar mining with fill are the only methods viable for sustained operations today. LHOS is the preferred mining method with limited cut-and-fill mining at Bunker Hill Mine. Room-and-pillar mining is not in the current plan. Timbered ground support has been replaced with newer ground support technology of rock bolts, mesh, shotcrete and steel sets as required. Ground conditions are generally good to excellent at Bunker Hill Mine and the rest of the mines in the Silver Valley. Bunker Hill Mine does not have a history of rock burst events that are frequent in the deeper mines to the east. Recovery Methods Historical and on-going current test work at RDi indicates that sequential flotation process can produce marketable-grade Pb/Ag and Zn concentrates. A conceptual process flowsheet was developed based on limited test work, historical plant flowsheet and plants processing similar polymetallic mineralized material. Process flowsheets consist of two-stage crushing to produce a feed of P80 of 0.5 inch for the milling circuit. Material will be ground in a ball mill to P80 of 270 mesh with sodium cyanide and zinc sulfate. Resulting ground slurry will be subjected to rougher flotation of lead and silver minerals using xanthate and MIBC. Concentrates could be reground and cleaned up to three times to produce a lead/silver concentrate. Lead rougher- and first-cleaner tailings will be combined and conditioned with copper sulfate and then pH adjusted, and zinc minerals floated with xanthate and MIBC. Zinc rougher concentrates could be reground and cleaned up to three times to produce marketable zinc concentrate. Current Exploration and Development Bunker Hill has a rare exploration opportunity available at the Bunker Hill Mine and has embarked on a new path to fully maximize the potential. A treasure trove of geologic and production data has been organized and preserved in good condition in the mine office since the shutdown of major mine operations in the early 1980s. This data represents 70+ years of proper scientific data and sample collection, with high standards of accuracy and precision that were generally at or above industry standards at the time. The Company saw the wealth of information that was available but not readily usable and embarked on a scanning and digitizing program. From this they were able to build a 3D digital model of the mine workings and 3D surfaces and solids of important geologic features. To add to this, all of the historic drill core lithology logs and assay data (>2900 holes) was entered into a database and imported with the other data into Maptek Vulcan 3D software. Exploration activities at the Bunker Hill Mine are focused on core drilling to confirm presence of siler-rich mineralization and wide bluebird style mineralization, as well as finding un-mined offset segments of known mineralized structures. 26 Conclusions Bunker Hill continues investment in the advancement of the Bunker Hill Mine through drilling, tunnel refurbishment and technical evaluations both internally and with the assistance of reputable consulting firms. RDA is of the opinion that the current Mineral Resources at Bunker Hill Mine are sufficient to warrant continued planning and effort to explore, permit and develop the Bunker Hill Mine, and that it supports the conclusions herein. RDA is of the opinion that with a historic silver production of over 160 million ounces, silver mineralization should be investigated with vigorous exploration programs. While base metals are a very important component of the Bunker Hill Mine and drilling resources are recommended to be allocated to the further delineation and addition of base metal dominant resource, the recent selling price of silver demands attention. The confirmation drilling program identified intercepts of 10 to 20 ounces per ton of silver. The J vein and Francis stopes hosted high grade silver mineralization and the near-surface historic Caledonia and Sierra Nevada Mines were bonanza grade silver producers in the past. These and other known occurrences of silver must be followed up on to determine that economic silver occurrences exist on the Bunker Hill Mine land package Recommendations Exploration programs should focus on the definition of silver resources. Silver resources that demonstrate the reasonable prospects of eventual economic extraction have been identified within the current mineral resource estimate. Significant silver mineralization encountered through exploration and past production suggests that these zones should be given as much weight as past Pb and Zn exploration and resource definition programs. Metallurgical test work should be completed and the results thoroughly analyzed in order to further refine metallurgical recovery and concentrate grade assumptions, and optimize flowsheet characteristics. Digitization of nearly 100 years of paper maps is nearing completion. In addition to unlocking the understanding of the geometry of the mineral deposit much of the information describes the mined-out portion of the Bunker Hill Mine. This will be critical for future mineral resource estimates as mined out voids need to be accurately defined. Results from the Technical Report PEA indicate that the Bunker Hill Mine may support a Preliminary Feasibility Study. Plant and backfill engineering and metallurgical testing are recommended. Used equipment estimates should also be procured. The Newgard, Quill and UTZ block model portion of the mine was initially scheduled based on a 5.0% zinc cutoff grade (not zinc equivalent) for the June 2021 Restart PEA in the upper majority zinc mineralization. The lower majority lead and silver mineralization used a 5.0% zinc equivalent. This lower section is not included in the block model and represents Bunker Hill Mine records at the time of closure. It is classified as inferred resource. The Newgard, Quill and UTZ block model has been updated with NSR values to better represent actual zinc, lead and silver revenues. The block model NSR valuation change and the majority use of longhole stoping methods are the subject of this report. Additional drilling and mine block modeling should continue to increase the conversion of Inferred to Indicated Resources. Based on the aforementioned, the authors are not recommending successive phases of the work for the advancement of the project. Table 1-4 Proposed Budget for Project Advancement Activity Amount Exploration Drilling (includes labor and assaying) $ 0.50M Metallurgical definition characteristics $ 0.50M Surface Geophysics $ 0.40M Ongoing Digital compilation of historical information $ 0.25M Environmental Studies as part of care and maintenance $ 0.80M Rehabilitation and Infrastructure Improvements $ 1.30M Plant Engineering $ 0.50M Hydraulic Backfill and Tailing Placement Engineering $ 0.25M Mine Rehabilitation, Care and Maintenance $ 0.75M Further details regarding the MRE, including estimation methodologies, can be found in the technical report which is filed as an exhibit to the Registration Statement of which this prospectus is a part. 27 Infrastructure Review The Mine main level is termed the nine level and is the largest level in the Mine. It is connected to the surface by the approximately 12,000-foot-long Kellogg Tunnel. Three major inclined shafts with associated hoists and hoistrooms are located on the nine level. These are the No. 1 shaft, which is used for primary muck hoisting in the main part of the Mine; the No. 2 shaft, which is a primary shaft for men and materials in the main part of the Mine; and the No. 3 Shaft, which is used for personnel, materials and muck hoisting for development in the northwest part of the Mine. The top stations of these shafts and the associated hoistrooms and equipment have all been examined by Company personnel and are in moderately good condition. The Company believes that all three shafts remain in a condition that they are repairable and can be bought back into good working order over the next few years. The water level in the Mine is held at approximately the ten level of the Mine, roughly 200 feet below the nine level. The Mine was historically developed to the 27 level, although the 25 level was the last major level that underwent significant development and past mining. Each level is approximately 200 feet vertically apart. The south-eastern part of the Mine was historically serviced by the Cherry Raise, which consisted of a two-compartment shaft with double drum hoisting capability that ran at an incline up from the nine level to the four level. The central part of the Mine was serviced upward by the Last Chance Shaft from the nine level to the historic three or four level. Neither the Cherry Raise or the Last Chance shaft are serviceable at this time. However, the upper part of the Mine from eight level up to the four level has been developed by past operators by a thorough-going rubber tire ramp system, which is judged to be about 65% complete. The Company has repaired the first several thousand feet of the Russell Tunnel, which is a large rubber-tire capable tunnel with an entry point at the head of Milo Gulch. This tunnel will provide early access to the UTZ Zone, and Quill and Newgard Zones, following ramp and access development. The Company has made development plans to provide interconnectivity of the ramp system from the Russell Tunnel at the four level down to the eight level, with further plans to extend the ramp down to the nine level. Thus rubber-tired equipment will be used for mining and haulage throughout the upper Mine mineral zones, which have already been identified, and for newly found zones. The Kellogg Tunnel will be used as a tracked rail haulage tunnel for supply of personnel and materials into the Mine and for haulage of mined material out of the Mine. Historically, the Kellogg Tunnel was used in this manner when the Mine was producing upwards of 3,000 tons per day of mined material. The Company has inspected the Kellogg Tunnel for its entire length and has determined that significant timbered sections of the tunnel will need extensive repairs. These are areas that intersect various faults passing through the Kellogg Tunnel at normal to oblique angles and create unstable ground. 28 The Company has determined that all of the track, as well as spikes, plates and ties holding the track will need to be replaced, and has started that process in support of the on-going exploration program. Additionally, the water ditch that runs parallel to the track will need to be thoroughly cleaned out and new timber supports and boards that keep the water contained in its path will need to be installed. All new water lines, compressed air lines and electric power feeds will also need to be installed. The total cost estimate for this Kellogg Tunnel work is still in process as of the date hereof, but the time estimate for these repairs is approximately twelve months. Restart Project Update: On March 22, 2022, the Company announced its plans to continue to advance technical studies to a level that will enable a construction decision to be made and a Pre-Feasibility Study (“PFS”) to be published during Q2 2022. The PFS will focus upon mining of Measured and Indicated Resources that maximize cash flow and returns on initial capital invested, leveraging existing infrastructure and the Pend Oreille process plant once it has been relocated to the Bunker Hill site. The Company aims to have the mine in commercial production by the end of 2023, in accordance with the summary timetable shown below. 29 Figure 1: Bunker Hill Planned Development Timeline The technical studies to support both a PFS and a Construction Decision remain on track, with updates to some of the key and supporting activities detailed below: Figure 2: Technical Studies Update Project Work Currently In-Progress Completion % (To PFS) Process Plant Engineering ● GA drawings for processing plant and crushing gallery complete. Multiple simulation exercises have indicated reduced initial construction capital expenditures from PEA estimates. ● Trade-off studies complete. These affirm preference for an underground location for the primary crushing circuit on Level 9, with milling and flotation circuits on surface within existing building. 80 ● Final cost analysis, detailed construction planning and construction contractor negotiations on-going. Tailings and Backfill Plant Engineering ● Final paste plant design and location trade-offs on-going. ● Opex trade-off analysis and mine scheduling on-going. 85 ● Geotechnical analysis of back-fill requirements indicates significant cost savings from PEA estimates. Metallurgy ● Metallurgical studies continue to further optimize the mill and process flow sheet used in the PEA. 80 ● Final Lock-Cycle Testing (LCT) on-going. Geotechnical Study ● Golder and Associates study complete, supporting geotechnical assumptions made within the PEA. 100 Mine Planning ● Detailed stope sequencing and optimization on-going. 85 ● Ore haulage trade-off studies complete. Crushed ore to be moved from UG crushing gallery to surface processing circuits via conveyor within the Kellogg Tunnel. Pend Oreille Plant Demobilization ● Project/process plant manager appointed. 85 ● Final demobilization planning on-going, set to meet timelines agreed with Teck, with cost estimates in line with PEA. Current Mining and Rehabilitation Activities ● CMC (mining contractor) building organic capacity on site. This includes adding local staff and acquiring mining equipment including LHDs. N/A ● Rehabilitation of UTZ drift on 5-Level completed on schedule. ● Initiating construction of decline ramp to connect 5-Level with existing 6-level spiral ramp for rubber-tired equipment. N/A Bunker Hill Surface Upgrades ● Mine yard and surface facilities now cleared to accept Pend Oreille plant equipment. ● Finalizing plans to upgrade electrical infrastructure to both Kellogg and Wardner Portal yards.