What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-14 · 106 added, 136 removed, 93 unchanged (72% of the section changed)

25 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 Bunker Hill mine (the “Mine”)

in Idaho, USA.

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

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

The 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’s sole focus is the development and restart of its 100% owned Bunker Hill mine (the “Mine”) in Idaho, US

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

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

The 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 Mine on January 7, 2022 for $5,400,000 in cash.

Prior to purchasing the Mine, the Company had entered

into a series of agreements with Placer Mining Corporation (“Placer Mining”), the prior owner, for the lease and option to

purchase the Mine.

The first of these agreements was announced on August 28, 2017, with subsequent amendments and/or extensions announced

on November 1, 2019, July 7, 2020, and November 20, 2020.

Prior to purchasing the Mine, the Company had entered into a series

of agreements with Placer Mining Corporation (“Placer Mining”), the prior owner, for the lease and option to purchase the

The first of these agreements was announced on August 28, 2017, with subsequent amendments and/or extensions announced on November

1, 2019, July 7, 2020, and November 20, 2020.

the most recent of these agreements, the Company was required to make payments pursuant to an agreement with the U.S.

10 unchanged sentences

assumed leadership of the Company.

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.

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.

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 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 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.

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

otherwise stated, all figures herein are expressed in United States Dollars, which is the Company’s functional currency.

of the three and nine months ended September 30, 2023, and 2022

the three and nine months ended September 30, 2023, and 2022, respectively, the Company generated no revenue.

the three and nine months ended September 30, 2023, the Company reported total operating expenses of $2,771,722 and $8,294,183, respectively

(total operating expenses of $3,824,948 and $13,291,484 for the three and nine months ending September 30, 2022, respectively).

decrease in total operating expenses was primarily due to (i) a decrease in mine preparation expenses of $2,533,101, and $6,861,403 (ii)

a decrease in consulting and wages expenses of $132,774 and $2,355,473 (iii) partially offset by an increase in operation and admin expenses of

$1,379,974 and $3,827,267 for the three and nine months ending, respectively.

Mine preparation

expenses were $nil in the nine months ended September 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 nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022.

Operation and admin expenses increased due to increased activities

(Loss) Income and Comprehensive (Loss) Income

Company had net income of $7,447,860 for the three months ended September 30, 2023 ($3,690,353 for the three months ended September 30,

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

impacted by an increase in interest income of $476,397 ($nil for three months ending September 30, 2022) an increase in the gain recorded

due to change in derivative liability of $1,216,469 ($8,513,630 and $7,315,161 for the three months ended September 30, 2023 and 2022

respectively) and an increase in the gain recorded due to change in convertible debentures of $1,149,899 ($2,450,968 and $1,301,069

for the three months ended September 30, 2023 and 2023 respectively).

Both changes in fair value were driven by a proportionally greater

decline in the Company’s share price for the three months ending September 30, 2023, relative to the decline in share price in

the three months ending September 30, 2022.

Net loss for the three months ending September 30, 2023, includes a deferred tax recovery

of $903,000 compared to $nil for the three months ending September 30, 2022.

Partially offset by an increase in interest expense of

$1,267,410 ($2,293,643 and 1,026,233 for the three months ended September 2023 and 2022 respectively).

The Company had net loss of $7,618,775 for the nine months ended September 30, 2023 (net income of $12,864,248 for the nine months ended

September 30, 2022).

Offsetting the decrease in operating expenses (as described above), net loss in the nine months ended September 30,

2023 a decrease in the gain recorded due to change in derivative liability of $19,026,737 (loss of $488,357 and gain of $18,538,380 for

the nine months ended September 30, 2023 and 2022 respectively) and a decrease in the gain recorded due to change in convertible debentures

of $784,619 ($2,256,437 and $3,041,056 for the three months ended September 30, 2023 and 2023 respectively).

Both changes in fair value

were driven by a proportionally smaller decline in the Company’s share price for the nine months ending September 30, 2023, relative

to the decline in share price in the three months ending September 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).

of $1,496,683 gain on extinguishment in debt in the nine months ending September 30, 2023, compared to the nine months ending September

A gain of $7,117,420 was recognized in the nine months ending September 30, 2023, relating to the sale of mineral properties,

compared with a $8,614,103 gain on EPA settlement in the nine months ending September 30, 2022.

The decrease in net income was further

increased by a higher interest expense in the nine months ending September 30, 2023 ($5,006,692) compared to the nine months ending September

30, 2022 (2,143,840).

Net loss for the nine months ending September 30, 2023, also included the initial recognition of a deferred tax

liability and corresponding deferred tax expense relating to the closing of the stream transaction ($2,605,741 for the nine months ending

September 30, 2023, compared to $nil for the nine months ending September 30, 2022).

The decrease in net income was partially offset by

an increase in interest income of $707,530 ($nil for three months ending September 30, 2022).

Company had comprehensive income (loss) of $7,516,598 and ($7,116,440) for the three and nine months ended September 30, 2023, respectively

(comprehensive income of $4,315,403 and $13,860,884 for the three and nine months ended September 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).

(loss) income for the three and nine months ended September 30, 2023, is inclusive of a $68,738 and $502,335 gain on change in fair value

on own credit risk ($625,050 and $996,636 for the three and nine months ended September 30, 2022, respectively).

and Capital Resources

Assets and Total Assets

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,

of September 30, 2023, the Company had total current assets of $35,521,813, compared to total current assets of $7,741,052 at December

31, 2022 – an increase of $27,780,761;

4 unchanged sentences

Liabilities and Total 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.

of September 30, 2023, the Company had total current liabilities of $5,122,137 and total liabilities of $86,356,025, 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 partial repayment of the promissory note, and settlement of accounts payable and accrued liabilities

from the proceeds of the Stream.

Total liabilities increased primarily as a result of closing of the $46,000,000 Stream and

recognition of deferred tax liability, partially offset by a decrease in the carrying values of CD1 and CD2 as well as the

settlement of the RCD and the bridge loan.

Capital and Shareholders’ Deficit

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.

of September 30, 2023, the Company had a working capital balance of $30,399,676 and a shareholders’ deficiency of $21,191,903 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 nine months ended September 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 nine months ended September 30, 2023, partially offset by an increase

due to proceeds received from equity financing in the nine months ended September 30, 2023.

the nine months ended September 30, 2023, the Company had a net cash increase of $27,652,390, 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 nine months ended September 30, 2023, were primarily related to working capital requirements.

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.

accounting estimates

preparation of the interim condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates

and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements

and reported amounts of expenses during the reporting period.

Estimates and judgments are continuously evaluated and are based on management’s

experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

outcomes can differ from these estimates.

The key sources of estimation uncertainty that have a significant risk of causing material

adjustment to the amounts recognized in the financial statements are:

preparation of the interim unaudited condensed consolidated financial statements in conformity with U.S.

GAAP requires management to

make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the

financial statements and reported amounts of expenses during the reporting period.

Estimates and judgments are continuously

evaluated and are based on management’s experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances.

Actual outcomes can differ from these estimates.

The key sources of estimation

uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements

determines costs for share-based payments using market-based valuation techniques.

16 unchanged sentences

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.

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

19 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis