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Item 7. Management’s Discussion and Analysis

2023-12-22 compared with 2020-12-04 · 252 added, 105 removed, 3 unchanged (99% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS “FORWARD LOOKING STATEMENTS”, WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE.

FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE.

WORDS SUCH AS “PLANS,” “INTENDS,” “WILL,” “HOPES,” “SEEKS,” “ANTICIPATES,” “EXPECTS “AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT.

SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS.

NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS.

THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY’S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Background and Overview

On August 28, 2017, the Company announced that it signed a definitive agreement (the “Agreement”) for the lease and option to purchase of the Bunker Hill Mine (the “Mine”) in Idaho.

The “Bunker Hill Lease with Option to Purchase” is between the Company and Placer Mining Corporation (“Placer Mining”), the current owner of the Mine.

Highlights of the Agreement are as follows:

* Effective date:

November 1, 2017;

* Initial lease term:

* The Company shall pay Placer Mining US$100,000 monthly mining lease payments, which shall be paid quarterly;

* The lease can be extended for another 12 months at any time by the Company by paying Placer Mining a US$600,000 bonus payment and by continuing to pay the monthly US$100,000 lease payments;

* The option to purchase is exercisable at the Company’s discretion;

* Purchase by the Company can be made at any time during lease period and any extension thereto.

On October 2, 2018, the Company announced that it was in default of its Lease with Option to Purchase Agreement with Placer Mining.

The default arose as a result of missed lease and operating cost payments, totaling $400,000, which were due at the end of September and on October 1, 2018.

As per the Agreement, the Company had 15 days, from the date notice of default was provided (September 28, 2018), to remediate the default by making the outstanding payment.

While Management worked with urgency to resolve this matter, Management was ultimately unsuccessful in remedying the default, resulting in the lease being terminated.

On November 13, 2018, the Company announced that it was successful in renewing the lease, effectively with the original Agreement intact, except that monthly payments are reduced to $60,000 per month for 12 months, with the accumulated reduction in payments of $140,000 per month (“deferred payments”) added to the purchase price of the mine should the Company choose to exercise its option.

Results of Operations

The 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 fiscal year ended June 30, 2019, as compared to the fiscal year ended June 30, 2018.

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

NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report, including statements in the following

discussion, are what are known as “forward looking statements”, which are basically statements about the future.

reason, these statements involve risk and uncertainty since no one can accurately predict the future.

Words such as “plans,”

“intends,” “will,” “hopes,” “seeks,” “anticipates,” “expects “and

the like often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement.

Such forward looking statements include statements concerning the Company’s plans and objectives with respect to the present and

future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues,

income or profits.

Numerous factors and future events could cause the Company to change such plans and objectives or fail to successfully

implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits.

Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors

contained in this report and in the Company’s other filings with the SEC.

No statements contained in the following discussion should

be construed as a guarantee or assurance of future performance or future results.

Company’s sole focus is the development and restart of its 100% owned flagship asset, the 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 Bunker Hill Mine is located within Operable

Unit 2 of the Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921), where cleanup activities have been completed.

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

Prior to purchasing the Mine, the Company had entered

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

purchase the Mine.

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

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

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

Environmental Protection

Agency (“EPA”) whereby for so long as the Company leases, owns and/or occupies the Mine, the Company would make payments

to the EPA on behalf of Placer Mining in satisfaction of the EPA’s claim for historical water treatment cost recovery in accordance

with the Settlement Agreement reached with the EPA in 2018.

Immediately prior to the purchase of the Mine, the Company’s liability

to EPA in this regard totaled $11,000,000.

Concurrent with the purchase of the Mine, the Company assumed incremental liabilities of $8,000,000

to the EPA, consistent with the terms of the amended Settlement Agreement with the EPA that was executed in December 2021 (see “EPA

2018 Settlement Agreement & 2021 Amended Settlement Agreement” in the “Our Business” section above).

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

assumed leadership of the Company.

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

the rehabilitation and development of the Mine.

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

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

for a rapid restart of the Mine.

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

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

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

Key milestones

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

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

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

Bunker Hill Mine.

of Operations

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

of operation and financial condition of the Company for the years ended December 31, 2021 and 2022.

