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Item 1. Financial Statements

2023-11-13 compared with 2023-08-14 · 575 added, 501 removed, 572 unchanged (65% of the section changed)

Financial Statements

condensed interim consolidated financial statements of Bunker Hill Mining Corp., (“Bunker Hill”, the “Company”,

or the “Registrant”) a.

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

of the Securities and Exchange Commission.

Because certain information and notes normally included in financial statements prepared in

accordance with accounting principles generally accepted in the United States of America (“U.S.”) were condensed or omitted

pursuant to such rules and regulations, these financial statements should be read in conjunction with the audited consolidated financial

statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022.

unaudited condensed interim consolidated financial statements of Bunker Hill Mining Corp., (“Bunker Hill”, the

“Company”, or the “Registrant”) a.

Nevada corporation, included herein were prepared, without audit,

pursuant to rules and regulations of the Securities and Exchange Commission.

Because certain information and notes normally included

in financial statements prepared in accordance with accounting principles generally accepted in the United States of America

(“U.S.”) were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in

conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the

year ended December 31, 2022.

Hill Mining Corp.

Interim Consolidated Balance Sheets

Condensed Interim Consolidated Balance Sheets

in United States Dollars)

September 30,

Current assets

13 unchanged sentences

Accrued liabilities

Interest payable (note 7)

Current portion of lease liability

Derivative warrant liability (note 8)

Deferred share units liability (note 10)

Derivative special warrant liability (note 8)

Interest payable (note 7)

Promissory notes payable (note 7)

26 unchanged sentences

Hill Mining Corp.

Interim Consolidated Statements of (Loss) Income and Comprehensive Income

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

in United States Dollars)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses

2 unchanged sentences

Legal and accounting

Consulting and wages

Loss from operations

6 unchanged sentences

Change in derivative liabilities (note 8)

( 13,246,561 )

( 9,019,987 )

Gain (loss) on foreign exchange

(Loss) gain on FV of debentures (note 7)

( 1,884,232 )

Gain on FV of debentures (note 7)

Gain on EPA settlement

5 unchanged sentences

( 5,006,692 )

Debenture finance costs

( 2,143,840 )

Debenture finance costs

( 1,230,539 )

Finance costs (note 7, 8)

( 1,100,881 )

Loss on debt modification (note 7)

Loss on debt settlement (note 7)

Other (loss) income

(Loss) on foreign exchange

(Loss) income for the period pre tax

$ ( 5,013,034 )

$ ( 11,557,894 )

Deferred tax expense (note 12)

( 3,508,741 )

Deferred tax recovery (expense) (note 12)

( 2,605,741 )

1 unchanged sentence

$ ( 7,618,775 )

$ ( 15,066,635 )

Other comprehensive (loss) income, net of tax:

(loss) gain on change in FV on own credit risk

Other comprehensive income, net of tax:

Gain on change in FV on own credit risk

Other comprehensive income

1 unchanged sentence

$ ( 7,116,440 )

$ ( 14,633,038 )

Dilutive effect of convertible debentures

Dilutive effect of derivative warrant liabilities

1 unchanged sentence

$ ( 7,116,440 )

$ ( 14,633,038 )

Net income (loss) per common share – basic

4 unchanged sentences

Hill Mining Corp.

Interim Consolidated Statements of Cash Flows

Condensed Interim Consolidated Statements of Cash Flows

in United States Dollars)

September 30,

Operating activities

2 unchanged sentences

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

Stock-based compensation (note 9)

Stock-based compensation

Depreciation expense

1 unchanged sentence

( 18,538,380 )

Deferred tax expense (note 12)

Deferred tax expense

Gain on warrant settlement

Units issued for services

Interest expense on lease liability (note 7)

Interest expense on lease liability

Interest expense

Financing costs

5 unchanged sentences

( 2,256,437 )

Amortization of non-current liabilities

( 3,041,056 )

Accretion of non-current liabilities

Gain on debt settlement

4 unchanged sentences

Accounts receivable and prepaid expenses

( 1,145,727 )

Accounts payable

( 1,393,749 )

Accrued liabilities

5 unchanged sentences

( 2,000,000 )

Interest payable - EPA

Interest payable

5 unchanged sentences

( 1,094,037 )

( 5,880,471 )

Land purchase

37 unchanged sentences

Hill Mining Corp.

Interim Consolidated Statements of Changes in Shareholders’ Deficiency

Condensed Interim Consolidated Statements of Changes in Shareholders’ Deficiency

in United States Dollars)

7 unchanged sentences

Shares issued for RSUs vested

Non brokered shares issued for $0.30 CAD

Stock subscription received for units

Contractor shares issued for $0.30 CAD

Shares issued for Mill purchase

Warrant valuation

Shares issued for warrant exercise

Shares issued for interest payable

Special warrant shares issued for $ 0.15 CAD

Net income (loss) for the period

1 unchanged sentence

( 7,618,775 )

Balance, June 30, 2023

Balance, September 30, 2023

$ ( 79,211,334 )

3 unchanged sentences

$ ( 34,242,368 )

$ ( 72,491,150 )

$ ( 34,242,368 )

Stock-based compensation

12 unchanged sentences

Net income (loss) for the period

Net income (loss)

Balance, June 30, 2022

Balance, September 30, 2022

$ ( 59,626,902 )

4 unchanged sentences

Hill Mining Corp.

to the Condensed Interim Consolidated Financial Statements (Unaudited)

and Six Months Ended June 30, 2023

to the Unaudited Condensed Interim Consolidated Financial Statements

and Nine Months Ended September 30, 2023

in United States Dollars)

13 unchanged sentences

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

It continues to work at developing its project

with a view towards putting it into production.

It continues to work at developing

its project with a view towards putting it into production.

Significant Accounting Policies :

of Presentation

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

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

Commission for interim financial information.

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

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

It is management’s opinion,

however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial

statement presentation.

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

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

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

The interim results for the period ended June 30, 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, sale of mineral

properties for the accounting of the conversion of the royalty convertible debenture (the “RCD”), 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, stream obligation, 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

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

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

Securities and Exchange Commission for interim financial information.

Accordingly, they do not include all the information and

footnotes necessary for a comprehensive presentation of financial position, results of operations, shareholders’ deficiency,

or cash flows.

It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments)

have been made which are necessary for a fair financial statement presentation.

The unaudited condensed interim consolidated

financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the annual

audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the

year ended December 31, 2022.

The interim results for the period ended September 30, 2023, are not necessarily indicative of the

results for the full fiscal year.

The unaudited condensed interim 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, sale of mineral properties for

the accounting of the conversion of the royalty convertible debenture (the “RCD”), 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, stream obligation, 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:

of Accounts receivable and prepaid expenses

Schedule of Accounts receivable and prepaid expenses

September 30,

Prepaid expenses and deposits

3 unchanged sentences

Schedule of Equipment

September 30,

Equipment, gross

1 unchanged sentence

Equipment, net

total depreciation expense relating to equipment during the three and six months ended June 30, 2023, was $ 31,732 and $ 76,424 , respectively.

Compared to the three and six months ended June 30, 2022, was $ 38,692 and $ 77,091 , respectively.

On May 13, 2022, the Company completed the purchase of a package of equipment

and parts inventory from Teck Resources Limited’s (“Teck”) Pend Oreille operation.

The package comprises substantially

all the mineral processing equipment 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 components and parts for the mill, assay lab, conveyer, field instruments, and

electrical spares.

total depreciation expense relating to equipment during the three and nine months ended September 30, 2023, was $ 30,344 and $ 106,769 ,

respectively.

Compared to the three and nine months ended September 30, 2022, was $ 42,814 and $ 119,905 , respectively.

May 13, 2022, the Company completed the purchase of a package of equipment and parts inventory from Teck Resources Limited’s (“Teck”)

Pend Oreille operation.

The package comprises substantially all the mineral processing equipment 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 components

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

purchase of the mill has been valued at:

4 unchanged sentences

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

process plant was purchased in an assembled state, 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 sheets as a non-current asset in accordance with the purchase price

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.

process plant was purchased in an assembled state, 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 sheets as a non-current asset in accordance with the 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.

plant consists of the following:

of Plant Asset Consists

Schedule of Plant Asset Consists

September 30,

Plant purchase price less inventory

3 unchanged sentences

Process Plant

On June 30, 2023, the Company made the final payment of $ 545,626 to D’Angelo International LLC to complete the purchase of a ball mill for a total $ 745,626 (inclusive of two previously paid deposits of $ 100,000 from the Company to D’Angelo International LLC).

The ball mill is capable of delivering the 1,800 ton per day

mine plan envisaged in the Company’s Prefeasibility Study, and subject to future detailed engineering and mine planning, the mill

could also potentially support a throughput increase.

June 30, 2023, the Company made the final payment of $ 545,626 to D’Angelo International LLC to complete the purchase of a ball

mill for a total $ 745,626 (inclusive of two previously paid deposits of $ 100,000 from the Company to D’Angelo International

The ball mill is capable of delivering the 1,800 ton per day mine plan envisaged in the Company’s Prefeasibility Study, and

subject to future detailed engineering and mine planning, the mill could also potentially support a throughput increase.

asset consists of the following:

of Right-of-use Asset

Loader accumulated depreciation

Schedule of Right-of-use Asset

September 30,

Loader leases

Loader leases accumulated depreciation

Right-of-use asset, net

total depreciation expense during the three and six months ended June 30, 2023, was $ 6,385 and $ 12,769 , respectively.

Compared to the

three and six months ended June 30, 2022, was $ 24,442 and $ 52,353 , (relating to an expired lease) respectively.

total depreciation expense during the three and nine months ended September 30, 2023, was $ 6,887 and $ 19,656 , respectively.

to the three and nine months ended September 30, 2022, was $ nil and $ 52,353 , (relating to an expired lease) respectively.

Bunker Hill Mine and Mining Interests

11 unchanged sentences

of $ 3,400,000 payable in cash and $ 2,000,000 in Common Shares of the Company.

The Amended Agreement also required payments pursuant to an agreement with

the 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 as per 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.

Amended Agreement also required payments pursuant to an agreement with the 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 as per the Settlement Agreement reached with the

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 Mine on January 7, 2022.

17 unchanged sentences

in December 2021 (see “EPA Settlement Agreement” section below).

Management has determined the purchase to be an acquisition

of a single asset.

Capitalized Development

Commencing on October 1, 2022, the Company capitalizes

mine development.

Through June 30, 2023, a total of $ 1,517,526 had been capitalized.

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

on October 1, 2022, the Company capitalizes mine development.

Through September 30, 2023, a total of $ 2,218,439 had been capitalized.

of Mineral Properties

June 23, 2023, as consideration for the extinguishment of the RCD, as described in note 7, the Company granted a royalty for 1.85 % of life-of-mine

gross revenue (the “Royalty”) from mining claims considered to be historically worked, contiguous to current accessible underground

development, and covered by the Company’s 2021 ground geophysical survey.

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

June 23, 2023, as consideration for the extinguishment of the RCD, as described in note 7, the Company granted a royalty for 1.85 % of

life-of-mine gross revenue (the “Royalty”) from mining claims considered to be historically worked, contiguous to current

accessible underground development, and covered by the Company’s 2021 ground geophysical survey.

A 1.35% rate will apply to claims

outside of these areas.

transaction is treated as a sale of mineral interest to Sprott.

4 unchanged sentences

This analysis utilized a discount rate of 13% and long-term metal prices of $1.09/lb, $0.98/lb and $25.51/oz for

zinc, lead and silver respectively, consistent with assumptions utilized in the valuation of the RCD at

extinguishment.

The Company has recognized a gain of $ 6,980,932 in

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

zinc, lead and silver respectively, consistent with assumptions utilized in the valuation of the RCD at extinguishment.

has recognized a gain of $ 6,980,932

in the unaudited condensed interim consolidated statements of (loss) income and comprehensive

(loss) income.

carrying cost of the Mine is comprised of the following:

of Mining Interests

Schedule of Mining Interests

September 30,

Bunker Hill Mine purchase

Capitalized development

Sale of mineral properties (royalty)

Sale of mineral properties (note 7)

( 1,973,840 )

3 unchanged sentences

patented mining claims, for which the Company already owns the mineral rights.

the six months ended June 30, 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.

the nine months ended September 30, 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 (note 11).

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

Cost Recovery Payables - EPA

a part of the lease of the Mine with Placer Mining 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, it 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 an 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.

Prior to the purchase of the Mine, 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,

4 unchanged sentences

payment terms for recovery of the historical environmental costs.

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:

of Amended Settlement Environmental Protection Agency Agreement

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:

Schedule of Amended Settlement Environmental Protection Agency Agreement

Within 30 days of Settlement Agreement

9 unchanged sentences

date of the Amended Settlement.

Once 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”).

Once 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 .

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 ).

the year ended 2022, the financial assurance was put into place, enabling the restructuring of the payment under the Amendment

Settlement with the entire $ 17,000,000 liability being recognized as long-term.

As of June 30, 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

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 June 30, 2023.

Company recorded accretion expense on the liability of $ 396,663

and $ 770,969

for the three and six months ended June 30, 2023, respectively, bringing the net liability to $ 8,712,435

(previously accrued interest of $ 154,743 )

as of June 30, 2023.

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

cost recovery payment on January 7, 2022.

Concurrent 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 from $ 9,000,000 .

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 ).

the year ended 2022, the financial assurance was put into place, enabling the restructuring of the payment under the Amendment Settlement

with the entire $ 17,000,000 liability being recognized as long-term.

As of September 30, 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.

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

September 30, 2023.

Company recorded accretion expense on the liability of $ 420,518 and $ 1,191,487 for the three and nine months ended September 30, 2023,

respectively, bringing the net liability to $ 9,132,953 (previously accrued interest of $ 154,743 ) as of September 30, 2023.

Treatment Charges – Idaho Department of Environmental Quality

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

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”) following a handover of responsibilities for the Central Treatment Plant from the EPA to the

IDEQ as of that date.

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”) following a handover of responsibilities for the Central Treatment Plant from the EPA to the IDEQ as of

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

3 unchanged sentences

cost of water treatment.

As of June 30, 2023, a prepaid expense of $ 60,000 (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

condensed interim balance sheets as accounts receivable and prepaid expenses.

As of September 30, 2023, a prepaid expense of $ 90,000 (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 unaudited condensed interim balance sheets as accounts receivable and prepaid expenses.

Promissory Notes Payable and Convertible Debentures

9 unchanged sentences

Principal payment of $ 504,315

was made during the 6 months ended June 30, 2023.

was made during the 9 months ended September 30, 2023.

The Company incurred a one-time penalty of 10 %

of the outstanding principal on June 30, 2023, of $ 99,569

which is included in loss on modification of debt in the condensed interim consolidated statements of income.

February 21, 2023, the Company issued a non-convertible promissory note to a related party of $ 120,000 , and a separate

non-convertible promissory note 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.

which is included in loss on modification of debt in the unaudited condensed interim consolidated statements of income.

February 21, 2023, the Company issued a non-convertible promissory note to a related party of $ 120,000 , and a separate non-convertible

promissory note 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 through participating in the March 2023 Offering (Note 8).

June 2023, the Company issued a non-convertible promissory note in the amount of $ 150,000 .

3 unchanged sentences

note, including interest, was settled in June 2023.

June 30, 2023, the Company owes $ 1,095,253 in promissory notes payable, which is included in current liabilities on the condensed interim

consolidated balance sheets.

Interest expense for the three and six months ended June 30, 2023, was $ 54,931 and $ 110,411 respectively.

Compared to the three and six months ended June 30, 2022, was $ 92,466 and $ 167,877 respectively.

At June 30, 2023 financing costs of

$ 3,151 ($ 384,041 at December 31, 2022) is included in interest payable on the condensed interim balance sheet.

The effective interest

rate of the promissory note is 15 %.

September 30, 2023, the Company owes $ 1,095,253

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

Interest expense for the three and nine months ended September 30, 2023, was $ 41,410

and $ 151,821

respectively.

Compared to the three and nine months ended September 30, 2022, was $ 56,712

and $ 224,589

respectively.

At September 30, 2023 financing costs of $ 44,560

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

The effective interest rate

of the promissory note is 15 %.

Finance Package with Sprott Private Resource Streaming & Royalty Corp.

4 unchanged sentences

a $ 5,000,000 convertible debenture (the “CD1”), and a multi-metals Stream of up to $ 37,000,000 .

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

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”).

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

On May 23, 2023, the Company announced an upsized

and improved $ 67,000,000 project finance package with SRSR, consisting of a $ 46,000,000 stream and a $ 21,000,000 new debt facility.

newly proposed $ 46,000,000 stream (the “Stream”) was envisaged to have the same economic terms as the previously proposed

$ 37,000,000 stream, with a $ 9,000,000 increase in gross proceeds received by the Company, resulting in a lower cost of capital for the

The Company also announced a new $ 21,000,000 new debt facility (the “Debt Facility”), available for draw at the Company’s

election for two years.

As a result, total funding commitments from SRSR was envisaged to increase to $ 96,000,000 including the RCD, CD1,

CD2, Stream and debt facility (together, the “Project Financing Package”).

The Bridge Loan, as previously envisaged, was to

be repaid from the proceeds of the Stream.

The parties also agreed to extend the maturities of the CD1 and CD2 to March 31, 2026, when

the full $ 6 million and $ 15 million, respectively, will become due.

On June 23, 2023, the Project Financing

Package and related transactions closed, consistent with the Company’s announcement of May 23, 2023.

The Company incurred

of financing costs on the condensed interim consolidated statements of (loss) income and comprehensive income relating to the

modification of CD1, CD2, the extinguishment of RCD and the closing of the $ 21,000,000

debt facility.

June 23, 2023, the Company closed the upsized and improved $ 67,000,000 project finance package with SRSR, consisting of a $ 46,000,000

stream and a $ 21,000,000 new debt facility.

The newly proposed $ 46,000,000 stream (the “Stream”) was envisaged to have the

same economic terms as the previously proposed $ 37,000,000 stream, with a $ 9,000,000 increase in gross proceeds received by the Company,

resulting in a lower cost of capital for the Company.

The Company also announced a new $ 21,000,000 new debt facility (the “Debt

Facility”), available for draw at the Company’s election for two years.

As a result, total funding commitments from SRSR

was envisaged to increase to $ 96,000,000 including the RCD, CD1, CD2, Stream and debt facility (together, the “Project Financing

The Bridge Loan, as previously envisaged, was to be repaid from the proceeds of the Stream.

The parties also agreed

to extend the maturities of the CD1 and CD2 to March 31, 2026, when the full $ 6 million and $ 15 million, respectively, will become due.

The Company incurred $ 254,220 of

financing costs on the unaudited condensed interim consolidated statements of (loss) income and comprehensive (loss) income relating

to the modification of CD1, CD2, the extinguishment of RCD and the closing of the $ 21,000,000 debt

Royalty Convertible Debenture

19 unchanged sentences

for as a modification.

On June 23, 2023, the funding date of the Stream, the RCD was repaid by

the Company granting a royalty for 1.85% of life-of-mine gross revenue (the “Royalty”) from mining claims historically worked

as described above.

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

The Company recorded a gain on sale of mineral properties

of $6,980,932 in the condensed interim consolidated statements of income (loss).

Additionally, on settlement of the RCD, $347,499 of previously

deferred to other comprehensive income was recognized in the net income (loss on FV of convertible debentures) on the condensed interim

consolidated statement of income (loss).

The Royalty Put Option permits SRSR Streaming to resell the royalty to the Company for $8 million

upon default under the Series 1 Convertible Debentures or Series 2 Convertible Debentures until such time that they are repaid in full.

The Company has accounted for the Royalty as a sale of mineral properties (refer to Note 5 for further detail).

June 23, 2023, the funding date of the Stream, the RCD was repaid by the Company granting a royalty for 1.85% of life-of-mine gross

revenue (the “Royalty”) from mining claims historically worked as described above.

A 1.35% rate will apply to claims

outside of these areas.

The Company recorded a gain on sale of mineral properties of $ 6,980,932

in the unaudited condensed interim consolidated statements of income (loss).

Additionally, on settlement of the RCD, $ 347,499

of previously deferred to other comprehensive (loss) income was recognized in the net income (loss on FV of convertible debentures)

on the unaudited condensed interim consolidated statement of income (loss).

The Royalty Put Option permits SRSR Streaming to resell

the royalty to the Company for $ 8

million upon default under the Series 1 Convertible Debentures or Series 2 Convertible Debentures until such time that they are

repaid in full.

The Company has accounted for the Royalty as a sale of mineral properties (refer to Note 5 for further

Convertible Debenture (CD1)

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 initially had a maturity date of the earlier of July 7, 2023

(subsequently amended, as described below) or the closing of the $ 37,000,000 stream that was announced on December 20, 2021.

is secured by a pledge of the Company’s properties and assets, and is convertible into Common Shares at a price of C$ 0.30

per Common Share at SRSR’s election at any time through the maturity date.

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 apply.

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 or SRSR elects to exercise its share conversion option.

determined 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.

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 initially had a maturity date of the earlier

of July 7, 2023 (subsequently amended, as described below) or the closing of the $ 37,000,000 stream that was announced on December 20,

The CD1 is secured by a pledge of the Company’s properties and assets, and is convertible into Common Shares at a price of

C$ 0.30 per Common Share at SRSR’s election at any time through the maturity date.

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 apply.

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 or SRSR elects

to exercise its share conversion option.

The Company determined 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.

with the funding of the Stream in June 2023, the Company and SRSR agreed to amend the maturity date of CD1 from March 31, 2025, to March

6 unchanged sentences

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

The CD2 is secured by a pledge of the Company’s properties and assets, and is convertible into Common Shares at a price of C$ 0.29 per Common Share at SRSR’s election at any time

through the maturity date.

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

and is convertible into Common Shares at a price of C$ 0.29 per Common Share at SRSR’s election at any time through the maturity

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

with the funding of the Stream in June 2023, the Company and SRSR agreed to amend the maturity date of the CD2 from 3 quarterly

payments of $ 2,000,000 each beginning June 30, 2024, and $ 9,000,000 on March 31, 2025, to payment in full on March 31, 2026, and

that the CD2 would remain outstanding until the new maturity date unless the company elects to exercise its option of early

repayment or SRSR elects to exercise its share conversion option.

The Company determined that the amendments to the terms of the CD2 should not be treated as an extinguishment of the CD2

and have therefore been accounted for as a modification.

with the funding of the Stream in June 2023, the Company and SRSR agreed to amend the maturity date of the CD2 from 3 quarterly payments

of $ 2,000,000 each beginning June 30, 2024, and $ 9,000,000 on March 31, 2025, to payment in full on March 31, 2026, and that the CD2

would remain outstanding until the new maturity date unless the company elects to exercise its option of early repayment or SRSR elects

to exercise its share conversion option.

The Company determined that the amendments to the terms of the CD2 should not be treated as

an extinguishment of the CD2 and have therefore been accounted for as a modification.

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

9 unchanged sentences

adjusted rate

CD1 carried a Discount for Lack of Marketability (“DLOM”) of 5.0 %

as of the issuance date and as of June 30, 2023.

The CD2 carried a DLOM of 10.0 %

as of the issuance date and June 30, 2023

(2)(4 )(5)(3)

Convertible Debenture

CD1 carried a Discount for Lack of Marketability (“DLOM”) of 5.0 % as of the issuance date and as of September 30, 2023.

CD2 carried a DLOM of 10.0 % as of the issuance date and September 30, 2023

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 $ 0.226 as of June 30, 2023, and $ 0.219 and CD2 is $ 0.212 as of December 31, 2022

conversion price of the CD1 is $ 0.219 and CD2 is $ 0.226 as of September 30, 2023, and $ 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

6 unchanged sentences

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 June 30, 2023 (pre-modification), the implied probability of the RCD being converted to a 1.85 % royalty,

in the event that the Stream is advanced, was 77 %.

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

resulting fair values of the CD1, RCD, and CD2 at June 30, 2023, and as of December 31, 2022, were as follows:

of Fair Value Derivative Liability

Based on this methodology, as of June 30, 2023 (pre-modification), the implied probability of the RCD being converted

to a 1.85 % royalty, in the event that the Stream is advanced, was 77 %.

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 is advanced.

resulting fair values of the CD1, RCD, and CD2 at September 30, 2023, and as of December 31, 2022, were as follows:

Schedule of Fair Value Derivative Liability

Instrument Description

total (loss) gain on fair value of debentures recognized during the three and six months ended June 30, 2023 was ($ 1,884,232 ) and

($ 194,531 ) , respectively,

and $ 1,813,456 and

September 30,

total gain on fair value of debentures recognized during the three and nine months ended September 30, 2023 was $ 2,450,968 and

$ 2,256,437 ,

respectively, and $ 1,301,069 and

$ 3,041,056 for

the three and six months ended June 30, 2022, respectively .

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

other comprehensive (loss) income during the three and six months ended June 30, 2023 was ($ 373,415 ) and

the three and nine months ended September 30, 2022, respectively.

The portion of changes in fair value attributable to changes in

the Company’s credit risk is accounted for within other comprehensive (loss) income during the three and nine months ended

September 30, 2023 was $ 68,738 and

respectively.

Compared to the three and six months ended June 30, 2022 was $ 371,255 and

Compared to the three and nine months ended September 30, 2022 was $ 625,050 and

respectively.

Interest expense for the three and six months ended June 30, 2023 was $ 670,562 and

Interest expense for the three and nine months ended September 30, 2023 was $ 510,411 and

$ 1,857,822 ,

respectively.

Compared to the three and six months ended June 30, 2022 was $ 348,574 and

Compared to the three and nine months ended September 30, 2022 was $ 691,111 and

$ 1,279,849 ,

respectively.

At June 30, 2023 interest of $ nil ($ 691,890 at

At September 30, 2023 interest of $ 510,411 ($ 691,890 at

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

For the three and six months ended June 30,

2023 the Company recognized $ 18,803 and

For the three and nine months ended September

30, 2023 the Company recognized $ nil and

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

(loss) income as a result of settling interest by issuance of shares ( 0

and 20,125,209

shares for the three and nine months ending September 30, 2023 respectively).

Compared to the three and nine months ended September

30, 2022 was $ nil and

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.

Compared to the three and six months ended June 30, 2022 was $ nil and

$ nil , respectively.

Company performs quarterly testing of the covenants in the CD1 and CD2 and was in compliance with all such covenants as of June 30, 2023.

December 6, 2022, the Company closed a $ 5,000,000

loan facility with Sprott (the “Bridge Loan”).

The Bridge Loan is secured by the same security package in place for the

RCD, CD1, and CD2.

Bridge Loan bears interest of 10.5% per annum and matures at the earlier of (i) the advance of the Stream, or (ii) June

In addition, the minimum quantity of metal delivered under the Stream, if advanced, would increase by 5 %

relative to amounts previously announced.

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

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

The Bridge Loan is secured

by the same security package in place for the RCD, CD1, and CD2.

The Bridge Loan bears interest at 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.

June 23, 2023 the Company repaid the outstanding principal and interest on the Bridge Loan recognizing a loss on extinguishment of

debt of $ 222,754

in the condensed interim consolidated statements of (loss) income.

At June 30, 2023 interest of $ nil

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

Interest expense for three and six months

ended June 30, 2023, was $ 168,166

in the unaudited condensed interim consolidated statements of (loss) income.

At September 30, 2023 interest of $ nil

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

Interest expense for three

and nine months ended September 30, 2023, was $ 168,166

and $ 346,550

respectively.

Compared to the three and six months ended June 30, 2022, was $ nil

Compared to the three and nine months ended September 30, 2022, was $ nil

respectively.

1 unchanged sentence

was advanced to the Company.

The Stream applies to 10% of all payable metals sold until a

minimum quantity of metal is delivered consisting of, individually, 63.5 million pounds of zinc, 40.4 million pounds of lead, and 1.2

million ounces of silver (subsequently amended, as described below).

Thereafter, the Stream would apply to 2% of payable metals

The delivery price of streamed metals will be 20% of the applicable spot price.

The Company may buy back 50% of the Stream

Amount at a 1.40x multiple of the Stream Amount between the second and third anniversary of the date of funding, and at a 1.65x

multiple of the Stream Amount between the third and fourth anniversary of the date of funding .

The Stream applies to 10% of all payable metals sold until a minimum quantity of metal is delivered

consisting of, individually, 63.5 million pounds of zinc, 40.4 million pounds of lead, and 1.2 million ounces of silver

(subsequently amended, as described below).

Thereafter, the Stream would apply to 2% of payable metals sold.

The delivery price of

streamed metals will be 20% of the applicable spot price.

The Company may buy back 50% of the Stream Amount at a 1.40x multiple of

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

between the third and fourth anniversary of the date of funding.

The Company incurred $ 824,156

of transactions costs directly related to the Stream which were capitalized against the initial recognition of the Stream of $ 45,175,844

on the condensed interim consolidated balance sheets.

The Company determined that in accordance with ASC 815 derivatives and hedging, the Stream does not meet the criteria

for treatment as a derivate instrument as the quantities of metal to be sold thereunder are not subject to a minimum quantity, and therefore

a notional amount is not determinable.

The Company has therefore determined that in accordance with ASC 470, the stream obligation should

be treated as a liability based on the indexed debt rules thereunder.

on the unaudited condensed interim consolidated balance sheets.

Company determined that in accordance with ASC 815 derivatives and hedging, the Stream does not meet the criteria for treatment as a

derivate instrument as the quantities of metal to be sold thereunder are not subject to a minimum quantity, and therefore a notional

amount is not determinable.

The Company has therefore determined that in accordance with ASC 470, the stream obligation should be

treated as a liability based on the indexed debt rules thereunder.

The initial recognition has been made at fair value based on cash

received, net of transaction costs, and the discount rate calibrated so that the future cash flows associated with the Stream, using forward

commodity prices, equal the cash received.

The measurement of the stream obligation is accounted for at amortized cost with accretion

at the discount rate.

Subsequent changes to the expected cash flows associated with the Stream will result in the adjustment of the carrying

value of the stream obligation using the same discount rate, with changes to the carrying value recognized in the condensed interim consolidated

statements of income.

The Company determined the effective interest rate of the Stream obligation

to be 11.6 % and recorded accretion expense on the liability of $ 85,000 for the three and six months ended June 30, 2023 ($ nil for the

three and six months 2022), bringing the liability to $ 45,260,844 as of June 30, 2023.

received, net of transaction costs, and the discount rate calibrated so that the future cash flows associated with the Stream, using

forward commodity prices, equal the cash received.

The measurement of the stream obligation is accounted for at amortized cost with

accretion at the discount rate.

Subsequent changes to the expected cash flows associated with the Stream will result in the

adjustment of the carrying value of the stream obligation using the same discount rate, with changes to the carrying value

recognized in the unaudited condensed interim consolidated statements of income.

Company determined the effective interest rate of the Stream obligation to be 11.4 % and recorded accretion expense on the liability of

$ 1,321,000 and $ 1,406,000 respectively for the three and nine months ended September 30, 2023 ($ nil for the three and nine months 2022),

bringing the liability to $ 46,665,044 as of September 30, 2023.

Debt Facility

On June 23, 2023 the Company closed a $ 21,000,000

debt facility with SRSR which is available for draw at the Company’s election for a period of 2

June 23, 2023 the Company closed a $ 21,000,000 debt facility with SRSR which is available for draw at the Company’s election for

a period of 2 years.

As of June 23, 2023, and June 30, 2023, the company has not drawn on the facility.

Any amounts drawn will bear interest of 10 %

per annum, payable annually in cash or capitalized until three years from closing of the Debt Facility at the Company’s

Any amounts drawn will bear interest

of 10 % per annum, payable annually in cash or capitalized until three years from closing of the Debt Facility at the Company’s

election, and thereafter payable in cash only.

maturity date of any drawings under the Debt Facility will be June

For every $ 5

The maturity date of any drawings under the Debt Facility will be June 23, 2027 .

$ 5 million or part thereof advanced under the Debt Facility, the Company will grant a new 0.5% life-of-mine gross revenue royalty, on

1 unchanged sentence

The Company may buy back

50% of these royalties for $ 20

The Company determined that no recognition is required on the financial statements as of June 30, 2023.

50% of these royalties for $ 20 million.

The Company determined that no recognition is required on the financial statements as of September

30, 2023 as no amount has been drawn from the facility.

Capital Stock, Warrants and Stock Options

4 unchanged sentences

and outstanding

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

The warrant entitled the holder to purchase one 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 from C$ 0.37 to C$ 0.11 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.

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 %.

March 2023, the Company closed a brokered private placement of special warrants (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 ), 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.

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

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

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

Each 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.

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

April 1, 2025.

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.

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

warrants 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 processing plant.

The warrant entitled the holder to purchase one 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 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 837,460

(C$ 1,145,834 )

to the Company.

During the three and nine months ending September 30, 2023 the Company recognized a change (gain) in derivative

liability of $ nil

and $( 400,152 )

respectively, relating to the Teck warrants using the following assumptions:

volatility of 120 %,

stock price of C$ 0.11 ,

interest rate of 3.42 %

and dividend yield of 0 %.

March 2023, the Company closed a brokered private placement of special warrants (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 ),

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

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

8 unchanged sentences

Unit being comprised of 1.2 Unit Shares and 1.2 Warrants.

Notice of such effectiveness was received on July 11, 2023, eliminating the potential for issuance of the Penalty

Notice of such effectiveness was received on July 11, 2023, eliminating the

potential for issuance of the Penalty Units.

connection with the March 2023 Offering, the Company incurred share issuance costs of $ 846,661 and issued 2,070,258 compensation options

2 unchanged sentences

into one Unit Share and one Warrant Share.

Refer to note 15 subsequent events for details on the effectiveness of the registration statement and conversion into units.

The Special Warrants issued on March

27, 2023 were converted to 51,633,727

Common Shares and common stock purchase warrants in the third quarter of 2023.

As of June 30, 2023, the common shares and common

stock purchase warrants had not been issued.

The Company determined that in accordance with ASC 815 derivatives and hedging, each

Special Warrant will be valued and carried as a single instrument, with the periodic changes to fair value accounted through

earnings, profit and loss until the common shares and common stock purchase warrants are issued.

The fair value of the Special Warrant is determined through the valuation of the Unit Share based on the observed

price of the Company’s Common Shares, a Level 1 input, together with a valuation of the warrant component of the March 2023 Unit

using the Binomial model calibrated with inputs as shown in the table below.

Consistent with the approach above, the following table summarizes the

key valuation inputs as at applicable valuation dates:

of Estimated Fair Value of Special Warrant Liabilities

Special Warrants issued on March 27, 2023 were converted to 51,633,727 Common Shares and common stock purchase warrants on July 24, 2023.

The Company determined that in accordance with ASC 815 derivatives and hedging, each Special Warrant will be valued and carried as a

single instrument, with the periodic changes to fair value accounted through earnings, profit and loss until the common shares and common

stock purchase warrants are issued.

fair value of the Special Warrant is determined through the valuation of the Unit Share based on the observed price of the Company’s

Common Shares, a Level 1 input, together with a valuation of the warrant component of the March 2023 Unit using the Binomial model calibrated

with inputs as shown in the table below.

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

Schedule of Estimated Fair Value of Special Warrant Liabilities

March 2023 special warrants

3 unchanged sentences

Share price (C$)

Fair value of March 2023 Unit

Change in derivative liability

For prior financings, excluding the March 2023 Special Warrants, the Company has accounted for warrants in accordance

with ASC 815 derivatives and hedging.

The warrants are considered derivative instruments as they were issued in a currency other than

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

The estimated fair value of warrants accounted for as liabilities was determined

on the date of issue and marked to market at each financial reporting period.

The 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 outstanding warrants during the period were

estimated using the Binomial model to determine the fair value using the following assumptions as at June 30, 2023 and December 31,

prior financings, excluding the March 2023 Special Warrants, the Company has accounted for warrants in accordance with ASC 815

derivatives and hedging.

The warrants are considered derivative instruments as they were issued in a currency other than the

Company’s functional currency of the United States Dollars.

The estimated fair value of warrants accounted for as liabilities

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

The change in fair value of the warrant

is recorded in the unaudited condensed interim consolidated statements of income (loss) and comprehensive (loss) income as a

gain or loss and is estimated using the Binomial model.

