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Item 8. Financial Statements and Supplementary Data

2023-12-22 compared with 2020-12-04 · 1463 added, 942 removed, 77 unchanged (97% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BUNKER HILL MINING CORP.

of Independent Registered Public Accounting Firm – MNP, LLP PCAOB ID:

Balance Sheets, December 31, 2022 and 2021

Statements of Operations for the years ended December 31, 2022 and 2021

Statements of Cash Flows for the years ended December 31, 2022 and 2021

Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2022 and 2021

to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Shareholders of Bunker Hill Mining Corp.

(formerly Liberty Silver Corp.)

A MENDED AND RESTATED

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Bunker Hill Mining Corp.

(the Company) as at December 31, 2022 and 2021,

and the related consolidated statements of income (loss) and comprehensive income (loss), cash flows, and changes in shareholders’

deficiency for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the

consolidated financial statements).

YEARS ENDED JUNE 30, 2019 AND 2018

(EXPRESSED IN UNITED STATES DOLLARS)

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Consolidated Balance Sheets

(Expressed in United States Dollars)

(As restated)

our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the

Company as at December 31, 2022 and 2021, and the results of its consolidated operations and its consolidated cash flows for each of

the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

Uncertainty Related to Going Concern

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

discussed in Note 1 to the consolidated financial statements, the Company has suffered an accumulated deficit and recurring losses

from operations and does not have sufficient working capital which raises substantial doubt about its ability to continue as a going

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

This matter is also described in

the “Critical Audit Matters” section of our report.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Audit Matter Description

As described in Note 1 of the consolidated financial statements, the Company

has been incurring losses from operations and does not have sufficient working capital needed to meet its current obligations and commitments.

In order to continue as a going concern, the Company must seek additional financing.

Significant assumptions and judgements on cash flow projections were made

by management in estimating future cash flows, which are subject to high degree of uncertainty.

Refer to Note 1 Nature and Continuance of Operations and Going Concern.

This matter is also described in the “Material Uncertainty Related

to Going Concern” section of our report.

We responded to this matter by performing audit procedures in relation

to the assessment of the ability of the Company to continue as a going concern.

Our audit work in relation to this included, but was not

restricted to, the following:

Evaluated the impact of the Company’s existing financial arrangements

and conditions in relation to the ability to continue as a going concern.

Obtained an understanding from management on the Company’s future

plans on the operations including financing arrangements.

Evaluated the assumptions and estimates on cashflow projections used in

the forecast incorporating information established from our understanding above and any materialized arrangements subsequent to the period

Assessed the appropriateness of the related disclosures.

of Series 1 & 2 Convertible Debentures and Royalty Convertible Debenture (CDs)

Company issued various convertible debentures that are complex in nature and are required to be fair valued on issuance and at each

reporting period.

calculation of the fair value of the CDs requires management to use an appropriate valuation model and incorporates estimates.

to the complexity of these CDs and the estimates and assumptions involved in the determination of fair value we consider this to

be a critical audit matter.

to Note 3 Significant Account Policies – Use of Estimates and Assumptions and Note 8 – Promissory Note Payable and Convertible

responded to this matter by performing audit procedures in relation to the accounting and valuation of the CDs.

Our audit work in

relation to this included, but was not restricted to, the following:

and reviewed the agreements for the CDs.

management’s analysis and assessment of the accounting of the CDs and their calculation of the fair value related to the instruments.

the accounting treatment of the CDs to ensure it follows the appropriate accounting guidance.

the reasonability of the model used to value the CDs and the appropriateness of the inputs used and recalculated the fair values.

a sensitivity analysis of the inputs.

the covenants involved to ensure compliance.

Chartered Professional Accountants

Licensed Public Accountants

have served as the Company’s auditor since 2014.

April 17, 2023

Hill Mining Corp.

Balance Sheets

in United States Dollars)

cash (note 7)

receivable and prepaid expenses (note 5)

mine deposit and acquisition costs (note 6)

finance costs

current assets

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Total current assets

Non-current assets

Equipment (note 6

Long term deposit

Mining interests (note 7

EQUITY AND LIABILITIES

parts inventory

Long-term deposit (note 5)

assets (note 6)

Hill Mine and Mining interests (note 7)

plant (note 5)

AND LIABILITIES

water treatment payable (note 8)

payable (notes 8 and 9)

warrant liability (note 11)

Deferred share units

liability (note 14)

notes payable (note 9)

Environment protection agency

cost recovery payable (note 8)

portion of lease liability (note 10)

current liabilities

Accounts payable (notes 7

Accrued liabilities (notes 7

Other liabilities

Interest payable

Convertible loan payable (note 8

Derivative liability - conversion feature (note 8)

Total current liabilities

Non-current liabilities

Derivative warrant liability (note 9)

Total liabilities

Shareholders' Deficiency

Preferred shares, $ 0.000001

par value, 10,000,000 preferred shares authorized;

payable (note 9)

1 convertible debenture (note 9)

2 convertible debenture (note 9)

convertible debenture (note 9)

protection agency cost recovery liability net of discount (note 8)

warrant liability (note 11)

Shareholders’

shares, $ 0.000001 par value, 10,000,000 preferred shares authorized;

Nil preferred shares issued and outstanding (note 11)

Common shares, $ 0.000001

par value, 750,000,000

common shares authorized;

15,811,396 and 3,301,372 common shares issued and outstanding, respectively (note 9

Additional paid-in-capital (note 9

Shares to be issued (note 1 3

Deficit accumulated during the exploration stage

Totalshareholders'deficiency

Totalshareholders'deficiencyandliabilities

The accompanying notes are an integral part of these amended and restated

consolidated financial statements.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in United States Dollars)

(As restated)

Operating expenses

Operation and administration

Legal and accounting

Loss from operations

Other income or gain (expense or loss)

Change in derivative liability (notes 8

Accretion expense (note 8

(Loss) gain on foreign exchange

Interest expense (note 8

Loss on sale of equipment

Loss on loan extinguishment (note 8

Loss before income tax

Provisionforincometaxes

Netlossandcomprehensivelossfortheyear

$ (8,442,320)

$ (5,716,606)

Netlosspercommonshare-basicandfullydiluted

Weightedaveragenumberofcommonshares-basicandfullydiluted

The accompanying notes are an integral part of these amended and restated

consolidated financial statements.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

(As restated)

Operating activities

Net loss for the year

$ ( 8,442,320)

$ ( 5,716,606)

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

Stock-based compensation

Depreciation expense

Write-down of mining interest

Change in fair value of warrant liability

Accretion expense

Loss on sale of equipment

Loss on loan extinguishment

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses

Long term deposit

Accounts payable

Accrued liabilities

Other liabilities

Interest payable

Net cash used in operating activities

Investing activities

Purchase of machinery and equipment

Proceeds on disposal of equipment

Net cash provided by (used in) investing activities

Financing activities

Proceeds from convertible loan payable

Proceeds from issuance of common stock, net

Proceeds from stock options exercised

Shares to be issued

Net cash provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental disclosures

Non-cash activities:

Common stock issued to settle convertible loan payable

Disposal of equipment used to settle accounts payable

Stock options exercised used to settle accrued liabilities

The accompanying notes are an integral part of these amended and restated

consolidated financial statements.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated Consolidated

Statements of Changes in Shareholders’ Deficiency

(Expressed in United States Dollars)

Additional paid-in-capital

Shares to be issued

Deficit accumulated during the exploration stage

Balance, June 30, 2017

$ (18,443,702)

Stock-based compensation

Shares issued at $9.77 per share (i)

Net loss for the year

Balance, June 30, 2018 (As restated, note 5)

$ (24,160,308)

Stock-based compensation

issued at $7.80 per share (ii)

issued at $0.57 per share (iii)

issued at $0.04 per share (iv)

Stock options exercised

Warrant valuation

Shares to be issued (note 13

Net loss for the year

Balance, June 30, 2019 (As restated, note 5)

$ (32,602,628)

$ (8,210,510)

(i) Shares issued from proceeds at $12.50 CAD, converted to US at $9.77 (note 9

(ii) Units issued

from proceeds at $4.50 CAD, converted to US at $3.42 (note 9

issued from proceeds at $0.75 CAD, converted to US at $0.57 (note 9)

issued from proceeds at $0.05 CAD, converted to US at $0.04 (note 9

The accompanying notes are an integral part of these amended and restated

consolidated financial statements.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Nature and continuance of operations and going concern

Bunker Hill Mining Corp.

(formerly Liberty Silver Corp.) (the “Company”) was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.

Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp., and on September 29, 2017 the Company changed its name to Bunker Hill Mining Corp.

The Company’s registered office is located at 1802 N.

Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4, and its telephone number is 888-749-4916.

As of the date of this Form 10-K, the Company had two subsidiaries, Bunker Hill Operating LLC, a Colorado corporation that is currently dormant, and American Zinc Corp., an Idaho corporation created to facilitate the work being conducted at the Bunker Hill Mine in Idaho.

The Company was incorporated for the purpose of engaging in mineral exploration activities.

It continues to work at developing its project with a view towards putting it into production.

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 $ 32,602,628 (restated)

and further losses are anticipated in the development of its business.

The Company does not have sufficient working capital needed to meet its current fiscal obligations and commitments.

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.

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

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.

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves.

These financial statements of the Company for the year ended June 30, 2019 were approved and authorized for issue by the Board of Directors of the Company on December 3, 2020

Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises.

The consolidated financial statements are expressed in U.S.

dollars, the functional currency.

The Company’s fiscal year end is June 30.

Significant accounting policies

The following is a summary of significant account policies used in the preparation of these consolidated financial statements.

Basis of consolidation

These consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiaries, American Zinc Corp.

and Bunker Hill Operating LLC.

All intercompany transactions and balances have been eliminated on consolidation.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents may include highly liquid investments with original maturities of three months or less.

Mineral rights, property and acquisition costs

The Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized any revenues from its planned operations.

It is primarily engaged in the acquisition and exploration of mining properties.

The Company capitalizes acquisition and option costs of mineral rights as intangible assets.

Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights.

If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time.

The costs of acquiring mining properties are capitalized upon acquisition.

Mine development costs incurred to develop and expand the capacity of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property is a commercially mineable property.

Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged to operations.

Costs of abandoned projects are charged to operations upon abandonment.

The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets.

Equipment is stated at cost less accumulated depreciation.

Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 5 years.

The cost of repairs and maintenance is charged to expense as incurred.

Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or gain (expense or loss).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment.

If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability.

Impairment of long-lived assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable.

The assets are subject to impairment consideration under FASB ASC 360-10-35, Measurement of an Impairment Loss, if events or circumstances indicate that their carrying amount might not be recoverable.

When the Company determines that an impairment analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities - Mining, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Various factors could impact the Company’s ability to achieve forecasted production schedules.

Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment.

The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Significant accounting policies (continued)

Fair value of financial instruments

The Company adopted FASB ASC 820-10-50, Fair Value Measurements.

This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.

