What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2022-11-04 · 139 added, 316 removed, 67 unchanged (87% of the section changed)

17 unchanged sentences

No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.

Coronavirus Pandemic Response and Impact

the outbreak of the COVID-19 coronavirus global pandemic (“COVID-19”) in early 2020, in March 2020 the U.S.

Centers for Disease

Control issued guidelines to mitigate the spread and health consequences of COVID-19.

The Company implemented changes to its operations

and business practices to follow the guidelines and minimize physical interaction, including using technology to allow employees to work

from home when possible.

As long as they are required, the operational practices implemented could have an adverse impact on our results.

Although the pandemic has subsided significantly, the negative impact of COVID-19 remains uncertain, including on overall business and market conditions.

There is uncertainty related

to the potential additional impacts COVID-19 could have on our operations and financial results for the year.

Russia/Ukraine Crisis:

18 unchanged sentences

Company’s sole focus is the development and restart of its 100% owned flagship asset, the Bunker Hill mine (the “Mine”)

The Mine remains the largest single producing mine by tonnage in the Silver Valley region of northwest Idaho, producing over 165 million

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

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 Idaho, USA.

The Mine remains the largest single producing mine by tonnage in the Silver Valley region of northwest Idaho, producing

over 165 million ounces of silver and 5 million tons of base metals between 1885 and 1981.

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.

Company purchased the Bunker Hill Mine on January 7, 2022 for $5,400,000 in cash.

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.

the most recent of these agreements, the Company was required to make 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.

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” in the “Our Business” section above).

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

assumed leadership of the Company.

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.

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.

This agreement limits the Company’s

exposure to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) liability for past environmental

damage to the mine site and surrounding area to obligations that include:

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

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

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

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

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

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

assumed by the Company, resulting in a total of $19,000,000 liability to the Company, an increase of $8,000,000.

The new payment schedule

included a $2,000,000 payment to the EPA within 30 days of execution of this amendment, which was made.

The remaining $17,000,000 will

be paid on the following dates:

November 1, 2024 $

November 1, 2025 $

November 1, 2026 $

November 1, 2027 $

November 1, 2028 $

November 1, 2029 $

2,000,000 plus accrued

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

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 20, 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 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

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 the apply to claims outside of these areas.

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 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.

The Company determined

that amendments to the terms should not be treated as an extinguishment of CD1, but as a debt modification.

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 September

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 “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

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

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

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

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

Units”) at a deemed issue price of C$0.30 per unit.

Each Teck Unit consists of one Common Share and one Common Share purchase warrant

(the “Teck Warrants”).

Each whole Teck Warrant entitles the holder to acquire one Common Share at a price of C$0.37 per Common

Share for a period of three years.

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

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.

time, the Company conducted multiple exploration campaigns, published multiple economic studies and Mineral Resource Estimates, and advanced

the rehabilitation and development of the Mine.

In December 2021, it announced a project finance package with Sprott Private Resource

Streaming & Royalty Corp., an amended Settlement Agreement with the EPA, and the purchase of the Bunker Hill Mine, setting the stage

for a rapid restart of the Mine.

January 2022, with the closing of the purchase of the Bunker Hill Mine, the funding of the $8,000,000 Royalty Convertible Debenture and

$6,000,000 Series Convertible Debenture, and the announcement of an MOU for the purchase of the Pend Oreille process plant from a subsidiary

of Teck Resources Limited, the Company embarked on a program of activities with the goal of achieving a restart of the Mine.

Key milestones

and achievements from January 2022 onwards have included the closing of the purchase of the Pend Oreille process plant, the demobilization

of the process plant to the Bunker Hill site, the completion of demolition activities at the Pend Oreille site, a Prefeasibility Study

envisaging the restart of the Mine, and the completion of the primary portion of the ramp decline connecting the 5 and 6 Levels of the

Bunker Hill Mine.

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 and nine months ended September 30, 2022 and September 30, 2021.

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

of operation and financial condition of the Company for the three months ended March 31, 2023 and March 31, 2022.

Unless otherwise stated,

all figures herein are expressed in U.S.

dollars, which is the Company’s functional currency.

of the three and nine months ended September 30, 2022 and 2021

the nine months ended September 30, 2022 and 2021, respectively, the Company generated no revenue.

the three and nine months ended September 30, 2022, the Company reported total operating expenses of $3,824,948 and $13,291,484, respectively.

Compared to the three and nine months ended September 30, 2021, the Company reported total operating expenses of $2,464,945 and $12,384,474,

respectively.

increase in total operating expenses is primarily due to an increase in mine preparation legal and consulting fees when compared to the

three and nine-month periods ended September 30, 2021.

The Company was engaged in an active exploration campaign during the three and

nine-month periods ended September 30, 2021, whereas the Company’s primary focus during the three and nine-month periods ended

September 30, 2022 was on advancing mine restart efforts, including underground development and process plant demobilization activities.

significant increase in consulting fees reflects the engagement of numerous engineering, geological and other professional firms to assist

the Company in consummating several complex debt and equity financings, the purchases of the mine and processing plant, 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.

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.

of the three months ended March 31, 2023 and 2022

the three months ended March 31, 2023, and 2022, respectively, the Company generated no revenue.

the three months ended March 31, 2023, and 2022, the Company reported total operating expenses of $2,185,488 and $5,486,674, respectively.

decrease in total operating expenses was primarily due to (i) a decrease in mine preparation expenses of $2,507,079, (ii) a decrease

in consulting and wages expenses of $1,586,562.

Mine preparation expenses were $nil in the three months ended March 31, 2023 primarily

as a result of the Company determining that costs directly attributed to the mine after September 30, 2022 (upon the release of the prefeasibility

study) constituted mine development (capitalized to non-current assets) instead of mine preparation costs (expense) given the existence

of probable mineral reserves and an economic study incorporating them.

The decrease in consulting and wages expenses was impacted by

a lower volume of transactions and a lower bonus accrual in the three months ended March 31, 2023 as compared to the three months ended

March 31, 2022.

Income and Comprehensive Income

Company had net income of $1,791,149 for the year three months ended March 31, 2023 (net loss of $2,880,886 for the three months

ended March 31, 2022).

In addition to the decrease in operating expenses (as described above), net income in the three months ended

March 31, 2023 was positively impacted by a $772,556 increase in the gain due to change in derivative liability ($4,226,574 for the

three months ended March 31, 2023 compared to $3,454,008 for the three months ended March 31, 2022) driven by a proportionally

greater decline in the Company’s share price in Q1 2023 relative to Q1 2022, a $214,714 gain on extinguishment of Teck

warrants during Q1 2023 and an increase in the gain on fair value of convertible debentures of $1,689,701 (three months ended March

This was partially offset by an increase in interest expense of $589,392 ($1,324,629 for the three months ended

March 31, 2023 compared to $735,237 for the three months ended March 31, 2022).

Company had comprehensive income of $2,598,161 for the three months ended March 31, 2023 (comprehensive loss of $2,880,886 for the month

three ended March 31, 2022).

Comprehensive income for the three months ended March 31, 2023, is inclusive of a $807,012 gain on change

in fair value on own credit risk ($nil for the three months ended March 31, 2022).

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

Additionally, the Company owes a total of $7,420,024 net of discount to the EPA (see Note 6) 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, debt and

closing on the multi-metals stream transaction.

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.

and Equity Financings, EPA obligations, and Mine Purchase

described above, during the nine months ended September 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 and the processing

plant, 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.

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.

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.

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.

Assets and Total Assets

of September 30, 2022, the Company’s balance sheet reflects that the Company had:

i) total current assets of $11,787,942, compared

to total current assets of $3,622,548 at December 31, 2021 – an increase of $8,165,394;

and ii) total assets of $33,586,588, compared

to total assets of $4,071,796 at December 31, 2021 – an increase of $29,514,792.

The increase in current assets was primarily due

to an increase in restricted cash as a result of the proceeds from the convertible debentures and equity financings, and from increases

in prepaid expenses and deposits.

Total assets increased principally due to the increase in cash from financings and the purchase of

the Bunker Hill Mine, the process plant and inventory.

of March 31, 2023, the Company had total current assets of $10,584,049, compared to total current assets of $7,741,052 at December 31,

2022 – an increase of $2,842,997;

and total assets of $36,929,798, compared to total assets of $32,929,892 at December 31, 2022

– an increase of $3,999,906.

The increase in current assets was due to an increase in unrestricted cash as a result of the proceeds

from the non-brokered private placement of units of the Company and the exercise of warrants.

Total assets increased principally due

to the increase in cash and additions to the process plant during the three months ended March 31, 2023.

Liabilities and Total Liabilities

of September 30, 2022, the Company’s balance sheet reflects that the Company had total current liabilities of $11,439,038 and total

liabilities of $48,321,757, compared to total current liabilities of $22,795,277 and total liabilities of $38,314,164 at December 31,

The decrease in the current liabilities is primarily reflective of financing and assurance activities that moved the EPA cost recovery

liability from current to long term liabilities.

Total liabilities increased as a result of the closing of the three convertible debentures

and movement of the EPA cost recovery liability from current to long term, offset by the decrease in the long-term derivative warrant

liability, promissory note.

As of March 31, 2023, the Company had total current

liabilities of $10,102,157 and total liabilities of $56,152,235, compared to total current liabilities of $10,155,581 and total liabilities

of $59,106,835 at December 31, 2022.

Total liabilities decreased as a result of the revaluations of the convertible debentures and the

derivative warrant liabilities.

Capital and Shareholders’ Deficit

September 30, 2022, the Company had working capital of $384,904 and a shareholders’ deficiency of $14,735,169 compared to negative

working capital of $19,172,729 and a shareholders’ deficiency of $34,242,368 for the year ended December 31, 2021.

Working capital

increased during the nine months ended September 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 $3,690,353 and $12,864,248

for the three and nine-month periods ended September 30, 2022, driven by decreases in the fair value of the derivative warrant liability.

the nine months ended September 30, 2022, the Company had a net cash decrease of $382,230, 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.

the nine months ended September 30, 2022, cash of $26,531,674 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 $9,372,253 for the nine months ended September 30, 2021.

the nine months ended September 30, 2022, cash of $9,555,473 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 nine months ended September 30,

the nine months ended September 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 and repayment of a promissory note, compared with cash of $8,411,534

provided by financing activities in the nine months ended September 30, 2021

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).

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 cash.

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.

As of March 31, 2023,

the Company had a working capital balance of $481,892 and a shareholders’ deficiency of $19,222,437 compared to a working

capital deficit of $2,414,530 and a shareholders’ deficiency of $26,176,943 as of December 31, 2022.

The working capital

balance increased during the three months ended March 31, 2023, primarily due to the closing of a brokered private placement of

special warrants of the Company and proceeds received from the exercise of warrants.

The shareholders’ deficiency decreased

primarily due to proceeds received from equity financing in the quarter and comprehensive net income in quarter.

During the three months ended March 31, 2023, the Company had a net cash

increase of $2,884,453, primarily due to the closing of a brokered private placement of special warrants of the Company and proceeds received

from the exercise of warrants.

Cash expenditures during the three months ended March 31, 2023 were primarily utilized to fund working

capital requirements.

accounting estimates

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The fair value of the share awards and warrant liabilities

are determined at the date of grant using generally accepted valuation techniques and for warrant liabilities at each balance sheet date

are determined at the date of grant using generally accepted valuation techniques and for warrant liabilities at each balance sheets

date thereafter.

Assumptions are made and judgment used in applying valuation techniques.

3 unchanged sentences

in these assumptions affect the fair value estimates.

and accrued liabilities

the fair value of derivative warrant liability requires determining the most appropriate valuation model, which is dependent on the terms

and conditions of the issuance.

This estimate also requires determining the most appropriate inputs to the valuation model including

the expected life of the warrants and conversion feature derivative liability, volatility and dividend yield and making assumptions about

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

These accruals

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

Convertible loans, promissory notes and warrants

Estimating the fair value of derivative warrant liability

requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance.

This estimate

also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants derivative liability,

volatility and dividend yield and making assumptions about them.

The fair value estimates of the convertible loans

use inputs to the valuation model that include risk-free rates, equity value per common share, USD-CAD exchange rates, spot and futures

prices of minerals, expected equity volatility, expected volatility in minerals prices, discount for lack of marketability, credit spread,

expected mineral production over the life of the mine, and project risk/estimation risk factors.

The fair value estimates may differ from actual fair

values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated

statements of operations.

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

This determination requires significant

Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends,

interruptions in exploration activities or a significant drop in precious metal prices.

Accrued liabilities

The Company has to make estimates to accrue for certain

expenditures due to delay in receipt of third-party vendor invoices.

These accruals are made based on trends, history and knowledge of

Actual results may be different.

Company makes monthly estimates of its water treatment costs, with a true-up to the annual invoice received from the IDEQ.

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

Financing Transactions

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

Company has no off-balance sheet arrangements.

The Company makes monthly estimates of its water treatment

costs, with a true-up to the annual invoice received from the IDEQ.

Using the actual costs in the annual invoice, the Company will then

reassess its estimate for future periods.

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

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

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

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