What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-12 · 151 added, 128 removed, 78 unchanged (78% 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.

Russia/Ukraine Crisis:

Company’s operations could be adversely affected by the effects of the escalating Russia/Ukraine crisis and the effects of sanctions

imposed against Russia or that country’s retributions against those sanctions, embargos or further-reaching impacts upon energy

prices, food prices and market disruptions.

The Company cannot accurately predict the impact the crisis will have on its operations and

the ability of contractors to meet their obligations with the Company, including uncertainties relating the severity of its effects,

the duration of the conflict, and the length and magnitude of energy bans, embargos and restrictions imposed by governments.

the crisis could adversely affect the economies and financial markets of the United States in general, resulting in an economic downturn

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

Additionally, the Company cannot predict

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

Company was incorporated under the laws of the State of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.

6 unchanged sentences

Information appearing on the website is not incorporated by reference into this

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

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

in Idaho, USA.

1 unchanged sentence

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

The 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.

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

Prior to purchasing the Mine, the Company had entered

15 unchanged sentences

assumed leadership of the Company.

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.

that 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.

(“SRSR”), an amended Settlement Agreement with the EPA, and the purchase of the Bunker Hill

Mine, setting the stage for a restart of the Mine.

Key milestones following the purchase of the mine

have included the purchase and demobilization of a process plant to site, advancement of engineering and a Prefeasibility Study envisaging

the restart of the Mine, the completion of the primary portion of the ramp decline connecting the 5 and 6 Levels and securing of $96,000,000

of financing commitments from SRSR.

of Operations

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

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

Unless otherwise stated,

all figures herein are expressed in U.S.

of operation and financial condition of the Company for the three and six months ended June 30, 2023 and June 30, 2022.

Unless otherwise

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

dollars, which is the Company’s functional currency.

of the three months ended March 31, 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).

of the three and six months ended June 30, 2023 and 2022

the three and six months ended June 30, 2023, and 2022, respectively, the Company generated no revenue.

the three and six months ended June 30, 2023, the Company reported total operating expenses of $3,336,973 and $5,522,461, respectively

(total operating expenses of $ 3,979,862 and $9,466,536 for the three and six months ending June 30, 2022, respectively).

decrease in total operating expenses was primarily due to (i) a decrease in mine preparation expenses of $1,821,223, and $4,382,302

(ii) a decrease in consulting and wages expenses of $636,137 and $2,222,699 for the three and six months ending, respectively.

preparation expenses were $nil in the six months ended June 30, 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

costs (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 and six months ended June 30, 2023, as compared to the three and six months ended

June 30, 2022.

Income (loss) and Comprehensive Income (loss)

Company had net loss of $16,857,782 for the three months ended June 30, 2023 (net income of $12,054,781 for the three months ended

June 30, 2022).

Offsetting the decrease in operating expenses (as described above), net loss in the three months ended June 30, 2023

was impacted by a $21,015,772, increase in the loss due to change in derivative liability (loss of $13,246,561 for the three months

ended June 30, 2023 compared to gain of $7,769,211 for the three months ended June 30, 2022) and a loss of $1,884,232 for the 3

months ending June 30, 2023 relating to the change in fair of convertible debentures compared to a gain of 626,075 for the 3 months

ending June 30, 2022).

Both changes in fair value were driven by a proportionally greater incline in the Company’s

share price for the three months ending June 30, 2023, relative to a decline in share price in the three months ending June 30,

The change in net loss was further impacted by a decrease of $1,496,683 gain on extinguishment in debt in the three months

ending June 30, 2023, compared to the 3 months ending June 30, 2022.

A gain of $7,117,420 was recognized in the three months ending

June 30, 2023, relating to the sale of mineral properties, compared with a $8,614,103 gain on EPA settlement in the three months

ending June 30, 2022.

Net loss for the three months ending June 30, 2023, included the initial recognition of a deferred tax

liability and corresponding deferred tax expense relating to the closing of the stream transaction ($3,508,741 for the six months

ending June 30, 2023, compared to $nil for the 6 months ending June 30, 2022).

Company had net loss of $15,066,635 for the six months ended June 30, 2023 (net income of $9,173,895 for the six months ended June 30,

Offsetting the decrease in operating expenses (as described above), net loss in the six months ended June 30, 2023 was impacted

by a $20,243,206 increase in the loss due to change in derivative liability (loss of $9,019,987 for the six months ended June 30, 2023

compared to gain of $11,223,2019 for the six months ended June 30, 2022) and a loss of $194,531 for the 3 months ending June 30, 2023

relating to the change in fair of convertible debentures compared to a gain of 552,606 for the 3 months ending June 30, 2022).

in fair value were driven by a proportionally greater incline in the Company’s share price for the six months ending June 30, 2023,

relative to a decline in share price in the six months ending June 30, 2022.

The change in net loss was further impacted by a decrease

of $1,496,683 gain on extinguishment in debt in the six months ending June 30, 2023, compared to the 3 months ending June 30, 2022.

gain of $7,117,420 was recognized in the six months ending June 30, 2023, relating to the sale of mineral properties, compared with a

$8,614,103 gain on EPA settlement in the six months ending June 30, 2022.

Net loss for the six months ending June 30, 2023, included

the initial recognition of a deferred tax liability and corresponding deferred tax expense relating to the closing of the stream transaction

($3,508,741 for the six months ending June 30, 2023, compared to $nil for the 6 months ending June 30, 2022).