The three levels are defined as follows:

* Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

* Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

* Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, interest payable, convertible loan payable, and derivative liability, all of which qualify as financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and current market rate of interest.

Environmental expenditures

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs.

Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable.

The Company’s policy is to meet, or if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits.

Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

No costs have been recognized by the Company for environmental expenditures.

The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes ("FASB ASC 740"), on a tax jurisdictional basis.

The Company files income tax returns in the United States.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse.

A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

The Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date.

The Company is subject to examination by taxing authorities in jurisdictions such as the United States.

Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements.

The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Significant accounting policies (continued)

FSAB ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return.

FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in periods, disclosure and transition.

At June 30, 2019

and June 30, 2018

, the Company has not taken any tax positions that would require disclosure under FASB ASC 740.

Basic and diluted net loss per share

The Company computes net loss per share of common stock in accordance with FASB ASC 260, Earnings per Share (“ASC 260”).

Under the provisions of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible loan payable.

As of June 30, 2019, 287,100 stock options and 13,046,484 warrants were considered in the calculation but not included, as they were anti-dilutive (June 30, 2018 - 287,100 stock options and 663,496 warrants).

Stock-based compensation

In December 2004, the FASB issued FASB ASC 718 “Compensation – Stock Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.

It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.

FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements.

That cost will be measured based on the fair value of the equity or liability instruments issued.

Use of estimates and assumptions

Many of the amounts included in the consolidated financial statements require management to make judgments and/or estimates.

These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

Actual results may differ from the amounts included in the consolidated financial statements.

Areas of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include:

Impairment of mining interests

The Company’s fair value measurement with respect to the carrying amount of mining interests is based on numerous assumptions and may differ significantly from actual fair values.

The fair values are based, in part, on certain factors that may be partially or totally outside of the Company’s control.

This evaluation involves a comparison of the estimated recoverable amount of mining interests to their carrying values.

The Company’s fair value estimates are based on numerous assumptions.

Convertible loans and warrants

Estimating the fair value of warrants and conversion feature derivative 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 them.

The assumptions and models used for estimating fair value of warrants and conversion feature derivative liability are disclosed in notes 8 and 9

The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated statements of operations.

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

This determination requires significant judgment.

Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in precious metal prices

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Significant accounting policies (continued)

Concentrations of credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents.

The Company places its cash and cash equivalents with financial institutions of high credit worthiness.

At times, its cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

The Company’s management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.

Risks and uncertainties

The Company operates in the mineralized material exploration industry that is subject to significant risks and uncertainties, including financial, operational, and other risks associated with operating a mineralized material exploration business, including the potential risk of business failure.

Foreign currency transactions

The Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar.

The Company will use its US dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction are reported as gain or loss on foreign exchange.

The gain or loss reported by the Company in the consolidated financial statements represents transaction gain or loss.

Segment reporting

FASB ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s consolidated financial statements.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company does not have any reportable segments.

Convertible loan payable

The Company reviews the terms of its convertible loans payable to determine whether there are embedded derivatives, including the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments.

In circumstances where the convertible debt contains embedded derivatives that are to be separated from the host contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using the binomial model.

The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments being recorded at a discount from their principal amount.

This discount is accreted over the expected life of the instruments to profit (loss) using the effective interest method.

The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method.

The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss).

The Company presents its embedded derivatives and related debenture host contracts as separate instruments on the consolidated balance sheets.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

New and recently adopted technical and accounting pronouncements

In November 2015, the FASB issued ASU No.

2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires that deferred tax liabilities and assets be classified on our Consolidated Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction.

2015-17 is effective for the fiscal year commencing after December 15, 2017.

The adoption of ASU No.

2015-17 did not have a material effect on the financial position or the results of operations.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows:

Classification of Certain Cash Receipts and Cash Payments”.

This ASU provides eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows.

ASU 2016-15 is effective for the fiscal year commencing after December 15, 2017.

The adoption of ASU 2016-15 did not have on the consolidated statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases.

This update requires organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases.

The new guidance will also require additional disclosure about the amount, timing and uncertainty of cash flows arising from leases.

The provisions of this update are effective for annual and interim periods beginning after December 15, 2018.

The Company is still assessing the impact that the adoption of ASU 2016-02 will have on the financial position and the results of operations.

Restatement of previously issued financial statements

In November 2020, it was determined that the Company has underaccrued for invoices issued by the United States Environmental Protection Agency ("EPA") for excess water treatment costs relating to years ended June 30, 2018, 2019 and 2020 and interest payable on the outstanding EPA balance, which resulted in an understatement of liabilities for 2018 and 2019, an understatement of opening deficit for 2019 and closing deficit for 2018 and 2019, and an understatement of exploration expenses and net losses for 2018 and 2019.

The following tables present the impact of the restatement adjustments on the Company's previously issued consolidated financial statements for the years ended June 30, 2018 and 2019.

Impact to Consolidated Statements of Loss and Comprehensive Loss

As previously

Year ended June 30, 2018

Loss from operations

$ (9,101,702)

$ (9,648,434)

Loss before income tax and net loss and comprehensive loss for the year

$ (5,169,874)

$ (5,716,606)

Net loss per common share - basic and fully diluted

As previously

Year ended June 30, 2019

Loss from operations

$ (7,409,431)

$ (8,113,926)

Loss before income tax and net loss and comprehensive loss for the year

$ (7,737,825)

shares, $ 0.000001 par value, 1,500,000,000 common shares authorized;

229,501,661 and 164,435,826 common shares issued and outstanding,

respectively (note 11)

paid-in-capital (note 11)

other comprehensive income

( 71,592,559 )

Net loss per common share - basic and fully diluted

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Restatement of previously issued financial statements (continued)

Impact to Consolidated Balance Sheets

As previously

As at June 30, 2018

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

( 72,491,150 )

shareholders’ deficiency

( 26,176,943 )

Total shareholders' deficiency

As previously

As at June 30, 2019

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

( 34,242,368 )

shareholders’ deficiency and liabilities

accompanying notes are an integral part of these consolidated financial statements.

Hill Mining Corp.

Statements of Income (loss) and Comprehensive Income (loss)

in United States Dollars)

and administration (notes 11, 13 and 14)

and accounting

and wages (note 17)

from operations

( 16,487,161 )

( 18,752,504 )

Total shareholders' deficiency

income or gain (expense or loss)

in derivative liability (note 11)

(loss) gain on foreign exchange

on fair value of convertible debentures (note 9)

( 1,140,537 )

on EPA debt extinguishment (note 8)

expense (notes 8 and 9)

( 3,382,559 )

finance costs (note 9)

( 1,230,540 )

Impact to Consolidated Statements of Cash Flows

As previously

For the year ended June 30, 2018

Net loss for the year

on debt settlement

income (loss) for the year

$ ( 6,402,277 )

comprehensive income (loss), net of tax

on change in FV on own credit risk (note 9)

comprehensive income (loss)

Comprehensive

income (loss)

( 6,402,277 )

Changes in operating assets and liabilities:

Accounts payable

As previously

Year ended June 30, 2019

Net loss for the year

Income (loss) per common share

income (loss) per common share – basic (note 12)

income (loss) per common share – fully diluted (note 12)

average number of common shares

average common shares – basic (note 12)

average common shares – fully diluted (note 12)

accompanying notes are an integral part of these consolidated financial statements.

Hill Mining Corp.

Statements of Cash Flows

in United States Dollars)

Income (loss) for the year

$ ( 6,402,277 )

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

in derivative liability

( 15,696,391 )

Changes in operating assets and liabilities:

Accounts payable

Impact to Consolidated Statements of Changes in Shareholders' Deficiency

As previously

Net loss for the year ended June 30, 2018

( 12,300,453 )

issued for services

interest expense on lease liability

exchange loss (gain)

exchange loss (gain) on re-translation of lease

on debt settlement

of EPA discount

on fair value of convertible debt derivatives

on EPA debt extinguishment

( 8,614,103 )

Deficit accumulated during the exploration stage, June 30, 2018

in operating assets and liabilities:

mine acquisition costs

finance costs

expenses and deposits

( 1,133,124 )

water treatment payable

( 4,458,707 )

Balance, Total, June 30, 2018

Net loss for the year ended June 30, 2019

cost recovery payable

( 2,000,000 )

payable – EPA

cash used in operating activities

( 22,498,307 )

Deficit accumulated during the exploration stage, June 30, 2019

( 11,372,153 )

of spare inventory

Hill mine purchase

( 5,524,322 )

( 1,157,059 )

Balance, Total, June 30, 2019

and demobilization of Process plant

( 3,129,856 )

of machinery and equipment

cash used in investing activities

( 11,174,672 )

from convertible debentures

from bridge loan

from issuance of shares, net of issue costs

from promissory note

of promissory note

( 1,000,000 )

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Restatement of previously issued financial statements (continued)

The circumstances associated with the adjustments also created errors in each of the previously reported quarters in 2018 and 2019, which have also been restated on a quarterly basis as disclosed in note 14.

In addition, subsequent to the year end, the Company amended its articles of incorporation to change the authorized capital and the par values, which have been retrospectively applied in these amended and restated consolidated financial statements (note 9).

Equipment consists of the following:

Leasehold improvements

Less accumulated depreciation

Equipment, net

Mining interests (restated)

Bunker Hill Mine Complex

On November 27, 2016, the Company entered into a non-binding letter of intent with Placer Mining Corp.

(“Placer Mining”), which letter of intent was further amended on March 29, 2017, to acquire the Bunker Hill Mine in Idaho and its associated milling facility located in Kellogg, Idaho, in the Coeur d’Alene Basin (the “Letter of Intent”).

Pursuant to the terms and conditions of the Letter of Intent, the acquisition, which was subject to due diligence, would include all mining claims, surface rights, fee parcels, mineral interests, existing infrastructure, machinery and buildings at the Kellogg Tunnel portal in Milo Gulch, or anywhere underground at the Bunker Hill Mine Complex.

The acquisition would also include all current and historic data relating to the Bunker Hill Mine Complex, such as drill logs, reports, maps, and similar information located at the mine site or any other location.

During the fiscal year ended June 30, 2017, the Company made payments totaling $300,000 as part of this Letter of Intent.

These amounts were initially capitalized and subsequently written off during fiscal 2018 and are included in exploration expenses.

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

Under the terms of the Agreement, the Company was required to make a $1 million bonus payment to Placer Mining no later than October 31, 2017, which payment was made, along with two additional $500,000 bonus payments in December 2017.

The 24-month lease commences November 1, 2017 and continues until October 31, 2019.

The lease period can be extended by a further 12 months at the Company’s discretion.

During the term of the lease, the Company must make $100,000 monthly mining lease payments, paid quarterly.

The Company has an option to purchase the Bunker Assets at any time before the end of the lease and any extension for a purchase price of $45 million with purchase payments to be made over a ten-year period to Placer Mining.

Under terms of the agreement, there is a 3% net smelter return royalty (“NSR”) on sales during the Lease and a 1.5% NSR on the sales after the purchase option is exercised, which post-acquisition NSR is capped at $60 million.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Mining interests (restated) (continued)

Bunker Hill Mine Complex (continued)

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.

As at June 30, 2019, the Company has accrued for $1,373,000 of the deferred payments and is included in accounts payable.

In addition to the payments to Placer Mining, and

pursuant to an agreement with the United States Environmental Protection Agency (“EPA”) whereby for so long as Bunker leases, owns and/or occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the current owner in satisfaction of the EPA’s claim for cost recovery.

These payments, if all are made, will total $20 million.

The agreement calls for payments starting with $1 million 30 days after a fully ratified agreement was signed followed by payment schedule detailed below:

Within 30 days of the effective date

November 1, 2018

November 1, 2019

November 1, 2020

November 1, 2021

November 1, 2022

November 1, 2023

November 1, 2024

In addition to these cost recovery payments, the Company is to make semi-annual payments of $480,000 on June 1 and December 1 of each year, to cover the EPA’s costs of operating and maintaining the water treatment facility that treats the water being discharged from the Bunker Hill Mine.

Of these, $560,000 is outstanding as at June 30, 2019 (June 30, 2018 - $80,000).

The Company also has received invoices from the EPA for water treatment charges for the periods from December 2017 to October 2019.

This was for a total of $3,749,388, with $1,209,530 additional accruals required as at June 30, 2019 (June 30, 2018 - $546,125).

The Company is having discussions with the EPA to review and, where appropriate, have the additional water treatment charges amended.

The unpaid EPA balance is subject to interest at the rate specified for interest on investments of the EPA Hazardous Substance Superfund.

As at June 30, 2019, the interest accrued on the unpaid EPA balance is $13,061 (June 30, 2018 - $607).

Trinity Project

On August 31, 2017, the Company and Renaissance Exploration Inc.

signed a notice of termination and release of exploration Earn-In Agreement.

Upon signing this agreement, the Company has terminated the March 29, 2010 Earn-In Agreement.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Convertible loan payable

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

This was accounted for as a loan extinguishment which resulted in the recording of a net loss on loan extinguishment of $1,195,880.

In June 2019, the Company repaid $100,000 of the Additional Amount, which resulted in the recording of a net loss on loan extinguishment of $8,193.

The Company has accounted for the conversion features and warrants in accordance with ASC Topic 815.

The conversion features and warrants are considered derivative financial liabilities as they are convertible into common shares at a conversion price denominated in a currency other than the Company’s functional currency of the US dollar.

The estimated fair value of the conversion features and warrants was determined on the date of issuance and marks to market at each financial reporting period.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Convertible loan payable (continued)

At June 30, 2019, the fair value of the conversion features was estimated using the Binomial model to determine the fair value of conversion features using the following assumptions:

Principal Amount

June 30, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Additional Amount

August 9, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

The fair value of the warrants were estimated using the Binomial model to determine the fair value of the derivative warrant liabilities using the following assumptions:

Principal Amount

June 30, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Additional Amount

August 9, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

The residual value of the Principal Amount was deemed to be $61,448, net of $20,074 of expenses, and the residual value of the Additional Amount was deemed to be $34,850, net of $38,449 of expenses.

The residual value of the loan after the loan extension was deemed to be $1,800,000, net of $200,000 of expenses.

Accretion expense for the year ended June 30, 2019 were $734,589 (year ended June 30, 2018 - $9,373) based on effective interest rates of 32% for the Principal Amount, 26% for the Additional Amount, and 17% after the loan extension.

Interest expense for the year ended June 30, 2019 were $198,219 (year ended June 30, 2018 - $3,287).

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Convertible loan payable (continued)

Balance, June 30, 2017

Proceeds on issuance

Debt issue costs

Conversion feature valuation

Warrant valuation

Accretion expense

Balance, June 30, 2018

Proceeds on issuance

Debt issue costs

Conversion feature valuation

Warrant valuation

Accretion expense

Loss on loan extinguishment

Partial extinguishment

Balance, June 30, 2018

Capital stock, warrants and stock options (restated)

The total authorized capital is as follows:

cash provided by financing activities

change in cash and restricted cash

( 3,082,598 )

common shares with a par value of $ 0.000001

per common share;

* 10,000,000 preferred shares with a par value of $ 0.000001

per preferred share

On May 23, 2019, the Company affected a consolidation of its issued and outstanding share capital on the basis of one (1) post-consolidation share for each ten (10) pre-consolidation common shares, which has been retrospectively applied in these financial statements.

On July 19, 2019, the Company amended its articles of incorporation to change the total authorized capital and the par values which have been retrospectively applied in these amended and restated consolidated financial statements.

Issued and outstanding

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.

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").

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Capital stock, warrants and stock options (restated) (continued)

Issued and outstanding (continued)

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.

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 (see note 8)

For each financing, the Company has accounted for the warrant liability in accordance with ASC Topic 815.

The 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 is recorded in the consolidated statement of operations and comprehensive loss as a gain or loss and is estimated using the Binomial model.

The fair value of the warrant liabilities related to the various tranches of warrants issued during the year were estimated using the Binomial model to determine the fair value using the following assumptions on the day of issuance and as at June 30, 2019:

August 9, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

November 28, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

June 27, 2019

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Capital stock, warrants and stock options (restated) (continued)

Issued and outstanding (continued)

The warrant liability as a result of the December 2017 private placement was revalued as at June 30, 2019 and June 30, 2018 using the Binomial model and the following assumptions:

June 30, 2018

June 30, 2019

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

At June 30, 2019, there were 15,811,396 common shares issued and outstanding.

exercise price

Balance, June 30, 2017

Balance, June 30, 2018

Balance, June 30, 2019

As of June 30, 2019, the Company had 13,046,484 warrants outstanding, with exercise prices from C$0.25 to C$20.00, expiring from June 13, 2020 to November 28, 2021.

December 5, 2020

beginning of year

and restricted cash, end of year

issued to settle accounts payable and accrued liabilities

issued to settle interest payable

purchase for shares and warrants

issued to settle DSU/RSU/Bonuses

Reconciliation from Cash Flow Statement to Balance Sheet:

Cash and restricted cash, end of year

Less restricted cash

accompanying notes are an integral part of these consolidated financial statements.

Hill Mining Corp.

Statements of Changes in Shareholders’ Deficiency

in United States Dollars)

comprehensive

December 31, 2021

June 13, 2020

August 9, 2021

November 28, 2021

June 27, 2021

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Capital stock, warrants and stock options (restated) (continued)

Stock options

The following table summarizes the stock option activity during the periods ended June 30, 2019 and 2018:

stock options

exercise price

Balance, June 30, 2017

Granted (i)(ii)

Balance, June 30, 2018

Granted (iii)

Balance, June 30, 2019

(i) On December 6, 2017, 10,000 options were granted to a consultant with a five-year life and an exercise price of C$16.50.

These options vested immediately and, using the Black-Scholes option pricing method, had a value of $103,815, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(ii) On June 19, 2018, the Company granted incentive stock options to purchase up to an aggregate of 48,000 common shares, exercisable for 5 years at a strike price of C$8.50.

These options vested immediately and, using the Black-Scholes option pricing method, had a value of $206,489, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

(iii) On September 27, 2018, 43,750 fully-vested stock options were issued to a consultant to whom C$350,000 was due and payable and reflected in accrued liabilities at September 30, 2018.

These options had a 5-year life and were exercisable at C$8.00 per share.

On October 3, 2018, these options were exercised in full, with consideration received being the liability already on the Company’s books, extinguishing the liability in full.

The vesting of these options resulting in stock-based compensation of $43,893, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

The fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following underlying assumptions:

Risk free interest rate

Dividend yield

Weighted average life

The following table reflects the actual stock options issued and outstanding as of June 30, 2019:

Weighted average

(exercisable)

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Commitments and contingencies (restated)

Effective June 1, 2017, the Company has a lease agreement for office space at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4.

The 5-year lease provides for a monthly gross rent of C$29,005 for the first two years, increasing to C$29,545 per month for years three through five.

The monthly rental expenses are offset by rental income obtained through a series of subleases held by the Company.

As stipulated by the agreements with Placer Mining as described in note 7, the Company is required to make monthly payment of $60,000 for care and maintenance and a lease extension fee of $60,000.

Including the previously accrued payments, a total of $1,373,000 is payable until the Company decides to acquire the mine at which time these payments will be waived.

As stipulated in the agreement with the EPA and as described in note 7, the company is required to make two payments to the EPA, one for cost-recovery, and the other for water treatment.

As at June 30, 2019, $3,811,227 payable to the EPA has been included in accounts payable and accrued liabilities.

The Company is now engaged with the EPA to amend and defer these payments.

Income taxes (restated)

As at June 30, 2019 and 2018, the Company had no accrued interest and penalties related to uncertain tax positions.

The income tax provision differs from the amount of income tax determined by applying the U.S.

federal and state income tax rates of 26.9% (2018 - 26.9%) to pretax loss from operations for the years ended June 30, 2019 and 2018 due to the following:

Loss before income taxes

Expected income tax recovery

Tax rate changes and other adjustments

Other permanent difference

Change in valuation allowance

Deferred tax assets and the valuation account are as follows:

Deferred tax asset:

Net operating loss carry forward

Other deferred tax assets

Valuation allowance

Unrealized foreign exchange loss

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Income taxes (restated) (continued)

Deferred tax assets:

Non-capital losses carried forward

Deferred tax liabilities:

Convertible debt

Net deferred tax asset

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As of June 30, 2019, and 2018, the Company has an unused net operating loss carry-forward balance of $ 22,094,056

and $ 19,987,152

, respectively, that is available to offset future taxable income.

The US non-capital loss carryforwards generated before 2018 expire between 2031 and 2037.

The losses generated after 2018 do not expire.

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012.

Related party transactions

During the year ended June 30, 2019, Julio DiGirolamo (Former CFO) billed $70,000, Howard Crosby (Former director and Former Executive Vice President) billed $20,000, and John Ryan (Director and Interim CEO) billed $50,000 for services to the Company.

Julio DiGirolamo resigned his position in May 2019 and Mr.

Crosby resigned his positions in November 2018.

Through November 2017, each of Messrs.

Bruce Reid (Former CEO), Julio DiGirolamo (Former CFO), Howard Crosby (Former Executive Vice President) and John Ryan (Director and current Interim CEO) received $5,000 per month for services to the Company.

Commencing December 1, 2017, commensurate with the increased activities in the Company, Messrs.

Reid and DiGirolamo’s pay increased to $20,000 and $15,000 per month, respectively.

Commencing September 2018, Mr.

DiGirolamo agreed to a reduced fee for services.

In early December 2017, the Board approved and ratified compensation to Mr.

Reid for unaccrued and unpaid salary and bonus, including for risk-capital sums advanced by Mr.

Reid to the Company in order that the Company could complete many of its obligations and initiatives during 2017.

The payment, totaling $500,000 was accrued at December 31, 2017 and was paid in January 2018.

The Company also incurred $200,000 of debt issue costs to Wayne Parsons (CFO) for extension of the Hummingbird loan, which was settled by shares subsequent to year end.

At June 30, 2019, $37,547 is owed to Mr.

DiGirolamo, $23,032 to Mr.

Crosby, $49,399 to Mr.

Ryan, and $200,000 to Mr.

Parsons, all amounts included in accounts payable and accrued liabilities.

Bruce Reid (Former CEO) earned $29,287 for consulting services rendered and including reimbursed expenses of $4,287, which amount is included in accounts payable at June 30, 2019.

Subsequent events

On August 1, 2019, the Company closed the second and final tranche ("Tranche Two") of the non-brokered private placement, issuing 6,042,954 units ("August 2019 Units") at C$0.05 per August 2019 Unit for gross proceeds of C$302,148 ($228,202) and incurring financing costs of $36,468.

Each August 2019 Unit consists of one common share of the Company and one common share purchase warrant, which entitles the holder to acquire one common share at a price of C$0.25 per common share for a period of two years.

The Company also issued 16,962,846 August 2019 Units to settle $640,556 of debt at a deemed price of C$0.09 based on the fair value of the shares issued.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Subsequent events (continued)

On August 23, 2019, the Company closed the first tranche (the "First Tranche") of the non-brokered private placement, issuing 27,966,002 common shares of the Company at C$0.05 per share for gross proceeds of C$1,398,300 ($1,049,974) and incurring financing costs of $28,847.

The Company also issued 2,033,998 common shares to settle $77,117 of debt at a deemed price of C$0.18 based on the fair value of the shares issued.

On August 30, 2019, the Company closed the second and final tranche (the "Second Tranche") of the non-brokered private placement, issuing 1,000,000 common shares at C$0.05 per share for gross proceeds of C$50,000 ($37,550).

Quarterly financial data (unaudited)

The Company restated its consolidated financial statements as of and for the quarterly periods ended September 30, 2018, December 31, 2018 and 2017, and March 31, 2019 and 2018 to correct misstatements, as discussed in note 5 describing the restatement of annual periods.

The misstatements did not impact the quarterly period ended September 30, 2017.

The following tables summarize the impact of the restatement on the Company's unaudited condensed interim consolidated financial statements.

Impact to Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

As previously

Three months ended December 31, 2017

Lease payments and exploration

Total operating expenses and loss from operations

$ ( 72,491,150 )

$ ( 34,242,368 )

Loss before income tax and net loss and comprehensive loss for the period

$ (2,991,909)

$ (3,034,296)

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Six months ended December 31, 2017

Lease payments and exploration

Total operating expenses and loss from operations

$ (3,875,739)

issued for interest payable

issued for RSUs vested

brokered shares issued for C$ 0.30

warrant shares issued for C$ 0.30

shares issued for C$ 0.30

issued for Process plant purchase

( 6,246,848 )

Loss before income tax and net loss and comprehensive loss for the period

( 6,246,848 )

on fair value from change in credit risk

income for the period

Shares issued at $0.32 per share(ii)

$0.32 per share(ii), shares

Shares issued for debt settlement at $0.45 per share

Shares issued for debt settlement at $0.45 per share, shares

December 31, 2022

$ ( 71,592,559 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Three months ended March 31, 2018

Lease payments and exploration

Loss from operations

$ ( 26,176,943 )

December 31, 2020

$ ( 66,088,873 )

Loss before income tax and net loss and comprehensive loss for the period

$ ( 31,537,597 )

balance value

( 66,088,873 )

Net income (loss) per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Quarterly financial data (unaudited) (continued)

As previously

Nine months ended March 31, 2018

Lease payments and exploration

Loss from operations

( 31,537,597 )

issued at $ 0.32 per share (ii)

issued for debt settlement at $ 0.45 per share (iii)

issued for RSUs vested

( 3,813,103 )

Loss before income tax and net loss and comprehensive loss

for the period

( 3,813,103 )

loss for the period

( 6,402,277 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Three months ended September 30, 2018

Total operating expense and loss from operations

( 6,402,277 )

income (loss)

( 6,402,277 )

Loss before income tax and net loss and comprehensive loss

for the period

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Three months ended December 31, 2018

Total operating expense and loss from operations

( 6,402,277 )

December 31, 2021

$ ( 72,491,150 )

Loss before income tax and net loss and comprehensive loss

for the period

$ ( 34,242,368 )

balance value

$ ( 72,491,150 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Six months ended December 31, 2018

Total operating expense and loss from operations

$ ( 34,242,368 )

issued at C$ 0.30 , converted to US at $ 0.24 (note 11)

issued at C$ 0.40 , converted to US at $ 0.32 (note 11)

issued at C$ 0.57 , converted to US at $ 0.45 (note 11)

accompanying notes are an integral part of these consolidated financial statements.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Nature and continuance of operations and going concern

Hill Mining Corp.

(the “Company”) was incorporated under the laws of the state of Nevada , U.S.A.

on February 20, 2007, under

the name Lincoln Mining Corp.

Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty

Silver Corp., and on September 29, 2017, the Company changed its name to Bunker Hill Mining Corp.

The Company’s registered office

is located at 1802 N.

Carson Street, Suite 212, Carson City, Nevada 89701, and its head office is located at 82 Richmond Street East,

Toronto, Ontario, Canada, M5C 1P1.

As of the date of this Form 10-Q, the Company had one subsidiary, Silver Valley Metals Corp.

Valley”, formerly American Zinc Corp.), an Idaho corporation created to facilitate the work being conducted at the Bunker Hill

Mine in Kellogg, Idaho.

The Company was incorporated for the initial purpose

of engaging in mineral exploration activities at the Mine.

The Company has moved into the development stage concurrent with (i) purchasing

the Mine and a process plant, (ii) completing successive technical and economic studies, including a Prefeasibility Study, (iii) delineating

mineral reserves, and (iv) conducting the program of activities outlined above.

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 (see note 8).

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.

Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of epidemics, pandemics,

or other health crises, including the recent outbreak of respiratory illness caused by the novel coronavirus (“COVID-19”).

Although the pandemic has subsided significantly, the Company cannot accurately predict the impact a COVID-19 resurgence would have on

its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate

geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions

imposed by governments of affected countries.

In addition, a significant outbreak of contagious diseases in the human population could

result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in

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

Russia/Ukraine Crisis:

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

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

food prices and market disruptions.

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

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

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

In addition, the crisis

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

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

Additionally, the Company cannot predict changes

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

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Basis of presentation

consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the

United States of America applicable to exploration stage enterprises.

The consolidated financial statements are expressed in U.S.

the Company’s functional currency.

Significant accounting policies

following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.

of consolidation

consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiary, Silver

Valley Metals Corp.

(formerly American Zinc Corp.).

All intercompany transactions and balances have been eliminated on consolidation.

and cash equivalents

and cash equivalents may include highly liquid investments with original maturities of three months or less.

rights, property and acquisition costs

Company transitioned from the exploration stage to the development stage at the beginning of the fourth quarter of 2022.

has not yet realized any revenues from its planned operations.

Company capitalizes acquisition and option costs of mineral rights as intangible assets when there is sufficient evidence to support

probability of generating positive economic returns in the future.

Upon commencement of commercial production, the mineral rights will

be amortized using the unit-of-production method over the life of the mineral rights.

If the Company does not continue with exploration

after the completion of the feasibility study, the mineral rights will be expensed at that time.

costs of acquiring mining properties are capitalized upon acquisition.

Mine development costs incurred to develop and expand the capacity

of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property

is a commercially mineable property.

Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged

to operations.

Costs of abandoned projects are charged to operations upon abandonment.

The Company evaluates the carrying value of capitalized

mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever

events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Evaluation of the carrying value of capitalized

costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance

with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets.

is stated at cost less accumulated depreciation.

Depreciation is provided principally on the straight-line method over the estimated

useful lives of the assets, which range from 3 to 10 years.

The cost of repairs and maintenance is charged to expense as incurred.

sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss

is reflected in other income or gain (expense or loss).

Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives

of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment.

If events and circumstances

warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring

their recoverability.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

lease right of use (“ROU”) assets represent the right to use the leased asset for the lease term and operating lease liabilities

are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most leases

do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date

in determining the present value of future payments.

Lease expense for minimum lease payments is amortized on a straight-line basis over

the lease term and is included in operation and administration expenses in the consolidated statements of Income (loss) and comprehensive Income (loss).

Company is required to make additional payments for certain variable costs.

These costs are expensed and included in operation and administration

expenses in the consolidated statements of loss and comprehensive loss.

Rental income obtained through subleases is recorded as income

over the lease term and is offset against operation and administration expenses.

of long-lived assets

Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying

amounts may not be recoverable.

The assets are subject to impairment consideration under FASB ASC 360, Property, Plant and Equipment,

if events or circumstances indicate that their carrying amount might not be recoverable.

When the Company determines that an impairment

analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities – Mining, and

360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

factors could impact the Company’s ability to achieve forecasted production schedules.

Additionally, commodity prices, capital

expenditure requirements and reclamation costs could differ from the assumptions the Company may use in future production cash flow

models when compared to factors used to assess impairment.

The ability to achieve the estimated quantities of recoverable minerals

from development stage mineral interests involves further risks in addition to those factors applicable to mineral interests where

proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can

ultimately be mined economically.

value of financial instruments

Company adopted FASB ASC 820-10, Fair Value Measurement.

This guidance defines fair value, establishes a three-level valuation hierarchy

for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.

The three levels are defined

1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that

are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the consolidated balance sheets for cash,

restricted cash, accounts receivable excluding HST, accounts payable, accrued liabilities, interest payable, promissory notes payable,

environmental protection agency water treatment payable, environmental protection agency cost recovery payable, and lease liability, all

of which qualify as financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination

of such instruments and their expected realization and current market rate of interest.

The carrying amounts of convertible loans are

reported at estimated fair values as a result of the application of fair value models at each quarter end.

The Company measured its DSU

liability at fair value on recurring basis using level 1 inputs.

Derivative warrant liabilities and convertible debentures are measured

at fair value on recurring basis using level 3 inputs.

Environmental

operations of the Company have been, and may in the future be, affected from time to time, in varying degrees, by changes in environmental

regulations, including those for future reclamation and site restoration costs.

Both the likelihood of new regulations and their overall

effect upon the Company vary greatly and are not predictable.

The Company’s policy is to meet, or if possible, surpass standards

set by relevant legislation, by application of technically proven and economically feasible measures.

Environmental

expenditures that relate to ongoing environmental and reclamation programs are expensed as incurred or capitalized and amortized depending

on their future economic benefits.

Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably

determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes (“FASB ASC 740”),

on a tax jurisdictional basis.

The Company files income tax returns in the United States.

tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of

assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year

in which the differences are expected to reverse.

A valuation allowance is provided against deferred tax assets when it is determined

to be more likely than not that the deferred tax asset will not be realized.

Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is

more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the

tax position, circumstances, and information available as of the reporting date.

The Company is subject to examination by taxing authorities

in jurisdictions such as the United States.

Management does not believe that there are any uncertain tax positions that would result

in an asset or liability for taxes being recognized in the accompanying consolidated financial statements.

The Company recognizes tax-related

interest and penalties, if any, as a component of income tax expense.

ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement

of a tax position taken, or expected to be taken, in a tax return.

FASB ASC 740 also provides guidance on de-recognition, classification,

interest and penalties, accounting in periods, disclosure and transition.

At December 31, 2022, December 31, 2021, the Company has not

taken any tax positions that would require disclosure under FASB ASC 740.

and diluted net income (loss) per share

Company computes net income (loss) per share in accordance with FASB ASC 260, Earnings per Share (“FASB ASC 260”).

Under the provisions

of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding

during the period.

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, RSU’s, warrants

and the conversion of convertible loan payable.

As of December 31, 2022, 9,005,636 stock options, 162,129,064 warrants, and 5,470,799

broker options were considered in the calculation but not included, as they were anti-dilutive (December 31, 2021 – 9,053,136 stock

options, 111,412,712 warrants, and 3,590,907 broker options).

December 2004, FASB issued FASB ASC 718, Compensation – Stock Compensation (“FASB ASC 718”), which establishes standards

for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.

It also addresses transactions

in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity

instruments or that may be settled by the issuance of those equity instruments.

FASB ASC 718 focuses primarily on accounting for transactions

in which an entity obtains employee services in share-based payment transactions.

FASB ASC 718 requires that the compensation cost relating

to share-based payment transactions be recognized in the consolidated financial statements.

That cost will be measured based on the fair

value of the equity or liability instruments issued.

Company accounts for stock-based compensation arrangements with non-employees in accordance with ASU 505-50, Equity-Based Payments to

Non-Employees, which requires that such equity instruments are recorded at the value on the grant date based on fair value of the equity

or goods and services whichever is more reliable.

share units (“RSUs”)

Company estimates the grant date fair value of RSUs using the Company’s common shares at the grant date.

The Company records the

value of the RSUs in paid-in capital.

share units (“DSUs”)

Company estimates the grant date fair value of the DSUs using the trading price of the Company’s common shares on the day of grant.

The Company records the value of the DSUs owing to its directors as DSU liability and measures the DSU liability at fair value at each

reporting date, with changes in fair value recognized as stock-based compensation in profit (loss).

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

of estimates and assumptions

of the amounts included in the consolidated financial statements require management to make judgments and/or estimates.

These judgments

and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

Actual results may differ from the amounts included in the consolidated financial statements.

of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include:

assessment of the Company’s ability to continue as a going concern involves judgment regarding future funding available for its

operations and working capital requirements as discussed in note 1.

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

These accruals

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

Actual results may be different.

The Company makes monthly estimates of

its water treatment costs, with a true-up to the annual invoice received from the Idaho Department of Environmental Quality (“IDEQ”).

Using the actual costs in the annual invoice, the Company then reassesses 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.

loans, promissory notes and warrants

the fair value of derivative warrant liability requires determining the most appropriate

valuation model, which is dependent on the terms and conditions of the issuance.

This estimate also requires determining the most appropriate

inputs to the valuation model including the expected life of the warrants derivative liability, volatility and

dividend yield and making assumptions about them.

The assumptions and models used for estimating fair value of warrants derivative liability are disclosed in Notes 9 and 11.

The fair value estimates of the convertible loans

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

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

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

See Note 11 for full disclosures related

to the convertible loans and promissory notes.

fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on

the Company’s balance sheets and the consolidated statements of operations.

Assets are reviewed for an indication of impairment

at each reporting date.

This determination requires significant judgment.

Factors that could trigger an impairment review include, but

are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in

precious metal prices.

Reclassifications

reclassifications have been made to conform prior year’s data to the current presentation.

The reclassifications have no effect

on the results of reported operations or stockholders’ deficit or cash flows.

Concentrations

of credit risk

Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and restricted cash.

places its cash with financial institutions of high credit worthiness.

At times, its cash equivalents with a particular financial

institution may exceed any applicable government insurance limits.

The Company’s management also routinely assesses the

financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated

credit risk exposures are limited.

and uncertainties

Company operates in the mineral resource exploration and mine development industry that is subject to significant risks and uncertainties,

including financial, operational, and other risks associated with operating a mineral resource exploration business, including the potential

risk of business failure.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

currency transactions

Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar.

The Company will use its U.S.

dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction

are reported as gain or loss on foreign exchange.

loans and promissory notes payable

Company reviews the terms of its convertible loans and promissory notes payable to determine whether there are embedded derivatives,

including the embedded options, that are required to be bifurcated and accounted for as individual derivative financial instruments.

In circumstances where the convertible loans or the promissory note contains embedded derivatives that are to be separated from the host

contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using

the binomial model.

The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments

being recorded at a discount from their principal amount.

This discount is accreted over the expected life of the instruments to profit

(loss) using the effective interest method.

In circumstances where the convertible loans or the promissory note contains embedded derivatives that are not separated

from the host contracts, the fair values of the host contract and the derivative are valued together, with the change in fair value accounted

through earnings, profit and loss for each period reported.

debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method.

embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit

The Company applies ASC 480 distinguishing liabilities

from equity and ASC 815 derivatives and hedging in determining the appropriate accounting treatment for hybrid instruments.

options within the convertible loans are not bifurcated and measured at fair value at each period end.

Recent Accounting Pronouncements

Standards Updates Adopted

2020, the FASB issued ASU No.

2020 - 06 Debt with Conversion and Other Options (Subtopic 470 - 20 )

and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815 - 40 ):

Accounting for Convertible

Instruments and Contracts in an Entity’s Own Equity.

The update is to address issues identified as a result of the complexity associated

with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity.

The update is effective for fiscal years beginning after December 15, 2023 for smaller reporting companies, including interim

periods within those fiscal years and with early adoption permitted.

The Company is assessing the impact from the adoption of this amendment.

Management does

not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect

on the accompanying financial statements.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Accounts receivable and prepaid expenses

Accounts receivable and prepaid expenses consists

of the following:

Schedule of Accounts receivable and prepaid expenses

Prepaid expenses

Environment protection agency overpayment (note 8)

consists of the following:

Schedule of Equipment

Equipment, gross

accumulated depreciation

total depreciation expense during the year ended December 31, 2022, was $ 162,290 (year ended December 31, 2021 - $ 133,526 ).

Plant Purchase from Teck Resources Limited

May 13, 2022, the Company completed purchase of a comprehensive package of equipment and parts inventory from Teck Resources Limited

The package comprises substantially all processing equipment of value located at the Pend Oreille mine site, 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 nearly 10,000 components and parts for mill, assay lab, conveyer, field instruments, and electrical spares.

purchase of the mill has been valued at:

consideration given, comprised of $ 500,000 non-refundable deposit remitted on January 7, 2022 and $ 231,000 sales tax remitted on May

13, 2022, a total of $ 731,000 cash remitted.

of common shares issued on May 13, 2022 at the market price of that day, a value of $ 1,970,264 .

value of the warrants issued together with the inputs, as determined by a binomial model, resulted in a fair value of $ 1,273,032 .

a result, the total value of the mill purchase was determined to be $ 3,974,296 .

process plant was purchased in an assembled state in the seller’s location, 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 current asset in accordance with a preliminary 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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

December 31, 2022, the asset consists of the following:

of Plant Asset Consists

of shares issued

of warrants issued

plant & inventory purchased

preparation costs

Demobilization

spare parts inventory

Oreille plant asset, net

August 30, 2022, the Company entered into an agreement to purchase a ball mill from D’Angelo International LLC for $ 675,000 .

purchase of the mill is to be made in three cash payments.

The first two payments were made as follows:

on September 15, 2022 as a non-refundable long-term deposit

on October 13, 2022, as a refundable long-term deposit

of December 31, 2022, the Company had not made the final payment of $ 475,000 .

Right-of-use asset

asset consists of the following:

of Right-of-use Asset

accumulated depreciation

total depreciation expense during the year ended December 31, 2022 was $ 52,353 (year ended December 31, 2021 - $ 106,378 ).

Mining Interests

Hill Mine Complex

Company purchased the Bunker Hill Mine (the “Mine”) in January 2022, as described below.

to purchasing the Mine, the Company had entered into a series of agreements with Placer Mining Corporation (“Placer Mining”),

the prior owner, for the lease and option to purchase the Mine.

The first of these agreements was announced on August 28, 2017, with

subsequent amendments and/or extensions announced on November 1, 2019, July 7, 2020, and November 20, 2020.

the terms of the November 20, 2020 amended agreement (the “Amended Agreement”), a purchase price of $ 7,700,000 was agreed,

with $ 5,700,000 payable in cash (with an aggregate of $ 300,000 to be credited toward the purchase price of the Mine as having been previously

paid by the Company) and $ 2,000,000 in Common Shares of the Company.

On November 20, 2020 the Company made an advance payment of $ 2,000,000 , credited

towards the purchase price of the Mine, which had the effect of decreasing the remaining amount payable to purchase the Mine to an aggregate

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

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Amended Agreement also required payments pursuant to an agreement with the Environmental Protection Agency (the “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 .

(See also Note 8 Environmental

Protection Agency Agreement).

Prior to the completion of the sale, the Company accrued

$ 260,463 in acquisition costs during the year ended December 31, 2021.

Together with the $ 2,000,000 advance payment made in November 2020,

this comprises the balance of $ 2,260,463 for prepaid mine deposit and acquisition costs on the balance sheet as of December 31, 2021.

Company completed the purchase of the Mine on January 7, 2022.

The terms of the purchase price were modified to $ 5,400,000 in cash, from

$ 3,400,000 of cash and $ 2,000,000 of Common Shares.

Concurrent with the purchase of the Mine, the Company assumed incremental liabilities

of $ 8,000,000 to the EPA, consistent with the terms of the amended Settlement Agreement with the EPA that was executed in December 2021

(see also Note 8 Environmental protection Agency Agreement).

$ 5,400,000 contract cash paid at purchase was the $ 7,700,000 less the $ 2,000,000 deposit and $ 300,000 credit given by the seller for

prior years’ maintenance payments.

Management has determined the purchase to be an acquisition of a single asset as guided by ASU

805-10 Business Combinations.

carrying cost of the Mine is comprised of the following:

of Mining Interests

purchase price

Credit by seller for prior maintenance payments

present value of water treatment cost recovery liability assumed (note 8)

costs capitalized

acquisition costs - legal

cost of mine – January 7, 2022

mining costs – 2022

cost of mine - total

March 3, 2022, the Company purchased a 225-acre surface land parcel for $ 202,000 which includes the surface rights to portions of 24

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

Environmental Protection Agency

Cost Recovery Payables

a part of the lease of the Mine, 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, the Company 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 2017.

These payments, if all are made, will total $ 20,000,000 .

The agreement called for

payments starting with $ 1,000,000 30 days after a fully ratified 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.

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.

2021, 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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

December 19, 2021, the Company entered into an amended Settlement Agreement between the Company, Idaho Department of Environmental Quality,

US Department of Justice, and the EPA (the “Amended Settlement”).

Upon the effectivity of the Amended Settlement, the Company

would become fully compliant with its payment obligations to these parties.

The Amended Settlement modified the payment schedule and

payment terms for recovery of the aforementioned historical environmental response 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

30 days of Settlement Agreement

plus accrued interest

addition to the changes in payment terms and schedule, the Amended Settlement included a commitment by the Company to secure $ 17,000,000

of financial assurance in the form of performance bonds or letters of credit deemed acceptable to the EPA within 180 days from the effective

date of the Amended Settlement.

Once put 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 7) 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 .

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).

of March 31, 2022, the financial assurance had not yet been secured, and as such the Company accounted for the $17,000,000 liabilities

according to the previous payment schedule, resulting in $12,000,000 classified as a current liability and $5,000,000 as a long-term

The long-term portion was discounted at an interest rate of 16.5% to arrive at a net present value of $3,540,851 after discount ($3,402,425 as of the purchase of the mine plus $138,427 of accretion expense during the quarter

ended March 31, 2022.

the quarter ended June 30, 2022, the Company was successful in obtaining the final financial assurance.

Specifically, a $ 9,999,000

payment bond and a $ 7,001,000

letter of credit were secured and provided to the EPA.

This milestone provides for the Company to recognize the effects of the

change in terms of the EPA liability as outlined in the Amendment Settlement.

Once the financial assurance was put into place, the

restructuring of the payment stream under the Amendment Settlement occurred with the entire $ 17,000,000

liability being recognized as long-term in nature.

The aforementioned payment bond is secured by a $ 2,475,000

letter of credit.

The $ 2,475,000

and $ 7,001,000

letters of credit are secured by $ 9,476,000

of cash deposits under an agreement with a commercial bank.

These cash deposits comprise the $ 9,476,000

of restricted cash shown within current assets as of September 30, 2022.

the quarter ended December 31, 2022 the $ 7,001,000 letter of credit was reduced to $ 2,000,001 as a result of a new $ 5,000,000 payment

bond obtained through an insurance company.

The collateral for the new payment bond is comprised of a $ 2,000,000 letter of credit and

land pledged by third parties, with whom the company has entered into a financing cooperation agreement that contemplates a monthly fee

of $ 20,000 (payable in cash or common shares of the Company, at the Company’s election).

As a result of the $ 3,000,000 net decrease

in the Company’s letter of credit requirements, the Company’s restricted cash balance (utilized as collateral for letters

of credit) decreased by $ 3,000,000 from $ 9,476,000 as of September 30, 2022 to $ 6,476,000 as of December 31, 2022.

ASC 470-50, Debt Modifications and Extinguishments, the Company performed a comparison of net present value of the pre-settlement Cost

Recovery obligation to the post-settlement schedule of Cost Recovery obligation to determine this was an extinguishment of debt.

Company recorded a gain on extinguishment of debt totaling $ 8,614,103 .

The old debt, including any discount, was written off and the new payment stream of the amended $ 17,000,000

table, including the new discount of $ 9,927,590 ,

using the effective interest rate of 19.95 %,

was recorded to result in a net liability of $ 7,072,410 ,

which is due long-term.

During the year ended December 31, 2022, the Company recorded combined discount amortization expense of $ 712,713

on the discounted pre- and post-extinguishment

liability, and interest expense of $ 156,343 respectively, bringing the net liability to $ 7,941,466 .

As at December 31, 2022 interest of $ 24,587 ($ 306,501

at December 31, 2021) is included in interest payable

on the consolidated balance sheets.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Treatment Charges – EPA

to the cost recovery liabilities 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”) given a handover of responsibilities for the Central Treatment Plant from the EPA to the

IDEQ as of that date.

The Company had estimated water treatment payables to the EPA of $ nil as of December 31, 2022 and $ 5,110,706 at

December 31, 2021, which is reflected in current liabilities.

Treatment Charges – IDEQ

the year ended December 31, 2022, the Company made net payments of $ 1,400,000

(12 monthly payments of $ 140,000

less $ 280,000

refund received in December 2022) to the IDEQ to estimate the cost of treating water at the Central Treatment Plant.

As of December

31, 2022, a prepaid expense of $ 170,729

represents the difference between the actual cost of water treatment through December 31, 2022 and net payments made by the Company

This balance has been recognized on the consolidated balance sheets as accounts receivable and prepaid

Promissory notes payable and Convertible Debentures

September 22, 2021, the Company issued a non-convertible promissory note in the amount of $ 2,500,000 bearing interest of 15 % per annum

and payable at maturity.

The promissory note was scheduled to mature on March 15, 2022 ;

however, the note holder agreed to accept $ 500,000

payment, which the Company paid, by April 15, 2022, and the remaining principal and interest was deferred to June 20, 2022.

the revised maturity of June 20, 2022, the note holder agreed to accept a further $ 500,000 payment by June 30, 2022, which the Company

The remaining principal and interest has been deferred to June 15, 2023.

The Company purchased a land parcel for approximately

$ 202,000 on March 3, 2022, which may be used as security for the promissory note.

At December 31, 2022, the Company owes $ 1,500,000 in

promissory notes payable, which is included in current liabilities on the consolidated balance sheets.

Interest expense for the years

ended December 31, 2022 and 2021 was $ 281,301 and $ 102,740 respectively.

At December 31, 2022 interest of $ 384,041 ($ 102,740 at December

31, 2021) is included in interest payable on the consolidated balance sheets.

Finance Package with Sprott Private Resource Streaming & Royalty Corp.

December 20, 2021, the Company executed a non-binding term sheet outlining a $ 50,000,000 project finance package with Sprott Private

Resource Streaming and Royalty Corp.

non-binding term sheet with SRSR outlined a $ 50,000,000 project financing package that the Company expects to fulfill the majority of

its funding requirements to restart the Mine.

The term sheet consisted of an $ 8,000,000 royalty convertible debenture (the “RCD”),

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

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

June 17, 2022, the Company consummated a new $ 15,000,000 convertible debenture (the “CD2”).

As a result, total potential

funding from SRSR was further increased to $ 66,000,000 including the RCD, CD1, CD2 and the Stream (together, the “Project Financing

Royalty Convertible Debenture (RCD)

Company closed the $ 8,000,000 RCD on January 7, 2022.

The RCD bears interest at an annual rate of 9.0 %, payable in cash or Common Shares

at the Company’s option, until such time that SRSR elects to convert a royalty, with such conversion option expiring at the earlier

of advancement of the Stream or July 7, 2023 (subsequently amended as described below).

In the event of conversion, the RCD will cease

to exist and the Company will grant a royalty for 1.85 % of life-of-mine gross revenue from mining claims considered to be historically

worked, contiguous to current accessible underground development, and covered by the Company’s 2021 ground geophysical survey (the

“SRSR Royalty”).

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

The RCD was initially secured by a share pledge

of the Company’s operating subsidiary, Silver Valley, until a full security package was put in place concurrent with the consummation

In the event of non-conversion, the principal of the RCD will be repayable in cash.

with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the RCD, including an

amendment of the maturity date from July 7, 2023 to March 31, 2025 .

The parties also agreed to enter into a Royalty Put Option such that

in the event the RCD is converted into a royalty as described above, the holder of the royalty will be entitled to resell the royalty

to the Company for $ 8,000,000 upon default under the CD1 or CD2 until such time that the CD1 and CD2 are paid in full.

The Company determined

that the amendments in the terms of the RCD should not be treated as an extinguishment of the RCD, and have therefore been accounted

for as a modification as a result of the treatment the Company reported a gain of $ 607,261 in the loss on fair value of convertible debentures line

of the consolidated statements of income (loss) and comprehensive income (loss) for the year

ended December 31, 2022.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Series 1 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 matures on July 7, 2023 (subsequently amended,

as described below).

The CD1 is secured by a pledge of the Company’s properties and assets.

Until the closing of the Stream, the

CD1 was to be convertible into Common Shares at a price of C$ 0.30 per Common Share, subject to stock exchange approval (subsequently

amended, as described below).

Alternatively, SRSR may elect to retire the CD1 with the cash proceeds from the Stream.

The Company may

elect to repay the CD1 early;

if SRSR elects not to exercise its conversion option at such time, a minimum of 12 months of interest would

with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the CD1, including that

the maturity date would be amended from July 7, 2023 to March 31, 2025 , and that the CD1 would remain outstanding until the new maturity

date regardless of whether the Stream is advanced, unless the Company elects to exercise its option of early repayment.

The Company determined

that 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 as a result of the treatment the Company reported a gain of $ 179,046 in the loss on fair value of convertible debentures line

of the statement of operations for the year

ended December 31, 2022.

Series 2 Convertible Debenture (CD2)

Company closed the $ 15,000,000 CD2 on June 17, 2022.

The CD2 bears interest at an annual rate of 10.5 %, payable in cash or shares at

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

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

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

light of the Series 2 Convertible Debenture financing, the previously permitted additional senior secured indebtedness of up to $ 15 million

for project finance has been removed.

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

periodic changes to fair value accounted through earnings, profit and loss.

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

Schedule of Key Valuation Inputs

Interest rate

equity volatility

adjusted rate

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

as of the issuance date and as of March 31, 2022.

The CD2 carried a DLOM of 10.0 % as of the issuance date and June

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 $ 0.212 as of December 31, 2022

project risk rate of 13.0 % was used for all scenarios of the RCD fair value computations

The valuation of the RCD is driven by the aggregation of (i) the present

value of future potential cash flow to the royalty holder, in the event that the RCD is converted to a royalty, utilizing an estimate

of future metal sales and Monte Carlo simulations of future metal prices, and (ii) the computation of the present value assuming no conversion

to the 1.85 % gross revenue royalty.

The valuation of (i) is compared to the valuation of (ii) for each simulation, with the higher value

used in the aggregation to arrive at the fair value of the RCD.

This results in an implied probability of the RCD being converted to the

royalty, in the event that the Stream is advanced.

Based on this methodology, as of December 31.

2022, the implied probability of the

RCD being converted to a 1.85 % royalty, in the event that the Stream is advanced, was 98 %.

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.

As of December 31, 2022 these were 6.71 %, 4.36 %, and 17.55 % respectively for the Scenario

where the Stream is advanced

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

resulting fair values of the CD1, RCD, and CD2 at the issuance dates, and as of December 31, 2022, were

of Fair Value Derivative Liability

Issuance date CD1 RCD, CD2

total loss on fair value of debentures recognized during the year ended December 31, 2022 and December 31, 2021, was $ 1,140,537

respectively.

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

for within other comprehensive income.

During the year ended December 31, 2022 and December 31, 2021, the Company recognized $ 253,875

respectively, within other comprehensive income.

Interest expense for the years ended December 31, 2022 and 2021 was $ 2,092,065 and $ nil respectively.

31, 2022 interest of $ 691,890 ($ nil at December 31, 2021) is included in interest payable on the consolidated balance sheets.

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

Loan Facility

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

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

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

with respect to the RCD, CD1, and CD2.

Bridge Loan bears interest at a rate 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.

Interest expense for the years ended December 31, 2022 and 2021 was $ 70,404 and $ nil respectively.

At December 31,

2022 interest of $ 53,985 ($ nil at December 31, 2021) is included in interest payable on the consolidated balance sheets.

minimum of $ 27,000,000 and a maximum of $ 37,000,000 (the “Stream Amount”) will be made available under the Stream, at the

Company’s option, once the conditions of availability of the Stream have been satisfied, including confirmation of full project

funding by an independent engineer appointed by SRSR.

If the Company draws the maximum funding of $ 37,000,000 , the Stream would apply

to 10% of payable metals sold until a minimum quantity of metal is delivered consisting of, individually, 55 million pounds of zinc,

35 million pounds of lead, and 1 million ounces of silver (subsequently amended, as described below).

Thereafter, the Stream would apply

to 2% of payable metals sold.

If the Company elects to draw less than $37,000,000 under the Stream, the percentage and quantities of

payable metals streamed will adjust pro-rata.

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

may buy back 50% of the Stream Amount at a 1.40x multiple of the Stream Amount between the second and third anniversary of the date of

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

As of December 31, 2022, the Stream had not been advanced.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

with the funding of the CD2 in June 2022, the Company and SRSR agreed that the minimum quantity of metal delivered under the Stream,

if advanced, will increase by 10% relative to the amounts noted above.

Other Interest

During the year ended December 31, 2022 and December

the Company recognized $ 72,304 and $ nil respectively of other interest expense.

Lease liability

Company had an operating lease for office space that expired in 2022.

Below is a summary of the Company’s lease liability as of

December 31, 2022:

Schedule of Operating Lease Liability

December 31, 2020

exchange loss

Balance, December

exchange loss

December 31, 2022

Capital stock, warrants and stock options

total authorized capital is as follows:

1,500,000,000

Loss before income tax and net loss and comprehensive loss

for the period

common shares, with a par value of $ 0.000001 per common share;

preferred shares with a par value of $ 0.000001 per preferred share

and outstanding

February 2021, the Company closed a non-brokered private placement of units of the Company (the “February 2021 Offering”),

issuing 19,576,360 units of the Company (“February 2021 Units”) at C$ 0.40 per February 2021 Unit for gross proceeds of $ 6,168,069

(C$ 7,830,544 ).

Each February 2021 Unit consisted of one common share of the Company and one common share purchase warrant of the Company

(each, “February 2021 Warrant”), which entitles the holder to acquire a common share of the Company at C$ 0.60 per common

share for a period of five years .

In connection with the February 2021 Offering, the Company incurred share issuance costs of $ 154,630

and issued 351,000 compensation options (the “February 2021 Compensation Options”).

Each February 2021 Compensation Option

is exercisable into one February 2021 Unit at an exercise price of C$ 0.40 for a period of three years.

Company also issued 417,720 February 2021 Units to settle $ 132,000 of accrued liabilities at a deemed price of $ 0.45 based on the fair

value of the units issued.

As a result, the Company recorded a loss on debt settlement of $ 56,146 .

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 above).

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

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 of

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 warrant.

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.

In 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.

In April 2022, the Company issued 768,750 shares in

connection with the settlement of RSU’s.

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 during the three months ended March 31, 2022.

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,

In June 2022, the Company issued 165,000 shares in

connection with the settlement of RSU’s.

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.

In September 2022, the Company issued 33,000 common

shares in connection with the settlement of RSU’s.

October 2022, the Company issued 8,252,940 common shares in connection with its election to satisfy interest payments under the outstanding

convertible debentures for the three months ended September 30, 2022.

November 2022, the Company issued 1,599,150 common shares in connection with settlement of RSU’s.

each financing, the Company has accounted for the warrants in accordance with ASC Topic 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 marks to market at each financial

reporting period.

The change in fair value of the warrant is recorded in the consolidated statement of operations and comprehensive

loss as a gain or loss in the change in derivative liability line

item and is estimated using the Binomial model.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

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

model to determine the fair value using the following assumptions on the day of issuance and as at December 31, 2022 and December 31, 2021:

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

2022 special warrants issuance

free interest rate

in derivative liability

$ ( 3,541,128 )

2022 non-brokered issuance

free interest rate

in derivative liability

2022 Teck issuance

free interest rate

in derivative liability

$ ( 588,535 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Quarterly financial data (unaudited) (continued)

As previously

Three months ended March 31, 2019

Total operating expense and loss from operations

2022 issuance

free interest rate

in derivative liability

2021 issuance

free interest rate

in derivative liability

$ ( 2,147,756 )

warrant liabilities as a result of the August 2018, November 2018, June 2019, August 2019, and August 2020 private placements were revalued

as at December 31, 2022 and December 31, 2021 using the Binomial model and the following assumptions:

2020 issuance

free interest rate

in derivative liability

$ ( 5,886,466 )

Loss before income tax and net loss and comprehensive loss for the period

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

2019 issuance (i)

free interest rate

in derivative liability

$ ( 1,341,756 )

(i) During the six

months ended December 31, 2020, the Company amended the exercise price to C$ 0.59

per common share and extended the expiry date

31, 2025 for 11,660,000

2019 issuance (ii)

free interest rate

in derivative liability

$ ( 2,062,116 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

As previously

Nine months ended March 31, 2019

Total operating expense and loss from operations

(ii) During the six

months ended December 31, 2020, the Company amended the exercise price to C$ 0.59 per common share and extended the expiry date to December

31, 2025 , for 17,920,000 warrants.

The terms of the remaining 2,752,900 warrants remain unchanged.

Schedule of Warrant Activity

December 31, 2020

( 4,359,174 )

December 31, 2021

December 31, 2022

the year ended December 31, 2022, 239,284 February 2020 broker warrants expired.

December 31, 2022, the following warrants were outstanding:

Schedule of Warrants Outstanding Exercise Price

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

December 31, 2022, the following compensation options were outstanding:

of Compensation Options

- August 2020 Compensation Options

December 31, 2020

– February 2021 Compensation Options

December 31, 2021

– April 2022 Compensation Options

December 31, 2022

Schedule of Estimated Using Black-Scholes Valuation Model for Fair Value of Broker Options

free interest rate

February 2021

April 1, 2022

Schedule of Broker Exercise Prices

16, 2024 (ii)

1, 2024 (iii)

(i) Exercisable into

one August 2020 Unit

(ii) Exercisable into

one February 2021 Unit

(iii) Exercisable into

one April 2022 Unit

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

following table summarizes the stock option activity during the years ended December 31, 2022 and 2021:

Schedule of Stock Options

December 31, 2020

December 31, 2021

November 25, 2022

December 31, 2022

February 19, 2021, 1,037,977 stock options were issued to an officer of the Company, of which 273,271 stock options vested immediately

and the balance of 764,706 stock options vested on December 31, 2021.

These options have a 5 -year life and are exercisable at C$ 0.335

per common share.

The grant date fair value of the options was estimated at $ 204,213 .

The vesting of these options resulted in stock-based

compensation of $ nil for the year ended December 31, 2022 ($ 204,213 for the year ended December 31, 2021) which is included in operation

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

August 24, 2022, 300,000 stock options were issued to an employee of the Company, of which

150,000 vested immediately and the remaining balance of outstanding options to vest equally

over the next two anniversaries of the grant date.

These options have a 5 -year life and are

exercisable at C$ 0.15 per common share.

The grant fair value of the options was estimated

at $ 28,930 .

The vesting of these options resulted in stock-based compensation of $ 15,594

for the year ended December 31, 2022, which is included in the operation and administration

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

November 23, 2022, 400,000 stock options were issued to an employee of the Company, of which 200,000 vested immediately and the remaining

balance of outstanding options to vest equally over the next two anniversaries of the grant date.

These options have a 5 -year life

and are exercisable at C$ 0.15 per common share.

The grant fair value of the options was estimated at $ 37,387 .

The vesting of these

options resulted in stock-based compensation of $ 20,191 for the year ended December 31, 2022, which is included in the operation

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

fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following

underlying assumptions:

Schedule of Estimated Using Black-Scholes Valuation Model for Fair value of Stock Options

following table reflects the actual stock options issued and outstanding as of December 31, 2022:

of Actual Stock Options Issued and Outstanding

(exercisable)

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Income per Share

dilutive securities include convertible loan payable, warrants, broker options, stock options, and unvested restricted share units (“RSU”).

Diluted income per share reflects the assumed exercise or conversion of all dilutive securities using the treasury stock method.

of Income Per Share

Year ended December 31,

income (loss) for the period

( 6,402,277 )

Loss before income tax and net loss and comprehensive loss for the period

income (loss) per share Weighted average number of common shares - basic

income (loss) per share – basic

income (loss) for the period

( 6,402,277 )

effect of convertible debentures

effect of warrants on net income

net income (loss) for the period

( 6,402,277 )

Net loss per common share - basic and fully diluted (*)

(*) Adjusted for 10-to-1 share consolidation on May 23, 2019.

Impact to Condensed Interim Consolidated Balance Sheets

As previously

Diluted income (loss)

Weighted average

number of common shares - basic

Stock options and RSUs

average number of common shares - fully diluted

income (loss) per share - fully diluted

Restricted share units

March 25, 2020, the Board of Directors approved a Restricted Share Unit (“RSU”) Plan to grant RSUs to its officers, directors,

key employees and consultants.

following table summarizes the RSU activity during the year ended December 31, 2022:

Schedule of Restricted Share Units

as at December 31, 2020

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

( 1,516,299 )

$ (21,880,285)

Total shareholders' equity

As previously

As at March 31, 2018

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

$ (23,420,954)

$ (23,614,778)

Total shareholders' deficiency

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Quarterly financial data (unaudited) (continued)

As previously

As at September 30, 2018

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

$ (24,250,066)

$ (25,013,420)

Total shareholders' equity (deficiency)

$ (1,404,816)

As previously

as at December 31, 2021

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

( 2,373,900 )

$ (28,488,660)

Total shareholders' deficiency

$ (3,572,758)

$ (4,521,059)

As previously

As at March 31, 2019

Accounts payable

Total current liabilities

Total liabilities

Deficit accumulated during exploration stage

$ (29,366,764)

$ (1,099,319)

$ (30,466,083)

Total shareholders' deficiency

$ (5,399,163)

$ (1,099,319)

$ (6,498,482)

Impact to Condensed Interim Consolidated Statements of Cash Flows

As previously

Six months ended December 31, 2017

Net loss for the period

as at December 31, 2022

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

On January 1, 2021, the Company granted 735,383 RSUs to a consultant of the Company.

245,128 RSUs vested immediately with the remaining

RSUs vesting in one twelfth increments per month.

During the year ended 2021, a total of 490,258 RSUs vested, and in July 2021, the consultant

forfeited the remaining 245,125 unvested RSUs, resulting in a reversal of share-based compensation of $ 64,870 .

The vesting of these RSUs

resulted in stock-based compensation of $ nil for the year ended December 31, 2022 and $ 199,542 for the year ended December 31, 2021,

which is included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

On July 1, 2021, the Company granted 17,823 RSUs to a consultant of the Company, vested immediately.

The vesting of these RSUs resulted

in stock-based compensation of $ nil for the year ended December 31, 2022 and $ 4,026 for the year ended December 31, 2021, which is included

in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

On August 5, 2021, the Company granted 595,228 RSUs to consultants of the Company, vested immediately.

The vesting of these RSUs resulted

in stock-based compensation of $ nil for the year ended December 31, 2022 and $ 100,022 for the year ended December 31, 2021, which is

included in operation and administration expenses on the consolidated statements of loss and comprehensive loss.

On 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 year ended December 31, 2022, which is included in operation and administration

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

On 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 income (loss) and comprehensive income (loss).

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 income (loss) and comprehensive income (loss).

On September 29, 2022 the Company granted 33,000 RSUs to two consultants of the Company, vested immediately.

The vesting of these RSUs

resulted in stock-based compensation of $ 2,889 for the year ended December 31, 2022, which is included in operation and administration

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

On October 31, 2022 the Company granted 1,599,150 RSUs to two consultants of the Company, vested immediately.

The vesting of these RSUs

resulted in stock-based compensation of $ 111,304 for the year ended December 31, 2022, which is included in operation and administration

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

On November 17, 2022 the Company granted 4,396,741 RSUs to certain key management of the Company.

The RSUs vest in one third increments

upon each anniversary of the grant date.

The vesting of these RSUs resulted in stock-based compensation of $ 79,504 for the year ended

December 31, 2022, which is included in operation and administration expenses on the consolidated statements of loss and comprehensive

Deferred share units

April 21, 2020, the Board of Directors approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its directors.

Plan permits the eligible directors to defer receipt of all or a portion of their retainer or compensation until termination of their

services and to receive such fees in the form of cash at that time.

vesting of the DSUs or termination of service as a director, the director will be able to redeem DSUs based upon the then market price

of the Company’s common share on the date of redemption in exchange for cash.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

following table summarizes the DSU activity during the years ended December 31, 2022 and 2021:

Schedule of Deferred Share Units

as at December 31, 2020

( 1,875,000 )

as at December 31, 2021

( 3,125,000 )

Changes in operating assets and liabilities:

Accounts payable

As previously

Nine months ended March 31, 2018

Net loss for the period

as at December 31, 2022

April 21, 2020, the Company granted 7,500,000 DSUs.

The DSUs vest in one fourth increments upon each anniversary of the grant date

and expire in 5 years.

On July 1, 2022 the Company granted 210,000 DSU’s, these DSU’s vest after 12 months of the issuance

During the year ended December 31, 2022, and 2021 the Company recognized recovery of $ 282,967 and expense of $ 421,284 , respectively,

in stock-based compensation related to the DSUs, which is included in operation and administration expenses on the consolidated statements

of income (loss) and comprehensive income (loss), as DSU’s were settled in cash during the year ended December 31, 2022.

redemption of the 2,500,000 DSUs (see (iii)) the fair value of the remaining DSU liability at December, 2022 was $ 573,742 .

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

the year ended December 31, 2022, the director redeemed 2,500,000 DSUs for C$ 750,000 , and elected to use net proceeds to subscribe

for 375,000 units in the Company’s April 2022 special warrant issuance at C$ 0.30 per unit, with the balance of the redeemed

amount payable in cash after applicable withholding tax deductions.

The DSU’s were therefore all accelerated to vest.

Commitments and contingencies

stipulated in the agreement with the EPA and as described in Note 7, the Company is required to make two types of payments to the EPA

and IDEQ, one for historical water treatment cost-recovery to the EPA, and the other for ongoing water treatment.

Water treatment costs

incurred through December 2021 are payable to the EPA, and water treatment costs incurred thereafter are payable to the IDEQ.

(as done formerly by the EPA) invoices the Company on an annual basis for the actual water treatment costs, which may exceed the recognized

estimated costs significantly.

When the Company receives the water treatment invoices, it records any liability for actual costs over

and above any estimates made and adjusts future estimates as required based on these actual invoices received.

The Company is required

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”).

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

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 AMD 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.

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.

Placer Mining Corp.

and Bunker Hill Mining

Corp are named as co-defendants.

Bunker Hill 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 Crescent’s lawsuit is without merit

and intends to vigorously defend itself, as well as Placer Mining Corp.

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.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

at December 31, 2022, and December 31, 2021, the Company had no accrued interest and penalties related to uncertain tax positions.

income tax provision differs from the amount of income tax determined by applying the U.S.

federal tax rate of 21.0 % (December 31, 2021

– 21.0 %) to pretax loss from operations for the periods ended December 31, 2022 and December 31, 2021:

Schedule of Income Tax Provision

(loss) before income taxes

$ ( 6,402,277 )

income tax recovery

( 1,344,478 )

Changes in operating assets and liabilities:

Accounts payable

Bunker Hill Mining Corp.

(Formerly Liberty Silver Corp.)

Amended and Restated

Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

Quarterly financial data (unaudited) (continued)

As previously

Three months ended September 30, 2018

Net loss for the period

Changes in operating assets and liabilities:

Accounts payable

As previously

Six months ended December 31, 2018

Net loss for the period

in estimates in respect of prior periods

in fair value of derivative liability

( 3,296,242 )

( 2,583,095 )

Changes in operating assets and liabilities:

Accounts payable

As previously

Nine months ended March 31, 2019

Net loss for the period

and local taxes, net of federal benefit

in valuation allowance

tax assets and the valuation account are as follows:

Schedule of Deferred Tax Assets

operating loss carryforwards

interest purchase option

deferred tax assets

( 21,602,677 )

( 17,886,174 )

Changes in operating assets and liabilities:

Accounts payable

Schedule of Components of Deferred Tax Assets and Liabilities

operating loss carryforwards

tax liabilities:

foreign exchange gain

deferred tax asset

potential income tax benefit of these losses has been offset by a full valuation allowance.

of December 31, 2022 and December 31, 2021, the Company has an unused net operating loss carryforward balance of $ 40,227,950 , and $ 26,356,908 ,

respectively, that is available to offset future taxable income.

The net operating loss carryforwards generated before 2018 expire between

2031 and 2037.

The losses generated in 2018 and later tax years do not expire.

Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly

increase or decrease within the next 12 months.

tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2022 and December

31, 2021 and years 2020, 2019, 2018, 2017, 2016, and 2015.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

Related party transactions

Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities

of the Company and consists of the Company’s executive management team and management directors.

Schedule of Related Party Transactions

fees, wages and bonus

December 31, 2022 and December 31, 2021, $ 154,797 and $ 279,554 , respectively is owed to key management personnel with all amounts included

in accounts payable and accrued liabilities.

During the year ended December 31, 2022, Wayne Parsons (Director and former CFO) billed $ 147,287 (year ended December 31, 2021 - $ 120,127 )

for consulting services to the Company, in addition to 2,500,000 DSU’s which settled on June 30, 2022, at a value of $ 582,027 concurrent with his

departure from the Board of Directors.

During the year ended December 31, 2022, Richard Williams (Director and Executive Chairman) billed $ 372,084

(year ended December 31, 2021 - $ 179,605 )

for consulting services and bonus payment to the Company.

At December 31, 2022, $ 135,600

is owed to Richard Williams (December 31, 2021 - $ 108,719 )

for consulting services, with all amounts included in accounts payable and accrued liabilities.

the year ended December 31, 2022, 1,110,756 restricted share units (RSU’s) were issued to Richard Williams which will vest in one third

increments on March 31, 2023, March 31, 2024, and March 31, 2025.

The vesting of these RSU’s resulted in stock-based compensation

of $ 20,085 for the year ended December 31, 2022.

During the year ended December 31, 2022, the Company incurred $ 438,600

in payroll expense and bonus payment for Sam Ash (year ended December 31, 2021 - $ 250,000 )

for services to the Company.

At December 31, 2022, $ nil

(December 31, 2021 - $ 62,500 )

is payable and included in accrued liabilities.

the year ended December 31, 2022, 1,249,600 restricted share units (RSU’s) were issued to Sam Ash which will vest in one third

increments on March 31, 2023, March 31, 2024, and March 31, 2025.

The vesting of these RSU’s resulted in stock-based compensation

of $ 22,596 for the year ended December 31, 2022.

During the year ended December 31, 2022, Pam Saxton (Director) billed $ 36,133 (year ended December 31, 2021 - $ 37,669 ) for consulting

services to the Company.

During the year ended December 31, 2022, Cassandra Joseph (Director) billed $ 36,133 (year ended December 31, 2021 - $ 37,494 ) for consulting

services to the Company.

During the year ended December 31, 2022, Mark Cruise (Director) billed $ 15,774 (year ended December 31, 2021 - $0) for consulting services

to the Company.

On July 1, 2022, the Company issued 210,000 DSU’s to a Mark Cruise.

During the year ended December 31, 2022, the Company incurred $ 383,315

in payroll expense and bonus payment for David Wiens (CFO) (year ended December 31, 2021, $ 276,315 )

for services to the Company.

At December 31, 2022, $ 19,197

(year ended December 31, 2021 - $ 108,335 )

is payable, including reimbursable expenses, and included in accrued liabilities.

the year ended December 31, 2022, 1,018,193 restricted share units (RSU’s) were issued to David Wiens which will vest in one third

increments on March 31, 2023, March 31, 2024, and March 31, 2025.

The vesting of these RSU’s resulted in stock-based compensation

of $ 18,411 for the year ended December 31, 2022.

the year ended December 31, 2021, 1,037,977 stock options were issued to David Wiens, of which 273,271 stock options vested immediately

and the balance of 764,706 stock options vested on December 31, 2021.

These options have a 5 -year life and are exercisable at C$ 0.335

per common share.

The grant date fair value of the options was estimated at $ 204,213 .

The vesting of these options resulted in stock-based

compensation of $ 204,213 for the year ended December 31, 2021.

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

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.

February 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.

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.

of Prospectus Offering 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 C$ 9 million 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$ 6,196,047.26 .

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 C$ 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 C$ 211,461.38 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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective September 2, 2014, the Company appointed the firm of MNP, LLP, Chartered Professional Accountants, as the Company’s principal independent accountant to audit the Company’s financial statements.

The Company has had no disagreements with its accountants, that would require disclosure pursuant to Item 304 of Regulation S-K.

September 2, 2014, the Company appointed the firm of MNP, LLP, Chartered Professional Accountants, as the Company’s principal independent

accountant to audit the Company’s financial statements.

The Company has had no disagreements with its accountants that would require

disclosure pursuant to Item 304 of Regulation S-K.

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 8. Financial Statements and Supplementary Data