What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 241 added, 234 removed, 129 unchanged (79% of the section changed)

50 unchanged sentences

ounces of silver and 5 million tons of base metals between 1885 and 1981.

The Mine is located within Operable Unit 2 of the

The Bunker Hill Mine is located within Operable Unit 2 of the

Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921), where cleanup activities have been completed.

In early 2020, a new management team

comprised of former executives from Barrick Gold Corp.

early 2020, a new management team comprised of former executives from Barrick Gold Corp.

assumed leadership of the Company.

Since that time, the Company has conducted

multiple exploration campaigns, published multiple economic studies, purchased the Mine, entered into an agreement to purchase a

process plant, and advanced the rehabilitation and development of the Mine.

The Company is focused on completing the financing for,

and execution of, a potential restart of operations at the Mine.

Lease and Purchase of the Bunker Hill Mine

The Company purchased 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 toward 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.

The Amended Agreement also required

payments pursuant to an agreement with the U.S.

Environmental Protection Agency (“EPA”) whereby for so long as the Company

leases, owns and/or occupies the Mine, the Company 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

time, the Company has conducted multiple exploration campaigns, published multiple economic studies, purchased the Bunker Hill Mine,

purchased a process plant, and advanced the rehabilitation and development of the Mine.

The Company is focused on completing the financing

for, and execution of, a potential restart of operations at the Mine.

and Purchase of the Bunker Hill Mine

Company purchased the Bunker Hill Mine in January 2022, as described below.

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.

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

toward 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.

Amended Agreement also required payments pursuant to an agreement with the U.S.

Environmental Protection Agency (“EPA”) whereby

for so long as the Company leases, owns and/or occupies the Mine, the Company 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.

Immediately 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).

EPA 2018 Settlement Agreement & 2021 Amended

Settlement Agreement

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

Company completed the purchase of the Bunker Hill 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 2018 Settlement Agreement & 2021 Amended Settlement Agreement” section below).

2018 Settlement Agreement & 2021 Amended Settlement Agreement

Hill entered into a Settlement Agreement and Order on Consent with the EPA on May 15, 2018.

3 unchanged sentences

of $20,000,000 for historical water treatment cost recovery for amounts paid by the EPA from 1995 to 2017

of for water treatment services provided by the EPA at the Central Treatment Plant (“CTP”) in Kellogg, Idaho until

such time that Bunker Hill either purchases or leases the CTP or builds a separate EPA-approved water treatment facility

of for water treatment services provided by the EPA at the Central Treatment Plant (“CTP”) in Kellogg, Idaho until such

time that Bunker Hill either purchases or leases the CTP or builds a separate EPA-approved water treatment facility

a work program as described in the Ongoing Environmental Activities section of this study

1 unchanged sentence

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

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

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

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

11 unchanged sentences

$2,000,000 plus accrued interest

resumption of payments in 2024 were agreed in order to allow the Company to generate sufficient revenue from mining activities at the Mine to address remaining payment obligations from free cash flow.

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

that have been incurred over the period from 2018 through 2021.

This approximately $2,900,000 settlement payment was to be made

within 90 days of the execution of the Amendment.

changes in payment terms and schedule, are contingent upon the Company securing Financial Assurance in the form of performance bonds

or letters of credit deemed acceptable to the EPA totaling $17,000,000.

These assurances correspond to the Company’s cost recovery

obligations to be paid in 2024 through 2029 as outlined above.

Should the Company fail to make its scheduled payment, the EPA can draw

against this financial assurance.

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

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

changes in payment terms and schedule were contingent upon the Company securing financial assurance in the form of performance bonds

or letters of credit deemed acceptable to the EPA totaling $17,000,000, corresponding to the Company’s cost recovery obligations

to be paid in 2024 through 2029 as outlined above.

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

financial assurance.

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

If the Company does not post an Interim Financial Assurance within 90 days of execution of the Amendment, or fail to post the Final Financial

Assurance within 180 days of the execution of the Amendment, the terms of the original agreement will be reinstated.

