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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 776 added, 791 removed, 188 unchanged (89% of the section changed)

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

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

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

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

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

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

HILL MINING CORP.

INTERIM CONSOLIDATED FINANCIAL

AND NINE MONTHS ENDED

IN UNITED STATES DOLLARS)

Financial Statements

Condensed interim consolidated financial statements

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

Nevada corporation,

included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.

Because certain

information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted

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

statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s

Form 10-K for the year ended December 31, 2021, and all amendments thereto.

Hill Mining Corp.

1 unchanged sentence

in United States Dollars)

and cash equivalents

Current assets

asset (note 4)

term deposit (note 5)

interests (note 5)

AND LIABILITIES

payable (notes 5 and 14)

liabilities (notes 5 and 13)

liability (note 11)

notes payable (note 7)

portion of lease liability (note 8)

Accounts receivable

Prepaid expenses

Short-term deposit (notes 3 and 14)

Prepaid mine deposit and acquisition costs (note 5)

Prepaid finance costs

Total current assets

Non-current assets

Equipment (note 3)

Right-of-use assets (note 4)

Bunker Hill Mine and mining interests (note 5)

EQUITY AND LIABILITIES

Current liabilities

liability (note 8)

warrant liability (notes 7 and 9)

Shareholders’

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

Nil preferred shares issued and outstanding (note 9)

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 9)

paid-in-capital (note 9)

accumulated during the exploration stage

Accounts payable (note 13)

Accrued liabilities (note 12)

EPA/IDEQ water treatment payable (note 6)

Interest payable (note 6)

DSU liability (note 11)

Promissory notes payable (note 7)

EPA cost recovery payable - short-term (note 6)

Current portion of lease liability (note 8)

Total current liabilities

Non-current liabilities

Convertible debentures (note 7)

Derivatives of convertible debenture (note 7)

EPA cost recovery liability - long-term, net of discount (note

Derivative warrant liability (notes 8 and 9)

Total liabilities

Shareholders’ Deficiency

Preferred shares, $ 0.000001

par value, 10,000,000 preferred

shares authorized;

preferred shares issued and outstanding (note 9)

Common shares, $ 0.000001

par value, 750,000,000 common shares

164,435,442 and 143,117,068

common shares issued and outstanding, respectively (note 9)

Subscriptions received (note 14)

Additional paid-in-capital (note 9)

Deficit accumulated during the exploration stage

( 75,372,036 )

( 72,491,150 )

shareholders’ deficiency

Total shareholders’ deficiency

( 35,202,278 )

( 34,242,368 )

shareholders’ deficiency and liabilities

Total shareholders’ deficiency and liabilities

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

Hill Mining Corp.

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

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

and administration (notes 9, 10 and 11)

and accounting

from operations

( 2,464,945 )

( 6,105,916 )

( 12,384,474 )

( 11,058,237 )

income or gain (expense or loss)

in derivative liability (notes 7 and 9)

Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

in United States Dollars)

Three Months Ended

Operating expenses

Operation and administration

Mine preparation

Legal and accounting

Loss from operations

( 5,486,674 )

expense (notes 6 and 7)

costs (note 7)

(loss) on foreign exchange

expense (notes 6 and 7)

on private placement (note 9)

issuance costs (note 9)

on loan extinguishment (note 6)

on debt settlement (note 9)

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

( 4,623,974 )

Other income or gain (expense or loss)

Change in derivative liability

Gain on foreign exchange

Loss on FV of debenture derivative

Interest expense

Debenture finance costs (note 7)

Loss on debt settlement

Net (loss) income and comprehensive (loss)

income for the period

( 2,880,886 )

income (loss) per common share (note 12)

fully diluted

average number of common shares (note 12)

fully diluted

Net (loss) income per common share – basic

Net (loss) income per common share – fully diluted

Weighted average common shares – basic

Weighted average common shares – fully diluted

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

2 unchanged sentences

in United States Dollars)

income (loss) for the period

Operating activities

Net income (loss) for the period

$ ( 2,880,886 )

to reconcile net income (loss) to net cash used in operating activities:

in fair value of warrant liability

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

Stock-based compensation (note 10)

Depreciation expense

Change in fair value of warrant liability

( 3,454,008 )

( 10,475,376 )

on loan extinguishment

expense on lease liability

exchange gain on re-translation of lease liability

on debt settlement

on private placement

in operating assets and liabilities:

cash used in operating activities

Imputed interest expense on lease liability (note 8)

Foreign exchange loss (gain)

Foreign exchange loss (gain) on re-translation of lease (Note 8)

Loss on debt settlement

Amortization of EPA discount

Loss on fair value of convertible debt derivatives

Imputed interest expense on convertible debentures

Changes in operating assets and liabilities:

Accounts receivable

Prepaid finance costs

Prepaid expenses

Accounts payable

Accrued liabilities

Accrued EPA/IDEQ water treatment

EPA cost recovery payable

( 2,000,000 )

Interest payable

Net cash used in operating activities

( 6,839,679 )

of machinery and equipment

cash used in investing activities

from issuance of common stock, net of issuance costs

from warrants exercised

from promissory note

of promissory note

( 4,031,935 )

cash provided by financing activities

change in cash and cash equivalents

Investing activities

Deposit on plant

Land purchase

Bunker Hill mine purchase

( 5,524,322 )

and cash equivalents, beginning of period

and cash equivalents, end of period

issued to settle accounts payable, accrued liabilities and promissory notes

stock issued to settle convertible loan

Purchase of machinery and equipment

Net cash used in investing activities

( 6,379,672 )

Financing activities

Proceeds from convertible debentures

Proceeds from issuance of shares, net of issue costs

Proceeds from subscriptions received

Lease payments

Net cash provided by financing activities

Net change in cash

Cash, beginning of period

Cash, end of period

Supplemental disclosures

Non-cash activities

Units issued to settle accrued liabilities

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

2 unchanged sentences

in United States Dollars)

December 31, 2019

issued at $ 0.42 per share (i)

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

warrants issued

exercised at $ 0.18 per share (ii)

issued at $ 0.26 per

issued for debt settlement at $ 0.67 per unit

subscriptions

Balance, December 31, 2021

$ ( 72,491,150 )

$ ( 34,242,368 )

Stock-based compensation

Stock subscription received for Units

Net loss for the period

( 2,880,886 )

Balance, March 31, 2022

$ ( 75,372,036 )

$ ( 35,202,278 )

Balance, December 31, 2020

$ ( 66,088,873 )

$ ( 31,537,597 )

Beginning Balance

$ ( 66,088,873 )

$ ( 31,537,597 )

Stock-based compensation

Shares issued at

issued for debt settlement at $ 0.45 per

Shares issued for RSUs vested

Shares issued for RSUs vested, shares

issued at $ 0.32 per

issued at $0.32 per unit, shares

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

Units issued for debt settlement at

loss for the period

September 30, 2020

December 31, 2020

issued at $ 0.32 per

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

issued for RSUs vested

income for the period

September 30, 2021

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

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

issued at C$ 0.35 , converted to US at $ 0.26 (note 9)

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

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

Warrant valuation

( 3,813,103 )

Net loss for the period

Balance, March 31, 2021

$ ( 60,251,064 )

$ ( 22,696,011 )

Ending Balance

$ ( 60,251,064 )

$ ( 22,696,011 )

issued at C$ 0.40 ,

converted to US at $ 0.32

issued at C$ 0.57 ,

converted to US at $ 0.45

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

1 unchanged sentence

Hill Mining Corp.

(the “Company”) was incorporated under the laws of the state of Nevada , U.S.A on February 20, 2007 under

(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.

6 unchanged sentences

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

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

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

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

6 unchanged sentences

development of its business.

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

Additionally, the Company owes a total of $ 17,497,236

to the Environmental Protection Agency

(“EPA”) (see Note 6) that is classified as current liability unless the Company can consummate financial assurances

that would reclassify $ 12,000,000

of this liability to long-term debt.

owes a total of $ 3,540,852 ,

net of discount, to the EPA that is classified as long-term debt.

The Company 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.

5 unchanged sentences

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

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

financing, and royalty/streaming arrangements.

These condensed interim consolidated financial statements do not include any adjustments

relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might

be necessary in the event the Company cannot continue as a going concern.

ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to

continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves.

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, obtain 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,

7 unchanged sentences

ability to finance its operations.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Russia/Ukraine Crisis:

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.

The 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.

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

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

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

for interim financial information.

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

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

accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with accounting

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

Commission for interim financial information.

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

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

It is management’s opinion,

2 unchanged sentences

The unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s

Annual Report on Form 10-K/T, which contains the annual audited consolidated financial statements and notes thereto, together with the

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

The interim results for the period ended

September 30, 2021 are not necessarily indicative of the results for the full fiscal year.

The unaudited interim condensed consolidated

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

Annual Report on Form 10-K, which contains the annual audited consolidated financial statements and notes thereto, together with the

Management’s Discussion and Analysis, for the year ended December 31, 2021.

The interim results for the period ended March 31,

2022, are not necessarily indicative of the results for the full fiscal year.

The unaudited interim condensed consolidated financial

statements are presented in United States dollars, which is the Company’s functional currency.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

consists of the following:

Schedule of Equipment

accumulated depreciation

total depreciation expense during the three and nine months ended September 30, 2021 was $ 34,565

and $ 98,961 ,

respectively (three and nine months ended September 30, 2020 - $ 14,392

Equipment, gross

Less accumulated depreciation

Equipment, net

total depreciation expense during the three months ended March 31, 2022 and March 31, 2021 was $ 54,015

and $ 29,830 ,

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

(loss) and comprehensive income (loss).

respectively.

Pend Oreille Process Plant

On January 25, 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 Mill”).

comprises substantially all processing equipment of value located at the site, including complete crushing, grinding and flotation circuits

suitable for a planned ~1,500 ton-per-day operation at Bunker Hill, and total inventory of nearly 10,000 components and parts for mill,

assay lab, conveyer, field instruments, and electrical spares.

The MOU outlined a purchase price under two scenarios, at Teck’s

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 was paid by the Company in January 2022.

On March 31, 2022, the Company reached an agreement

with a subsidiary of Teck to satisfy the remaining purchase price for the Pend Oreille Mill by way of an equity issuance of the Company.

Teck will receive 10,416,667 units of the Company (the “Teck Units”) at a deemed issue price of C$ 0.30 per unit.

Unit consists of one common share of the Company and one common share purchase warrant (the “Teck Warrants”).

Teck Warrant entitles the holder to acquire one common share at a price of C$ 0.37 per common share for a period of three years.

The equity issuance

occurred on May 13, 2022.

Right-of-Use Asset

asset consists of the following:

Schedule of Right-of-use Asset

accumulated depreciation

total depreciation expense during the three and nine months ended September 30, 2021 was $ 26,594

and $ 79,783 ,

respectively (three and nine months ended September 30, 2020 - $ 20,034

and $ 73,396 ,

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

(loss) and comprehensive income (loss).

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

of Right-of-use Asset

Less accumulated depreciation

Right-of-use asset, net

total depreciation expense during the three months ended March 31, 2022 and March 31, 2021 was $ 24,442 and $ 26,595 , respectively.

Mining Interests

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”).

the terms of the Agreement, the Company was required to make a $ 1,000,000 bonus payment to Placer Mining no later than October 31, 2017,

which payment was made, along with two additional $ 500,000 bonus payments in December 2017.

The 24month lease commenced November 1, 2017.

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

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

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

Under the terms of the agreement, there

is a 3 % net smelter return royalty (“NSR”) on sales during the lease and a 1.5 % NSR on the sales after the purchase option

is exercised, which post-acquisition NSR is capped at $ 60,000,000 .

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

The default arose as a result of missed lease and operating

cost payments, totaling $ 400,000 , which were due at the end of September and on October 1, 2018.

As per the Agreement, the Company had

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

While management worked with urgency to resolve this matter, management was ultimately unsuccessful in remedying the default, resulting

in the Agreement being terminated.

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

except that monthly payments were reduced to $ 60,000

per month for 12 months, with the accumulated

reduction in payments of $ 140,000

per month (“deferred payments”) being

These deferred payments would be waived if the Company had chosen to exercise its option.

The accruals for the deferred payment were waived

pursuant to the November 20, 2020 Amended Agreement described below.

As a result, as at September 30, 2021, the Company had accrued

a total of $nil (December 31, 202 - $nil).

The Company purchased the Bunker Hill Mine

(the “Mine”) in January 2022, as described below.

Prior to purchasing the Mine, the Company had

entered into a series of agreements with Placer Mining Corporation (“Placer Mining”), the prior owner,

for the lease and option to purchase the Mine.

The first of these agreements was announced on August 28, 2017, with subsequent

amendments and/or extensions announced on November 1, 2019, July 7, 2020, and November 20, 2020.

Under the terms of the November 20, 2020 amended

agreement (the “Amended Agreement”), a purchase price of $ 7,700,000 was agreed, with $ 5,700,000 payable in cash (with

an aggregate of $ 300,000 to be credited toward the purchase price of the Mine as having been previously paid by the Company) and $ 2,000,000

in Common Shares of the Company.

The Company agreed to make an advance payment of $ 2,000,000 , credited towards the purchase price of the

Mine, which had the effect of decreasing the remaining amount payable to purchase the Mine to an aggregate of $ 3,400,000 payable

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Mining interests (continued)

Hill Mine Complex (continued)

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

The key terms of the Amended Agreement are as follows:

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

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

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

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

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

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

Upon signing the

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

This payment will be applied

to the purchase price upon execution of the purchase option.

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

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

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

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 during the six months ended December 31, 2020;

Company made an advance payment of $ 2,000,000

to Placer Mining which shall be credited toward the purchase price if and when the Company elects to exercise its purchase

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.

The amount has been recorded as a long term deposit.

This payment had the effect of decreasing the remaining

amount payable to purchase the Bunker Assets to an aggregate of $ 3,400,000

payable in cash and $ 2,000,000

in Common Shares of the Company.

The Amended Agreement also required payments

pursuant to an agreement with the EPA whereby for so long as the Company leases,

owns and/or occupies the Mine, the Company would make payments to the EPA on behalf of Placer Mining in satisfaction of the EPA’s

claim for historical water treatment cost recovery in accordance with the Settlement Agreement reached with the EPA in 2018.

prior to the purchase of the Mine, the Company’s liability to EPA in this regard totaled $ 11,000,000 .

The Company completed the purchase of the Mine

on January 7, 2022.

The terms of the purchase price were modified to $ 5,400,000

in cash, from $ 3,400,000

of cash and $ 2,000,000

of Common Shares.

Concurrent with the purchase of the Mine, the Company assumed incremental liabilities of $ 8,000,000

to the EPA, consistent with the terms of the amended Settlement Agreement with the EPA that was executed in December 2021 (see

“EPA Settlement Agreement” section below).

The $ 5,400,000 contract cash paid at purchase

was the $ 7,700,000 less the $ 2,000,000 deposit and $ 300,000 credit given by the seller for prior years’ maintenance payments.

carrying cost of the Mine is comprised of the following:

of Mining Interests

Contract purchase price

Credit by seller for prior maintenance payments

Net present value of water treatment cost recovery liability assumed

Closing costs capitalized

Mine acquisition costs - legal

Total carrying cost of mine

has determined the purchase to be an acquisition of a single asset.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Mining interests (continued)

Hill Mine Complex (continued)

addition to the payments to Placer Mining, and pursuant to an agreement with the EPA whereby for so long as Bunker leases, owns and/or

occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the current owner in satisfaction of the EPA’s

claim for cost recovery, excluding water treatment charges.

March 3, 2022, the Company purchased a 225-acre surface land parcel for $ 202,000

which includes the surface rights to portions of 24 patented mining claims, for which the Company already owns the mineral rights.

Environmental Protection Agency Agreement

a part of the lease of the Mine, the Company was required to make payments pursuant to an agreement with the EPA whereby

for so long as the Company leases, owns and/or occupies the Mine, the Company will make payments to the EPA on behalf of Placer Mining

in satisfaction of the EPA’s claim for cost recovery.

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

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

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

Schedule of Payments for Mining

30 days of the effective date

The agreement called

for payments starting with $ 1,000,000 30 days after a fully ratified agreement was signed (which payment was made) followed by $2,000,000

on November 1, 2018, and $3,000,000 on each of the next five anniversaries with a final $2,000,000 payment on November 1, 2024.

1, 2018, December 1, 2018, June 1, 2019, November 1, 2019, November 1, 2020, and November 1, 2021, payments were not made, and the Company

engaged in discussions with the EPA in an effort to reschedule these payments in ways that enable the sustainable operation of the Mine

as a viable long-term business .

EPA liability schedule in effect at March 31, 2022 was:

Of Environmental Protection Agency Agreement Liability

November 1, 2021

(aggregate amounts from 2018, 2019, 2020 and 2021)

November 1, 2022

1 unchanged sentence

November 1, 2024

plus accrued interest

Interest is accrued at EPA superfund interest

rates, which was 0.10 % and 2.22 % for the quarters ended March 31, 2022 and 2021, respectively.

Interest expense for those periods was

$ 5,028 and $ 47,982 , respectively.

At March 31, 2022 interest of $ 311,530 is included in interest payable on the condensed consolidated

balance sheet.

December 19, 2021, the Company entered into an amended Settlement Agreement between the Company, Idaho Department of Environmental Quality,

US Department of Justice, and the EPA (the “Amended Settlement”).

Upon the effectivity of the Amended Settlement, the Company

would become fully compliant with its payment obligations to these parties.

The Amended Settlement modified the payment schedule and

payment terms for recovery of historical environmental response costs at Mine by the EPA.

Pursuant to the terms of the Amended Settlement,

the Company paid $ 2,000,000 to the EPA on January 7, 2022.

Pursuant to the terms of the Amended Settlement, an additional $ 17,000,000

will be paid by the Company to the EPA on the following dates:

Of Amended Settlement Environmental Protection Agency Agreement

November 1, 2024

1 unchanged sentence

November 1, 2026

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

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

2017 to October 2019, which exceeds the semi-annual payments outlined in the agreement, which would have resulted in annual payment

of $960,000 .

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

in September 2020.

July 2021, the Company received an invoice from the EPA for water treatment charges for the period from November 2019 to October 2020,

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

higher than the invoice received in 2020 for the period of November 2018 to October 2019 of approximately $ 1,600,000 .

Based on preliminary review, the Company believes that this increase in water treatment charges is not consistent with the EPA’s

cost to treat water from the Mine, and a discussion with the EPA has been initiated.

August 2021, the Company received an interim invoice from the EPA for water treatment charges for the period from November 2020 to May

2021, and accordingly reversed the previously accrued estimate amount of $ 1,309,000 and recorded $ 1,155,000 to exploration expenses based

on the interim invoice for the period from November 2020 to May 2021.

Additionally, $660,000 or $165,000 per month has been accrued for

the period from June 1, 2021 to September 30, 2021 , reflecting the Company’s best estimate of future water treatment costs, informed

by the August 2021 invoice.

total of $ 4,872,186

for water treatment charges, net of payments

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

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

As at September 30, 2021, the interest accrued on the unpaid EPA balance is $ 306,136

(December 31, 2020 - $ 162,540 ).

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

to $ 13,178,322

(December 31, 2020 - $ 11,298,594 ).

The Company initiated a discussion with the EPA regarding the amount and payment schedule.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Convertible loan payable

June 13, 2018, the Company entered into a loan and warrant agreement with Hummingbird Resources PLC (“Hummingbird”),

an arm’s length investor, for an unsecured convertible loan in the aggregate sum of $ 1,500,000 , bearing interest at 10 %

per annum, maturing in one year.

Contemporaneously, the Company agreed to issue 229,464 share purchase warrants, entitling the lender

to acquire 229,464 common shares of the Company, at a price of C$ 8.50 per common share, for two years .

Under the terms of the loan agreement,

the lender may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into

common shares of the Company at a price per share equal to C$8.50.

In the event that a notice of conversion would result in the lender

holding 10% or more of the Company’s issued and outstanding shares, then, in the alternative, and under certain circumstances,

the Company would be required to pay cash to the lender in an amount equal to C$8.50 multiplied by the number of shares intended to be

issued upon conversion.

Further, in the event that the lender holds more than 5% of the issued and outstanding shares of the Company

subsequent to the exercise of any of its convertible securities held under this placement, it shall have the right to appoint one director

to the board of the Company.

Lastly, among other things, the loan agreement further provides that for as long as any amount is outstanding

under the convertible loan, the investor retains a right of first refusal on any Company financing or joint venture/strategic partnership/disposal

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 (the

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

(ii) 229,464 common shares may be acquired upon

exercise of warrants at a price of C$ 8.50 per warrant for a period of two years from the date of issuance;

(iii) $ 500,000 , being the

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

and (iv) 116,714

common shares may be acquired upon exercise of warrants at a price of C$ 4.50 per warrant for a period of two years from the date issuance.

In the event that Hummingbird would acquire common shares in excess of 9.999% through the conversion of the Principal Amount or the Additional

Amount, including interest accruing thereon, or on exercise of the warrants as disclosed herein, the Company shall pay to Hummingbird

a cash amount equal to the common shares exercised in excess of 9.999%, multiplied by the conversion price.

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

This was accounted

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

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

of a net loss on loan extinguishment.

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 for the year ended December 31, 2020.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Convertible loan payable (continued)

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

The conversion features and warrants

are considered derivative financial liabilities as they are convertible into common shares at a conversion price denominated in a currency

other than the Company’s functional currency of the U.S.

The estimated fair value of the conversion features and warrants

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

expense for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ nil and $ 75,093 ,

respectively) based on effective interest rate of 16 % after the loan extension.

expense for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ 101,827 and

$ 185,772 , respectively).

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

Schedule of Convertible Loan Outstanding Interest Payable

December 31, 2019

on loan extinguishment

extinguishment

November 1, 2027

November 1, 2028

November 1, 2029

plus accrued interest

Amended Settlement included additional payment for outstanding water treatment costs (described below) that have been incurred over the

period from 2018 through 2020.

This $ 2,900,000 payment was to be made within 90 days of execution of the Amended Settlement.

addition to the changes in payment terms and schedule, the Amended Settlement included a commitment by the Company to secure $ 17,000,000

of financial assurance in the form of performance bonds or letters of credit deemed acceptable to the EPA.

The financial assurance can

be drawn on by the EPA in the event of non-performance by the Company of its payment obligations under the Amended Settlement (the “Financial

The amount of the bonds will decrease over time as individual payments are made.

If the Company does not post the

Financial Assurance within 90 days of execution of the Amended Settlement, it must issue an irrevocable letter of credit for $ 9,000,000 .

The EPA may draw on this letter of credit after an additional 90 days if the Company is unable to either put the Financial Assurance

in place or make payment for the full $ 17,000,000 of remaining historical cost recovery sums.

In the event neither occurs, the terms

of the initial Settlement Agreement will be reinstated.

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

At March 31, 2022, the terms of the initial Settlement Agreement were still in place.

Company completed the purchase of the Mine on January 7, 2022 (see note 5).

The terms of the purchase price were modified to $5,400,000

in cash, from $3,400,000 of cash and $2,000,000 of Common Shares.

The purchase price of the mine totaled $7,342,638 was capitalized,

after taking into effect the deposits previously made, the credits given and closing costs.

Additionally, a total of $442,147 of legal

costs were capitalized .

Concurrent with the purchase

of the Mine, the Company assumed the balance of the EPA

liability totaling $17,000,000 (after the payment of the $2,000,000 on January 7, 2022), an increase of $8,000,000 of which $3,000,000

is current liability and $5,000,000 is long-term in nature.

The long-term portion was discounted at an interest rate of 16.5% to arrive

at a net present value of $3,402,425 after discount.

During the quarter ended March 31, 2022, $138,427 of the discount was amortized

to interest expense.

31, 2022, the total EPA cost recovery liability was $ 17,000,000 , less $ 1,457,147 discount on the long-term portion, or $ 15,540,853 .

current portion of the EPA cost recovery liability at March 31, 2022 was $ 12,000,000 as detailed below:

Of Environmental Cost Recover Liability

EPA cost recovery payable at December 31, 2021

Payment as part of mine purchase on January 7, 2022

( 2,000,000 )

December 31, 2020 and September 30, 2021

Promissory notes payable

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

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

and is due on demand after 90 days from issuance.

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

to the lender.

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

period of two years .

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 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 9).

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

The warrants are considered derivative financial liabilities

as they are convertible into common shares at a conversion price denominated in a currency other than the Company’s functional

currency of the US dollar.

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

financial reporting period.

Assumed with mine purchase – current portion

EPA cost recovery at March 31, 2022

balance of the NPV of the long-term portion of the EPA cost recovery payable at March 31, 2022 was $ 3,540,853

detailed below:

Of Net Present Vale of Environmental Protection Agency Agreement

Long-term portion of NPV of EPA cost recovery payable at purchase of mine on January 7, 2022

Accretion of NPV discount during the quarter

Long-term portion of NPV of EPA cost recovery payable at March 31, 2022

addition to these payments, the Company makes a monthly accrual of $ 165,000 to cover the Idaho Department of Environmental Quality (“IDEQ”)

(formerly performed and invoiced by the EPA) estimated costs of treating water at the water treatment facility.

The Company also pays

an agreed-upon monthly amount of $ 140,000 , with a true-up to be recorded and paid by the Company once the actual annual costs are determined

balance of EPA/IDEQ water treatment liability at March 31, 2022 was $ 5,185,706 as detailed below:

Of EPA/IDEQ Water Treatment Liability

EPA/IDEQ water treatment liability at December 31, 2021

Payments during the quarter

Accruals during the quarter

EPA/IDEQ water treatment liability at March 31, 2022

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Promissory notes payable (continued)

fair values of the warrants were estimated using the Binomial model to determine the fair value of the derivative warrant liabilities

using the following assumptions:

Schedule of Fair Value of Derivative Warrant Liability Assumptions

2019 issuance

September 30,

free interest rate

in derivative liability

2020 issuance

September 30,

free interest rate

in derivative liability

expense for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ 51,522 and

$ 170,438 , respectively) based on an effective interest rate of 11 % after the loan extension.

expense for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ 5,600 and

Promissory Note Payable and Convertible Debentures

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 matured on March

however, the note holder agreed to

accept $ 500,000 payment,

which the Company paid, by April 15, 2022, and the remaining principal and interest was deferred to June 20, 2022.

Interest expense

for the three months ended March 31, 2022 and 2021 was $ 92,466 and

respectively.

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

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 nine months

ended September 30, 2020.

Accretion expense for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended

September 30, 2020 - $ 47,737 and $ 89,190 , respectively) based on effective interest rate of 7 % .

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 nine months ended September 30, 2020, the

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

Accretion expense for the three and nine months ended September

30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ 19,129 and $ 35,676 , respectively) based on effective interest rate

At March 31, 2022 interest of $ 195,205 is

included in interest payable on the condensed consolidated balance sheet.

Project Finance Package

December 20, 2021, the Company executed a non-binding term sheet outlining a $ 50,000,000 project finance package with Sprott

Private Resource Streaming and Royalty Corp.

non-binding term sheet with SRSR outlined a $ 50,000,000

project financing package that the Company expects

to fulfill the majority of its funding requirements to restart the Mine.

The financing package consisted of an $ 8,000,000

royalty convertible debenture (the “RCD”),

a $ 5,000,000

convertible debenture (the “CD”),

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

(the “Stream”, together with the

RCD and the CD, the “Project Financing Package”).

Total finance costs for legal fees associated with the

two convertible debentures was $ 795,100 ,

of which $ 67,435

associated with the derivative portions

of the financing was recognized as a period expense and $ 727,665

was allocated to the CD and RCD pro-ratably

based on their fair value on the issuance date, with $ 300,579 and $ 427,086 allocated, respectively.

$8,000,000 Royalty Convertible Debenture

Company closed the $ 8,000,000

on January 7, 2022.

The RCD bears 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 a royalty, with such conversion

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

In the event of conversion, the RCD 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 (the “SRSR Royalty”).

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

secured by a share pledge of the Company’s operating subsidiary, Silver Valley, until a full security package was put in

place concurrent with the consummation of the CD.

In the event of non-conversion, the principal of the RCD will be repayable

$6,000,000 Convertible Debenture

Company closed the $ 6,000,000

on January 28, 2022, which was increased from the previously-announced $ 5,000,000 .

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

payable in cash or shares at the Company’s option, and matures on July

The CD is secured by a pledge

of the Company’s properties and assets.

Until the closing of the Stream, the CD 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 CD with the cash proceeds from the Stream.

The Company may elect to repay the CD

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Promissory notes payable (continued)

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 nine months ended September 30, 2020.

Financing cost

for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ nil and $ 15,000 , respectively).

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 nine months ended September 30, 2020.

Financing cost for the

three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ nil and $ 15,000 , respectively).

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 nine months ended September 30, 2020.

cost for the three and nine months ended September 30, 2021 was $ nil (three and nine months ended September 30, 2020 - $ 360,000 ).

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 is scheduled to mature on the earlier of March

15, 2022 , or the date at which the Company raises

more than $ 10,000,000

in equity financing in aggregate, beginning September

The Company is considering a land parcel purchase of approximately $200,000, which will be used as security for the

promissory note.

Interest expense for the three and nine months ended September 30, 2021 was $ 8,219 .

The Company determined that the conversion

features in both the RCD and CD were not closely related to their respective debt components, and should be considered as derivatives

under ASC 815.

As such, these derivative components were bifurcated, accounted for and valued separately under the framework prescribed

The fair value of the derivative components in the RCD included the utilization of payable metal production estimates from

the Company’s Preliminary Economic Assessment published in November 2022, and a Monte Carlo Simulation approach that included simulating

the future prices of metals, and application of an appropriate project discount rate, as well as key inputs included in the table below.

The value of the conversion feature in the CD was determined with the binomial model which involves the modelling of stock prices over

the applicable term to evaluate the payouts under ‘hold’, ‘convert’, and ‘prepay’ decisions and select

the decision that would maximize the fair value from a market participant’s perspective.

The derivative components will be fair

valued at each reporting period, with changes in fair value recorded as a gain or loss in the statement of profit or loss.

debt components of the RCD and CD were initially measured by first valuing the derivative components as described above, and are accounted

for separately as financial liabilities that will be subsequently measured at amortized cost.

with the approach above, the following table summarizes the key valuation inputs:

Schedule of Key Valuation Inputs

Reference (2)(4) (5)

Valuation date

Maturity date

Interest rate

Stock price (US$)

Expected equity volatility

Credit spread

Risk-free rate

Risk-adjusted rate

CD note (1)(3)

RCD note (stream not advanced scenario)

RCD note (stream advanced) scenario

CD note (1)(3)

RCD note (stream not advanced scenario)

RCD note (stream advanced) scenario

CD carries a Discount for Lack of Marketability (“DLOM”) of 5.0 %.

instruments carry an instrument-specific spread of 7.23 %

conversion price of the CD is $ 0.235

project risk rate of 13.0 % was used for all scenarios of the RCD fair value computations

probabilities for the stream being advanced and the stream not being advanced is 55 % and 45 %, respectively.

resulting fair values of the CD and RCD at the issuance

dates, and as of March 31, 2022 were as follows:

of Fair Value Derivative Liability

Instrument Description

Valuation Date

Component, Net of Finance Costs

January 28, 2022

January 7,2022

Instrument Description

Valuation Date

of the Debt Component

Interest at Effective Rates(1)

March 31, 2022

March 31,2022

effect rates for the CD and RCD are 21.357 %

and 17.795 %,

respectively.

Accretion of $181,099 and $287,017 was recognized as interest expense for the CD and RCD, respectively.

