What changed in this filing

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Item 1. Financial Statements

2023-05-12 compared with 2022-11-04 · 451 added, 715 removed, 434 unchanged (73% of the section changed)

1 unchanged sentence

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

or the “Registrant”) a.

Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations

of the Securities and Exchange Commission.

6 unchanged sentences

in United States Dollars)

September 30,

Current assets

Restricted Cash (note 6)

Restricted cash

Accounts receivable and prepaid expenses (note 3)

Short-term deposit (note 3)

Prepaid mine deposit and acquisition costs (note 5)

Prepaid finance costs

Total current assets

2 unchanged sentences

Equipment (note 4)

Right-of-use assets (note 4)

Right-of-use asset (note 4)

Long term deposit

Bunker Hill Mine and mining interests (note 5)

4 unchanged sentences

Accrued liabilities

EPA water treatment payable (note 6)

Interest payable (notes 6 and 7)

DSU liability (note 12)

Promissory notes payable (note 7)

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

Current portion of lease liability (note 8)

Interest payable (note 7)

Derivative warrant liability (note 9)

Deferred share units liability (note 11)

Promissory notes payable (note 7)

Total current liabilities

3 unchanged sentences

Royalty convertible debenture (note 7)

EPA cost recovery liability - long-term, net of discount (note 6)

Environment protection agency cost recovery liability, net of discount (note 6)

Derivative warrant liability (note 9)

6 unchanged sentences

Additional paid-in-capital (note 9)

Accumulated other comprehensive income (note 7)

Deficit accumulated during the exploration stage

Special warrants (note 9)

Accumulated other comprehensive income

Accumulated deficit

( 69,801,410 )

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses

2 unchanged sentences

Legal and accounting

Consulting and wages

Loss from operations

1 unchanged sentence

( 5,486,674 )

( 13,291,484 )

( 12,384,474 )

Other income or gain (expense or loss)

Change in derivative liability (note 9)

Gain (loss) on foreign exchange

Gain on fair value of convertible debentures

Gain on EPA debt extinguishment (note 6)

Interest expense

( 1,026,233 )

Gain on FV of convertible debentures (note 7)

Gain on modification of warrants (note 9)

Gain on foreign exchange

Loss on FV of debenture derivative

Interest expense (note 7)

( 1,324,629 )

Financing costs (note 9)

Debenture finance costs

Loss on debt settlement (note 7)

Net income (loss) for the period

( 2,880,886 )

Finance costs

Loss on debt settlement

Net income for the period

Other comprehensive income, net of tax:

Gain on change in FV on own credit risk

Other comprehensive income

Comprehensive income

Net income per common share – basic

Net income per common share – fully diluted

Other comprehensive income (loss), net of tax

Gain on change in FV on own credit risk (note 7)

Other comprehensive income (loss)

Comprehensive income (loss)

( 2,880,886 )

Net income/(loss) per common share – basic

Net income/(loss) per common share – fully diluted

Weighted average common shares – basic

4 unchanged sentences

in United States Dollars)

September 30,

Operating activities

Net income (loss) for the period

$ ( 2,880,886 )

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

Stock-based compensation

Stock-based compensation (note 10)

Depreciation expense

Change in derivative liability

Change in fair value of warrant liability

( 4,226,574 )

( 3,454,008 )

Gain on warrant extinguishment

Units issued for services

Imputed interest expense on lease liability

Interest expense

Finance costs

Interest expense on lease liability (note 8)

Financing costs

Foreign exchange loss (gain)

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

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

Loss on debt settlement

Amortization of EPA discount

Gain on fair value of convertible debt derivatives

( 3,041,056 )

Gain on EPA debt extinguishment

(Gain) loss on fair value of derivatives

( 1,689,701 )

Imputed interest expense on convertible debentures

Changes in operating assets and liabilities:

Restricted cash

( 9,476,000 )

Accounts receivable

Deposit on plant demobilization

( 1,000,000 )

Accounts receivable and prepaid expenses

Prepaid finance costs

Prepaid expenses

( 1,064,109 )

Accounts payable

Accrued liabilities

Accrued EPA water treatment

Accrued EPA/IDEQ water treatment

EPA cost recovery payable

( 2,000,000 )

Interest payable – EPA

Interest payable

3 unchanged sentences

Investing activities

Purchase of spare inventory

Deposit on plant

Land purchase

1 unchanged sentence

( 5,524,322 )

Process plant

Mine improvements

Purchase of Process plant

( 2,815,398 )

Purchase of machinery and equipment

3 unchanged sentences

Proceeds from convertible debentures

Proceeds from issuance of shares, net of issue costs

Proceeds from issuance of special warrants

Proceeds from warrants exercise

Proceeds from promissory note

Repayment of promissory note

( 1,000,000 )

Proceeds from subscriptions received

Lease payments

1 unchanged sentence

Net change in cash

( 1,055,412 )

Cash, beginning of period

2 unchanged sentences

Non-cash activities

Units issued to settle accounts payable and accrued liabilities

Units issued to settle interest payable

Mill purchase for shares and warrants

Units issued to settle DSU/RSU/Bonuses

Accounts payable, accrued liabilities, and promissory notes settled with

special warrants issuance

Interest payable settled with common shares

Reconciliation from Cash Flow Statement to Balance

Cash and restricted cash

end of period

Less restricted cash

Cash end of period

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

8 unchanged sentences

Stock-based compensation

Stock subscription payable

Net loss for the period

( 2,880,886 )

Balance, March 31, 2022

$ ( 75,372,036 )

$ ( 35,202,278 )

Stock-based compensation

Stock subscription received for units

Compensation options

Shares issued for interest payable

Shares issued for RSUs vested

Non brokered shares issued for C$ 0.30

Special warrant shares issued for C$ 0.30

( 1,775,790 )

Contractor shares issued for C$ 0.30

Shares issued for Process plant purchase

Shares issued @ $0.32 per share

Shares issued @ $0.32 per share, shares

Shares issued for debt settlement at $0.45

Shares issued for debt settlement at $0.45, shares

Warrant valuation

( 6,246,848 )

Gain on fair value from change in credit risk

Net income for the period

Balance, June 30, 2022

$ ( 63,317,255 )

$ ( 19,447,575 )

Stock-based compensation

Shares issued for RSUs vested

Shares issued for interest payable

Shares issued for warrant exercise

Special warrants

Gain on fair value from change in credit risk

Net income for the period

Balance, September 30, 2022

Balance, March 31, 2023

$ ( 69,801,410 )

3 unchanged sentences

$ ( 34,242,368 )

Stock-based compensation

Shares issued at C $ 0.40

Shares issued for debt settlement at C$ 0.58

Shares issued for RSUs vested

Warrant valuation

( 3,813,103 )

Net income for the period

Balance, March 31, 2021

balance value

$ ( 72,491,150 )

1 unchanged sentence

Stock-based compensation

Shares issued for RSUs vested

Net income for the period

Balance, June 30, 2021

Stock subscription received for units

Net loss for the period

( 2,880,886 )

Beginning balance, value

Net income (loss)

( 2,880,886 )

Stock-based compensation

Shares issued for RSUs vested

Net income for the period

Net income (loss)

Balance, September 30, 2021

Balance, March 31, 2022

$ ( 75,372,036 )

$ ( 35,202,278 )

Ending balance, value

balance value

$ ( 75,372,036 )

3 unchanged sentences

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

Months Ended March 31, 2023

in United States Dollars)

11 unchanged sentences

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

Valley”, formerly American Zinc Corp.), an Idaho corporation created to facilitate the work being conducted at the Bunker Hill

Mine in Kellogg, 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.

2 unchanged sentences

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 $ 59,626,902 and further losses are anticipated in the development of its business.

Additionally, the Company owes a total of $ 3,847,141 to the Environmental Protection Agency (“EPA”) (see Note 6) for water

treatment that is classified as current.

The Company also owes a total of $ 7,420,024 , 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.

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 unaudited 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, debt, and

closing on the multi-metals stream transaction (see note 7).

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.

Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of epidemics, pandemics,

or other health crises, including the recent outbreak of respiratory illness caused by the novel coronavirus (“COVID-19”).

Although the pandemic has subsided significantly, the Company cannot accurately predict the impact a COVID-19 resurgence would have on

its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate

geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions

imposed by governments of affected countries.

In addition, a significant outbreak of contagious diseases in the human population could

result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in

an economic downturn that could further affect the Company’s operations and ability to finance its operations.

The Company has incurred

losses since inception resulting in an accumulated deficit of $ 69,801,410

as at March 31, 2023 and further losses are anticipated in the development of its business.

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.

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, debt, and closing

on the multi-metals stream transaction (see note 7).

These unaudited 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.

Russia/Ukraine Crisis:

10 unchanged sentences

in precious metals pricing or changes in commodities pricing which may alternately affect the Company either positively or negatively.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Basis of Presentation

Significant Accounting Policies :

of Presentation

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

9 unchanged sentences

Management’s Discussion and Analysis, for the year ended December 31, 2022.

The financial results for the three and nine months

ended September 30, 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.

Plant & Equipment

The interim results for the period ended March 31,

2023, 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.

preparation of financial statements in conformity with accounting principles generally accepted in the United States requires

management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for

items such as mineral reserves, useful lives and depreciation methods, potential impairment of long-lived assets, deferred income

taxes, settlement pricing of commodity sales, fair value of stock based compensation, accrued liabilities, estimation of asset

retirement obligations and reclamation liabilities, convertible debentures, and warrants.

Estimates are based on historical experience and various other assumptions that

the Company believes to be reasonable.

Actual results could differ from those estimates.

Accounts receivable and prepaid expenses

receivable and prepaid expenses consists of the following:

Schedule of Accounts receivable and prepaid expenses

Prepaid expenses and deposits

Environment protection agency overpayment (note 6)

Equipment, Right-of-Use asset and Process Plant

consists of the following:

September 30,

Schedule of Equipment

Equipment, gross

1 unchanged sentence

Equipment, net

total depreciation expense for equipment during the three and nine months ended September 30, 2022 was $ 42,814 and $ 119,905 , respectively.

Compared to the three and nine months ended September 30, 2021 was $ 34,565 and $ 98,961 , respectively.

See Note 4 for additional depreciation

on the right-of-use asset.

Plant Purchase from Teck Resources Limited

May 13, 2022, the Company completed purchase of a comprehensive package of equipment and parts inventory from Teck Resources Limited

package comprises substantially all processing equipment of value located at the Pend Oreille mine site, including complete

crushing, grinding and flotation circuits suitable for a planned ~1,500 ton-per-day operation at the Bunker Hill site, and total

inventory of nearly 10,000 components and parts for mill, assay lab, conveyer, field instruments, and electrical

purchase of the mill has been valued at:

consideration given, comprised of $ 500,000 nonrefundable deposit remitted on January 7, 2022 and $ 231,000 sales tax remitted on May

13, 2022, a total of $ 731,000 cash remitted.

of common shares issued on May 13, 2022 at the market price of that day, a value of $ 1,970,264 .

value of the warrants issued together with the inputs, as determined by a binomial model, resulted in a fair value of $ 1,273,032 .

a result, the total value of the mill purchase was determined to be $ 3,974,296 .

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

process plant was purchased in an assembled state in the seller’s location, and included major processing systems, significant

components, and a large inventory of spare parts.

The Company has disassembled and transported it to the Bunker Hill site, and will be

reassembling it as an integral part of the Company’s future operations.

The Company determined that the transaction should be accounted

for as an asset acquisition, with the process plant representing a single asset, with the exception of the inventory of spare parts,

which has been separated out and appears on the balance sheet as a current asset in accordance with a preliminary purchase price allocation.

As the plant is demobilized, transported and reassembled, installation and other costs associated with these activities will be captured

and capitalized as components of the asset.

September 30, 2022, the asset consists of the following:

total depreciation expense relating to equipment during the three months ended March 31, 2023 and March 31, 2022 was $ 44,692

and $ 54,015 ,

respectively.

Process Plant Purchase from Teck Resources Limited

On May 13, 2022, the Company completed purchase of

a comprehensive package of equipment and parts inventory from Teck Resources Limited (“Teck”).

The package comprises substantially

all processing equipment of value located at the Pend Oreille mine site, including complete crushing, grinding and flotation circuits

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

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

The purchase of the mill has been valued at:

Cash consideration given, comprised of $ 500,000 non-refundable deposit remitted on January 7, 2022 and $ 231,000 sales tax remitted on May 13, 2022, a total of $ 731,000 cash remitted.

Value of common shares issued on May 13, 2022 at the market price of that day, a value of $ 1,970,264 .

Fair value of the warrants issued together with the inputs, as determined by a binomial model, resulted in a fair value of $ 1,273,032 .

As a result, the total value of the mill at the time of purchase was determined to be $ 3,974,296 , including $ 341,004 of spare parts inventory.

The process plant was purchased in an assembled

state in the seller’s location, and included major processing systems, significant components, and a large inventory of spare

The Company has disassembled and transported it to the Bunker Hill site, and will be reassembling it as an integral part of

the Company’s future operations.

The Company determined that the transaction should be accounted for as an asset acquisition,

with the process plant representing a single asset, with the exception of the inventory of spare parts, which has been separated out

and appears on the balance sheets as a non-current asset in accordance with a preliminary purchase price allocation.

is demobilized, transported and reassembled, installation and other costs associated with these activities will be captured and

capitalized as components of the asset.

plant consists of the following:

of Plant Asset Consists

September 30,

Sales tax paid

Value of shares issued

Value of warrants issued

Total plant & inventory purchased

Site preparation costs

Plant purchase price less inventory

Demobilization

Less spare parts inventory

Site preparation costs

Pend Oreille plant asset, net

Additionally,

at September 30, 2022, the Company has paid a refundable deposit of $ 1,000,000 to Teck as security while demobilization activities are

This is classified as a short-term deposit on the balance sheet.

August 30, 2022, the Company entered into an agreement to purchase a ball mill from D’Angelo International LLC for $ 675,000 .

purchase of the mill is to be made in three cash payments.

by September 15, 2022 as a non-refundable deposit (paid)

by October 15, 2022 (paid)

by December 15, 2022

September 30, 2022, the Company paid $ 100,000 towards the purchase as a non-refundable deposit.

Right-of-Use Asset

The first two payments were made as follows:

on September 15, 2022 as a non-refundable long-term deposit

on October 13, 2022, as a refundable long-term deposit

of March 31, 2023, the Company had not made the final payment of $ 475,000 .

asset consists of the following:

of Right-of-use Asset

September 30,

Less accumulated depreciation

Loader accumulated depreciation

Right-of-use asset, net

total depreciation expense for the right-of-use asset during the three and nine months ended September 30, 2022 was $ nil and $ 52,353 ,

respectively.

Compared to the three and nine months ended September 30, 2021 was $ 26,594 and $ 79,783 , respectively.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Mining Interests

total depreciation expense during the three months ended March 31, 2023 and March 31, 2022 was $ 6,384

(relating to an expired lease), respectively.

Bunker Hill Mine and Mining Interests

Hill Mine Complex

15 unchanged sentences

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

(See also Note 6 Environmental

Protection Agency Agreement and Water Treatment Liabilities).

Company completed the purchase of the Mine on January 7, 2022.

6 unchanged sentences

prior years’ maintenance payments.

The carrying cost of the Mine is comprised of the following:

purchase of the mine has been valued on January 7, 2022:

Contract purchase price of $ 7,700,000 less $ 300,000 credit by seller for prior maintenance payments.

Net present value of water treatment cost recovery liability assumed of $ 6,402,425 .

Capitalized legal and closing costs of $ 444,785 .

As a result, the total

value of the mine at the time of purchase was determined to be $ 14,247,210 .

The carrying cost of the Mine is comprised of the

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 as guided by ASU 805-10.

During the three and nine months ended September

30, 2022, the Company has spent an additional $ 356,149 and $ 356,149 , respectively, in mine improvements.

Bunker Hill Mine and Mining interests

Capitalized development

Pend Oreille plant asset, net

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

purchase and leases

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 and Water Treatment Liabilities

Cost Recovery Payables

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

Agency (the “EPA”) whereby for so long as the Company leases, owns and/or occupies the Mine, the Company was required to

make payments to the EPA on behalf of Placer Mining in satisfaction of the EPA’s claim for cost recovery related to historical

treatment costs paid by the EPA from 1995 to 2017.

During the three months ended March 31, 2023, the Company entered into

a lease agreement with C & E Tree Farm LLC for the lease of a land parcel overlaying a portion of the Company’s existing mineral

claims package.

The Company is committed to making monthly payments of $ 10,000 through February 2026.

The Company has the option to purchase

the land parcel through March 1, 2026, for $ 3,129,500 less 50% of the payments made through the date of purchase.

Environmental Protection Agency and Water Treatment Liabilities (“EPA”)

Historical Cost Recovery Payables - EPA

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 was required to make payments to the EPA on behalf of Placer

Mining in satisfaction of the EPA’s claim for cost recovery related to historical treatment costs paid by the EPA from 1995 to

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

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, November 1, 2019, November 1, 2020, and November 1, 2021, payments were not made.

As a result, a total of $ 11,000,000 was outstanding

as of December 31, 2021, accounted for within current liabilities.

As the purchase of the Bunker Hill Mine (which would trigger the immediate

recognition of the remaining liabilities due through November 1, 2024) had not yet taken place, the remaining $ 8,000,000 cost recovery

liabilities were not recognized on the Company’s balance sheet as of December 31, 2021.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

2021, the Company engaged in discussions with the EPA to reschedule these payments in ways that enable the sustainable operation of the

Mine as a viable long-term business.

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.

The November 1, 2018, November 1, 2019, November 1, 2020, and November

1, 2021, payments were not made.

As a result, a total of $ 11,000,000 was outstanding as of December 31, 2021, accounted for within current liabilities.

As the purchase

of the Bunker Hill Mine (which would trigger the immediate recognition of the remaining liabilities due through November 1, 2024) had

not yet taken place, the remaining $ 8,000,000 cost recovery liabilities were not recognized on the Company’s consolidated balance

sheets as of December 31, 2021.

Through 2021, the Company engaged in discussions with the EPA to reschedule these payments in

ways that enable the sustainable operation of the Mine as a viable long-term business.

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

5 unchanged sentences

Pursuant to the terms of the Amended Settlement,

upon purchase of the Bunker Hill Mine and the satisfaction of financial assurance commitments (as described below), the $ 19,000,000 of

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

upon purchase of the Bunker Hill Mine and the satisfaction of financial assurance commitments (as described below), the $ 19,000,000

of cost recovery liabilities will be paid by the Company to the EPA on the following dates:

of Amended Settlement Environmental Protection Agency Agreement

8 unchanged sentences

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 within 180 days from the effective

date of the Amended Settlement Agreement.

Once put in place, 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 Assurance”).

The amount of the bonds

will decrease over time as individual payments are made.

Company completed the purchase of the Mine (see note 5) and made the initial $ 2,000,000 cost recovery payment on January 7, 2022.

with the purchase of the Mine, the Company assumed the balance of the EPA liability totaling $ 17,000,000 , an increase of $ 8,000,000 .

of March 31, 2022, the financial assurance had not yet been secured, and as such the Company accounted for the $17,000,000 liabilities

according to the previous payment schedule, resulting in $12,000,000 classified as a current liability and $5,000,000 as a long-term

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.

the quarter ended June 30, 2022, the Company was successful in obtaining the final 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 is secured by a $ 2,475,000 letter of credit.

The $ 2,475,000 and $ 7,001,000 letters

of credit are secured by $ 9,476,000 of cash deposits under an agreement with a commercial bank.

These cash deposits comprise the $ 9,476,000

of restricted cash shown within current assets as of September 30, 2022.

ASC 470-50, Debt Modifications and Extinguishments, the Company performed a comparison of NPV’s of the pre-settlement Cost Recovery

obligation to the post-settlement schedule of Cost Recovery obligation to determine this was an extinguishment of debt.

The Company recorded

a gain on extinguishment of debt totaling $ 8,614,103 .

The old debt, including any discount, was written off and the new payment stream

of the amended $ 17,000,000 table, including the new discount of $ 9,927,590 , using the effective interest rate of 19.95 %, was recorded

to result in a net liability of $ 7,072,410 , which is due long-term.

During the three and nine months ended September 30, 2022, the Company

recorded combined discount amortization expense of $ 347,614 and $ 631,701 on the discounted pre- and post-extinguishment liability, respectively,

bringing the net liability to $ 7,420,024 as of September 30, 2022.

As at September 30, 2022 interest of $ 192,923 ($ 306,501 at December

31, 2021) is included in interest payable on the condensed consolidated balance sheet.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Treatment Charges – EPA

to the cost recovery liabilities outlined above, the Company is responsible for the payment of ongoing water treatment charges.

treatment charges incurred through December 31, 2021 are payable to the EPA, and charges thereafter are payable to the Idaho Department

of Environmental Quality (“IDEQ”) given a handover of responsibilities for the Central Treatment Plant from the EPA to the

IDEQ as of that date.

The Company previously estimated a balance due to the EPA of $ 5,110,706 for ongoing water treatment through December

During the six months ended June 30, 2022, the Company received an invoice from the EPA for water treatment through October

As a result, the Company reversed its previous accruals for this period and adjusted its estimated charges for November and December

Through recent discussions with the EPA, the Company has confirmed that payments to the IDEQ for water treatment charges cannot

be netted against invoices payable to the EPA.

After taking this into account, the additional invoice received from the EPA, and a $ 1,000,000

payment made in April 2022, the Company has estimated water treatment payables to the EPA of $ 3,847,141 as of September 30, 2022 and

$ 5,110,706 at December 31, 2021, which is reflected in current liabilities.

Treatment Charges – IDEQ

water treatment charges beginning January 2022, the Company makes a monthly accrual of $ 80,000 to cover the IDEQ’s 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 credited to or paid by the Company once the actual annual costs are determined each year.

At September 30, 2022, the

Company has accrued $ 720,000 for water treatment costs to IDEQ and has prepaid $ 1,260,000 , leaving a net prepaid of $ 540,000 ($ nil at

December 31, 2021) which is included in prepaid expenses on the unaudited condensed interim consolidated balance sheet.

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 was scheduled to mature on March 15, 2022 ;

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.

the revised maturity of June 20, 2022, the note holder agreed to accept a further $ 500,000 payment by June 30, 2022, which the Company

paid, and the remaining principal and interest was deferred to November 30, 2022.

of financial assurance in the form of performance

bonds or letters of credit deemed acceptable to the EPA within 180 days from the effective date of the Amended Settlement.

place, 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 Assurance”).

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

Company completed the purchase of the Mine (see note 5) and made the initial $ 2,000,000

cost recovery payment on January 7, 2022.

with the purchase of the Mine, the

Company assumed the balance of the EPA liability totaling $ 17,000,000 , an increase of $ 8,000,000 .

This was capitalized as $ 6,402,425

to the carrying value of the Bunker Hill Mine at time of purchase, comprised of $ 3,000,000 of incremental current liabilities and $ 5,000,000

of non-current liabilities (discounted to $ 3,402,425 ).

During the year ended 2022, the financial assurance was put into place, enabling the restructuring

of the payment stream under the Amendment Settlement with the entire $ 17,000,000 liability being recognized as long-term in nature.

of March 31, 2023 (unchanged from December 31, 2022), the Company had two payment bonds of $ 9,999,000 and $ 5,000,000 , and

a $ 2,001,000 letter of credit, in place to secure this liability.

The collateral for the payment bonds is comprised of two letters of credit of $ 4,475,000 in aggregate, as well as land pledged by third parties with whom the company has entered into a financing cooperation

agreement that contemplates a monthly fee of $ 20,000 (payable in cash or common shares of the Company, at the Company’s election).

The letters of credit of $ 6,476,000 in aggregate are secured by cash deposits under an agreement with a commercial bank, which comprise

the $ 6,476,000 of restricted cash shown within current assets as of March 31, 2023 .

Company recorded discount amortization expense of $ 374,306 on the discounted liability, bringing the net liability to

$ 8,315,772 (inclusive of interest payable of $ 156,343 ).

Water Treatment Charges – IDEQ

to the cost recovery liabilities outlined above, the

Company is responsible for the payment of ongoing water treatment charges.

Water treatment charges incurred through December 31,

2021 were payable to the EPA, and charges thereafter are payable to the Idaho Department of Environmental Quality (“IDEQ”) given a handover

of responsibilities for the Central Treatment Plant from the EPA to the IDEQ as of that date.

Company currently makes monthly payments of $ 100,000 to the IDEQ as instalments toward the cost of treating water at the Central Treatment

Upon receipt of an invoice from the IDEQ for actual costs incurred, a reconciliation is performed relative to payments made, with

an additional payment made or refund received as applicable.

The Company accrues $ 100,000 per month based on its estimate of the monthly

cost of water treatment.

As of March 31, 2023 a prepaid expense of $ 30,000 (December 31, 2022:

$ 170,729 ) represents the difference between the estimated cost of water

treatment and net payments made by the Company to the IDEQ to date.

This balance has been recognized on the consolidated balance sheets

as accounts receivable and prepaid expenses.

Promissory Notes Payable and Convertible Debentures

Promissory Notes

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 Company purchased a land parcel for approximately $ 202,000

$ 202,000 on March 3, 2022, which may be used as security for the promissory note.

At September 30, 2022, the Company owes $ 1,500,000

in promissory notes payable, which is included in current liabilities on the condensed consolidated balance sheet.

Interest expense for

the three and nine months ended September 30, 2022 was $ 56,712 and $ 224,589 , respectively.

For the three and nine months ended September

30, 2021, interest expense was $ 8,219 and $ 8,219 , respectively.

At September 30, 2022 interest of $ 327,329 ($ 102,740 at December 31,

2021) is included in interest payable on the condensed consolidated balance sheet.

on March 3, 2022, which may be used as security

for the promissory note.

The promissory note was originally scheduled to mature on March 15, 2022, however was extended multiple times and is currently due on

June 15, 2023 .

Principal payments of $ 1,000,000 in aggregate were made in the year ended December 31, 2022.

March 31, 2023, the Company owes $ 1,500,000 in

promissory notes payable, which is included in current liabilities on the condensed interim consolidated balance sheets.

expense for the three months ended March 31, 2023 and 2022 was $ 55,479 and

respectively.

At March 31, 2023 financing costs of $ 439,521 ($ 384,041

at December 31, 2022) is included in interest payable on the condensed consolidated balance sheet.

The effective interest rate of the promissory note is 15 % .

On February 21, 2023, the Company issued a non-convertible

promissory note to a related party in the amount of $ 120,000 , and a separate non-convertible promissory note in the amount of $ 120,000

to another party.

Each promissory note bore fixed interest of $ 18,000 per annum, payable at maturity, which was the earlier of one year

or the receipt of an equity or debt financing.

Both promissory notes, including interest, were settled on March 27, 2023.

Finance Package with Sprott Private Resource Streaming & Royalty Corp.

1 unchanged sentence

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

non-binding term sheet with SRSR outlined a $ 50,000,000 project financing package that the Company expected to fulfill the majority of

its funding requirements to restart the Mine.

2 unchanged sentences

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

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

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

1 unchanged sentence

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

Royalty Convertible Debenture (RCD)

Royalty Convertible Debenture

Company closed the $ 8,000,000 RCD on January 7, 2022.

17 unchanged sentences

that the amendments in the terms of the RCD should not be treated as an extinguishment of the RCD, and have therefore been accounted

for as a modification as a result of the treatment the Company reported a gain of $607,261 in the statement of operations for the period

ended September 30, 2022.

Series 1 Convertible Debenture (CD1))

for as a modification.

Convertible Debenture (CD1)

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

14 unchanged sentences

The Company determined

that the amendments in the terms of the RCD should not be treated as an extinguishment of the CD1, and have therefore been accounted

for as a modification as a result of the treatment the Company reported a gain of $ 179,046 in the statement of operations for the period

ended September 30, 2022

that the amendments in the terms of the CD1 should not be treated as an extinguishment of the CD1, and have therefore been accounted

for as a modification.

Series 2 Convertible Debenture (CD2)

6 unchanged sentences

for project finance has been removed.

Company determined that in accordance with ASC 815, each debenture will be valued and carried as a single instrument, with the periodic

changes to fair value accounted through earnings, profit and loss.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Company determined that in accordance with ASC 815 Derivatives and Hedging, each debenture will be valued and carried as a single instrument,

with the periodic changes to fair value accounted through earnings, profit and loss.

with the approach above, the following table summarizes the key valuation inputs as at applicable valuation dates:

8 unchanged sentences

CD1 note(3) (2)(4)(5)(3)

RCD note (stream not advanced scenario)

RCD note (stream advanced) scenario

RCD note (2)(4)(5)

CD2 note(3) (2)(4)(5)(3)

RCD note (stream not advanced scenario)

RCD note (stream advanced) scenario

RCD note (stream not advanced scenario)

RCD note (stream advanced) scenario

RCD note (stream not advanced)

RCD note (stream advanced)

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

CD1 note(3) (2)(4)(5)(3)

RCD note (2)(4)(5)

CD2 note(3) (2)(4)(5)(3)

CD1 carried a Discount for Lack of Marketability (“DLOM”) of 5.0 % as of the issuance date and as of March 31, 2022.

CD2 carried a DLOM of 10.0 % as of the issuance date and June 30, 2022

and RCD carry an instrument-specific spread of 7.23 %, CD2 carries an instrument-specific spread of 9.32 %

conversion price of the CD1 is $ 0.219 and CD2 is $ 0.212

conversion price of the CD1 is $ 0.219 and CD2 is $ 0.212 as of December 31, 2022

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 59 % and 41 %, respectively.

resulting fair values of the CD1, RCD, and CD2 at the issuance dates, June 30, 2022, and as of September 30, 2022 were as follows:

valuation of the RCD is driven by the aggregation of (i) the present value of future potential cash flow to the royalty holder, in

the event that the RCD is converted to a royalty, utilizing an estimate of future metal sales and Monte Carlo simulations of future

metal prices, and (ii) the computation of the present value assuming no conversion to the 1.85 % gross revenue royalty.

The valuation

of (i) is compared to the valuation of (ii) for each simulation, with the higher value used in the aggregation to arrive at the fair

value of the RCD.

This results in an implied probability of the RCD being converted to the royalty, in the event that the Stream

Based on this methodology, as of December 31, 2022, the implied probability of the RCD being converted to a 1.85 % royalty,

in the event that the Stream is advanced, was 89 %.

Credit spread, Risk-free rate, and Risk-adjusted rate shown for the RCD are applicable

to the scenario where the Stream is not advanced.

There are immaterial differences in these inputs for the scenario where the Stream

As of March 31, 2023, these were 11.38 %, 4.85 %, and 22.18 % respectively for the Scenario where the Stream is advanced

resulting fair values of the CD1, RCD, and CD2 at March 31, 2023, and as of December 31, 2022, were as follows:

of Fair Value Derivative Liability

Instrument Description

Issuance date CD1 and RCD

Issuance date CD2

September 30,

total gain on fair value of debentures recognized during the three and nine months ended September 30, 2022 was $ 1,301,069 and $ 3,041,056 ,

total gain on fair value of debentures recognized during the three months ended March 31, 2023 and March 31, 2022, was $ 1,689,701

respectively.

The portion of changes in fair value that is attributable to changes in the Company’s credit risk is accounted for

within other comprehensive income.

During the three and nine months ended September, 2022, the Company recognized $ 625,050 and $ 996,636 ,

The portion of changes in fair value that is attributable to changes in the Company’s credit risk is accounted

for within other comprehensive income.

During the three months ended March 31, 2023 and March 31, 2022, the Company recognized

respectively, within other comprehensive income.

Company performs quarterly testing of the covenants in the RCD, CD1 and CD2, and was in compliance with all such covenants as of September

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Interest expense for the three months ended March 31, 2023 and 2022 was $ 676,849

and $ 240,164

respectively.

At March 31, 2023 interest of $ nil

at December 31, 2022) is included in interest payable on the consolidated balance sheets.

For the three months ended March 31, 2023,

and March 31, 2022, the Company recognized $ 250,086

respectively, loss on debt settlement in the condensed interim consolidated statements of income (loss) and comprehensive

income (loss) as a result of settling interest by issuance of shares.

Company performs quarterly testing of the covenants in the RCD, CD1 and CD2, and was in compliance with all such covenants as of March

$5,000,000 Bridge

December 6, 2022, the Company closed a new $ 5,000,000 loan facility with Sprott (the “Bridge Loan”).

The Bridge Loan is secured

by the same security package that is in place with respect to the RCD, CD1, and CD2.

The Bridge Loan bears interest at a rate of 10.5%

per annum and matures at the earlier of (i) the advance of the Stream, or (ii) June 30, 2024 .

In addition, the minimum quantity of metal

delivered under the Stream, if advanced, would increase by 5 % relative to amounts previously announced.

Interest expense for three months

ended March 31, 2023 and 2022 was $ 178,383 and $ nil respectively.

At March 31, 2023 interest of $ 131,250 ($ 53,985 at December 31, 2022)

is included in interest payable on the consolidated balance sheets.

minimum of $ 27,000,000 and a maximum of $ 37,000,000 (the “Stream Amount”) will be made available under the Stream, at the

11 unchanged sentences

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

As of September

As of March 31,

2023, 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.

Lease liability

Company had an operating lease for office space that expired in May 2022.

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

of September 30, 2022:

Company has operating leases for a loader.

Below is a summary of the Company’s lease liability as of March 31, 2023:

Schedule of Operating Lease Liability

2 unchanged sentences

Lease payments

Foreign exchange loss

Balance, December 31, 2021

Interest expense

Lease payments

Foreign exchange loss

Balance, September 30, 2022

Balance, March 31, 2023

Capital Stock, Warrants and Stock Options

total authorized capital is as follows:

increase to 1,500,000,000 common shares, as approved in the July 29, 2022 annual meeting of shareholders, with a par value of $ 0.000001

per common share;

1,500,000,000

Common Shares with a par value of $ 0.000001 per Common Share;

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

and outstanding

February 2021, the Company closed a non-brokered private placement of units of the Company (the “February 2021 Offering”),

issuing 19,576,360 units of the Company (“February 2021 Units”) at C$ 0.40 per February 2021 Unit for gross proceeds of $ 6,168,069

March 2023, the Company amended the exercise price and expiry date of 10,416,667

warrants which were previously issued in a private placement to Teck Resources (“Teck”) on May 13, 2022 in consideration

for the Company’s acquisition of the Pend Oreille process plant.

The warrant entitled the holder thereof to purchase one share

of Common Share of the Company at an exercise price of C$ 0.37

per Warrant at any time on or prior to May 12, 2025.

The Company amended the exercise price of the warrants from C$ 0.37

per Warrant and the expiry date from May 12, 2025, to March

31, 2023 , resulting in a gain on modification of warrants of $ 214,714 .

In March 2023, Teck exercised all 10,416,667

warrants at an exercise price of C$ 0.11 ,

for aggregate gross proceeds of C$ 1,145,834

to the Company.

During the quarter the Company recognized a change in derivative liability of $ 400,152 relating to the Teck warrants

using the following assumptions:

volatility of 120 %, stock price of C$ 0.11 , interest rate of 3.42 % to 4.06 %, and dividend yield of 0 %.

In March 2023, the Company closed a brokered

private placement of special warrants of the Company (the “March 2023 Offering”), issuing 51,633,727

special warrants of the Company (“March 2023 Special Warrants”) at C$ 0.12

per March 2023 Special Warrant for $ 4,536,020

(C$ 6,196,047 ),

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

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

share for a period of five years .

In connection with the February 2021 Offering, the Company incurred share issuance costs of $ 154,630

and issued 351,000 compensation options (the “February 2021 Compensation Options”).

Each February 2021 Compensation Option

is exercisable into one February 2021 Unit at an exercise price of C$ 0.40 for a period of three years.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

Company also issued 417,720 February 2021 Units to settle $ 132,000 of accrued liabilities at a deemed price of $ 0.45 based on the fair

value of the units issued.

As a result, the Company recorded a loss on debt settlement of $ 56,146 .

April 2022, the Company closed a private placement of 37,849,325 Special Warrants and a non-brokered private placement of 1,471,664 units

of the Company for aggregate gross proceeds of approximately $ 9,384,622 (C$ 11,796,297 ).

Related parties, including management, directors,

and consultants, participated in the Special Warrant private placement for a total of 4,809,160 shares (included in the total above).

Special Warrants were issued at a price of C$ 0.30 per special warrant.

Each Special Warrant shall be 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 (3) 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 which the purchasers

and Agents (as defined herein) are residents where the Special Warrants are sold (the “Qualifying Jurisdictions”) 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 “Qualification Prospectus”);

and (B) notification that the registration statement, under U.S.

securities laws, of the Company filed with the United States Securities

and Exchange Commission (the “SEC”) has been declared effective by the SEC (the “Registration Statement”);

(ii) the date that is six months following April 1, 2022 (the “Closing ‎Date”).

Each unit consists of one common share

and one warrant.

Each warrant entitles the holder to acquire one common 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

May 31, 2022, the Company announced that it had received a receipt from the Ontario Securities Commission for its final short-form Canadian

prospectus qualifying the distribution of the common stock of the Company and common stock purchase warrants of the Company issuable

upon exercise of the special warrants of the Company that were issued on April 1, 2022.

The Company also announced that it received notice

from the United States Securities and Exchange Commission that its Form S-1 has been declared effective as of May 27, 2022.

of obtaining the receipt for the Canadian prospectus and the declaration of effectiveness for the Form S-1, each unexercised Special

Warrant was automatically exercised into one Common Share and one Warrant without further action on the part of the holders.

non-brokered 1,471,664 units were issued at a price of C$ 0.30 per unit.

Each unit consists of one common share and one warrant.

warrant entitles the holder to acquire one warrant share for C$ 0.37 until April 1, 2025.

connection with the special warrants offering, the agents earned a cash commission in the amount of C$563,968 and compensation options

exercisable to acquire an aggregate of 1,879,892 units of the Company at C$ 0.30 a unit until April 1, 2024.

Each compensation unit consists

of one common share and one warrant.

Each warrant entitles the holder to acquire one warrant share for C$ 0.37 until April 1, 2024.

April 2022, the Company issued 1,315,856 common shares in connection with its election to satisfy interest payments under the outstanding

convertible debentures for the three months ended March 31, 2022.

May 2022, the Company issued 10,416,667 units to Teck Resources Limited in consideration towards the purchase of the Pend Oreille Processing

Plant at C$ 0.245 per unit.

Each unit consists of one common share and one warrant.

Each warrant entitles the holder to acquire one warrant

share for C$ 0.37 until May 13, 2025.

June 2022, the Company issued 1,218,000 units to contractors for bonuses accrued during the three months ended March 31, 2022.

consists of one common share and one warrant.

Each warrant entitles the holder to acquire one warrant share for C$ 0.37 until April 1,

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 ended June 30, 2022.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

of which $ 3,661,822 was received in cash and $ 874,198 was applied towards settlement of accounts payable, accrued liabilities and promissory notes.

connection with the Offering, each March 2023 Special Warrant is automatically exercisable (without payment of any further consideration

and subject to customary anti-dilution adjustments) into one unit (“March 2023 Unit”) of the Company on the earlier date

(i) the third business day following the date upon which the Company has obtained notification that a resale registration statement

of the Company to be filed with the U.S.

SEC (the “SEC”) registering the resale of the Underlying Shares (as defined below)

issuable upon exercise of the March 2023 Special Warrants and the securities issuable thereunder, has been declared effective by the

and (ii) September 27, 2023 (collectively, the “Automatic Exercise Date”), subject to compliance with U.S.

March 2023 Unit consists of one share of Common Share of the Company (each, a “Unit Share”) and one common stock purchase

warrant of the Company (each, a “Warrant”).

Each whole Warrant entitles the holder thereof to acquire one Common Share of

the Company (a “Warrant Share”, and together with the Unit Shares, the “Underlying Shares”) at an exercise price

of C$0.15 per Warrant Share until March 27, 2026, subject to adjustment in certain events.

In the event that the Registration Statement

has not been declared effective by the SEC on or before 5:00 p.m.

(EST) on July 27, 2023, each unexercised Special Warrant will be deemed

to be exercised on the Automatic Exercise Date into one penalty unit of the Company (each, a “Penalty Unit”), with each Penalty

Unit being comprised of 1.2 Unit Shares and 1.2 Warrants.

connection with the March 2023 Offering, the Company incurred share issuance costs of $ 585,765 and issued 2,070,258 compensation options

(the “March 2023 Compensation Options”).

Each March 2023 Compensation Option is exercisable at an exercise price of C$ 0.12

into one Unit Share and one Warrant Share.

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

3 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 unaudited condensed interim consolidated statements of income and comprehensive

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

warrant liabilities as a result of the June 2019, August 2019, August 2020, February 2021, April 2022 special warrants, April 2022 non-brokered,

May 2022 Teck purchase, and June 2022 contractor private placements were revalued as at September 30, 2022, issuance date in 2022, and

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

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.

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 as at March 31, 2023 and December 31, 2022:

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

April 2022 special warrants issuance

September 30,

Expected life

5 unchanged sentences

April 2022 non-brokered issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

June 2022 issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

February 2021 issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

$ ( 653,416 )

May 2022 Teck issuance

September 30,

August 2020 issuance

Expected life

5 unchanged sentences

June 2019 issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

February 2021 issuance

September 30,

$ ( 387,129 )

August 2019 issuance

Expected life

4 unchanged sentences

$ ( 594,970 )

$ ( 329,358 )

2020 issuance

free interest rate

in derivative liability

( 7,703,052 )

2019 issuance (i)

free interest rate

in derivative liability

( 1,371,346 )

(i) During the six

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

31, 2025 for 11,660,000 warrants.

2019 issuance (ii)

free interest rate

in derivative liability

( 2,744,785 )

(ii) During the six

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

31, 2025 for 17,920,000 warrants.

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

warrants at March 31, 2023 and March 31, 2022 were as follows:

Schedule of Warrant Activity

1 unchanged sentence

Balance, December 31, 2021

( 2,913,308 )

Balance, September 30, 2021

Balance, March 31, 2022

Balance, December 31, 2022

Balance, September 30, 2022

the nine months ended September 30, 2022, 239,284 February 2020 broker warrants expired.

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Nine Months Ended September 30, 2022

in United States Dollars)

September 30, 2022, the following warrants were outstanding:

( 10,416,667 )

Balance, March 31, 2023

During the three months ended March 31, 2023, 10,416,667 May 2022 Teck

warrants were exercised.

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

March 31, 2023, the following warrants were outstanding:

Schedule of Warrants Outstanding Exercise Price

4 unchanged sentences

April 1, 2025

September 30, 2022, the following compensation options were outstanding:

2023 Special Warrants

Company closed a private placement of the March 2023 Special Warrants on March 27, 2023, which will convert to Common Shares and common

stock purchase warrants in the third quarter of 2023 as described above.

As a result, as of March 31, 2023, the Common Shares and common

stock purchase warrants had not been issued.

In accordance with its accounting policies, the Company has determined the fair value of

the March 2023 Special Warrants as of March 31, 2023, through the valuation of the underlying Common Shares and common stock purchase

of March 31, 2023, there were 51,633,727 March 2023 Special Warrants outstanding ($nil as of December 31, 2022).

The fair value of the

underlying warrant liability related to the March 2023 Special Warrants was estimated using the Binomial model to determine the fair

value using the following assumptions as at March 31, 2023 and December 31, 2022:

of Estimated Fair Value of Special Warrant Liabilities

March 2023 special warrants issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

March 31, 2023, the following broker options were outstanding:

of Compensation Options

exercise price

Issued - August 2020 Compensation Options

Balance, December 31, 2021

Issued – February 2021 Compensation Options

Balance, December 31, 2021

Issued – April 2022 Compensation Options

Balance, September 30, 2022

grant date fair value of the August 2020 and February 2021, and April 2022 Compensation Options were estimated at $ 521,993 , $ 68,078 and

$ 264,435 respectively, using the Black-Scholes valuation model with the following underlying assumptions:

Balance, December 31, 2022

Issued – March 2023 Compensation Options

Balance, March 31, 2023

grant date fair value of the March 2023 Compensation Options were estimated at $ 111,971 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

Risk free interest rate

Dividend yield

Weighted average life

Schedule of Broker Exercise Prices

3 unchanged sentences

April 1, 2024 (iii)

(i) Exercisable into

one August 2020 Unit

(ii) Exercisable into

one February 2021 Unit

(iii) Exercisable into

one April 2022 Unit

Hill Mining Corp.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September

(Expressed in United States Dollars)

following table summarizes the stock option activity during the nine months ended September 30, 2022:

March 27, 2026 (v)

Exercisable into one August 2020 Unit

Exercisable into one February 2021 Unit

Exercisable into one April 2022 Unit

Exercisable into one March 2023 Unit

following table summarizes the stock option activity during the three months ended March 31, 2023:

Schedule of Stock Options

2 unchanged sentences

Balance, December 31, 2022

Balance, December 31, 2021

Expired, May 1, 2022

Balance, September 30, 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.

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

The vesting of these options resulted in stock-based

compensation of $nil for the three and nine months ended September 30, 2022, compared to $ 43,941 and $ 160,750 for the three and nine

months ended September 30, 2021, respectively, which is included in operation and administration expenses on the consolidated statements

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

August 24, 2022, 300,000

stock options were issued to an employee of the Company, of which 150,000

vested immediately and the remaining balance of outstanding options to vest equally over the next two anniversaries of the grant date.

options have a 5 -year

life and are exercisable at C$ 0.15

per common share.

The grant fair value of the options was estimated at $ 28,930 .

The vesting of these options resulted in stock-based compensation of $ 14,465

for the three and nine months ended September 30, 2022, which is included in the operation and administration expense of the

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

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

underlying assumptions:

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

Dividend yield

(ii) On August 24, 2022,

300,000 stock options were issued to an employee of the Company, of which 150,000 stock options vested immediately and the balance

of 150,000 stock options will vest equally over two years on the anniversary date of issuance.

These options have a 5 -year life and are

exercisable at C$ 0.15 per common share.

The grant date fair value of the options was estimated at $ 28,930 .

The vesting of these options

resulted in stock-based compensation of $ 14,465 for the period ended September 30, 2022, which is included in operation and administration

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

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

underlying assumptions:

Dividend yield

following table reflects the actual stock options issued and outstanding as of September 30, 2022:

Expired, December 31, 2022

Balance, December 31, 2022

Balance, March 31, 2023

following table reflects the actual stock options issued and outstanding as of March 31, 2023:

of Actual Stock Options Issued and Outstanding

1 unchanged sentence

fair value ($)

Income per Share

dilutive securities include convertible loan payable, warrants, broker options, stock options, and unvested restricted share units (“RSU”).

Diluted income per share reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method.

of Income Per Share

September 30,

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

Basic income (loss) per share Weighted average number of common shares - basic

Net income (loss) per share – basic

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

Dilutive effect of convertible debentures

( 1,945,686 )

Dilutive effect of warrants on net income

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

Diluted income (loss) per share

Weighted average number of common shares - basic

Diluted effect:

Warrants, broker options, and stock options, convertible debentures, and RSUs

Weighted average number of common shares - fully diluted

Net income (loss) per share - fully diluted

Hill Mining Corp.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September

(Expressed in United States Dollars)

Restricted Share Units

1 unchanged sentence

key employees and consultants.

following table summarizes the RSU activity during the nine months ended September 30, 2022:

following table summarizes the RSU activity during the three months ended March 31, 2023:

Schedule of Restricted Share Units

2 unchanged sentences

Unvested as at December 31, 2022

Unvested as at September 30, 2022

On April 14, 2020, the Company granted 400,000 RSUs to a certain officer of the Company.

The RSUs vest in one fourth increments upon

each anniversary of the grant date.

The vesting of these RSUs resulted in stock-based compensation of $ 30,380 and $ 57,495 for the nine

months ended September 30, 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 April 20, 2020, the Company granted 200,000 RSUs to a certain director of the Company.

The RSUs vest in one fourth increments upon

each anniversary of the grant date.

The vesting of these RSUs resulted in stock-based compensation of $ 10,452 and $ 19,796 for the nine

months ended September 30, 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.

The RSUs vest in one fourth increments upon

each anniversary of the grant date.

The vesting of these RSUs resulted in stock-based compensation of $ 12,612 and $ 24,255 for the nine

months ended September 30, 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.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September

(Expressed in United States Dollars)

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

The RSUs vest in one sixth increments per month.

The vesting of these RSUs resulted in stock-based compensation of $ nil and $ 58,740 for the nine months ended September 30, 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 $ 265,101 for the nine months ended September 30, 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 and $ 4,026 for the nine months ended September 30, 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 and $ 100,022 for the nine months ended September 30, 2022 and 2021, respectively.

On January 10, 2022, the Company granted 500,000 RSUs to a consultant of the Company, vesting immediately.

The vesting of these RSUs

resulted in stock-based compensation of $ 122,249 for the nine months ended September 30, 2022, which is included in operation and administration

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

On April 29, 2022, the Company granted 76,750 RSUs to certain consultants of the Company, vesting immediately.

The vesting of these RSUs

resulted in stock-based compensation of $ 16,800 for the nine months ended September 30, 2022, which is included in operation and administration

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

On June 30, 2022, the Company granted 15,000 RSUs to a consultant of the Company, vesting immediately.

The vesting of these RSUs resulted

in stock-based compensation of $ 2,328 for the nine months ended September 30, 2022, which is included in operation and administration

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

On September 29, 2022 the Company granted 33,000 RSUs to two consultants of the Company, vesting immediately.

The vesting of these RSUs

resulted in stock-based compensation of $ 2,889 for the nine months ended September 30, 2022, which is included in operation and administration

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

Unvested as at March 31, 2023 (ii)

January 10, 2022, the Company granted 500,000 RSUs to a consultant of the Company, vested

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

the year ended December 31, 2022, which is included in operation and administration expenses

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

(ii) Includes

1,507,580 RSU’s which had vested as of March 31, 2023 but had not been converted to

Common Shares.

Deferred Share Units

4 unchanged sentences

of the Company’s Common Share on the date of redemption in exchange for cash.

Hill Mining Corp.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September

(Expressed in United States Dollars)

following table summarizes the DSU activity during the nine months ended September 30, 2022 and 2021:

following table summarizes the DSU activity during the three months ended March 31, 2023 and 2022:

Schedule of Deferred Share Units

Unvested as at December 31, 2020 and September 30, 2021 (i)

Unvested as at December 31, 2021

Vested (ii)(iii)

( 3,125,000 )

Unvested as at September 30, 2022

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

The DSUs vest in one fourth increments upon each anniversary of the grant date

and expire in 5 years.

On July 1, 2022 the Company granted 210,000 DSU’s, these DSU’s vest after 12 months of the issuance

During the nine months ended September 30, 2022, and 2021 the Company recognized $ 493,060 and $ 430,964 , 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), as DSU’s were settled in cash during the 9 months

ended September 30, 2022.

Upon redemption of the 2,500,000 DSUs (see (iii)) the fair value of the remaining DSU liability at September

30, 2022 was $ 363,648 .

Unvested as at March 31, 2022

Unvested as at December 31 2022 and March 31, 2023

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

the nine months ended September 30, 2022, the director redeemed 2,500,000 DSUs for C$ 750,000 , and elected to use net proceeds to

subscribe for 375,000 units in the Company’s April 2022 special warrant issuance at C$ 0.30 per unit, with the balance of the

redeemed amount payable in cash after applicable withholding tax deductions.

The DSU’s were therefore all accelerated to vest.

Commitments and Contingencies

13 unchanged sentences

intentionally flooded the Crescent Mine during the period from 1991 and 1994, and that the Company is jointly and severally liable

with the other defendants for unspecified past and future costs associated with the presence of acid mine drainage (“AMD”)

in the Crescent Mine.

The plaintiff has requested unspecified damages.

On September 20, 2021, the Company filed a motion to dismiss Crescent’s

claims against it, contending that such claims are facially deficient.

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

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.

These claims were dismissed without prejudice.

with the other defendants for unspecified past and future costs associated with the presence of AMD in the Crescent Mine.

The plaintiff

has requested unspecified damages.

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

that such claims are facially deficient.

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

Nye granted in part and denied

in part the Company’s motion to dismiss.

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

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

were dismissed without prejudice.

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

for Crescent’s trespass, nuisance and negligence claims.

for Crescent’s trespass,

nuisance and negligence claims.

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

Placer Mining

and Bunker Hill Mining Corp are named as co-defendants.

Bunker Hill responded to the amended filing, refuting and denying all allegations

made in the complaint except those that are assertions of fact as a matter of public record.

The Company believes Crescent’s is

without merit and intends to vigorously defend itself, as well as Placer Mining Corp.

pursuant to the Company’s indemnification

of Placer Mining Corp in the Sale and Purchase agreement executed between the companies for the Mine on December 15, 2021.

Hill Mining Corp.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September

(Expressed in United States Dollars)

Placer Mining Corp.

and Bunker Hill Mining

Corp are named as co-defendants.

Bunker Hill responded to the amended filing, refuting and denying all allegations made in the complaint

except those that are assertions of fact as a matter of public record.

The Company believes Crescent’s lawsuit is without merit

and intends to vigorously defend itself, as well as Placer Mining Corp.

pursuant to the Company’s indemnification of Placer Mining

Corp in the Sale and Purchase agreement executed between the companies for the Mine on December 15, 2021.

During the three months ended March 31, 2023, the Company entered into

a lease agreement with C & E Tree Farm LLC for the lease of a land parcel overlaying a portion of the Company’s existing mineral

claims package.

The Company is committed to making monthly payments of $ 10,000 through February 2026.

Related party transactions

2 unchanged sentences

Schedule of Related Party Transactions

September 30,

Consulting fees and wages

September 30, 2022 and September 30, 2021, $ 15,000 and $ 102,235 , respectively is owed to key management personnel with all amounts included

in accounts payable and accrued liabilities.

July 1, 2022 the Company issued 210,000 DSU’s to a director of the Company.

March 31, 2023

March 31, 2022

Consulting Fees and Salaries

March 31, 2023 and March 31, 2022, $ 248,533 and $ 825,776 respectively is owed to key management personnel with all amounts included in

accounts payable and accrued liabilities.

Subsequent Events

October 2022, the Company issued 8,252,940 common shares in connection with its election to satisfy interest payments under the outstanding

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

October 2022, the Company reported that it has been successful in securing a new payment bond to secure a portion of its cost recovery

obligations to the US Environmental Protection Agency (the “US EPA”), resulting in a $ 3,000,000 improvement in liquidity.

As reported in the Company’s financial statements for the period ending September 30, 2022, the Company held restricted cash of

$ 9,476,000 as of September 30, 2022 which included $ 7,001,000 as collateral for a letter of credit to the US EPA.

This letter of credit

has been reduced to $ 2,000,001 as a result of a new $ 5,000,000 payment bond obtained through an insurance company.

The collateral for

the new payment bond is comprised of a $ 2,000,000 letter of credit and land pledged by third parties, with whom the Company has entered

into a financing cooperation agreement that contemplates a monthly fee of $ 20,000 (payable in cash or common shares of the Company, at

the Company’s election).

The new payment bond is scheduled to increase to $ 7,001,000 (from $ 5,000,000 ) upon the advance of the

multi-metals Stream from Sprott Private Resource Streaming & Royalty Corp.

(see the Company’s news release of December 20, 2021

for further detail), which would result in a further $ 2,001,000 improvement in liquidity for the Company from the release of restricted

October 2022, the Company reported that it awarded a new water management consulting services contract to MineWater LLC (“MineWater”)

for strategic environmental support at the Bunker Hill Mine through September 30, 2023.

Pursuant to the contract, the Company agreed

to pay MineWater $ 60,000 in cash and issue 1,599,150 Restricted Share Units, which were issued and vested immediately to common shares

of the Company that are subject to customary resale restrictions in Canada and the United States.

November 2022, the Company awarded 4,396,741 Restricted Share Units to certain executives in relation to an annual grant under its Long-Term

Incentive Plan.

The RSUs vest in one-third increments on March 31 of 2023, 2024, and 2025.

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