On March 22, 2022, the Company reported that in

consultation with the EPA, it has committed to meet the $2,900,000 payment and Financial Assurance obligations by 180 days from the effective

date of the Amended Settlement Agreement.

As at March 31, 2022, the Company had

not secured the interim financial assurance, and therefore the contingency had not been removed or satisfied.

Further, as of the date

of this filing, the financial assurance has not been secured, and as a result, the liability to the EPA is accounted for with no effectivity

of the Amendment, with the liabilities each reflected as current liabilities.

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

November 1, 2021

$ 11,000,000 (aggregate amounts from 2018,

2019, 2020 and 2021)

November 1, 2022

November 1, 2023

November 1, 2024

$ 2,000,000 plus accrued interest

Project Finance Package

December 20, 2021, the Company announced the execution of a non-binding term sheet outlining a $50 million 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 “Royalty Convertible Debenture”), a $5,000,000 convertible debenture (the “Convertible Debenture”), and

a multi-metals stream of up to $37,000,000 (the “Stream”, together with the Royalty Convertible Debenture and the Convertible

Debenture, the “Project Financing Package”).

closed the $8,000,000 Royalty Convertible Debenture in January 2022.

The Royalty Convertible Debenture 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

Royalty Convertible Debenture will cease to exist and the Company will grant a royalty for 1.85% of life-of-mine gross revenue from mining

claims considered to be historically worked, contiguous to current accessible underground development, and covered by the Company’s

2021 ground geophysical survey (the “SRSR Royalty”).

If the Company

failed to post the final financial assurance within 180 days of the execution of the Amendment, the terms of the original agreement would

be reinstated.

the quarter ended June 30, 2022, the Company was successful in obtaining the financial assurance.

Specifically, a $9,999,000 payment

bond and a $7,001,000 letter of credit were secured and provided to the EPA.

This milestone provides for the Company to recognize the

effects of the change in terms of the EPA liability as outlined in the December 19, 2021, agreement.

Once the financial assurance was

put into place, the restructuring of the payment stream under the Amendment occurred with the entire $17,000,000 liability being recognized

as long-term in nature.

The aforementioned payment bond and letter of credit are secured by $2,475,000 and $7,001,000 of cash deposits,

respectively.

Finance Package with Sprott Private Resource Streaming & Royalty Corp.

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.

The 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 term sheet consisted of

an $8,000,000 royalty convertible debenture (the “RCD”), a $5,000,000 convertible debenture (the “CD1”), and

a multi-metals stream of up to $37,000,000 (the “Stream”).

The CD1 was subsequently increased to $6,000,000, increasing the project financing package to $51,000,000.

June 17, 2022, the Company consummated a new $15,000,000 convertible debenture (the “CD2”).

As a result, total potential

funding from SRSR was further increased to $66,000,000 including the RCD, CD1, CD2 and the Stream (together, the “Project

Financing Package”).

Company closed the $8,000,000 RCD 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 July 7, 2023 (subsequently amended as described below).

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.

Convertible Debenture is 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 Convertible Debenture.

In the event of non-conversion,

the principal of the Royalty Convertible Debenture will be repayable in cash.

The Company also closed the $6,000,000 Convertible

Debenture in January 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 7, 2023.

the closing of the Stream, the Convertible Debenture is convertible into Common Shares at a price of C$0.30 per Common Share, subject

to stock exchange approval.

Alternatively, SRSR may elect to retire the Convertible Debenture with the cash proceeds from the Stream.

The Company may elect to repay the Convertible Debenture early;

if SRSR elects not to exercise its conversion option at such time, a

minimum of 12 months of interest would apply.

Oreille Process Plant

The RCD was initially 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

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

with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the RCD, including an

amendment of the maturity date from July 7, 2023, to March 31, 2025.

The parties also agreed to enter into a Royalty Put Option such

that in the event the RCD is converted into a royalty as described above, the holder of the royalty will be entitled to resell the royalty

to the Company for $8,000,000 upon default under the CD1 or CD2 until such time that the CD1 and CD2 are paid in full.

Company closed the $6,000,000 CD1 on January 28, 2022, which was increased from the previously announced $5,000,000.

The CD1 bears interest

at an annual rate of 7.5%, payable in cash or shares at the Company’s option, and matures on July 7, 2023 (subsequently amended,

as described below).

The CD1 is secured by a pledge of the Company’s properties and assets.

Until the closing of the Stream, the

CD1 was to be convertible into Common Shares at a price of C$0.30 per Common Share, subject to stock exchange approval (subsequently

amended, as described below).

Alternatively, SRSR may elect to retire the CD1 with the cash proceeds from the Stream.

The Company may

elect to repay the CD1 early;

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

with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the CD1, including that

the maturity date would be amended from July 7, 2023, to March 31, 2025, and that the CD1 would remain outstanding until the new maturity

date regardless of whether the Stream is advanced, unless the Company elects to exercise its option of early repayment.

Company closed the $15,000,000 CD2 on June 17, 2022.

The CD2 bears interest at an annual rate of 10.5%, payable in cash or shares at

the Company’s option, and matures on March 31, 2025.

The CD2 is secured by a pledge of the Company’s properties and assets.

The repayment terms include 3 quarterly payments of $2,000,000 each beginning June 30, 2024, and $9,000,000 on the maturity date.

light of the Series 2 Convertible Debenture financing, the previously permitted additional senior secured indebtedness of up to $15 million

for project finance has been removed.

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 including confirmation of full project

funding by an independent engineer appointed by SRSR.

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 (subsequently amended, as described below).

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.

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.

As of June 30,

2022, the Stream had not been advanced.

with the funding of the CD2 in June 2022, the Company and SRSR agreed that the minimum quantity of metal delivered under the Stream,

if advanced, will increase by 10% relative to the amounts noted above.

January 25, 2022, the Company announced that it had 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”) in eastern Washington State, approximately 145 miles from the Mine by road.

site (the “Process Plant”) in eastern Washington State, approximately 145 miles from the Bunker Hill Mine by road.

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

1 unchanged sentence

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 7, 2022, the Company announced the signing

of an Asset Purchase agreement for the purchase of the Pend Oreille Mill.

The Company paid a $500,000 non-refundable deposit in January 2022.

March 31, 2022, the Company announced that it had 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.

for the Process Plant by way of an equity issuance of the Company.

Teck will receive 10,416,667 units of the Company (the “Teck

4 unchanged sentences

Share for a period of three years.

The equity issuance occurred on May 13, 2022.

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

The Company intends this property to serve as a strategic

asset for the restart of the Mine, optimizing construction efficiency and costs while providing improved access to prospective areas

identified by our recent geophysics survey.

The equity issuance and purchase of the Process Plant occurred on May 13, 2022.

of Operations

following discussion and analysis provide information that is believed to be relevant to an assessment and understanding of the results

of operation and financial condition of the Company for the three months ended March 31, 2022 and March 31, 2021.

Unless otherwise stated,

all figures herein are expressed in U.S.

of operation and financial condition of the Company for the three and six months ended June 30, 2022 and June 30, 2021.

Unless otherwise

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

dollars, which is the Company’s functional currency.

of the three months ended March 31, 2022 and 2021

the three months ended March 31, 2022, and 2021, respectively, the Company generated no revenue.

the three months ended March 31, 2022 and 2021, the Company reported total operating expenses of $5,486,674 and $4,623,974, respectively.

increase in total operating expenses is due to an increase in mine preparation costs in the most recent quarter as the Company ramps

up its preparations to put the mine into production and legal and accounting expenses and consulting expenses required to accomplish

the significant events of the quarter (convertible debentures, mine purchase and preparation of the placement of Special Warrants that

closed the day after the close of the quarter) when compared to the three-month period ended March 31, 2021.

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

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

Management determined that costs of the mine in

the most recent quarter constituted mine preparation costs rather than exploration costs, since it was not focused on expanding the mineral

resources, but was invested to execute on the tasks and projects required to get the mine into shape for production activities.

indirect expenses may be reported as operation and administration expense or consulting expense on the condensed interim consolidated

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

of the three and six months ended June 30, 2022 and 2021

the six months ended June 30, 2022 and 2021, respectively, the Company generated no revenue.

During the three and six months ended June 30, 2022,

the Company reported total operating expenses of $3,979,862 and $9,466,536, respectively.

Compared to the three and six months ended June

30, 2021, the Company reported total operating expenses of $5,295,557 and $9,919,531, respectively.

The decrease in total operating expenses is primarily

due to a decrease in exploration costs and operation and administration costs when compared to the three and six-month periods ended June

The Company was engaged in an active exploration campaign during the three and six-month periods ended June 30, 2021, whereas

the Company’s primary focus during the three and six-month periods ended June 30, 2022 was on advancing mine restart efforts, which

was accomplished with a lower level of expenditure.

The significant increase in consulting fees reflects

the engagement of numerous legal, accounting, engineering and other professional firms to assist the Company in consummating several complex

debt and equity financings, the purchases of the Mine, the EPA financial assurance requirements, fair value measurements of complex instruments,

and advancement of project activities.

These fees were somewhat offset by a decrease in operational and administration expenses.

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

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

Management determined that costs of the

mine in the most recent quarter constituted mine preparation costs rather than exploration costs, since it was not focused on

expanding the mineral resources, but was invested to execute on the tasks and projects required to get the mine into shape for

production activities.

Certain indirect expenses may be reported as operation and administration expense or consulting expense on

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

and Capital Resources

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

The Company has incurred

losses since inception resulting in an accumulated deficit of $75,372,036 and further losses are anticipated in the

development of its business.

Additionally, the Company owes a total of $12,000,000 to the EPA (see Note 6) that is classified

as current liability unless and until the Company can consummate financial assurances that would reclassify this liability to

long-term debt.

The Company owes an additional $5,185,706 to the EPA and IDEQ that is due within 12

The Company owes a total of $3,540,852, net of discount, to the EPA that is classified as long-term debt.

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.

This raises substantial doubt about the Company’s

ability to continue as a going concern.

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

generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its

liabilities arising from normal business operations when they come due.

The accompanying condensed interim consolidated financial

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

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

These 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.

Debentures and Mine Purchase

described above, in January 2022, the Company closed on two convertible debentures totaling $14,000,000 and used the proceeds to purchase

the Mine for a total capitalized cost of $14,247,210, also as described above, as well as satisfy the $2,000,000 EPA

payment requirement, the $500,000 deposit requirement on the upcoming plant equipment purchase, the purchase of 225 acres and fund its

continuing working capital requirements.

These unaudited condensed interim consolidated financial

statements have been prepared on a going concern basis.

The Company has incurred losses since inception resulting in an accumulated deficit

of $63,317,255 and further losses are anticipated in the development of its business.

Additionally, the Company owes a total of $7,072,410

net of discount to the EPA (see Note 6) 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

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

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

Its ability to continue as a going concern

is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing

to meet its obligations and repay its liabilities arising from normal business operations when they come due.

The accompanying condensed

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

Management is considering various financing

alternatives including, but not limited to, raising capital through the capital markets, debt and multi-metals stream financings.

These unaudited 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 in existence.

ability of the Company to emerge from the exploration stage is dependent upon, among other things, closing on the multi-metals stram

transaction (see note 7), obtaining additional financing to continue operations, explore and developing the mineral properties and the

discovery, development, and sale of reserves.

and Equity Financings, EPA obligations, and Mine Purchase

As described above, during the six months ended June

30, 2022, the Company closed on three convertible debentures totaling $29,000,000 and equity financings (net of issuance costs) totaling

$7,769,745 and used the proceeds to purchase the Bunker Hill Mine, as well as satisfy short-term obligations to the EPA including satisfaction

of its financial assurance commitments, cost recovery and water treatment payments, advancement of mine restart activities and the funding

of working capital requirements.

Assets and Total Assets

of March 31, 2022, the Company had:

As of June 30, 2022, the Company’s balance sheet

reflects that the Company had:

i) total current assets of $16,858,234, compared to total current assets of $3,622,548 at December 31,

2021 – an increase of $13,235,686;

and ii) total assets of $19,089,557, compared to total assets of $4,071,796 at

December 31, 2021 – an increase of $15,017,761.

The increase in current assets was due to an increase in available cash

as a result of the proceeds from the convertible debentures and the deposit toward the purchase of the Pend Oreille Mill, offset

by a decrease in prepaid mine acquisition costs held at December 31, 2021 toward the purchase of the Mine and financing activities related

to the convertible debentures.

Total assets increased principally due to the increase in cash and the purchase of the Mine and mining

interest assets, offset by the decrease in prepaid costs related to the anticipated mine acquisition and financing activities.

Current Liabilities and Liabilities

of March 31, 2022, the Company had total current liabilities of $24,872,184 and total liabilities of $54,291,835,

compared to total current liabilities of $22,795,277 and total liabilities of $38,314,164 at December 31, 2021.

The increase in the

current liabilities is reflective of increases in accrued liabilities, interest payable and EPA water treatment payable and current

portion of the EPA liability assumed upon the purchase of the Mine, offset by decreases in accounts payable and the short-term DSU

Total liabilities increased as a result of the two convertible debentures, the net present value of the long-term portion

of the EPA liability assumed with the purchase of the Mine and subscriptions payable for cash received during the quarter for

the financing which closed subsequent to the end of the quarter, offset by the decrease in the long-term derivative warrant

the quarter ended March 31, 2022, the Company had a net cash increase of $2,524,017, which represents cash provided from convertible

debentures and subscriptions received, with proceeds used to fund mining operations and purchase the Mine and real estate

assets and make a deposit on future equipment purchases.

the quarter ended March 31, 2022, cash of $6,839,679 was used in operating activities.

This compares with cash used in operating

activities of $4,031,935 for the quarter ended March 31, 2021.

the quarter ended March 31, 2022, cash of $6,379,672 was used in investing activities for the purchase of the Mine,

equipment, real estate and a deposit on the purchase of plant equipment, compared with no cash used for investing activities in the quarter

ended March 31, 2021

the quarter ended March 31, 2022, cash of $15,743,368 was provided by financing activities by the two convertible debentures and subscriptions

received for an upcoming financing, offset by cash used for lease payments, compared with cash of $5,976,675 provided by financing activities

in the quarter ended March 31, 2021

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 sheet.

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 and members of the Board of Directors purchased 4,537,160 of Non-Brokered Units for a total of $1,361,148

of cash proceeds to the Company.

On 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 taxes

for the Pend Oreille Mill.

Each unit 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.

and ii) total assets of assets of $36,662,582, compared to total current assets of $4,071,796

at December 31, 2021 – an increase of $32,590,786.

The increase in current assets was primarily due to an increase in available

cash as a result of the proceeds from the convertible debentures and equity financings.

Total assets increased principally due to the

increase in cash from financings and the purchase of the Bunker Hill Mine.

Current Liabilities and Total Liabilities

As of June 30, 2022, the Company’s balance sheet

reflects that the Company had total current liabilities of $10,333,772 and total liabilities of $56,110,157, compared to total current

liabilities of $22,795,277 and total liabilities of $38,314,164 at December 31, 2021.

The decrease in the current liabilities is primarily

reflective of the EPA cost recovery liability being moved from current to long term liabilities.