Company had comprehensive loss of $17,231,197 and $14,633,038 for the three and six months ended June 30, 2023, respectively

(comprehensive income of $12,426,367 and $9,545,481 for the month three and six ended June 30, 2022, respectively).

Comprehensive

(loss) income for the three and six months ended June 30, 2023, is inclusive of a ($373,415) and $433,597 gain on change in fair

value on own credit risk ($371,586 and $371,586 for the three and six months ended June 30, 2022, respectively).

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 $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 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,

of June 30, 2023, the Company had total current assets of $42,831,724, compared to total current assets of $7,741,052 at December 31,

2022 – an increase of $35,090,672;

1 unchanged sentence

– an increase of $34,934,072.

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.

The increase in current assets and total assets was primarily due to the closing of the $46,000,000

Stream, net of repayment of the $5,000,000 Bridge Loan and transaction related costs.

Liabilities and Total Liabilities

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.

of June 30, 2023, the Company had total current liabilities of $18,353,350 and total liabilities of $104,296,588, compared to total current

liabilities of $10,155,582 and total liabilities of $59,106,835 at December 31, 2022.

Current liabilities decreased primarily as a result

of the repayment of the $5,000,000 Bridge Loan from the proceeds of the Stream.

Total liabilities increased primarily as a result of

closing of the $46,000,000 Stream (net of repayment of the $5,000,000 Bridge Loan) and an increase in the carrying values of the CD1

and CD2 and settlement of RCD.

Capital and Shareholders’ Deficit

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.

of June 30, 2023, the Company had a working capital balance of $24,478,374 and a shareholders’ deficiency of $36,432,624

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

working capital balance increased during the six months ended June 30, 2023, primarily due to cash received from closing of the

$46,000,000 Stream (net of repayment of the $5,000,000 Bridge Loan and transaction related costs) and cash received from the closing

of a brokered private placement of special warrants of the Company, partially offset by operating expenses and capital expenditures

incurred during the period.

The shareholders’ deficiency decreased due to net loss for the six months ended June 30, 2023,

partially offset by an increase due to proceeds received from equity financing in the six months ended June 30, 2023.

the six months ended June 30, 2023, the Company had a net cash increase of $34,425,054, primarily due to the closing of a brokered private

placement of special warrants of the Company and proceeds received from the exercise of warrants and closing of the Stream agreement

Cash expenditures during the six months ended June 30, 2023, were primarily related to working capital requirements.

of March 2023 Special Warrants

July 24, 2023, the “March 2023, Special Warrants” automatically converted into one share of common stock of the company and

one common stock purchase warrant of the company which entitles each warrant holder therof to acquire one share of common stock of the

Company at an exercise price of $0.15 per Warrant share until March 27, 2026.

July 4, 2023, 6,735,354 RSU’s were granted to employees and executives of the Company.

The RSU awards vest in one-third increments

on March 31 of 2024, 2025 and 2026.

July 4, 2023, 1,611,826 DSU’s were granted to directors of the Company.

The DSU awards vest immediately.

July 6, 2023, 245,454 DSU’s were granted to a director of the Company.

The DSU award vest on July 6, 2024.

July 6, 2023, the Company appointed Paul Smith to its Board of Directors and Chair of its new Growth Committee.

Results and Amendments to Equity Compensation Plans

Company held its Annual General Meeting (the “Meeting”) on August 4, 2023.

The nominees for the Board of Directors listed

in the Company’s management information circular dated July 6, 2023 (the “Circular”), being (i) Sam Ash, (ii) Mark

Cruise, (iii) Dickson Hall, (iv) Cassandra Joseph, (v) Pamela Saxton, (vi) Paul Smith and (vii) Richard Williams, were elected to the

board of directors of the Company (the “Board”) to hold office until the next annual meeting of shareholders or until their

successors are duly appointed or elected.

addition, at the Meeting, the shareholders of the Company approved:

(ii) the re-appointment of MNP LLP Chartered Professional Accountants

as auditor of the Company for the ensuing year;

(ii) the Company’s amended and restated stock option plan (the “Amended and

Restated Stock Option Plan”);

and (iii) the Company’s amended and restated restricted stock unit incentive plan (the “Amended

and Restated RSU Plan” and, together with the Stock Option Plan, the “Security Based Compensation Plans”).

Security Based Compensation Plans were each approved by the Board on July 5, 2023 and are being implemented to comply with the policies

of the TSX Venture Exchange (the “TSXV”) in connection with Bunker Hill’s application to list its common stock (the

“Common Shares”) on the TSXV.

Amended and Restated Stock Option Plan is a rolling plan meaning that the maximum number of Common Shares issuable thereunder is 10%

of the issued and outstanding Common Shares (on a non-diluted basis) at the time of the grant of options.

Amended and Restated RSU Plan is a fixed plan meaning the maximum number of Common Shares issuable thereunder is fixed at 26,581,075,

being 10% of the issued and outstanding Common Shares (on a non-diluted basis as at July 5, 2023.

information regarding the Security Based Compensation Plans, including details regarding the amendments, can be found in the Circular

posted on Bunker Hill’s SEDAR+ profile at www.sedarplus.ca.

accounting estimates

17 unchanged sentences

in these assumptions affect the fair value estimates.

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

loans, promissory notes, stream obligation and warrants

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.

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 stream obligation inputs used to determine the future cash flows and effective interest for the amortized cost

calculation include futures prices of minerals and expected mineral production over the life of the mine.

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 judgment.

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.

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.

Actual results may be different.

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.

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.

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.

Sheet Arrangements

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