Unless otherwise stated, all figures

herein are expressed in U.S.

dollars, which is the Company’s functional currency.

Comparison of the fiscal years ended June 30, 2019 and June 30, 2018

During the fiscal years ended June 30, 2019 and June 30, 2018, the Company generated no revenue.

During the fiscal year ended June 30, 2019, the Company reported total operating expenses of $ 8,113,926

as compared to $ 9,648,434

during the fiscal year ended June 30, 2018;

a decrease of $ 1,534,508

or approximately 16

The decrease in total operating expenses is primarily due to a decrease in operation and administration expense by $1,530,520 ($1,189,226 in 2019 compared to $2,719,746 in 2018), commensurate with decreased corporate activities this year compared to last year.

The same is true for decreases in consulting (decreased by $529,863, $266,998 in 2019 compared to $796,861 in 2018) and legal and accounting costs (decreased by $249,393, $240,969 in 2019 compared to $490,362 in 2018).

For financial accounting purposes, the Company reports all direct exploration expenses under the exploration expense line item of the statement of operations.

Certain indirect expenses, which are related to the exploration activities, may be reported as operation and administration expense or consulting expense on the statement of operations, or in certain cases, these expenses may also be capitalized to the balance sheet if they relate to costs incurred to acquire mineral properties.

Net Loss and Comprehensive Loss

The Company had a net loss and comprehensive loss of $ 8,442,320

for the fiscal year ended June 30, 2019, as compared to a net loss and comprehensive loss of $ 5,716,606

for the fiscal year ended June 30, 2018;

an increase of $ 2,725,714

or approximately 48

The increase in net loss and comprehensive loss was due to a decrease in change in derivative liabilities, increase in accretion expense, interest expense and loss on loan extinguishment, offset by net decrease in total operating expenses as outlined above.

Liquidity and Capital Resources

The Company does not have sufficient working capital needed to meet its current fiscal obligations when including commitments associated with the acquisition on the Bunker Hill Mine.

In order to continue to meet its fiscal obligations in the current fiscal year and beyond the next twelve months, the Company must seek additional financing.

Management is considering various financing alternatives, specifically raising capital through the equity markets and debt financing.

In December 2017, the Company closed a private placement led by Red Cloud Klondike Strike Inc.

and including Haywood Securities Inc.

(collectively, the “Agents”) to raise gross proceeds of C$10,155,400 (the “Offering”).

Pursuant to the Offering, the Company issued 812,432 units (the "Units") at a price of CDN$12.50 per Unit.

Each Unit was comprised of one common share of the Company (a "Common Share") and one half of one transferable common share purchase warrant (a "Warrant"), each Warrant having a three-year life and entitling the holder thereof to acquire one Common Share at a price of C$20.00.

On June 13, 2018, the Company entered into a loan and warrant agreement with Hummingbird Resources PLC (“Hummingbird”), an arm’s length investor, for an unsecured convertible loan in the aggregate sum of $1,500,000, bearing interest at 10% per annum, maturing in one year.

Contemporaneously, the Company agreed to issue 229,464 share purchase warrants, entitling the lender to acquire 229,464 common shares of the Company, at a price of C$8.50 per share, for two years.

Under the terms of the loan agreement, the lender may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of the Company at a price per share equal to C$8.50.

In the event that a notice of conversion would result in the lender holding 10% or more of the Company’s issued and outstanding shares, then, in the alternative, and under certain circumstances, the Company would be required to pay cash to the lender in an amount equal C$8.50 multiplied by the number of shares intended to be issued upon conversion.

Further, in the event that the lender holds more than 5% of the issued and outstanding shares of the Company subsequent to the exercise of any of its convertible securities held under this placement, it shall have the right to appoint one director to the board of the Company.

Lastly, among other things, the loan agreement further provides that for as long as any amount is outstanding under the convertible loan, the investor retains a right of first refusal on any Company financing or joint venture/strategic partnership/disposal of assets.

In August 2018, the amount of the Hummingbird convertible loan payable was increased to $2 million from its original $1.5 million loan, net of $45,824 of debt issue costs, of which $25,750 was incurred in the current period.

Under the terms of the Amended and Restated Loan Agreement, Hummingbird may, at any time prior to maturity, convert any or all of the principal amount of the loan and accrued interest thereon, into common shares of Bunker as follows:

(i) $1,500,000, being the original principal amount (“Principal Amount”), the Principal Amount may be converted at a price per share equal to C$8.50;

(ii) 229,464 common shares may be acquired upon exercise of warrants at a price of C$8.50 per warrant for a period of two years from the date of issuance;

(iii) $500,000, being the additional principal amount (“Additional Amount”), the Additional Amount may be converted at a price per share equal to C$4.50;

and (iv) 116,714 common shares may be acquired upon exercise of warrants at a price of C$4.50 per warrant for a period of two years from the date issuance.

In the event that Hummingbird would acquire common shares in excess of 9.999% through the conversion of the Principal Amount or Additional Amount, including interest accruing thereon, or on exercise of the warrants as disclosed herein, the Company shall pay to Hummingbird a cash amount equal to the common shares exercised in excess of 9.999%, multiplied by the conversion price.

In August 2018, the Company closed a private placement, issuing 160,408 Units to Gemstone 102 Ltd.

(“Gemstone”) at a price of C$4.50 per Unit, for gross proceeds of C$721,834 ($549,333) and incurring financing costs of $25,750.

Each Unit entitles Gemstone to acquire one common share (“Unit Share”) and one common share purchase warrant (“Unit Warrant”), with each Unit Warrant entitling Gemstone to acquire one common share of the Company at a price of C$4.50 for a period of three years.

Prior to the issuance of the Units, Gemstone held 400,000 common shares of the Company and 200,000 warrants (“Prior Warrants”) exercisable at a price of C$20.00 per share.

Immediately prior to closing, the Prior Warrants were early terminated by mutual agreement of the Company and Gemstone.

Upon issuance of the 160,408 Units to Gemstone, Gemstone beneficially owns or exercises control or direction over 560,408 common shares of the Company.

Assuming exercise of the Unit Warrants, Gemstone would hold 720,816 of the outstanding common shares of the Company.

Gemstone’s participation in the Offering constitutes a "related party transaction"

under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").

Given the urgent need to secure financing to meet the new lease obligations, Bunker’s Board approved an equity private placement of Units to be sold at C$0.75 per Unit with each Unit consisting of one common share and one common share purchase warrant.

On November 28, 2018, the Company closed on a total of 645,866 Units for gross proceeds of C$484,400 ($365,341) and incurring financing costs of $10,062, with each purchase warrant exercisable into a Common Share at C$1.00 per Common Share for a period of thirty-six months.

In March 2019, Hummingbird agreed to extend the scheduled maturity date of the loan to June 30, 2020.

On June 27, 2019, the Company closed the first tranche ("First Tranche") of a non-brokered private placement, issuing 11,660,000 units ("June 2019 Unit") at a price of C$0.05 per June 2019 Unit for gross proceeds of C$583,000 ($436,608) and incurring financing costs of $19,640.

Each June 2019 Unit consists of one common share of the Company and one common share purchase warrant ("June 2019 Warrant").

Each whole June 2019 Warrant entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years.

As a part of the First Tranche, Hummingbird Resources PLC ("Hummingbird") has acquired 2,660,000 June 2019 Units for C$133,000 ($100,000) which was applied to reduction of the principal amount owing under the convertible loan facility.

The Company has accounted for the warrant liability in accordance with ASC Topic 815.

These warrants are considered derivative instruments as they were issued in a currency other than the Company’s functional currency of the US dollar.

The estimated fair value of warrants accounted for as liabilities was determined on the date of issue and marks to market at each financial reporting period.

The change in fair value of the warrant liability is recorded in the interim condensed consolidated statement of operations and comprehensive loss as a gain or loss and is estimated using the Binomial model.

Current Assets and Total Assets

As of June 30, 2019, the Company’s balance sheet reflects that the Company had:

i) total current assets of $106,100, compared to total current assets of $1,410,584 at June 30, 2018 - a decrease of $1,304,484 or approximately 92%;

and ii) total assets of $227,090, compared to total assets of $1,507,837 at June 30, 2018 – a decrease of $1,280,747 or approximately 85%.

The decrease in current assets was due to the decrease in cash year-over-year, resulting from the Company’s net loss during the year.

Total Current Liabilities and Liabilities

As of June 30, 2019, the Company’s balance sheet reflects that the Company had total current liabilities of $ 8,320,791

and total liabilities of $ 8,437,600,

compared to total current liabilities of $ 1,587,980

and total liabilities of $ 2,270,883

at June 30, 2018.

These increases are reflective of increased Placer Mining and EPA

accruals and convertible debt in the company year-over-year.

During the fiscal year ended June 30, 2019 cash was primarily used to fund activities at the Bunker Hill Mine operations.

The Company reported a net decrease in cash during the fiscal years ended June 30, 2019 as a result of operating activities offset by cash provided by financing activities.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

of the year ended December 31, 2022 and the year ended December 31, 2021

the year ended December 31, 2022, the Company generated no revenue (year ended December 31, 2021 - $nil).

the year ended December 31, 2022, the Company reported total operating expenses of $16,487,161 as compared to total operating expenses

of $18,752,504 for the year ended December 31, 2021.

decrease in operating expenses was impacted by a shift in focus by the company from exploration related activities prior to the purchase

of the Mine and process plant (purchased in January 2022 and June 2022 respectively) in 2021, to development related activities in 2022.

For financial accounting purposes, the Company reported all direct exploration expenses under the exploration expense line item in consolidated

statements of income (loss) and comprehensive income (loss) for the year ended December 31, 2021, which totalled $13,530,819.

purchase of the Mine in early January 2022 and concurrent shift to development related activities to advance mine restart efforts, the

Company reported exploration expenses of $nil for the year ended December 31, 2022, and reported $7,827,656 of mine preparation expenses

associated with these development activities.

This excludes costs capitalized to property, plant and equipment during the year ended

December 31, 2022.

increase in consulting fees and wages ( $5,477,765 for the

year ended December 31, 2022 compared to $1,533,954 for the year ended December 31, 2021) reflects (i) the engagement of

numerous engineering, geological and other professional firms to assist the Company in consummating several complex debt and equity

financings, the purchases of the mine and processing plant, the EPA financial assurance requirements, fair value measurements of

complex instruments, and advancement of project activities, and (ii) an increase in employees concurrent with a ramp-up in

development activities through 2022.

the release of the prefeasibility study dated September 30, 2022, the Company determined that the costs of the mine after this point

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

probable mineral reserves and an economic study incorporating them.

Certain indirect expenses may be reported as operation and

administration expense or consulting expense on the consolidated statements of income and comprehensive income.

Net Income and Comprehensive Income

The Company had net income of $898,591 for the year ended December

31, 2022 (net loss of $6,402,277 for the year ended December 31, 2021).

In addition to the decrease in operating expenses (as

described above), net income in the year ended December 31, 2022 was positively impacted by a gain on EPA settlement of $8,614,103 (year

ended December 31, 2021:

$nil) resulting from the reclassification of $17,000,000 of current liabilities to non-current liabilities, and

a $3,395,938 increase in the gain due to change in derivative liability ($15,696,391 for the year ended December 31, 2022 compared to

$12,300,453 for the year ended December 31, 2021) driven by a proportionally greater decline in the Company’s share price in 2022

relative to 2021.

This was partially offset by impacts from the $29,000,000 of convertible debenture financings that were entered into

during the year ended December 31, 2022, including an increase in interest expense of $3,279,819 ($3,382,559 for the year ended December

31, 2022 compared to $102,740 for the year ended December 31, 2021), an increase in debenture finance costs of $1,230,540 (year ended

December 31, 2021:

$nil) and an increase in the loss on fair value of convertible debentures of $1,140,537 (year ended December 31, 2021:

$nil) and increase in finance costs $945,507 (year ended December 31, 2021:

had comprehensive income of $1,152,466 for the year ended December 31, 2022 (comprehensive loss of $6,402,277 for the year ended

December 31, 2021).

Comprehensive income for the year ended December 31, 2022 is inclusive of a $253,875 gain on change in fair

value on own credit risk ($nil for the year ended December 31, 2021) relating to the convertible debentures entered into during the

year ended December 31, 2022.

and Capital Resources

These consolidated financial statements have been prepared on a going concern basis.

The Company has incurred losses

since inception resulting in an accumulated deficit of $71,592,559 and further losses are anticipated in the development of its business.

The Company does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring

payment on certain current liabilities and/or raising additional funds.

In order to continue to meet its fiscal obligations in the current

fiscal year and beyond, the Company must seek additional financing.

This raises substantial doubt about the Company’s ability to

continue as a going concern.

Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable

operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal

business operations when they come due.

The accompanying consolidated financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

is considering various financing alternatives including, but not limited to, raising capital through the capital markets, debt and closing

on the multi-metals stream transaction.

These consolidated financial statements do not include any adjustments

relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might

be necessary in the event the Company cannot continue in existence.

and Equity Financings

As described above, during year ended December 31, 2022, the Company closed

on three convertible debentures totaling $29,000,000, a loan facility of $5,000,000, and equity financings (net of issuance costs) totaling

The proceeds of these financings were primarily used to purchase the Bunker Hill Mine and the processing plant, the satisfaction

of short-term obligations to the EPA (including financial assurance commitments, cost recovery and water treatment payments), advancement

of mine restart activities and the funding of working capital requirements.

Assets and Total Assets

As of December 31, 2022, the Company’s balance sheet reflects that

the Company had:

(i) total current assets of $7,741,052, compared to total current assets of $3,622,548 at December 31, 2021 – an

increase of $4,118,504;

and (ii) total assets of $32,929,892, compared to total assets of $4,071,796 at December 31, 2021 – an increase

of $28,858,096.

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

convertible debentures and equity financings, and from increases in prepaid expenses and deposits.

Total assets increased principally

due to the purchase of, and costs capitalized to, the Bunker Hill Mine and process plant.

Liabilities and Total Liabilities

of December 31, 2022, the Company’s balance sheets reflects that the Company had total current liabilities of $10,155,582 and total

liabilities of $59,106,835, compared to total current liabilities of $22,795,277 and total liabilities of $38,314,164 as of December

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

liability from current to long-term liabilities.

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

debentures, one loan facility and movement of the EPA cost recovery liability from current to long term, offset by the decrease in the

long-term derivative warrant liability and promissory note.

Capital and Shareholders’ Deficit

As of December 31, 2022,

the Company had a working capital deficit of $2,414,530 and a shareholders’ deficiency of $26,176,943 compared to a working capital

deficit of $19,172,729 and a shareholders’ deficiency of $34,242,368 as of December 31, 2021.

The working capital deficit decreased

during the year ended December 31, 2022 primarily due to funding from debt and equity financings, and the reclassification of cost recovery

liabilities from current to long-term.

The shareholders’ deficiency decreased primarily due to proceeds from equity financing in

the second quarter of 2022, and comprehensive net income in 2022.

During the year ended December

31, 2022, unrestricted cash increased by $222,042 as a result of cash provided from the closing of the convertible debentures, loan facility

and equity financings, with proceeds used to satisfy short-term obligations with the EPA, purchase of the Bunker Hill Mine and a processing

plant, partial repayment of the outstanding promissory note, advancement of mine restart activities, and funding of working capital requirements.

In addition to the above, restricted cash increased $6,476,000 during the year end December 31, 2022.

the year ended December 31, 2022, $22,498,307 was used in operating activities, primarily due to the securing of the Company’s

financial assurance obligations with the EPA, payments made to the EPA in satisfaction of cost recovery and water treatment payables,

funding of mine restart activities, and other working capital requirements.

This compares with cash used in operating activities of $11,372,153

for the year ended December 31, 2021.

the year ended December 31, 2022, cash of $11,174,672 was used in investing activities primarily for the purchase of the Bunker Hill

Mine, a process plant, equipment, and real estate, compared with $94,693 used for investing activities in the year ended December 31,

the year ended December 31, 2022, cash of $40,371,021 was provided by financing activities primarily due to proceeds from the three convertible

debentures, one loan facility and the equity financings, partially offset by cash used for repayment of a promissory note, compared with

cash of $8,384,248 provided by financing activities in the year ended December 31, 2021.

occurring subsequent to December 31, 2022, as disclosed above in the Liquidity and Capital Resources section.

In addition, the Company

had the following subsequent events.

January 10, 2023, the Company issued 6,377,272 common shares in connection with its election to satisfy interest payments under the outstanding

convertible debentures for the three months ending December 31, 2022.

March 31, 2023, the Company issued 8,464,288 common shares in connection with its election to satisfy interest payments under the outstanding

convertible debentures for the three months ending March 31, 2023.

Feb 28, 2023, the Company reported that it had temporarily paused discretionary projects and procurement activities until the completion

of its financing initiatives.

Primarily due to the inability to procure certain long-lead items that were planned to be ordered by February

2023, and longer estimated delivery times thereof, the Company now expects the Bunker Hill Mine restart to be achieved in 2024.

project capital expenditures are not expected to be materially impacted given the Company’s ability to reschedule discretionary

expenditures and manage a modest fixed cost base.

Warrant Amendment

March 15, 2023, the Company amended the exercise price of 10,416,667 common stock purchase warrants of the Company (the “Warrants”)

and the expiry date of the warrants to March 31, 2023.

The Warrants comprise units of the Company issued to Teck Resources Limited (“Teck”)

on a private placement basis on May 13, 2022, in consideration for the Company’s acquisition of the Pend Oreille process plant.

Each Warrant entitles the holder thereof to purchase one share of common stock of the Company (each, a “Warrant Share”) at

an exercise price of C$0.37 per Warrant Share at any time on or prior to May 12, 2025.

The Company amended the exercise price of the

Warrants from C$0.37 to C$0.11 per Warrant Share (the “Amended Exercise Price”) and amend the expiry date from May 12, 2025,

to March 31, 2023.

Following the amendment of the terms of the warrants, Teck exercised all 10,416,667 warrants at an exercise price

of C$0.11, for aggregate gross proceeds of approximately C$1,145,834 to the Company.

Offering Termination and Private Placement

February 15, 2023, the Company reported that it intended to terminate its previously announced prospectus offering of Common Shares following

its determination that effectiveness of a registration statement on Form S-1 would not be achievable in a time frame consistent with

its capital requirements.

Concurrently, the Company announced that it had entered into an agreement with a syndicate of agents in connection

with a proposed private placement of up to $9,000,000 of special warrants of the Company (the “Special Warrants”).

March 28, 2023, the Company announced the closing of its private placement of the Special Warrants by issuing 51,633,727 Special Warrants

at a price of C$0.12 per Special Warrant, for aggregate gross proceeds of C$6,196,047.

Each Unit consists of one share of common stock

of the Company (each, a “Unit Share”) and one common stock purchase warrant of the Company (each, a “Warrant”).

Each whole Warrant entitles the holder thereof to acquire one share of common stock of the Company (a “Warrant Share”, and

together with the Unit Shares, the “Underlying Shares”) at an exercise price of $0.15 per Warrant Share until March 27, 2026.

In consideration for their services in connection with the Offering, a cash commission in the amount of $211,461 is payable to the

The Agents were also issued 2,070,258 compensation options (the “Compensation Options”).

Each Compensation Option

is exercisable to acquire one unit of the Company (a “Compensation Unit”) at the Issue Price for a period of 36 months from

March 27, 2023, subject to adjustment in certain events.

Each Compensation Unit consists of one share of common stock of the Company

and one common stock purchase warrant of the Company (an “Agents’ Compensation Warrant”) Each Agents’ Compensation

Warrant entitles the holder thereof to acquire one share of common stock of the Company (an “Agents’ Compensation Warrant

Share”) at a price of C$0.15 per Agents’ Compensation Warrant Share until March 27, 2026.

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:

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

The fair value of the share awards and warrant liabilities

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

Assumptions are made and judgment used in applying valuation techniques.

These assumptions and judgments include estimating

the future volatility of the stock price and expected dividend yield.

Such judgments and assumptions are inherently uncertain.

in these assumptions affect the fair value estimates.

and accrued liabilities

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

and conditions of the issuance.

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

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

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

These accruals

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

Actual results may be different.

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

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

Given the nature, complexity and

variability of the various actual cost items included in the invoice, the Company has used the most recent invoice as its estimate of

the water treatment costs for future periods.

Sheet Arrangements

Company has no off-balance sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

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-K/A

Item 7. Management’s Discussion and Analysis