Total liabilities increased as a result

of the closing of the three convertible debentures, offset by the decrease in the long-term derivative warrant liability, promissory note.

Working Capital and Shareholders’ Deficit

On June 30, 2022, the Company had working

capital of $6,524,462 and a shareholders’ deficit of $19,447,575 compared to negative working capital of $19,172,729 and a

shareholders’ deficit of $34,242,368 for the year ended December 31, 2021.

Working capital increased during the six months

ended June 30, 2022 primarily due to funding from debt and equity financings, and the reclassification of cost recovery liabilities

from current to long-term.

Shareholders’ equity increased due to net income of $12,054,781 and $9,173,895 for the three and

six month periods ended June 30, 2022, driven by decreases in the fair value of the derivative warrant liability.

the six months ended June 30, 2022, the Company had a net cash increase of $5,115,610, which represents cash provided from convertible

debentures and equity financings, with proceeds used to satisfy short-term obligations with the EPA, purchase of the Bunker Hill Mine

and a processing plant, partial repayment of the outstanding promissory note, advancement of mine restart activities, and funding of

working capital requirements.

During the six months ended June 30, 2022, cash of

$23,070,946 was used in operating activities, primarily due to the usage of $9,476,000 to secure the Company’s financial assurance

obligations with the EPA, $3,000,000 of payments against EPA cost recovery and water treatment payables, funding of mine restart activities,

and other working capital requirements.

This compares with cash used in operating activities of $7,040,266 for the six months ended June

the quarter ended June 30, 2022, cash of $7,518,361 was used in investing activities for the purchase of the Bunker Hill Mine, a process

plant, equipment, and real estate, compared with $94,693 used for investing activities in the six months ended June 30, 2021

the six months ended June 30, 2022, cash of $35,704,917 was provided by financing activities by the three convertible debentures and

the equity financings, offset by cash used for lease payments, compared with cash of $5,943,687 provided by financing activities in the

six months ended June 30, 2021

July 2022, the Company issued 1,975,482 common shares in connection with its election to satisfy interest payments under the outstanding

convertible debentures for the three months ending June 30, 2022.

July 29, 2022, the Company held its Annual General Meeting during which all director nominations and other proposals were approved.

included the re-appointment of Dr.

Mark Cruise, whose initial appointment was announced on June 30, 2022, replacing Mr.

Wayne Parsons.

The following notable proposals were approved:

(i) an increase in the authorized common share capital of the Company to 1,500,000,000

common shares, (ii) authorization for a share consolidation of up to 50:1 if enacted within the following two years, and (iii) an increase

in the maximum RSUs issuable under the Company’s Restricted Share Unit plan.

accounting estimates

28 unchanged sentences

Financing Transactions

Company has entered into convertible debentures that contain embedded derivatives arising from contractual terms that allow prepayment,

payment of interest with shares of the Company’s stock, conversion of the debentures into shares of the Company’s stock,

or conversion into a royalty stream.

These embedded derivatives require the use of valuation models, techniques and assumptions that

utilize estimates of several key valuation inputs.

The embedded derivatives require revaluation at each quarter end, with updates to

and re-evaluation of each of the key valuation inputs at each revaluation.

The Company has engaged in a series of complex financing

transactions, which involve the issuance of certain conversion features embedded in the debt, including options to receive interest payments

in the form of the Company’s shares and to purchase a gross revenue royalty in the Bunker Hill Mine.

These instruments require evaluation

to determine fair values of the debt and the embedded conversion features, which require complex calculations of many appropriate inputs

to the valuation model variables, including but not limited to the expected life of the debt instrument and conversion feature derivative

liability, volatility of the Company’s shares, effective discount rates, probabilities of operational assumptions as related to

an anticipated royalty revenue stream, the Company’s own credit risk and other inputs.

The Company has to make estimates of each

of these inputs in applying a valuation model to account for the derivative values, the presentation of these values, the periodic changes

to the fair values and the recognition of these changes.

Sheet Arrangements

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis