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Item 8. Financial Statements and Supplementary Data

2024-03-12 compared with 2023-04-17 · 1169 added, 1032 removed, 508 unchanged (81% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

Consolidated Balance Sheets, December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2023 and 2022

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

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’

(the “Company”) as at December 31,

2023 and 2022, 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, 2023, and the related notes (collectively referred to as the

3 unchanged sentences

the years in the two-year period ended December 31, 2023, 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.

2 unchanged sentences

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.

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.

21 unchanged sentences

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.

of Series 1 & 2 Convertible Debentures (CDs)

Company had previously issued CDs which are complex in nature and are required to be fair valued at the end of 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

resulted in an increased extent of audit effort, including the involvement of internal valuation specialists.

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

to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible

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

Our audit work in relation to this

included, but was not restricted to, the following:

Obtained and assessed all amendments signed in the year in relation to the CDs.

Obtained management’s assessment of the fair value of the CDs.

With the assistance of internal valuation specialists, evaluated the reasonability of management’s model for valuing the CDs

and the appropriateness of the inputs used in the model, and recalculated fair values.

Recalculated the covenants involved to ensure compliance.

Performed a sensitivity analysis on the inputs.

Assessed the appropriateness of the related disclosures.

Treatment and Valuation of Stream Debenture

closing of the Metals Purchase Agreement, the Company was issued a $46,000,000 debenture (the “Stream Debenture”).

determination of the accounting treatment of the Stream Debenture is complex in nature.

The measurement of the Stream Debenture requires

management to incorporate significant estimates.

to the complexity involved in determining the correct accounting treatment and measurement of the Stream Debenture, we considered

this to be a critical audit matter.

to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible

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

Our audit work in relation to this included, but was not restricted to, the following:

Obtained the agreement for the Stream Debenture.

Evaluated the appropriateness of management’s analysis and assessment of the accounting treatment of the Stream Debenture in

accordance with relevant accounting standards.

Assessed the reasonability of the model used to value the Stream Debenture and the appropriateness of the inputs used and

recalculated the value.

With the assistance of internal valuation specialists, assessed certain key assumptions in the valuation of the Stream Debenture

which included the discount rate and future metal prices.

Evaluated management’s calculation of the initial and year-end measurement of the Stream Debenture.

Assessed the appropriateness of the related disclosures.

of Gain on Conversion of Royalty Convertible Debenture (“RCD”)

RCD was converted and the Company granted a royalty over the life of the Bunker Hill mine (the “Royalty”).

determination of the accounting treatment of the Royalty is complex in nature.

The measurement of the converted RCD into the Royalty

requires management to incorporate significant estimates.

to the complexity involved in determining the correct accounting treatment and measurement of the RCD and the Royalty on the conversion

date, we consider this to be a critical audit matter.

to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible

responded to this matter by performing audit procedures in relation to the measurement of gain on conversion of the RCD.

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

Obtained the agreement for the conversion of the RCD into the Royalty.

Evaluated management’s analysis and assessment of the accounting treatment of the conversion in accordance with the relevant

accounting standards.

Assessed the reasonability of the model used to value the RCD and Royalty on conversion date and the appropriateness of the inputs

used and recalculated the values.

With the assistance of internal valuation specialists, assessed certain key assumptions in the valuation of the RCD and Royalty on

conversion date which included the discount rate and future metal prices.

Tested mathematical accuracy of management’s calculation of the RCD and the Royalty.

Assessed the appropriateness of the related disclosures.

Professional Accountants

Licensed Public Accountants

have served as the Company’s auditor since 2014.

April 17, 2023

March 12, 2024

Hill Mining Corp.

1 unchanged sentence

in United States Dollars)

cash (note 7)

receivable and prepaid expenses (note 5)

mine deposit and acquisition costs (note 6)

finance costs

Current assets

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)

Restricted cash (note 8)

Accounts receivable and prepaid expenses (note 4)

Total current assets

Non-current assets

Spare parts inventory

Long-term deposit

Equipment (note 5)

Right-of-use assets (note 5)

Bunker Hill Mine and Mining interests (note 6)

Process plant (note 5)

EQUITY AND LIABILITIES

Current liabilities

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;

Accounts payable

Accrued liabilities

Current portion of lease liability (note 7)

Derivative warrant liability (note 10)

Deferred share units liability (note 13)

Environment protection agency cost recovery payable (note 8)

Interest payable (notes 8 and 9)

Promissory notes payable (note 9)

Total current liabilities

Non-current liabilities

Lease liability (note 7)

Loan payable (note 9)

Series 1 convertible debenture (note 9)

Series 2 convertible debenture (note 9)

Stream debenture (note 9)

Royalty convertible debenture (note 9)

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

Deferred tax liability (note 15)

Derivative warrant liability (note 10)

Total liabilities

Shareholders’ Deficiency

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

Nil preferred shares issued and outstanding (note 10)

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

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

322,661,482 and 229,501,661 shares of common stock issued and outstanding, respectively (note 10)

Additional paid-in-capital (note 10)

Accumulated other comprehensive income

Accumulated deficit

( 85,025,098 )

( 71,592,559 )

shareholders’ deficiency

Total shareholders’ deficiency

( 26,367,162 )

( 26,176,943 )

shareholders’ deficiency and liabilities

Total 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)

Statements of (Loss) Income and Comprehensive (Loss) Income

in United States Dollars)

and administration (notes 11, 13 and 14)

and accounting

and wages (note 17)

from operations

Operating expenses

Operation and administration

Mine preparation

Legal and accounting

Consulting and wages (note 16)

Loss from operations

( 11,600,574 )

( 16,487,161 )

income or gain (expense or loss)

in derivative liability (note 11)

(loss) gain on foreign exchange

on fair value of convertible debentures (note 9)

Other income or gain (expense or loss)

Interest income

Change in derivative liability (note 10)

Gain (loss) on foreign exchange

Gain (loss) on fair value of convertible debentures (note 9)

( 1,140,537 )

on EPA debt extinguishment (note 8)

expense (notes 8 and 9)

Gain on RCD settlement (note 6)

Gain on debt settlement

Gain on EPA debt extinguishment (note 8)

Gain on warrant modification

Interest expense (notes 8 and 9)

( 7,124,527 )

finance costs (note 9)

( 3,382,559 )

on debt settlement

income (loss) for the year

Debenture finance costs (note 9)

( 1,230,540 )

comprehensive income (loss), net of tax

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

comprehensive income (loss)

Comprehensive

income (loss)

Financing costs (note 10)

Other expense

Loss on revaluation of stream debenture (note 9)

( 3,128,956 )

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)

Loss on debt modification (note 9)

Loss on debt settlement (note 9)

(Loss) income for the year pre tax

$ ( 10,843,949 )