Company performs quarterly testing of the covenants in the RCD and CD.

The RCD and CD contain a covenant that the Company must

maintain positive working capital at each quarterly filing date, as determined by the financial statements filed on such date.

As the Company would not have been in compliance with this covenant as of May 16, 2022 with respect to its working capital position

as of March 31, 2022, it has obtained a waiver of this covenant from the holders of the RCD and CD until the next filing date, which

is August 15, 2022.

The Company intends to ensure compliance with this covenant for future filing dates through the advance of

the Stream or other long-term financing.

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 of availability of the Stream

have been satisfied.

If the Company draws the maximum funding of $ 37,000,000 , 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.

Thereafter, 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 spot price.

The 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.

Lease Liability

1 unchanged sentence

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

September 30, 2021:

March 31, 2022:

Schedule of Operating Lease Liability

December 31, 2019

exchange loss

December 31, 2020

exchange loss

September 30, 2021

current portion

lease liability

Balance, December 31, 2020

Interest expense

Lease payments

Foreign exchange loss

Balance, December 31, 2021

Interest expense

Lease payments

Foreign exchange loss

Balance, March 31, 2022

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

2 unchanged sentences

Schedule of Lease Obligations

Less than 1 year

Additional rent

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

Hill Mining Corp.

Notes to Condensed Interim Consolidated Financial Statements

Three and Nine Months Ended September 30, 2021

(Expressed in United States Dollars)

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Capital Stock, Warrants and Stock Options

3 unchanged sentences

and outstanding

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

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

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

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

loan facility (see note 6).

the nine months ended September 30, 2020, the Company issued 3,315,200 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.

Each unit consisted of one common share of the Company

and one common share purchase warrant.

Each whole 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 .

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

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

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

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

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

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

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

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

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

Hill Mining Corp.

Notes to Condensed Interim Consolidated Financial Statements

Three and Nine Months Ended September 30, 2021

(Expressed in United States Dollars)

Capital stock, warrants and stock options (continued)

and outstanding (continued)

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

gross proceeds.

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

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

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

2 unchanged sentences

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

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

(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 .

11 unchanged sentences

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

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

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

and outstanding (continued)

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

model to determine the fair value using the following assumptions on the day of issuance and as at September 30, 2021:

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

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

warrant liabilities issued with private placements in June 2019, August 2019, August 2020, and February 2021

were revalued as at March 31, 2022 and December 31, 2021 using the Binomial model and the following assumptions:

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

2021 issuance

free interest rate

in derivative liability

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

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

2018 issuance

September 30,

free interest rate

in derivative liability

2018 issuance

September 30,

free interest rate

in derivative liability

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

and outstanding (continued)

2019 issuance (i)

September 30,

free interest rate

in derivative liability

December 2020, the Company amended the exercise price to C$ 0.59 per common share and extended the expiry date to December 31, 2025

for 11,660,000 warrants.

2019 issuance (ii)

free interest rate

in derivative liability

December 2020, the Company amended the exercise price to C$ 0.59 per common share and extended the expiry date to December 31, 2025

for 17,920,000 warrants.

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

February 2021 issuance

March 31, 2022

December 31, 2021

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 920,484 )

$ ( 329,358 )

August 2020 issuance

March 31, 2022

December 31, 2021

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 1,109,138 )

$ ( 7,703,052 )

2019 issuance

September 30,

free interest rate

in derivative liability

March 31, 2022

December 31, 2021

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 561,472 )

$ ( 1,371,346 )

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Capital stock, warrants and stock options (continued)

Schedule of Warrant Activity

average exercise price

average grant date

August 2019 issuance (ii)

December 31, 2020

( 2,332,900 )

September 30, 2020

Balance, December

December 31, 2021

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 862,914 )

September 30, 2021

the nine months ended September 30, 2020, 2,332,900 warrants were exercised at C$ 0.25 per warrant for gross proceeds of C$ 583,225

$ ( 2,744,785 )

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

of Warrants Outstanding Exercise Price

of warrants exercisable

November 13, 2021

November 28, 2021

February 26, 2022

Outstanding warrants at March 31, 2021 and March

31, 2022 were as follows:

Schedule of Warrant Activity

exercise price

Balance, December 31, 2020

Balance, March 31, 2021

Balance, December 31, 2021

Balance, March 31, 2022

the three months ended March 31, 2022, 239,284 February 2020 broker warrants expired.

March 31, 2022, the following warrants were outstanding:

Schedule of Warrants Outstanding Exercise Price

August 31, 2023

1 unchanged sentence

February 9, 2026

February 16, 2026

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Capital stock, warrants and stock options (continued)

March 31, 2022, the following broker options were outstanding:

Schedule of Broker Options

Weighted average

broker options

exercise price (C$)

Balance, December 31, 2019

Issued - August 2020 Compensation Options (i)

exercise price

Balance, December 31, 2020

Issued – February 2021 Compensation Options

Balance, September 30, 2021

The grant date fair values of the August 2020 Compensation

Options 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:

Balance, December 31, 2021

Balance, March 31, 2022

grant date fair value of the February 2021 Compensation Options were estimated at $ 68,078

using the Black-Scholes valuation model with the following underlying assumptions:

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

free interest rate

Risk free interest rate

Dividend yield

Weighted average life

February 2021

Schedule of Warrants Outstanding Broker Option Exercise Prices

16, 2024 (ii)

into one August 2020 Unit

into one February 2021 Unit

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Capital stock, warrants and stock options (continued)

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

broker options

Fair value ($)

August 31, 2023 (i)

February 16, 2024 (ii)

Exercisable into one August 2020 Unit

Exercisable into one February 2021 Unit

following table summarizes the stock option activity during the three months ended March 31, 2022:

Schedule of Stock Options

exercise price (C$)

December 31, 2019

September 30, 2020

exercise price

stock options

Balance, December 31, 2020

September 30, 2021

On October 24,

2019, 1,575,000

stock options were issued to directors and officers of the Company.

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

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 $ 10,430

and $ 48,189 ,

for the three and nine months ended September 30, 2021 respectively (three and nine months ended September 30, 2020 - $ 45,173

and $ 186,614 ,

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

(loss) and comprehensive income (loss).

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 $ 104,890 and $ 427,034 ,

for the three and nine months ended September 30, 2021 respectively (three and nine months ended September 30, 2020 - $ 201,728 and $ 357,409 , respectively), which is included in operation and

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

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 .

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 $ 6,596 and $ 32,652 , for the three

and nine months ended September 30, 2021, respectively (three and nine months ended September 30, 2020 - $ 218 and $ 218 , respectively),

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

income (loss).

On February 19, 2021, 1,037,977 stock options were issued to

an officer of the Company, of which 273,271 stock options vest immediately and the balance of 764,706 stock options shall vest on December

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 $ 43,941 and $ 160,750 , for the

three and nine months ended September 30, 2021, respectively (three and nine months ended September 30, 2020 - $ nil ), which is

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

Balance, December 31, 2021

Balance, March 31, 2022

February 19, 2021, 1,037,977

stock options were issued

to an officer of the Company, 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.

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

The vesting of these options resulted in stock-based compensation of $ 54,735 for the quarter ended March 31, 2022 and $ 204,213

for the year ended December

31, 2021, which are included in operation and administration expenses on the consolidated statements of income (loss) and comprehensive

income (loss).

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Capital stock, warrants and stock options (continued)

options (continued)

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

1 unchanged sentence

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

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

interest rate

Dividend yield

Weighted average life

following table reflects the actual stock options issued and outstanding as of March 31, 2022:

Schedule of Stock Option Issued and Outstanding

average remaining

Weighted average

(exercisable)

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

fair value ($)

Restricted Share Units

1 unchanged sentence

key employees, and consultants.

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

following table summarizes the RSU activity during the three months ended March 31, 2022:

Schedule of Restricted Share Units

average grant date fair value per share

as at December 31, 2019

Unvested as at September

Unvested as at December 31, 2020

Unvested as at September

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

officer of the Company.

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

The vesting of these RSUs results

in stock-based compensation of $ 14,334 and $ 57,494 , respectively for the three and nine months ended September 30, 2021 (three

and nine months ended September 30, 2020 $ 27,568 and $ 50,641 , respectively), which is included in operation and administration expenses

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

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

director of the Company.

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

The vesting of these RSUs results

in stock-based compensation of $ 5,785 and $ 14,933 , respectively for the three and nine months ended September 30, 2021 (three

and nine months ended September 30, 2020 $ 9,352 and $ 16,569 , respectively), which is included in operation and administration expenses

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

November 16, 2020, the Company granted 168,000

RSUs to certain directors

of the Company.

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

The vesting of these RSUs results in

stock-based compensation of $ 8,174

and $ 24,255 ,

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

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

income (loss).

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

consultant of the Company.

The RSUs vest in one-sixth increments per month.

The vesting of these RSUs results in stock-based compensation

of $ nil and $ 58,740 , respectively for the three and nine months ended September 30, 2021 (three and nine months ended September 30, 2020

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

and comprehensive income (loss).

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

of the Company.

Of the 735,383 RSUs, 245,128 RSUs vested immediately, and the remaining 490,255 RSUs vested in 1/12 increments per month.

The vesting of these RSUs results in stock-based compensation of $ 26,263 and $ 291,364 , respectively for the three and nine months

ended September 30, 2021 (three and nine months ended September 30, 2020 - $ nil ), which is included in operation and administration expenses

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

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 three and

nine months ended September 30, 2021 (three and nine months ended September 30, 2020 - $ nil ), which is included in operation and administration

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

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 three

and nine months ended September 30, 2021 (three and nine months ended September 30, 2020 - $ nil ), which is included in operation and

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

( 1,516,299 )

Unvested as at December 31, 2021

Unvested as at March 31, 2022

On April 14, 2020, the Company granted 400,000

RSUs to a certain officer of the Company.

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

The vesting of these RSUs resulted in stock-based compensation

for the three months ended March 31, 2022 and

2021, respectively, which is included in operation and administration expenses on the condensed interim consolidated statements

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

On April 20, 2020, the Company granted 200,000

RSUs to a certain director of the Company.

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

The vesting of these RSUs resulted in stock-based compensation

for the three months ended March 31, 2022 and

2021, respectively, which is included in operation and administration expenses on the condensed interim consolidated statements

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

On November 16, 2020, the Company granted 168,000

RSUs to certain directors of the Company.

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

The vesting of these RSUs resulted in stock-based compensation

for the three months ended March 31, 2022 and

2021, respectively, which is included in operation and administration expenses on the condensed interim consolidated statements

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

On December 6, 2020, the Company granted 220,990

RSUs to a consultant of the Company.

vest in one sixth increments per month.

The vesting of these RSUs resulted in stock-based compensation of $nil and $ 49,112

for the three months ended March 31, 2022 and

2021, respectively, which is included in operation and administration expenses on the condensed interim consolidated statements

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

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

245,128 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 $ nil and $ 212,878 for the three months ended March 31, 2022 and 2021, respectively.

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 $ nil for the three months ended March 31, 2022 and 2021, respectively.

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 $ nil for the three months ended March 31, 2022 and 2021, respectively.

On January 10, 2022, the Company granted 500,000

RSUs to a consultant of the Company, vesting

The vesting of these RSUs resulted in stock-based compensation of $ 122,249

for the three months ended March 31, 2022, which

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

and comprehensive income (loss).

Deferred Share Units

4 unchanged sentences

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

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

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

following table summarizes the DSU activity during the three months ended March 31, 2022 and 2021:

Schedule of Deferred Share Units

Unvested as at December 31, 2020 and March 31, 2021 (i)

Unvested as at December 31, 2021

as at September 30, 2020, December 31, 2020 and September 30, 2021

Unvested as at March 31, 2022

April 21, 2020, the Company granted 7,500,000

The DSUs vest in

one-fourth increments upon each anniversary of the grant date and expire in 5

The DSUs vest in one

fourth increments upon each anniversary of the grant date and expire in 5

During the three

and nine months ended September 30, 2021, the Company recognized $ 291,243

months ended March 31, 2022, and 2021 the Company recognized $ 199,921

and $ 85,535 ,

respectively, recovery of stock-based compensation related to the DSUs (three and nine months ended September 30, 2020 $ 204,127

respectively, recovery of stock-based compensation related to the DSUs, which is included in operation and administration expenses

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

The fair value

at March 31, 2022 was $ 1,331,488 .

On March 31, 2022, the Board approved the early vesting of 625,000 DSUs for one of the Company’s Directors

Commitments and Contingencies

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

and IDEQ, one for historical water treatment cost-recovery to the EPA, and the other for ongoing water treatment.

Water treatment costs incurred through December 2021 are payable to the EPA, and water treatment costs incurred thereafter are payable

The IDEQ (formerly 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 March 31, 2022 and December 31, 2021, $ 5,185,709

and $ 5,110,706 ,

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

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

respectively, is payable to the EPA and IDEQ, which has been included in accounts payable and accrued liabilities.

of these amounts relate to the EPA, given that they primarily relate to costs incurred through December 2021.