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

the Binomial model to determine the fair value using the following assumptions as at September 30, 2023 and December 31, 2022:

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

March 2023 warrants

September 30,

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

$ ( 1,234,399 )

April 2022 special warrants issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

$ ( 997,952 )

April 2022 non-brokered issuance

September 30,

Expected life

4 unchanged sentences

June 2022 issuance

September 30,

Expected life

4 unchanged sentences

February 2021 issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

$ ( 463,467 )

August 2020 issuance

September 30,

Expected life

5 unchanged sentences

June 2019 issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

$ ( 281,588 )

August 2019 issuance

September 30,

Expected life

3 unchanged sentences

Change in derivative liability

warrants at June 30, 2023 and June 30, 2022 were as follows:

$ ( 432,765 )

warrants at September 30, 2023 and September 30, 2022 were as follows:

Schedule of Warrant Activity

1 unchanged sentence

Balance, December 31, 2021

Balance, June 30, 2022

Balance, September 30, 2022

Balance, December 31, 2022

( 58,284,148 )

Balance, June 30, 2023

the six months ended June 30, 2023, 10,416,667 May 2022 Teck warrants were exercised.

During the six months ended June 30, 2022, 239,284

February 2020 broker warrants expired.

June 30, 2023, the following warrants were outstanding:

( 10,416,667 )

Balance, September 30, 2023

September 30, 2023, the following warrants were outstanding:

Schedule of Warrants Outstanding Exercise Price

August 31, 2023

April 1, 2025

December 31, 2025

1 unchanged sentence

February 16, 2026

April 1, 2025

June 30, 2023, the following broker options were outstanding:

March 27, 2026

September 30, 2023, the following broker options were outstanding:

of Compensation Options

1 unchanged sentence

Balance, December 31, 2021

Issued – April 2022 Compensation Options

Issued – April 2022 Compensation Options (i)

Balance, December 31, 2022

Issued – March 2023 Compensation Options

Balance, June 30, 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:

Issued – March 2023 Compensation Options (ii)

Expired – August 2020 Compensation Options

( 3,239,907 )

Balance, September 30, 2023

The grant date fair value of the April 2022 Compensation Options were estimated at $ 264,435 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

2 unchanged sentences

Weighted average life

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:

Risk free interest rate

Dividend yield

Weighted average life

Schedule of Broker Exercise Prices

broker options

August 31, 2023 (i)

February 16, 2024 (ii)

April 1, 2024 (iii)

March 27, 2026 (v)

into one August 2020 Unit

February 16, 2024 (i)

April 1, 2024 (ii)

March 27, 2026 (iii)

into one February 2021 Unit

1 unchanged sentence

into one March 2023 Unit

following table summarizes the stock option activity during the six months ended June 30, 2023:

following table summarizes the stock option activity during the nine months ended September 30, 2023:

of Stock Options

5 unchanged sentences

Balance, December 31, 2022

Balance, June 30, 2023

following table reflects the actual stock options issued and outstanding as of June 30, 2023:

Expired, September 30, 2023

Balance, September 30, 2023

August 22, 2022, the Company granted 300,000 Stock Options to certain employee of the Company

with half vesting immediately and a quarter vesting on the first and second anniversary of

the grant date.

On November 23, 2022, the Company granted 400,000 Stock Options to certain

employee of the Company with half vesting immediately and a quarter vesting on the first

and second anniversary of the grant date.

following table reflects the actual stock options issued and outstanding as of September 30, 2023:

of Actual Stock Options Issued and Outstanding

(exercisable)

fair value ($)

The vesting of stock options during the three and

six months ending June 30, 2023, resulted in stock based compensation expenses of $ 34,441 and $ 93,140 respectively ($ 66,384 and $ 168,994

for the three and six months ending June 30, 2022, respectively).

vesting of stock options during the three and nine months ending September 30, 2023, resulted in stock based compensation expenses of

$ 27,725 and $ 120,865 respectively ($ 72,066 and $ 241,060 for the three and nine months ending September 30, 2022, respectively).

Restricted Share Units

1 unchanged sentence

key employees and consultants.

following table summarizes the RSU activity during the six months ended June 30, 2023:

following table summarizes the RSU activity during the nine months ended September 30, 2023:

Schedule of Restricted Share Units

3 unchanged sentences

( 5,767,218 )

Unvested as at June 30,

January 10, 2022, the Company granted 500,000

RSUs to a consultant of the Company, vested immediately.

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

for the six months ended June 30, 2022, which is included in operation and administration expenses on the condensed consolidated

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

April 29, 2022, the Company granted

76,750 RSUs to certain consultants of the Company, vested immediately.

The vesting of these RSUs resulted in stock-based

compensation of $ 16,800

for the year ended December, 2022, which is included in operation and administration expenses on the consolidated statements of

(loss) income and comprehensive (loss) income.

On June 30, 2022, the

Company granted 15,000

RSUs to a consultant of the Company, vested immediately.

The vesting of these RSUs resulted in stock-based compensation of $ 2,328

for the year ended December 31, 2022, which is included in operation and administration expenses on the consolidated statements of

(loss) income and comprehensive (loss) income.

June 1, 2023, the Company granted 4,067,637

RSUs to executives and employees of the Company, vested immediately.

The vesting of these RSUs resulted in stock-based compensation

for the six months ended June 30, 2023, which is included in operation and administration expenses on the consolidated statements of

(loss) income and comprehensive (loss) income.

On June 4, 2023, the

Company granted 42,000

RSUs to a consultant of the Company, vested immediately.

The vesting of these RSUs resulted in stock-based compensation of $ 7,825

for the six months ended June 30, 2023, which is included in operation and administration expenses on the consolidated statements of

(loss) income and comprehensive (loss) income.

The vesting of RSU’s during the three and six

months ending June 30, 2023, resulted in stock based compensation expense of $ 419,754 and $ 594,724 respectively ($ 15,922 and $ 38,859 for

the three and six months ending June 30, 2022, respectively).

Unvested as at September 30, 2023

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

The vesting of these RSUs

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

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

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

The vesting of these RSUs

resulted in stock-based compensation of $ 16,800 for the year ended December, 2022, which is included in operation and administration

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

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

The vesting of these RSUs resulted

in stock-based compensation of $ 2,328 for the year ended December 31, 2022, which is included in operation and administration expenses

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

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 unaudited condensed

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

June 1, 2023, the Company granted 4,067,637 RSUs to executives and employees of the Company, vested immediately.

The vesting of these

RSUs resulted in stock-based compensation of $ 322,905 for the nine months ended September 30, 2023, which is included in operation

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

June 4, 2023, the Company granted 42,000 RSUs to a consultant of the Company, vested immediately.

The vesting of these RSUs resulted

in stock-based compensation of $ 7,825 for the nine months ended September 30, 2023, which is included in operation and administration

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

July 4, 2023, the Company granted 6,735,356 RSUs to executives and employees of the Company, which vest in one-third increments on

March 31 of 2024, 2025 and 2026.

The vesting of these RSUs resulted in stock-based compensation of $ 214,897 for the nine months ended

September 30, 2023, which is included in operation and administration expenses on the consolidated statements of (loss) income and

comprehensive (loss) income.

vesting of RSU’s during the three and nine months ending September 30, 2023, resulted in stock based compensation expense of $ 271,021

and $ 865,745 respectively ($ 14,585 and $ 53,444 for the three and nine months ending September 30, 2022, respectively).

Deferred Share Units

4 unchanged sentences

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

following table summarizes the DSU activity during the six months ended June 30, 2023 and 2022:

following table summarizes the DSU activity during the nine months ended September 30, 2023 and 2022:

Schedule of Deferred Share Units

1 unchanged sentence

( 3,125,000 )

Unvested as at June 30, 2022

Unvested as at December 31, 2022

Granted (ii, iii)

Vested (iv, v)

( 3,071,826 )

Unvested as at December 31 2022 and June 30, 2023

Unvested as at September 30, 2023

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

3 unchanged sentences

in cash after applicable withholding tax deductions.

July 4, 2023, 1,611,826 DSUs were issued to the Company’s Directors which vested immediately.

July 6, 2023, 245,454 DSUs were issued to one of the Company’s Directors which vests on July 6, 2024.

April 21, 2023, 1,250,000 DSUs for one of the Company’s Directors vested.

The vesting of DSU’s during the three and six months ending June 30, 2023, resulted in stock based compensation expense of $ 486,602

and $ 287,324 , respectively (stock based recovery of $ 695,494 and $ 895,416 for the three and six months ending June 30, 2022, respectively).

July 1, 2023, 210,000 DSUs for one of the Company’s Directors vested.

vesting of DSU’s during the three and nine months ending September 30, 2023, resulted in stock based compensation recovery (expense)

of $ 141,969 and ($ 145,355 ), respectively (stock based recovery of $ 188,194 and $ 1,083,610 for the three and nine months ending September

30, 2022, respectively).

Commitments and Contingencies

9 unchanged sentences

to pay for the actual costs regardless of the periodic required estimated accruals and payments made each year.

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

(“Crescent”).

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

The named defendants include Placer Mining, Robert Hopper Jr., and the Company.

The lawsuit alleges that

Placer Mining and Robert Hopper Jr.

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 in the Crescent Mine.

The lawsuit alleges that Placer Mining and Robert Hopper

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 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.

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.

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.

The court denied the motion

to dismiss filed by Placer Mining Corp.

for Crescent’s trespass, nuisance and negligence claims.

Crescent later filed an

amended complaint on April 1, 2022.

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

for Crescent’s

trespass, nuisance and negligence claims.

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

Placer Mining Corp.

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

The Company 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 the lawsuit against Placer Mining Corp.

without merit and intends to defend Placer Mining Corp.

vigorously 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.

the six months ended June 30, 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.

Hill Mining Corp are named as co-defendants.

The Company 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 the lawsuit against Placer

is without merit and intends to defend Placer Mining Corp.

vigorously 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.

the nine months ended September 30, 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 (note 5).

Deferred tax liability

The Company incurred income tax

expense of $ 3.5 million for the three and six months ended June 30, 2023, and incurred no income tax expense for

the three and six months ended June 30, 2022.

The Company’s effective income tax rate for the first six months of 2023 was

- 30.29 % compared to 0.0 % for the first six months of 2022.

The effective tax rate during the first six months of 2023 rate differed

from the statutory rate primarily due to the income tax treatment of the Stream proceeds as deferred revenue compared to its

treatment as debt under U.S.

GAAP thereby resulting in a decrease of the existing valuation allowance against deferred tax assets

related to the utilization of $ 32.3 million of net operating losses not previously benefitted.

The Company maintains a valuation

allowance against net operating losses subject to Section 382 and other deferred tax assets.

The effective tax rate during the first

six months of 2022 rate differed from the statutory rate primarily due to changes in the valuation allowance established to offset

net deferred tax assets.

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax

benefits will not be realized.

The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize

all or a portion of its deferred tax assets, it will record or increase a valuation allowance.

Conversely, if it is determined that the

Company will likely ultimately be able to realize all or a portion of the related benefits for which a valuation allowance

has been provided, all or a portion of the related valuation allowance will be reduced.

Company incurred income tax recovery (expense) of $ 0.90 million and ($ 2.61 ) million for the three and nine months ended September 30,

2023 respectively, and incurred no income tax expense for the three and nine months ended September 30, 2022.

The Company’s effective

income tax rate for the first nine months of 2023 was - 52.0 % compared to 0.0 % for the first nine months of 2022.

The effective tax rate

during the first nine months of 2023 rate differed from the statutory rate primarily due to the income tax treatment of the Stream proceeds

as deferred revenue compared to its treatment as debt under U.S.

GAAP thereby resulting in a decrease of the existing valuation allowance

against deferred tax assets related to the expected utilization of $ 35.8 million of net operating losses not previously benefitted.

Company maintains a valuation allowance against net operating losses subject to Section 382 and against other deferred tax assets.

effective tax rate during the first nine months of 2022 rate differed from the statutory rate primarily due to changes in the valuation

allowance established to offset net deferred tax assets.

valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be

The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of

its deferred tax assets, it will record or increase a valuation allowance.

Conversely, if it is determined that the Company will likely

ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion

of the related valuation allowance will be reduced.

Related party transactions

2 unchanged sentences

Schedule of Related Party Transactions

September 30,

Consulting fees & wages

June 30, 2023 and June 30, 2022, $ 52,148 and $ 1,049,304 , respectively is owed to key management personnel with all amounts included in

accounts payable and accrued liabilities.

September 30, 2023 and September 30, 2022, $ nil and $ 15,000 , respectively is owed to key management personnel with all amounts included

in accounts payable and accrued liabilities.

Subsequent Events

Conversion of March 2023 Special Warrants

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 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

The DSU award vests on July 6, 2024 .

In October 2023, the Company issued 5,175,000

common shares in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three

months ended September 30, 2023.

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