Deferred tax expense (note 15)

( 2,588,590 )

Net (loss) income for the year

( 13,432,539 )

Other comprehensive income (loss), net of tax

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

Other comprehensive income

Comprehensive (loss) income

( 12,877,752 )

Net (loss) Income per share of common stock

Net (loss) income per share of common stock – basic

Net (loss) income per share of common stock –

fully diluted (note 11)

Weighted average number of shares of common stock

Weighted average shares of common stock – basic (note 11)

Weighted average shares of common stock – fully diluted (note 11)

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

2 unchanged sentences

in United States Dollars)

Income (loss) for the year

Operating activities

Net (Loss) income for the year

$ ( 13,432,539 )

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

in derivative liability

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

Stock-based compensation

Depreciation expense

Change in derivative liability

( 2,360,025 )

( 15,696,391 )

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

Deferred tax expense

Units issued for services

Imputed interest expense on lease liability

Interest expense

Financing costs

Foreign exchange loss (gain)

Foreign exchange loss (gain) on re-translation of lease

Accretion of liabilities

Loss on revaluation of stream debenture

Loss on modification of debt

Loss on debt settlement

(Gain) loss on fair value of convertible debt derivatives

( 1,673,777 )

in operating assets and liabilities:

mine acquisition costs

finance costs

expenses and deposits

Gain on Warrant Extinguishment

Gain on RCD settlement

( 6,980,932 )

water treatment payable

Gain on debt settlement

Gain on extinguishment EPA debt

( 8,614,103 )

cost recovery payable

Changes in operating assets and liabilities:

Accounts receivable

Prepaid finance costs

Prepaid expenses and deposits

( 1,133,124 )

payable – EPA

cash used in operating activities

Accounts payable

( 1,840,426 )

Accrued liabilities

EPA water treatment payable

( 4,458,707 )

of spare inventory

Hill mine purchase

EPA cost recovery payable

( 2,000,000 )

Interest payable – EPA

Interest payable

Net cash used in operating activities

( 12,332,752 )

and demobilization of Process plant

( 22,498,307 )

of machinery and equipment

cash used in investing activities

Investing activities

Additions to Bunker Hill Mine and mining interests

( 1,458,506 )

from convertible debentures

from bridge loan

from issuance of shares, net of issue costs

from promissory note

of promissory note

( 6,681,381 )

cash provided by financing activities

change in cash and restricted cash

Land purchase

Process plant

( 9,398,032 )

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

( 3,633,687 )

Purchase of machinery and equipment

Purchase of spare inventory

Net cash used in investing activities

( 11,396,341 )

( 11,174,672 )

Financing activities

Proceeds from stream obligation

Transaction costs stream obligation

Proceeds from convertible debentures

Proceeds from bridge loan

Proceeds from issuance of shares, net of issue costs

Proceeds from warrants exercise

Proceeds from promissory notes

Repayment of bridge loan

( 5,000,000 )

Repayment of promissory notes

Repayment of promissory note

( 1,599,568 )

( 1,000,000 )

Lease payments

Net cash provided by financing activities

Net change in cash and restricted cash

Cash, beginning of year

Cash and restricted cash, end of year

Supplemental disclosures

Non-cash activities:

Units issued to settle accounts payable and accrued liabilities

Units issued to settle interest payable

Mill purchase for shares and warrants

Units issued to settle DSU/RSU/Bonuses

Reconciliation from Cash Flow Statement to Balance Sheet:

6 unchanged sentences

comprehensive

December 31, 2021

$ ( 72,491,150 )

$ ( 34,242,368 )

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 )

on fair value from change in credit risk

income for the period

Shares issued at $0.32 per share(ii)

Shares issued at $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

Balance, December 31, 2022

$ ( 71,592,559 )

$ ( 26,176,943 )

December 31, 2020

Stock-based compensation

Compensation options

Shares issued for interest payable

Shares issued for RSUs vested

Non brokered shares issued for C$0.30

Contractor shares issued for C$0.30

Shares issued for Process plant purchase

Shares issued for warrant exercise

Special warrant shares issued for C$ 0.15

Warrant valuation

Gain on fair value from change in credit risk

Net income for the period

( 13,432,539 )

balance value

Balance, December 31, 2023

$ ( 85,025,098 )

$ ( 26,367,162 )

issued at $ 0.32 per share (ii)

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

issued for RSUs vested

Balance, December 31, 2021

$ ( 72,491,150 )

$ ( 34,242,368 )

loss for the period

Beginning balance, value

$ ( 72,491,150 )

$ ( 34,242,368 )

income (loss)

Stock-based compensation

Compensation options

Shares issued for interest payable

Shares issued for RSUs vested

Non brokered shares issued for C$ 0.30

Special warrant shares issued for C$ 0.30

Contractor shares issued for C$ 0.30

Shares issued for Process plant purchase

Warrant valuation

( 6,246,848 )

December 31, 2021

Gain on fair value from change in credit risk

Net income for the period

Balance, December 31, 2022

$ ( 71,592,559 )

$ ( 26,176,943 )

balance value

Ending balance, value

$ ( 71,592,559 )

$ ( 26,176,943 )

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)

issued at C$ 0.15 , converted to U.S.

dollars at $ 0.11 (note 11)

issued at C$ 0.30 , converted to U.S.

dollars at $ 0.24 (note 11)

issued at C$ 0.40 , converted to U.S.

dollars at $ 0.32 (note 11)

issued at C$ 0.57 , converted to U.S.

dollars 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

Nature and continuance of operations

Hill Mining Corp.

8 unchanged sentences

Toronto, Ontario, Canada, M5C 1P1.

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

As of the date of this Form 10-K, 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)

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

It continues to work at developing

its project with a view towards putting it into production.

Basis of presentation

34 unchanged sentences

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

Borrowing costs that are directly attributable to the acquisition,

construction or production of an asset that takes a substantial period of time to prepare for its intended use are capitalized as part

of the cost of the asset.

Capitalization of borrowing costs begins when there are borrowings, and activities commence to prepare an asset

for its intended use.

Capitalization of borrowing costs ends when substantially all activity necessary to prepare a qualifying asset for

its intended use are complete.

When proceeds of project-specific borrowings are invested on a temporary basis, borrowing costs are capitalized

net of any investment income.

is stated at cost less accumulated depreciation.

9 unchanged sentences

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.

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

(loss) Income and comprehensive (loss) Income.

Rental income obtained through subleases is recorded as income

10 unchanged sentences

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.

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

7 unchanged sentences

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.

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, current portion of environmental protection agency cost

recovery payable, and current portion of 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

The Company measured the non-current portion of the EPA liability and the stream debenture using a discount rate

that represents the market rate.

The Company measured its lease liabilities using a discount rate that represents market rate for the

underlying asset.

Environmental

10 unchanged sentences

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”),

21 unchanged sentences

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).

and diluted net (loss) income per share

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

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

stock outstanding during the period.

Diluted net (loss) income per share is computed using the weighted average number of

shares of common stock and, if dilutive, potential shares of common stock outstanding during the period.

Potential shares of common

stock consist of the incremental shares of common stock issuable upon the exercise of stock options, RSUs, warrants and the

conversion of convertible loan payable.

As of December 31, 2023, a $ 6,000,000

convertible debenture (the “CD1”), a $ 15,000,000

convertible debenture (the “CD2”), 8,970,636

stock options, 145,061,976

warrants, and 4,301,150

broker options, and 7,044,527

RSUs were considered in the calculation but not included, as they were anti-dilutive (December 31, 2022 - 9,005,636

stock options, 162,129,064

warrants, and 5,470,799

broker options).

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

12 unchanged sentences

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.

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

The Company records the

1 unchanged sentence

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.

Company estimates the grant date fair value of the DSUs using the trading price of the Company’s common stock 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

5 unchanged sentences

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.

operations and working capital requirements.

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

8 unchanged sentences

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.

Loans, Promissory Notes, Stream Obligation and Warrants

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

and conditions of the issuance.

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

the expected life of the warrants derivative liability, volatility and dividend yield and making assumptions about them.

The assumptions

and models used for estimating fair value of warrants derivative liability are disclosed in Notes 9 and 10.

fair value estimates of the convertible loans use inputs to the valuation model that include risk-free rates, equity value per share

of common stock, 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 9 for full disclosures related to the convertible loans and promissory notes.

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

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

See Note 9 for full disclosures related to the stream

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.

of mineral properties, plant and equipment

Assets are reviewed for an indication of impairment

4 unchanged sentences

precious metal prices.

Incremental borrowing rate

Estimating the present value of minimum future

lease payments requires determining the most appropriate incremental borrowing rate.

The assessment of the Company’s

incremental borrowing rate involves judgment regarding the cost of borrowings for the related asset.

Borrowing cost capitalization rate

The assessment of the Company’s incremental borrowing rate involves

judgment on what qualifies as a qualifying asset and on determining the capitalization rates.

Reclassifications

4 unchanged sentences

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.

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

The Company 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.

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

2 unchanged sentences

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

4 unchanged sentences

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.

Company reviews the terms of its convertible loans, stream obligation 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

In circumstances where the convertible loans, the stream obligation, 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, the stream

obligation, 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)

Company applies ASC 480 distinguishing liabilities from equity and ASC 815 derivatives and hedging in determining the appropriate accounting

treatment for hybrid instruments.

The embedded options within the convertible loans are not bifurcated and measured at fair value at

each period end.

Accounting Pronouncements

Accounting Pronouncements – In August 2023, the Financial Accounting Standards Board issued Accounting Standards Update

(“ASU”) 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60):

Recognition and Initial

Measurement, which clarifies the business combination accounting for joint venture formations.

The amendments in the ASU seek to

reduce diversity in practice that has resulted from a lack of authoritative guidance regarding the accounting for the formation of

joint ventures in separate financial statements.

The amendments also seek to clarify the initial measurement of joint venture net

assets, including businesses contributed to a joint venture.

The guidance is applicable to all entities involved in the formation of

a joint venture.

The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025.

Early adoption and retrospective application of the amendments are permitted.

The Company does not expect adoption of the new

guidance to have a material impact on our consolidated financial statements and disclosures.

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”),

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to

include disclosure of incremental segment information on an annual and interim basis.

Among the disclosure enhancements are new disclosures

regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported

measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within

fiscal years beginning after December 15, 2024, and are applied retrospectively.

Early adoption is permitted.

The Company is currently evaluating

the impact of this update on our consolidated financial statements and disclosures.

December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and

income taxes paid.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, and are applied

prospectively.

Early adoption and retrospective application of the amendments are permitted.

The Company is currently evaluating the

impact of this update on our consolidated financial statements and disclosures .

accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have

a material impact on the consolidated financial statements upon adoption.

Accounts receivable and prepaid expenses

Accounts receivable and prepaid expenses consists

of the following:

receivable and prepaid expenses consists of the following:

Schedule of Accounts receivable and prepaid expenses

Prepaid expenses

HST Receivable

Environment protection agency overpayment (note 8)

Equipment, Right-of-Use asset, and Process Plant

consists of the following:

1 unchanged sentence

Equipment, gross

accumulated depreciation

Less accumulated depreciation

Equipment, net

total depreciation expense during the year ended December 31, 2023, was $ 144,347 (year ended December 31, 2022 - $ 162,290 ).

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.

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

Pend Oreille operation.

The package comprises substantially all the mineral processing equipment including complete crushing, grinding

and flotation circuits suitable for a planned ~1,500 ton-per-day operation at the Bunker Hill site, and total inventory of components

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

purchase of the mill has been valued at:

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 .

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 stock 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

a result, the total value of the mill at the time of purchase was determined to be $ 3,974,296 , including $ 341,004 of spare parts

process plant was purchased in an assembled state, and included major processing systems, significant components, and a large

inventory of spare parts.

The Company has disassembled and transported it to the Bunker Hill site, and will be reassembling it as an

integral part of the Company’s future operations.

The Company determined that the transaction should be accounted for as an

asset acquisition, with the process plant representing a single asset, with the exception of the inventory of spare parts, which has

been separated out and appears on the balance sheets as a non-current asset in accordance with the purchase price allocation.

associated with the completed demobilized and transportation were capitalized.

Reassemble, installation and other costs associated

with these activities will be capitalized as components of the asset as incurred.

plant consists of the following:

Schedule of Plant Asset Consists

Plant purchase price less inventory

Ball mill purchase

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

Site preparation costs

Capitalized interest (note 9)

Process Plant

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

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

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

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

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

Schedule of Right-of-use Asset

Right-of-use asset

Right-of-use asset accumulated depreciation

Right-of-use asset, net

total depreciation expense during the year ended December 31, 2023 was $ 45,786 (year ended December 31, 2022 - $ 52,353 , relating to an

expired lease).

The Company is a party primarily to lease contracts for mining related mobile equipment.

Bunker Hill Mine and Mining Interests

Hill Mine Purchase

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

5 unchanged sentences

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

paid by the Company) and $ 2,000,000 in common stock of the Company.

The Company agreed to make 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.

of $ 3,400,000 payable in cash and $ 2,000,000 in common stock of the Company.

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 as per the Settlement Agreement reached with the

Immediately prior to the purchase of the Mine, the Company’s liability to EPA in this regard totaled $ 11,000,000 .

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

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).

$ 3,400,000 of cash and $ 2,000,000 of common stock of the Company.

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

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

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

$ 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.

purchase of the mine has been valued on January 7, 2022:

purchase price of $ 7,700,000 less $ 300,000 credit by seller for prior maintenance payments.

present value of water treatment cost recovery liability assumed of $ 6,402,425 (note 8).

legal and closing costs of $ 444,785 .

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

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

Through December 31, 2023, a total of $ 2,722,889 had been capitalized.

of Mineral Properties

June 23, 2023, as consideration for the extinguishment of the royalty convertible debenture (the “RCD”), as described in note 9, the Company granted a royalty for 1.85 % of

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

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

A 1.35% rate will apply to claims

outside of these areas.

transaction is treated as a sale of mineral interest to Sprott Private Resource Streaming & Royalty Corp.

The portion of the mineral interest sold was determined based on an analysis

of discounted life-of-mine royalty payments relative to discounted future cash flows generated from the mine net of capital and operating

costs, applied to the carrying value of the Bunker Hill Mine as of June 23, 2023 before consideration of the sale of mineral properties.

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

respectively, consistent with assumptions utilized in the valuation of the RCD at extinguishment.

The Company has recognized a gain of

$ 6,980,932 in the consolidated statements of (loss) income and comprehensive (loss) income.

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

Schedule of Mining Interests

Bunker Hill Mine purchase

Capitalized development

Sale of mineral properties (note 9)

( 1,973,840 )

Bunker Hill mine

purchase and lease

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.

the year ended December 31, 2023, the Company entered into a lease agreement with C & E Tree Farm LLC for the lease of a land parcel

overlaying a portion of the Company’s existing mineral claims package.

The Company is committed to making monthly payments of $ 10,000

through February 2026.

The Company has the option to purchase the land parcel through March 1, 2026, for $ 3,129,500 less 50% of the payments

made through the date of purchase.

Lease Liability

As of December 31, 2023, The Company’s undiscounted

lease obligations consisted of the following:

of Lease Liability

Gross lease obligation – minimum lease payments

Future interest expense on lease obligations

Total lease liability

lease liability

Total lease liability

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

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

Upon the effectiveness 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.

payment terms for recovery of the historical environmental response costs.

Pursuant to the terms of the Amended Settlement,

1 unchanged sentence

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

Schedule of Amended Settlement Environmental Protection Agency Agreement

Within 30 days

of Settlement Agreement

November 1, 2024

November 1, 2025

November 1, 2026

November 1, 2027

November 1, 2028

November 1, 2029

plus accrued interest

6 unchanged sentences

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 .

Company completed the purchase of the Mine (see note 6) and made the initial $ 2,000,000 cost recovery payment on January 7, 2022.

with the purchase of the Mine, the Company assumed the balance of the EPA liability totaling $ 17,000,000 , an increase of $ 8,000,000 from

$ 9,000,000 .

This was capitalized as $ 6,402,425 to the carrying value of the Bunker Hill Mine at time of purchase, comprised of $ 3,000,000

of incremental current liabilities and $ 5,000,000 of non-current liabilities (discounted to $ 3,402,425 ).

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

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

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

As of December 31, 2023 (unchanged from December 31, 2022), the

Company had two payment bonds of $ 9,999,000 and $ 5,000,000 , and a $ 2,001,000 letter of credit, in place to secure this liability.

collateral for the payment bonds is comprised of two letters of credit of $ 4,475,000 in aggregate, as well as land pledged by third parties

with whom the company has entered into a financing cooperation agreement that contemplates a monthly fee of $ 20,000 (payable in cash

or common stock of the Company, at the Company’s election).

The letters of credit of $ 6,476,000 in aggregate are secured by cash

deposits under an agreement with a commercial bank, which comprise the $ 6,476,000 of restricted cash shown within current assets as of

December 31, 2023 and December 31, 2022.

Company recorded accretion expense on the liability of $ 1,632,674 for the year ended December 31, 2023, respectively, bringing the net

liability to $ 9,574,140 (previously accrued interest of $ 154,743 ) as of December 31, 2023.

Additionally, there is $ 24,587 of interest owed to the EPA recorded in

interest payable on the consolidated balance sheets.

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 is included in interest payable on the consolidated

balance sheets.

Under ASC 470-50, Debt Modifications and Extinguishments, during the year ended December 31, 2022, 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.

For the year ended December 31, 2022 the Company recorded a gain on extinguishment of

debt totaling $ 8,614,103 .

Treatment Charges – Idaho Department of Environmental Quality

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

Water treatment

charges incurred through December 31, 2021, were payable to the EPA, and charges thereafter are payable to the Idaho Department of Environmental

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

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

Upon receipt of an invoice from the IDEQ for actual costs incurred, a reconciliation is performed relative to payments made, with

an additional payment made or refund received as applicable.

The Company accrues $ 100,000 per month based on its estimate of the monthly

cost of water treatment.

As of December 31, 2023, a prepaid expense of $ 94,582 (December 31, 2022:

$ 170,729 ) represents the difference

between the estimated cost of water treatment and net payments made by the Company to the IDEQ to date.

This balance has been recognized

on the consolidated balance sheets as accounts receivable and accounts payable.

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.

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

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.

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

by June 30, 2022, which the Company paid.

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

incurred a one-time penalty of 10 %

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

is included in loss on debt modification in the consolidated statements of (loss) income.

A final principal payment of

$ 1,599,569 was

made during the year ended December 31, 2023.

Interest expense for the years ended December 31, 2023, and 2022 was $ 189,179 and

$ 281,301 respectively.

On December 31, 2023 interest of $ nil ($ 384,041 at

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

On December 31, 2023, the Company owes $ nil ($ 1,500,000 at

December 31, 2022) in promissory notes payable, which was included in current liabilities on the consolidated balance

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

and a separate non-convertible promissory note of $ 120,000

to another party.

Each promissory note bore fixed interest of $ 18,000 ,

payable at maturity, which was the earlier of one year or the receipt of an equity or debt financing.

Both promissory notes,

including interest of a total of $ 36,000 recognized during the year ended December 31, 2023 ($ nil for the year ended December 31, 2022), were settled on March 27, 2023 through participating in the March 2023 Offering (Note 10).

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

The promissory note bore fixed interest of

$ 15,000 , payable at maturity, which was the earlier of one year or the receipt of an equity or debt financing.

The promissory

note, including interest, was settled in June 2023.

Finance Package with Sprott

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

non-binding term sheet with Sprott outlined a $ 50,000,000 project financing package that the Company expected 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 .

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

The CD1 was subsequently

increased to $ 6,000,000 , increasing the project financing package to $ 51,000,000 .

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

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

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

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

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

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

resulting in a lower cost of capital for the Company.

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

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

As a result, total funding commitments from Sprott

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

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

The parties also agreed

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

Company incurred $ 83,499 of financing costs on the consolidated statements of (loss) income and comprehensive (loss) income relating

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

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

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

at the Company’s option, until such time that Sprott 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).

2 unchanged sentences

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

“SRSR Royalty”).

“Sprott Royalty”).

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

2 unchanged sentences

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

with the funding of the CD2 in June 2022, the Company and Sprott 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 .

4 unchanged sentences

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)

for as a modification.

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

of life-of-mine gross revenue (the “Royalty”) from mining claims historically worked as described above.

rate will apply to claims outside of these areas.

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

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

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

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

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

The Company has accounted for the Royalty as a

sale of mineral properties (refer to Note 6 for further detail).

Series 1 Convertible Debenture (CD1)

1 unchanged sentence

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,

at an annual rate of 7.5 %, payable in cash or common stock at the Company’s option, and matures on July 7, 2023 (subsequently amended,

as described below).

1 unchanged sentence

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

CD1 was to be convertible into shares of Company common stock at a price of C$ 0.30 per 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.

Alternatively, Sprott 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

if Sprott 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 Sprott 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.

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 gain (loss) on fair value of convertible debentures line of the statement of operations for the year ended December 31,

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

31, 2026 , and that CD1 would remain outstanding until the new maturity date unless the company elects to exercise its option of early

The Company determined that the amendments to 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 modification the company reported a gain of $ 58,657 in the gain (loss) on fair value of convertible

debentures line of the consolidated statement of (loss) income for year ended December 31, 2023.

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 bears interest at an annual rate of 10.5 %, payable in cash or common stock

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

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

and is convertible into Company common stock at a price of C$ 0.29 per share at Sprott’s election at any time through the maturity

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

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

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

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

to exercise its share conversion option.

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

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

As a result of the modification the company reported a loss of $ ( 3,833 ) in the gain (loss) on fair value of convertible

debentures line of the consolidated statement of (loss) income for year ended December 31, 2023.

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

Reference (2)(4) (5)

Interest rate

equity volatility

Stock price (US$)

Expected equity volatility

Credit spread

Risk-free rate

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

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

Convertible Debenture

CD1 carried a Discount for Lack of Marketability (“DLOM”) of 5.0 % as of the issuance date and as of March 31, 2022.

CD2 carried a DLOM of 10.0 % as of the issuance date and June 30, 2022

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

conversion price of the CD1 is $ 0.227 and CD2 is $ 0.219 as of December 31, 2023.

The conversion price of the CD1 is $ 0.219 and CD2 is $ 0.212 as of December

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

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

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

Schedule of Fair Value Derivative Liability

Instrument Description

December 31, 2023

total gain (loss) on fair value of debentures recognized during the year ended December 31, 2023 and December 31, 2022, was $ 1,673,776

and ($ 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, 2023 and December 31, 2022, the Company recognized

$ 554,787 and $ 253,875 respectively, within other comprehensive income.

Interest expense for the year ended December 31, 2023 and 2022

was $ 2,368,233 and $ 2,092,065 respectively.

At December 31, 2023 interest of $ 510,411 ($ 691,890 at December 31, 2022) is included in

interest payable on the consolidated balance sheets.

During the year ended December 31, 2023, the Company issued shares of common stock in connection with its election

to satisfy interest payments under the outstanding convertible debentures recognizing a loss on extinguishment of debt of $ 268,889 ($ nil

in the year ended December 31, 2022) in the consolidated statements of (loss) income and comprehensive (loss) income.

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

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

The Bridge Loan is secured

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

The Bridge Loan bears interest at 10.5% per annum and matures at the

earlier of (i) the advance of the Stream, or (ii) June 30, 2024.

In addition, the minimum quantity of metal delivered under the Stream,

if advanced, would increase by 5 % relative to amounts previously announced.

June 23, 2023 the Company used some of the proceeds from the Stream to repay the outstanding principal and interest on the Bridge

Loan recognizing a loss on extinguishment of debt of $ 222,754

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

At December 31, 2023 interest of $ nil

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

Interest expense for year ended December 31,

2023, was $ 346,550

compared to $ 70,404

for the year ended December 31, 2022.

June 23, 2023, all conditions were met for the closing of the Stream, and $ 46,000,000

was advanced to the Company.

The Stream is secured by the same security package that is in place with respect to the RCD, CD1, and

The Stream is repayable by applying 10% of all payable metals sold until a minimum quantity of metal is delivered consisting

of, individually, 63.5 million pounds of zinc, 40.4 million pounds of lead, and 1.2 million ounces of silver (subsequently amended,

as described below).

Thereafter, the Stream would be repayable by applying 2% of payable metals sold.

The delivery price of streamed

metals will be 20% of the applicable spot price.

At the Company’s option, the Company may buy back 50% of the Stream Amount at

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

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

Company incurred $ 740,956 of

transactions costs directly related to the Stream which were capitalized against the initial recognition of the Stream of $ 45,259,044 on

the consolidated balance sheets.

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

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

amount is not determinable.

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

as a liability based on the indexed debt rules thereunder.

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

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

prices, equal the cash received.

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

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

the stream obligation using the same discount rate, with changes to the carrying value recognized in the consolidated statements of (loss) income and comprehensive (loss) income.

Company determined the effective interest rate of the Stream obligation to be 10.8 % and recorded accretion expense on the liability of

$ 2,516,593 for the year ended December 31, 2023 ($ nil for the year ended December 31, 2022) recognized in the consolidated statement of (loss) income and comprehensive (loss) income, accretion expense on the

liability of $ 233,407 for the year ended December 31, 2023 ($ nil for the year ended December 31, 2022) capitalized into the process

plant (note 5) on the consolidated balance sheets and loss on revaluation of the liability

of $ 3,128,956 for the year ended December 31, 2023 ($ nil for the year ended December 31, 2022), bringing the liability to $ 51,138,000

as of December 31, 2023.

The revaluation is because of a change in projections.

The key assumptions used in the revaluation are production

of 700,000,000 lbs of zinc, 385,000,000 lbs of lead, 8,700,000

oz of silver over 14 years and commodity prices of 1.15 $/lb to 1.25 $/lb for zinc, 0.90 $/lb to 0.95 $/lb for lead, and 22.50 $/oz to

$24.50 $/oz for silver.

Debt Facility

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

a period of 2 years.

As of December 31, 2023, the company has not drawn on the facility.

Any amounts drawn will bear interest

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

election, and thereafter payable in cash only.

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

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

the same terms as the Royalty, to a maximum of 2.0% on the Primary Claims and 1.4% on the Secondary Claims.

The Company may buy back

50% of these royalties for $ 20 million.

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

31, 2023, as no amount has been drawn from the facility.

the year ended December 31, 2023, and December 31, 2022 the Company recognized $ 1,708 and $ 72,304 respectively of other interest expense.

Capital stock, warrants and stock options

1 unchanged sentence

1,500,000,000

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

shares of common stock, with a par value of $ 0.000001 per 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

2 unchanged sentences

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.

Special Warrants were issued at a price of C$ 0.30 per

special warrant.

Each unit consists of one share of Company common stock and one warrant.

Each warrant entitles the holder to

acquire one share of Company common stock for C$ 0.37 until

April 1, 2025.

The warrants were 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 exercise.

On May 31, 2022, each unexercised Special Warrant was automatically exercised

into one share of Company common stock 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.

Each unit consists of one share of Company common stock and one

Each warrant entitles the holder to acquire one warrant share for C$ 0.37 until April 1, 2025.

connection with the special warrants offering, the agents earned a cash commission in the amount of C$ 563,968 and compensation options

1 unchanged sentence

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.

of one share of Company common stock and one warrant.

Each warrant entitles the holder to acquire one warrant share for C$ 0.37 until

April 1, 2024.

April 2022, the Company issued 1,315,856 shares of common stock in connection with its election to satisfy interest payments under the

outstanding convertible debentures for the three months ended March 31, 2022.

April 2022, the Company issued 768,750 shares of common stock in connection with the settlement of RSUs.

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.

Each unit consists of one share of Company common stock 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 unit consists

of one share of Company common stock and one warrant.

Each warrant entitles the holder to acquire one warrant share for C$ 0.37 until

April 1, 2025.

June 2022, the Company issued 165,000 shares of common stock in connection with the settlement of RSUs.

July 2022, the Company issued 1,975,482 share of common stock in connection with its election to satisfy interest payments under the

outstanding convertible debentures for the three months ended June 30, 2022.

September 2022, the Company issued 33,000 shares of common stock in connection with the settlement of RSUs.

October 2022, the Company issued 8,252,940 shares of common stock 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 shares of common stock in connection with settlement of RSUs.

January 2023, the Company issued 6,377,271 shares of common stock in connection with its election to satisfy interest payments under

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

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

warrants previously issued in a private placement

to Teck Resources (“Teck”) on May 13, 2022 in consideration for the Company’s acquisition of the Pend Oreille processing

The warrant entitled the holder to purchase one share of common stock of the Company at an exercise price of C$ 0.37

per Warrant at any time on or prior to May 12,

The Company amended the exercise price from C$ 0.37

per Warrant and the expiry date from May 12,

2025, to March

31, 2023 , resulting in a gain on modification

of warrants of $ 214,714 .

In March 2023, Teck exercised all 10,416,667

warrants at an exercise price of C$ 0.11 ,

for aggregate gross proceeds of $ 837,460

(C$ 1,145,834 )

to the Company.

During the year ended December 31, 2023 the Company recognized a change (gain) in derivative liability of $ ( 400,152 ) ,

relating to the Teck warrants using the following

volatility of 120 %,

stock price of C$ 0.11 ,

interest rate of 3.42 %

and dividend yield of 0 %.

March 2023, the Company closed a brokered private placement of special warrants (the “March 2023 Offering”), issuing 51,633,727

special warrants of the Company (“March 2023 Special Warrants”) at C$ 0.12 per March 2023 Special Warrant for $ 4,536,020 (C$ 6,196,047 ),

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

March 2023 Unit consists of one share of common 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, subject to adjustment in certain events.

In the event that the Registration Statement

had not been declared effective by the SEC on or before 5:00 p.m.

(EST) on July 27, 2023, each unexercised Special Warrant would be deemed

to be exercised on the Automatic Exercise Date into one penalty unit of the Company (each, a “Penalty Unit”), with each Penalty

Unit being comprised of 1.2 Unit Shares and 1.2 Warrants.

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

potential for issuance of the Penalty Units.

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

(the “March 2023 Compensation Options”).

Each March 2023 Compensation Option is exercisable at an exercise price of C$ 0.12

into one Unit Share and one Warrant Share and has an expiry of March 27, 2027.

Special Warrants issued on March 27, 2023 were converted to 51,633,727 shares of common stock and common stock purchase warrants on July

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

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

stock and common stock purchase warrants are issued.

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

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

with inputs as shown in the table below.

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

Schedule of Estimated Fair Value of Special Warrant Liabilities

March 2023 special warrants

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Fair value of March 2023 Unit

Change in derivative liability

March 2023, the Company issued 9,803,574 shares of common stock in connection with its election to satisfy interest payments under the

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

May 2023, the Company issued 1,318,183 shares of common stock in connection with settlement of RSUs.

June 2023, the Company issued 4,449,035 shares of common stock in connection with settlement of RSUs.

June 2023, the Company issued 3,944,364 shares of common stock in connection with its election to satisfy interest payments under the

outstanding convertible debentures for the three months ended June 30, 2023.

October 2023, the Company issued 5,175,000 shares of common stock in connection with its election to satisfy interest payments under

the outstanding convertible debentures for the three months ended September 30, 2023.

November 2023, the Company issued 42,000 shares of common stock in connection with settlement of RSUs.

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

The warrants are

considered derivative instruments as they were issued in a currency other than the Company’s functional currency of the U.S.

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

reporting period.

The change in fair value of the warrant is recorded in the 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)

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.

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

1 unchanged sentence

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

March 2023 warrants

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

$ ( 2,102,852 )

2022 non-brokered issuance

free interest rate

in derivative liability

2022 Teck issuance

free interest rate

in derivative liability

April 2022 special warrants issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

$ ( 1,859,512 )

2022 issuance

free interest rate

in derivative liability

2021 issuance

April 2022 non-brokered issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

2022 Teck issuance

free interest rate

in derivative liability

June 2022 issuance

Expected life

Risk free interest rate

Dividend yield

Share price (C$)

Change in derivative liability

February 2021 issuance

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 968,641 )

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

August 2020 issuance

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 903,697 )

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

June 2019 issuance

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 499,167 )

(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

August 2019 issuance (ii)

Expected life

Risk free interest rate

Dividend yield

Change in derivative liability

$ ( 767,158 )

(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

exercise price

Balance, December 31, 2021

Balance, December 31, 2022

( 10,416,667 )

December 31, 2021

December 31, 2022

( 58,284,148 )

Balance, December 31, 2023

the year ended December 31, 2023, 58,284,148 August 2020 warrants expired.

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

1 unchanged sentence

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)

April 1, 2025

December 31, 2025

February 9, 2026

February 16, 2026

March 27, 2026

December 31, 2023, 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

exercise price

Balance, December 31, 2021

Issued – April 2022 Compensation Options (i)

Balance, December 31, 2022

Issued – March 2023 Compensation Options (ii)

Expired – August 2020 Compensation Options

( 3,239,907 )

Balance, December 31, 2023

grant date fair value of the April 2022 Compensation Options were estimated at $ 264,435 using the Black-Scholes valuation model with

the following underlying assumptions:

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

free interest rate

February 2021

April 1, 2022

Risk free interest rate

Dividend yield

Weighted average life

grant date fair value of the March 2023 Compensation Options were estimated at $ 111,971 using the Black-Scholes valuation model with

the following underlying assumptions:

Risk free interest rate

Dividend yield

Weighted average life

Schedule of Broker Exercise Prices

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)

broker options

February 16, 2024 (i)

April 1, 2024 (ii)

March 27, 2026 (iii)

into one February 2021 Unit

into one April 2022 Unit

Exercisable into one March 2023 Unit

following table summarizes the stock option activity during the years ended December 31, 2023 and 2022:

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 .

of Stock Options

exercise price

stock options

Balance, December 31, 2021

Expired, May 1, 2022

Forfeited, November 25, 2022

Expired, December 31, 2022

Balance, December 31, 2022

Expired September 30, 2023

Expired November 25, 2023

Balance, December 31, 2023

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

These options have a 5 -year

life and are exercisable at C$ 0.15

per share of common stock.

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.

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

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

On 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

These options have a 5 -year

life and are exercisable at C$ 0.15

per share of common stock.

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).

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 (loss) income and comprehensive (loss) income.

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

1 unchanged sentence

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

interest rate

Dividend yield

February 2021

November 2022

following table reflects the actual stock options issued and outstanding as of December 31, 2023:

1 unchanged sentence

(exercisable)

Hill Mining Corp.

to Consolidated Financial Statements

Ended December 31, 2022 and December 31, 2021

in United States Dollars)

fair value ($)

vesting of stock options during the year ended December 31, 2023, resulted in stock-based compensation expenses of $ 147,592 ($ 317,723

for the year ended December 31, 2022).

Income per Share

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

dilutive securities include convertible debentures payable, warrants, broker options, stock options, and unvested RSU.

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

2 unchanged sentences

Year ended December 31,

income (loss) for the period

Net (loss) income for the year

( 13,432,539 )

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

income (loss) per share – basic

income (loss) for the period

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

Net (loss) income per share – basic

Net (loss) income for the period

( 13,432,539 )

effect of convertible debentures

effect of warrants on net income

net income (loss) for the period

Dilutive effect of convertible debentures

Dilutive effect of warrants on net income

Diluted net (loss) income for the year

( 13,432,539 )

Diluted income (loss)

Weighted average

number of common shares - basic

Weighted average number of shares of common stock - basic

Diluted effect:

Stock options and RSUs

average number of common shares - fully diluted

income (loss) per share - fully diluted

Weighted average number of shares of common stock - fully diluted

Net (loss) income 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,

March 25, 2020, the Board of Directors approved a RSU Plan to grant RSUs to its officers, directors,

key employees and consultants.

1 unchanged sentence

Schedule of Restricted Share Units

as at December 31, 2020

Unvested as at December 31, 2021

( 2,373,900 )

as at December 31, 2021

Unvested as at December 31, 2022

( 5,809,217 )

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.

( 2,813,990 )

Unvested as at December 31, 2023

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).

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 (loss) income and comprehensive (loss) income.

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

1 unchanged sentence

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).

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

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

1 unchanged sentence

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

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

1 unchanged sentence

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).

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

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

1 unchanged sentence

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.

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

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.

vesting of these RSUs resulted in stock-based compensation of $ 208,574 and $ 79,504

respectively for the year ended December 31, 2023 and December 31, 2022, which is included in operation and administration expenses on the consolidated

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

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

of these RSUs resulted in stock-based compensation of $ 355,420 for the year ended December 31, 2023, which is included in operation

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

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

The vesting of these RSUs resulted in stock-based compensation of $ 7,825 for the year ended

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

December 31, 2023, which is included in operation and administration expenses on the consolidated

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

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

on March 31 of 2024, 2025 and 2026.

The vesting of these RSUs resulted in stock-based compensation of $ 344,515 for the year ended

December 31, 2023, which is included in operation and administration expenses on the consolidated statements of (loss) income and

comprehensive (loss) income.

vesting of RSUs during the year ended December 31, 2023, resulted in stock-based compensation expense of $ 949,114

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).

Deferred share units

3 unchanged sentences

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)

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

following table summarizes the DSU activity during the years ended December 31, 2023 and 2022:

Schedule of Deferred Share Units

as at December 31, 2020

Unvested as at December 31, 2021

Vested (ii)(iii)

( 3,125,000 )

as at December 31, 2021

Unvested as at December 31, 2022

Vested (ii)(iii)

( 3,071,826 )

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 .

Unvested as at December 31, 2023

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.

During the three months

ended June 30, 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.

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

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

on July 6, 2024.

April 21, 2023, 1,250,000

DSUs for one of the Company’s

Directors vested.

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

vesting of DSU’s during the year ended December 31, 2023, resulted in a recovery of stock-based compensation of $ 4,416

(a stock-based recovery of $ 282,967

for the year ended December 31, 2022).

The fair value of each DSU is $ 0.08 as of December 31, 2023 and $ 0.13 as of December 31, 2022.

Commitments and contingencies

9 unchanged sentences

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

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

July 28, 2021, a lawsuit was filed in the U.S.

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.

1 unchanged sentence

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,

with the other defendants for unspecified past and future costs associated with the presence of acid mine drainage (AMD) in the Crescent

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 U.S.

District Court Judge, David

Nye granted in part and denied in part the Company’s motion to dismiss.

The court granted the Company’s motion to dismiss

in respect of Crescent’s cost recovery claim under CERCLA Section 107(a), and declaratory judgment, tortious interference, trespass,

nuisance and negligence claims.

These claims were dismissed without prejudice.

The court denied the motion to dismiss filed by Placer

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)

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,

at December 31, 2023, and December 31, 2022, the Company had no accrued interest and penalties related to uncertain tax positions.

3 unchanged sentences

Schedule of Income Tax Provision

(loss) before income taxes

$ ( 6,402,277 )

income tax recovery

(Loss) income before income taxes

$ ( 10,843,949 )

in estimates in respect of prior periods

in fair value of derivative liability

Expected income tax (recovery) expense

( 2,277,229 )

Change in estimates in respect of prior periods

Change in tax rate

Change in fair value of derivative liability

( 3,296,242 )

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

State and local taxes, net of federal benefit

Loss (gain) on debt settlement

Change in valuation allowance

components of deferred tax assets and liabilities are as follows:

Schedule of Components of Deferred Tax Assets and Liabilities

Deferred tax assets:

Net operating loss carryforwards

Mining interests

EPA liabilities

Stream debenture

Lease liabilities

Other deferred tax assets

Total deferred tax assets

Valuation allowance

( 29,214,112 )

( 21,501,015 )

Schedule of Components of Deferred Tax Assets and Liabilities

operating loss carryforwards

tax liabilities:

foreign exchange gain

deferred tax asset

Total deferred tax assets

Deferred tax liabilities:

Deferred revenue

( 12,526,577 )

Convertible debentures

Right of use assets and lease obligations

Unrealized foreign exchange gain

Total deferred tax liabilities

( 13,535,436 )

Net deferred tax liabilities

$ ( 2,588,590 )

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

of December 31, 2023 and December 31, 2022, the Company has an unused net operating loss carryforward balance of $ 58,145,638

and $ 40,227,950 ,

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

respectively, that is available to offset future taxable income.

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)

Company incurred $ 2,588,590 of income tax expense for the year ended December 31, 2023 and incurred no income tax expense for the year

ended December 31, 2022.

The Company’s effective income tax rate for 2023 was - 23.4 % compared to 0.0 % for 2022.

The effective

tax rate during 2023 differed from the statutory rate primarily due to the income tax treatment of the Stream proceeds as deferred revenue

compared to its treatment as debt under U.S.

GAAP and due to changes in the valuation allowance established to offset net deferred tax

tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2015 through 2023.

Related party transactions

2 unchanged sentences

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 )

Consulting fees, wages and bonus

December 31, 2023 and December 31, 2022, $ 67,800

and $ 154,797 ,

respectively, is owed to key management personnel with all amounts included in accounts payable and accrued liabilities.

During the year ended December 31, 2023, Richard Williams (Director and Executive Chairman) billed $ 286,253 (year ended December 31,

2022 - $ 372,084 ) 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 )

At December 31, 2023, $ 67,800 is owed to Richard Williams (December

31, 2022 - $ 135,600 ) 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

the year ended December 31, 2023, 1,588,800 restricted share units (RSUs) were issued to Richard Williams which will vest in one third

increments on March 31, 2024, March 31, 2025, and March 31, 2026.

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 )

The vesting of these RSUs resulted in stock-based compensation of $ 103,688

for the year ended December 31, 2023.

the year ended December 31, 2023, 894,199 restricted share units (RSUs) were issued to Richard Williams which vested immediately.

vesting of these RSUs resulted in stock-based compensation of $ 157,765 for the year ended December 31, 2023.

the year ended December 31, 2022, 1,110,756

restricted share units (RSUs) 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 RSUs resulted in stock-based compensation of $ 78,393 and $ 20,085

respectively for the year ended December 31, 2023 and December 31, 2022.

During the year ended December 31, 2023, the Company incurred $ 318,924 in payroll expense and bonus payment for Sam Ash (year ended December

31, 2022 - $ 438,600 ) 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.

At December 31, 2023, $ nil (December 31, 202 - $ nil ) is payable and included in accrued

the year ended December 31, 2023, 1,787,400 restricted share units (RSUs) were issued to Sam Ash which will vest in one third increments

on March 31, 2024, March 31, 2025, and March 31, 2026.

The vesting of these RSUs resulted in stock-based compensation of $ 116,649 for

the year ended December 31, 2023.

the year ended December 31, 2023, 945,841 restricted share units (RSUs) were issued to Sam Ash which vested immediately.

of these RSUs resulted in stock-based compensation of $ 166,876 for the year ended December 31, 2023.

the year ended December 31, 2022, 1,249,600

restricted share units (RSUs) 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 RSUs resulted in stock-based compensation of $ 88,192 and $ 22,596

respectively for the year ended December 31, 2023 and December 31, 2022.

During the year ended December 31, 2023, the Company incurred $ 132,000 in payroll expense and bonus payment for Gerbrand van Heerden

(CFO) (year ended December 31, 2022, $ nil ) for services to the Company.

At December 31, 2023, $ nil (year ended December 31, 2022 - $ nil )

is payable, including reimbursable expenses, and included in accrued liabilities.

During the year ended December 31, 2023, the Company incurred $ 246,673 in payroll expense and bonus payment for David Wiens (Former CFO)

(year ended December 31, 2021, $ 383,315 ) for services to the Company.

At December 31, 2023, $ nil (year ended December 31, 2022 - $ 19,197 )

is payable, including reimbursable expenses, and included in accrued liabilities.

the year ended December 31, 2023, 1,456,400 restricted share units (RSUs) were issued to David Wiens which will vest in one third increments

on March 31, 2024, March 31, 2025, and March 31, 2026.

The vesting of these RSUs resulted in stock-based compensation of $ nil for

the year ended December 31, 2023.

the year ended December 31, 2023, 902,365 restricted share units (RSUs) were issued to David Wiens which vested immediately.

of these RSUs resulted in stock-based compensation of $ 159,206 for the year ended December 31, 2023.

the year ended December 31, 2022, 1,018,193 restricted

share units (RSUs) were issued to David Wiens which will vest in one third increments on March 31, 2023, March 31, 2024, and March

The vesting of these RSUs resulted in stock-based compensation of $ 26,467 for

the year ended December 31, 2023 and $ 12,939 December 31, 2022.

During the year ended December 31, 2023, Pam Saxton (Director) billed $ 34,832 (year ended December 31, 2022 - $ 36,133 ) for consulting

services to the Company.

On July 4, 2023, the Company issued 431,739 DSU’s to Pam Saxton.

During the year ended December 31, 2023, Cassandra Joseph (Director) billed $ 34,832 (year ended December 31, 2022 - $ 36,133 ) 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

On July 4, 2023, the Company issued 431,739 DSU’s to Cassandra Joseph.

During the year ended December 31, 2023, the Company incurred $ 31,240 in director fees for Mark Cruise (year ended December 31, 2022

- $ 15,774 ).

On July 4, 2023, the Company issued 374,174

DSU’s to Mark Cruise.

On July 1, 2022,

the Company issued 210,000

DSU’s to Mark Cruise.

During the year ended December 31, 2023, Paul Smith (Director) billed $ 19,322 (year ended December 31, 2022 - $ nil ) 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)

On July 5, 2023, the Company issued 245,454 DSU’s to Paul Smith.

During the year ended December 31, 2023, Dickson Hall (Director) billed $ nil (year ended December 31, 2022 - $ nil ) for consulting services

to the Company.

On July 4, 2023, the Company issued 374,174 DSU’s to Dickson Hall.

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.

January 09, 2024, the Company issued 7,392,859 shares of common stock in connection with its election to satisfy interest payments under

the outstanding convertible debentures for the three months ended December 31, 2023.

January 29, 2024, the Company granted 672,450 RSUs to a certain member of management of the Company.

The RSUs vest on January 29, 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

4 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data