Company pays a lease under a lease agreement which

expires in May 2022 .

Monthly rental expenses

are approximately C$ 26,000

and are offset by rental income obtained through

short-term subleases held by the Company.

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

to the Condensed Interim Consolidated Financial Statements (Unaudited)

Months Ended March 31, 2022

in United States Dollars)

Income per share

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

Diluted income per share

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

Schedule of Income per Share

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

$ ( 267,859 )

$ ( 13,848,837 )

income (loss) per share

Weighted average number of common shares - basic

income (loss) per share – basic

Diluted income (loss)

Weighted average number of common shares - basic

RSUs, broker options, and stock options

average number of common shares - fully diluted

income (loss) per share - fully diluted

Commitments and contingencies

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

care and maintenance.

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

cost-recovery, and the other for water treatment.

As at September 30, 2021, $ 13,178,322 payable to the EPA has been included in accounts

payable and accrued liabilities.

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

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

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

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

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.

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.

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.

July 28, 2021, a lawsuit was filed in the US District Court for the District of Idaho brought by Crescent Mining, LLC (“Crescent”).

5 unchanged sentences

has requested unspecified damages.

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

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 denied the motion to dismiss filed by Placer Mining Corp.

for Crescent’s trespass,

nuisance and negligence claims.

Crescent later filed it amended complaint on April 1, 2022.

Placer Mining Corp.

and Bunker Hill Mining

Corp are named as co-defendants.

Bunker Hill and Placer have until May 20, 2022 to respond to the amended filing.

The Company believes

Crescent Mining LLC’s lawsuit against Placer Mining Corp.

is without merit and intends to defend Placer Mining Corp.

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.

October 26, 2021, the Company asserted claims against Crescent in a separate lawsuit.

Bunker Hill Mining Corporation v.

Technologies Inc.

et al, Case No.

2:21-cv-209-REP, filed in the same court on May 14, 2021.

The Company has subsequently executed a

tolling agreement with Venzee in exchange for dropping its lawsuit.

The Company originally filed this lawsuit on May 14, 2021

against other parties but has since filed an amended complaint to include its claims against Crescent.

Related party transactions

of key management personnel

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

1 unchanged sentence

Schedule of Related Party Transactions

September 30, 2021, $ 102,235 is owed to key management personnel (December 31, 2020 - $ 45,000 ) with all amounts included in accounts

payable and accrued liabilities

subscriptions

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

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

of debt owed to the CFO.

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

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

Hill Mining Corp.

to Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2021

in United States Dollars)

Financial instruments

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

excluding HST, accounts payable, accrued liabilities, DSU liability, lease liability and promissory note payable, all

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

origination of such instruments and their expected realization and current market rate of interest.

The Company measured its DSU

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

using level 3 inputs.

There were no transfers of financial instruments between levels 1, 2, and 3 during the period ended September

30, 2021 and year ended December 31, 2020.

currency risk

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

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

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

Concentration

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.

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.

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.

NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

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

which are basically statements about the future.

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

predict the future.

Words such as “plans,” “intends,” “will,” “hopes,” “seeks,”

“anticipates,” “expects “and the like often identify such forward looking statements, but are not the only indication

that a statement is a FORWARD-LOOKING statement.

Such forward looking statements include statements concerning THE COMPANY’S plans

and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present

and future operations will or may produce revenues, income or profits.

Numerous factors and future events could cause the Company to

change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future

operations to fail to produce revenues, income or profits.

Therefore, the reader is advised that the following discussion should be considered

in light of the discussion of risks and other factors contained in this report and in the Company’s other filings with the UNITED

STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”).

NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED

AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

March 31, 2022

March 31, 2021

Consulting Fees and Salaries

March 31, 2022 and March 31, 2021, $ 825,776 and $ 171,223 , respectively is owed to key management personnel with all amounts included

in accounts payable and accrued liabilities.

April 1, 2022, the Company announced that it had closed the private placement of 37,849,325

Special Warrants, and concurrent non-brokered

private placement of 1,471,644

units of the Company (the “Non-Brokered

Units”) for aggregate gross proceeds of approximately $ 11,796,297

(the “Offering”).

Of this amount,

$ 1,775,790 was received prior to the end of the quarter and is included in Subscriptions received in the equity section of the balance

to the Offering, the Company issued 37,849,325 Special Warrants at a price of $ 0.30 per Special Warrant.

Each Special Warrant is automatically

exercisable (without payment of any further consideration and subject to customary anti-dilution adjustments) into one unit of the Company

(a “Brokered Unit”) on the date that is the earlier of:

(i) the date that is three business days following the date on which

the Company has obtained both (A) a receipt from the Canadian security commission in each of the each of the provinces of Canada in which

the purchasers of the Special Warrants were sold for a (final) short-form Prospectus qualifying the distribution of the common stock

of the Company (“Common Shares”) and common stock purchase warrants of the Company (the “Warrants”) issuable

upon exercise of the Special Warrants (the “Final Qualification Prospectus”);

and (B) notification that the registration

statement, of which this Prospectus is a part, has been declared effective by the SEC (the “Registration Statement”);

(ii) October 1, 2022.

Brokered Unit consists of one Common Share and one Warrant.

Each whole Warrant will entitle the holder to acquire one Common Share (a

“Warrant Share”) for C$ 0.37 until April 1, 2025.

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.

addition, pursuant to the Offering, the Company issued 1,471,644 Non-Brokered Units at a price of $ 0.30 per Non-Brokered Units.

Non-Brokered Unit consists of one Common Share and one Warrant.

Each whole Warrant will entitle the holder to acquire one Warrant Share

for C$ 0.37 until April 1, 2025.

parties, including management, directors and officers purchased 4,537,160

of Non-Brokered Units for a total of $ 1,361,148

of gross cash proceeds to the Company.

May 13, 2022, the Company issued 10,416,667

units of the Company to Teck Resources

Limited at an issue price of C$ 0.30

per unit, or C$ 3,125,000

(US$ 2,500,000 ),

which together with the $ 500,000

cash payment made in January 2022, satisfies the purchase price

of $ 3,000,000

and applicable sales tax for the Pend Oreille Mill.

consists of one common share and one common share purchase warrant.

Each whole warrant entitles the holder to acquire one common share

at a price of C$ 0.37

for a period of three years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements