Bunker Hill Mining Corp. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm – MNP LLP, PCAOB ID: 1930 43 Consolidated Balance Sheets, December 31, 2023 and 2022 45 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 46 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 47 Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2023 and 2022 48 Notes to the Consolidated Financial Statements 49-77 42 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Bunker Hill Mining Corp. (formerly Liberty Silver Corp.) Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Bunker Hill Mining Corp. (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 “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023 and 2022, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 43 Critical Audit Matter Description Audit Response Valuation of Series 1 & 2 Convertible Debentures (CDs) The Company had previously issued CDs which are complex in nature and are required to be fair valued at the end of each reporting period. The calculation of the fair value of the CDs requires management to use an appropriate valuation model and incorporates estimates. This resulted in an increased extent of audit effort, including the involvement of internal valuation specialists. Due 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. Refer to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible Debentures. We 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. Accounting Treatment and Valuation of Stream Debenture Upon closing of the Metals Purchase Agreement, the Company was issued a $46,000,000 debenture (the “Stream Debenture”). The 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. Due 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. Refer to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible Debentures. We 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. Measurement of Gain on Conversion of Royalty Convertible Debenture (“RCD”) The RCD was converted and the Company granted a royalty over the life of the Bunker Hill mine (the “Royalty”). The 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. Due 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. Refer to Note 3 Significant Accounting Policies - Use of Estimates and Assumptions and Note 9 Promissory Notes Payable and Convertible Debentures. We responded to this matter by performing audit procedures in relation to the measurement of gain on conversion of the RCD. Our audit 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. MNP LLP Chartered Professional Accountants Licensed Public Accountants We have served as the Company’s auditor since 2014. Mississauga, Canada March 12, 2024 44 Bunker Hill Mining Corp. Consolidated Balance Sheets (Expressed in United States Dollars) December 31, December 31, 2023 2022 ASSETS Current assets Cash $ 20,102,596 $ 708,105 Restricted cash (note 8) 6,476,000 6,476,000 Accounts receivable and prepaid expenses (note 4) 598,401 556,947 Total current assets 27,176,997 7,741,052 Non-current assets Spare parts inventory 341,004 341,004 Long-term deposit 249,265 269,015 Equipment (note 5) 946,661 551,204 Right-of-use assets (note 5) 625,022 - Bunker Hill Mine and Mining interests (note 6) 15,198,259 15,896,645 Process plant (note 5) 17,452,470 8,130,972 Total assets $ 61,989,678 $ 32,929,892 EQUITY AND LIABILITIES Current liabilities Accounts payable $ 1,788,950 $ 4,523,502 Accrued liabilities 1,225,525 1,500,164 Current portion of lease liability (note 7) 353,526 - Derivative warrant liability (note 10) - 903,697 Deferred share units liability (note 13) 569,327 573,742 Environment protection agency cost recovery payable (note 8) 3,000,000 - Interest payable (notes 8 and 9) 534,998 1,154,477 Promissory notes payable (note 9) - 1,500,000 Total current liabilities 7,472,326 10,155,582 Non-current liabilities Lease liability (note 7) 71,808 - Loan payable (note 9) - 4,684,446 Series 1 convertible debenture (note 9) 5,244,757 5,537,360 Series 2 convertible debenture (note 9) 13,458,570 14,063,525 Stream debenture (note 9) 51,138,000 - Royalty convertible debenture (note 9) - 10,285,777 Environment protection agency cost recovery liability net of discount (note 8) 6,574,140 7,941,466 Deferred tax liability (note 15) 2,588,590 - Derivative warrant liability (note 10) 1,808,649 6,438,679 Total liabilities 88,356,840 59,106,835 Shareholders’ Deficiency Preferred shares, $ 0.000001 par value, 10,000,000 preferred shares authorized; Nil preferred shares issued and outstanding (note 10) - - 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) 321 228 Additional paid-in-capital (note 10) 57,848,953 45,161,513 Accumulated other comprehensive income 808,662 253,875 Accumulated deficit ( 85,025,098 ) ( 71,592,559 ) Total shareholders’ deficiency ( 26,367,162 ) ( 26,176,943 ) Total shareholders’ deficiency and liabilities $ 61,989,678 $ 32,929,892 The accompanying notes are an integral part of these consolidated financial statements. 45 Bunker Hill Mining Corp. Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income (Expressed in United States Dollars) Year Year Ended Ended December 31, December 31, 2023 2022 Operating expenses Operation and administration $ 6,146,322 $ 2,033,879 Mine preparation - 7,827,656 Legal and accounting 1,848,879 1,147,861 Consulting and wages (note 16) 3,605,373 5,477,765 Loss from operations ( 11,600,574 ) ( 16,487,161 ) Other income or gain (expense or loss) Interest income 1,107,093 - Change in derivative liability (note 10) 2,360,025 15,696,391 Gain (loss) on foreign exchange 4,821 ( 237,546 ) Gain (loss) on fair value of convertible debentures (note 9) 1,673,776 ( 1,140,537 ) Gain on RCD settlement (note 6) 6,980,932 - Gain on debt settlement 170,941 - Gain on EPA debt extinguishment (note 8) - 8,614,103 Gain on warrant modification 214,714 - Interest expense (notes 8 and 9) ( 7,124,527 ) ( 3,382,559 ) Debenture finance costs (note 9) - ( 1,230,540 ) Financing costs (note 10) ( 934,502 ) ( 945,507 ) Other income 23,520 18,626 Other expense - ( 6,679 ) Loss on revaluation of stream debenture (note 9) ( 3,128,956 ) - Loss on debt modification (note 9) ( 99,569 ) - Loss on debt settlement (note 9) ( 491,643 ) - (Loss) income for the year pre tax $ ( 10,843,949 ) $ 898,591 Deferred tax expense (note 15) ( 2,588,590 ) - Net (loss) income for the year ( 13,432,539 ) 898,591 Other comprehensive income (loss), net of tax Gain on change in FV on own credit risk (note 9) 554,787 253,875 Other comprehensive income 554,787 253,875 Comprehensive (loss) income ( 12,877,752 ) 1,152,466 Net (loss) Income per share of common stock Net (loss) income per share of common stock – basic (note 11) $ ( 0.05 ) $ 0.00 Net (loss) income per share of common stock – fully diluted (note 11) $ ( 0.05 ) $ 0.00 Weighted average number of shares of common stock Weighted average shares of common stock – basic (note 11) 280,354,631 205,950,811 Weighted average shares of common stock – fully diluted (note 11) 280,354,631 269,801,281 The accompanying notes are an integral part of these consolidated financial statements. 46 Bunker Hill Mining Corp. Consolidated Statements of Cash Flows (Expressed in United States Dollars) Year Year Ended Ended December 31, December 31, 2023 2022 Operating activities Net (Loss) income for the year $ ( 13,432,539 ) $ 898,591 Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,092,290 421,881 Depreciation expense 190,133 214,643 Change in derivative liability ( 2,360,025 ) ( 15,696,391 ) Deferred tax expense 2,588,590 - Units issued for services 111,971 1,060,858 Imputed interest expense on lease liability 29,699 1,834 Interest expense 92,799 16,466 Financing costs - 264,435 Foreign exchange loss (gain) - 233,059 Foreign exchange loss (gain) on re-translation of lease - 718 Accretion of liabilities 4,149,267 996,400 Loss on revaluation of stream debenture 3,128,956 - Loss on modification of debt 99,569 - Loss on debt settlement 491,643 - (Gain) loss on fair value of convertible debt derivatives ( 1,673,777 ) 1,140,537 Gain on Warrant Extinguishment ( 214,714 ) - Gain on RCD settlement ( 6,980,932 ) - Gain on debt settlement ( 170,941 ) - Gain on extinguishment EPA debt - ( 8,614,103 ) Changes in operating assets and liabilities: Accounts receivable - 369,544 Prepaid finance costs - 393,640 Prepaid expenses and deposits ( 26,267 ) ( 1,133,124 ) Accounts payable ( 1,840,426 ) 773,102 Accrued liabilities 425,719 316,167 EPA water treatment payable - ( 4,458,707 ) EPA cost recovery payable - ( 2,000,000 ) Interest payable – EPA - ( 78,710 ) Interest payable 1,966,233 2,380,853 Net cash used in operating activities ( 12,332,752 ) ( 22,498,307 ) Investing activities Additions to Bunker Hill Mine and mining interests ( 1,458,506 ) ( 6,681,381 ) Land purchase - ( 202,000 ) Process plant ( 9,398,032 ) ( 3,633,687 ) Purchase of machinery and equipment ( 539,803 ) ( 316,600 ) Purchase of spare inventory - ( 341,004 ) Net cash used in investing activities ( 11,396,341 ) ( 11,174,672 ) Financing activities Proceeds from stream obligation 46,000,000 - Transaction costs stream obligation ( 740,956 ) - Proceeds from convertible debentures - 29,000,000 Proceeds from bridge loan - 4,668,000 Proceeds from issuance of shares, net of issue costs 3,661,822 7,767,849 Proceeds from warrants exercise 837,459 - Proceeds from promissory notes 390,000 - Repayment of bridge loan ( 5,000,000 ) - Repayment of promissory notes ( 150,000 ) - Repayment of promissory note ( 1,599,568 ) ( 1,000,000 ) Lease payments ( 275,173 ) ( 64,828 ) Net cash provided by financing activities 43,123,584 40,371,021 Net change in cash and restricted cash 19,394,491 6,698,042 Cash, beginning of year 7,184,105 486,063 Cash and restricted cash, end of year $ 26,578,596 $ 7,184,105 Supplemental disclosures Non-cash activities: Units issued to settle accounts payable and accrued liabilities $ 874,198 $ 228,421 Units issued to settle interest payable 2,515,235 1,400,174 Mill purchase for shares and warrants - 3,243,296 Units issued to settle DSU/RSU/Bonuses - 872,399 Reconciliation from Cash Flow Statement to Balance Sheet: Cash and restricted cash, end of year $ 26,578,596 $ 7,184,105 Less restricted cash 6,476,000 6,476,000 Cash $ 20,102,596 $ 708,105 The accompanying notes are an integral part of these consolidated financial statements. 47 Bunker Hill Mining Corp. Consolidated Statements of Changes in Shareholders’ Deficiency (Expressed in United States Dollars) Accumulated Additional other Common stock paid-in- comprehensive Accumulated Shares Amount capital loss deficit Total Balance, December 31, 2022 229,501,661 $ 228 $ 45,161,513 $ 253,875 $ ( 71,592,559 ) $ ( 26,176,943 ) Stock-based compensation - - 1,458,946 - - 1,458,946 Compensation options - - 111,971 - - 111,971 Shares issued for interest payable 25,300,209 25 2,784,124 - - 2,784,149 Shares issued for RSUs vested 5,809,218 6 ( 6 ) - - - Non brokered shares issued for C$0.30 - Contractor shares issued for C$0.30 - Shares issued for Process plant purchase - Shares issued for warrant exercise 10,416,667 10 907,080 - - 907,090 Special warrant shares issued for C$ 0.15 51,633,727 52 7,425,325 - - 7,425,377 Issue costs Warrant valuation Gain on fair value from change in credit risk OCI - - - 554,787 - 554,787 Net income for the period - - - - ( 13,432,539 ) ( 13,432,539 ) Balance, December 31, 2023 322,661,482 $ 321 $ 57,848,953 $ 808,662 $ ( 85,025,098 ) $ ( 26,367,162 ) Balance, December 31, 2021 164,435,826 $ 164 $ 38,248,618 $ - $ ( 72,491,150 ) $ ( 34,242,368 ) Beginning balance, value 164,435,826 $ 164 $ 38,248,618 $ - $ ( 72,491,150 ) $ ( 34,242,368 ) Stock-based compensation - - 700,737 - - 700,737 Compensation options - - 264,435 - - 264,435 Shares issued for interest payable 11,544,279 12 1,400,174 - - 1,400,186 Shares issued for RSUs vested 2,565,900 2 ( 2 ) - - - Non brokered shares issued for C$ 0.30 1,471,664 1 352,854 - - 352,855 Special warrant shares issued for C$ 0.30 37,849,325 38 9,083,719 - - 9,083,757 Contractor shares issued for C$ 0.30 1,218,000 1 289,999 - - 290,000 Shares issued for Process plant purchase 10,416,667 10 1,970,254 - - 1,970,264 Issue costs - - ( 902,427 ) - - ( 902,427 ) Warrant valuation - - ( 6,246,848 ) - - ( 6,246,848 ) Gain on fair value from change in credit risk - - - 253,875 - 253,875 Net income for the period - - - - 898,591 898,591 Balance, December 31, 2022 229,501,661 $ 228 $ 45,161,513 $ 253,875 $ ( 71,592,559 ) $ ( 26,176,943 ) Ending balance, value 229,501,661 $ 228 $ 45,161,513 $ 253,875 $ ( 71,592,559 ) $ ( 26,176,943 ) (i) Shares issued at C$ 0.15 , converted to U.S. dollars at $ 0.11 (note 11) (ii) Shares issued at C$ 0.30 , converted to U.S. dollars at $ 0.24 (note 11) (ii) Units issued at C$ 0.40 , converted to U.S. dollars at $ 0.32 (note 11) (iv) Units issued at C$ 0.57 , converted to U.S. dollars at $ 0.45 (note 11) The accompanying notes are an integral part of these consolidated financial statements. 48 1. Nature and continuance of operations Bunker Hill Mining Corp. (the “Company”) was incorporated under the laws of the state of Nevada , U.S.A. on February 20, 2007, under the name Lincoln Mining Corp. Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp., and on September 29, 2017, the Company changed its name to Bunker Hill Mining Corp. The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City, Nevada 89701, and its head office is located at 82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1. As of the date of this Form 10-K, the Company had one subsidiary, Silver Valley Metals Corp. (“Silver 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 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. 2. Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises. The consolidated financial statements are expressed in U.S. dollars, the Company’s functional currency. 3. Significant accounting policies The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements. 49 Basis of consolidation These consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiary, Silver Valley Metals Corp. (formerly American Zinc Corp.). All intercompany transactions and balances have been eliminated on consolidation. Cash and cash equivalents Cash and cash equivalents may include highly liquid investments with original maturities of three months or less. Mineral rights, property and acquisition costs The Company transitioned from the exploration stage to the development stage at the beginning of the fourth quarter of 2022. The Company has not yet realized any revenues from its planned operations. The Company capitalizes acquisition and option costs of mineral rights as intangible assets when there is sufficient evidence to support probability of generating positive economic returns in the future. Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. The costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred to develop and expand the capacity of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (FASB ASC) 360-10-35, Impairment or Disposal of Long-Lived Assets. 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. Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which range from 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or gain (expense or loss). The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment or whether the remaining balance of the equipment should be evaluated for possible impairment. If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability. Leases Operating 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 over the lease term and is offset against operation and administration expenses. 50 Impairment of long-lived assets The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360, Property, Plant and Equipment, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35, Extractive Activities – Mining, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets. Various factors could impact the Company’s ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in 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. Fair value of financial instruments The Company adopted FASB ASC 820-10, Fair Value Measurement. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the consolidated balance sheets for cash, 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 3 inputs. 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 expenditures The operations of the Company have been, and may in the future be, affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet, or if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures. Environmental expenditures that relate to ongoing environmental and reclamation programs are expensed as incurred or capitalized and amortized depending on their future economic benefits. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries. 51 Income taxes The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes (“FASB ASC 740”), on a tax jurisdictional basis. The Company files income tax returns in the United States. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized. The Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. The Company is subject to examination by taxing authorities in jurisdictions such as the United States. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements. The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense. FSAB ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in periods, disclosure and transition. At December 31, 2023, December 31, 2022, the Company has not taken any tax positions that would require disclosure under FASB ASC 740. Basic and diluted net (loss) income per share The Company computes net (loss) income per share in accordance with FASB ASC 260, Earnings per Share (“FASB ASC 260”). Under 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). Stock-based compensation In December 2004, FASB issued FASB ASC 718, Compensation – Stock Compensation (“FASB ASC 718”), which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The Company accounts for stock-based compensation arrangements with non-employees in accordance with ASU 505-50, Equity-Based Payments to Non-Employees, which requires that such equity instruments are recorded at the value on the grant date based on fair value of the equity or goods and services whichever is more reliable. Restricted share units The Company estimates the grant date fair value of RSUs using the Company’s common stock at the grant date. The Company records the value of the RSUs in paid-in capital. 52 Deferred share units (“DSUs”) The 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). Use of estimates and assumptions Many of the amounts included in the consolidated financial statements require management to make judgments and/or estimates. These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. Actual results may differ from the amounts included in the consolidated financial statements. Areas of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include: Going concern The 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. Accrued liabilities The Company has to make estimates to accrue for certain expenditures due to delay in receipt of third-party vendor invoices. These accruals are made based on trends, history and knowledge of activities. Actual results may be different. The Company makes monthly estimates of its water treatment costs, with a true-up to the annual invoice received from the Idaho Department of Environmental Quality (“IDEQ”). Using the actual costs in the annual invoice, the Company then reassesses its estimate for future periods. Given the nature, complexity and variability of the various actual cost items included in the invoice, the Company has used the most recent invoice as its estimate of the water treatment costs for future periods. Convertible Loans, Promissory Notes, Stream Obligation and Warrants Estimating 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. The 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. The stream obligation inputs used to determine the future cash flows and effective interest for the amortized cost calculation include futures prices of minerals and expected mineral production over the life of the mine. See Note 9 for full disclosures related to the stream obligation. The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated statements of operations. Impairment of mineral properties, plant and equipment Assets are reviewed for an indication of impairment at each reporting date. This determination requires significant judgment. Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in precious metal prices. 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. 53 Reclassifications Certain reclassifications have been made to conform prior year’s data to the current presentation. The reclassifications have no effect on the results of reported operations or stockholders’ deficit or cash flows. Concentrations of credit risk The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and restricted cash. 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. Risks and uncertainties The Company operates in the mineral resource exploration and mine development industry that is subject to significant risks and uncertainties, including financial, operational, and other risks associated with operating a mineral resource exploration business, including the potential risk of business failure. Foreign currency transactions The Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar. The Company will use its U.S. dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction are reported as gain or loss on foreign exchange. Convertible loans and promissory notes payable The 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 instruments. 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. The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method. The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss). The Company 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. 54 Recent Accounting Pronouncements New 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. In 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 or loss. 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. In 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 . Other 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. 4. Accounts receivable and prepaid expenses Accounts receivable and prepaid expenses consists of the following: Schedule of Accounts receivable and prepaid expenses December 31, December 31, 2023 2022 Prepaid expenses $ 382,198 $ 334,686 HST Receivable 121,621 51,532 Environment protection agency overpayment (note 8) 94,582 170,729 Total $ 598,401 $ 556,947 5. Equipment, Right-of-Use asset, and Process Plant Equipment consists of the following: Schedule of Equipment December 31, December 31, 2023 2022 Equipment $ 1,460,375 $ 920,571 Equipment, gross 1,460,375 920,571 Less accumulated depreciation ( 513,714 ) ( 369,367 ) Equipment, net $ 946,661 $ 551,204 The total depreciation expense during the year ended December 31, 2023, was $ 144,347 (year ended December 31, 2022 - $ 162,290 ). 55 Process Plant On May 13, 2022, the Company completed the purchase of a package of equipment and parts inventory from Teck Resources Limited’s (“Teck”) Pend Oreille operation. The package comprises substantially all the mineral processing equipment including complete crushing, grinding and flotation circuits suitable for a planned ~1,500 ton-per-day operation at the Bunker Hill site, and total inventory of components and parts for the mill, assay lab, conveyer, field instruments, and electrical spares. The purchase of the mill has been valued at: - Cash 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. - Value of common stock issued on May 13, 2022 at the market price of that day, a value of $ 1,970,264 . - Fair value of the warrants issued together with the inputs, as determined by a binomial model, resulted in a fair value of $ 1,273,032 . See note 10. - As 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 inventory. The 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. Costs 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. Process plant consists of the following: Schedule of Plant Asset Consists December 31, December 31, 2023 2022 Plant purchase price less inventory $ 3,633,292 $ 3,633,292 Ball mill purchase 745,626 - Demobilization 2,204,539 2,201,414 Site preparation costs 10,635,606 2,296,266 Capitalized interest (note 9) 233,407 - Process Plant $ 17,452,470 $ 8,130,972 On June 30, 2023, the Company made the final payment of $ 545,626 to D’Angelo International LLC to complete the purchase of a ball mill for a total $ 745,626 (inclusive of two previously paid deposits of $ 100,000 from the Company to D’Angelo International LLC). The ball mill is capable of delivering the 1,800 ton per day mine plan envisaged in the Company’s Prefeasibility Study, and subject to future detailed engineering and mine planning, the mill could also potentially support a throughput increase. Right-of-use asset consists of the following: Schedule of Right-of-use Asset December 31, December 31, 2023 2022 Right-of-use asset 670,808 - Right-of-use asset accumulated depreciation ( 45,786 ) - Right-of-use asset, net $ 625,022 $ - The 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. 56 6. Bunker Hill Mine and Mining Interests Bunker Hill Mine Purchase The Company purchased the Bunker Hill Mine (the “Mine”) in January 2022, as described below. Prior to purchasing the Mine, the Company had entered into a series of agreements with Placer Mining Corporation (“Placer Mining”), the prior owner, for the lease and option to purchase the Mine. The first of these agreements was announced on August 28, 2017, with subsequent amendments and/or extensions announced on November 1, 2019, July 7, 2020, and November 20, 2020. Under the terms of the November 20, 2020, amended agreement (the “Amended Agreement”), a purchase price of $ 7,700,000 was agreed, with $ 5,700,000 payable in cash (with an aggregate of $ 300,000 to be credited toward the purchase price of the Mine as having been previously paid by the Company) and $ 2,000,000 in common 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 stock of the Company. The 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 EPA in 2018. Immediately prior to the purchase of the Mine, the Company’s liability to EPA in this regard totaled $ 11,000,000 . The 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 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). The $ 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. The purchase of the mine has been valued on January 7, 2022: - Contract purchase price of $ 7,700,000 less $ 300,000 credit by seller for prior maintenance payments. - Net present value of water treatment cost recovery liability assumed of $ 6,402,425 (note 8). - Capitalized legal and closing costs of $ 444,785 . Management has determined the purchase to be an acquisition of a single asset. Capitalized Development Commencing on October 1, 2022, the Company capitalizes mine development. Through December 31, 2023, a total of $ 2,722,889 had been capitalized. Sale of Mineral Properties On 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. 57 This transaction is treated as a sale of mineral interest to Sprott Private Resource Streaming & Royalty Corp. (“Sprott”). 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. The carrying cost of the Mine is comprised of the following: Schedule of Mining Interests December 31, December 31, 2023 2022 Bunker Hill Mine purchase $ 14,247,210 $ 14,247,210 Capitalized development 2,722,889 1,447,435 Sale of mineral properties (note 9) ( 1,973,840 ) - Bunker Hill mine $ 14,996,259 $ 15,694,645 Land purchase and lease On 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. During 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. 7. Lease Liability As of December 31, 2023, The Company’s undiscounted lease obligations consisted of the following: Schedule of Lease Liability December 31, December 31, 2023 2022 Gross lease obligation – minimum lease payments 1 year $ 393,673 $ - 2- 3 years 73,588 - 4-5 years - - Future interest expense on lease obligations ( 41,927 ) - Total lease liability 425,334 - Current lease liability 353,526 - Non-current lease liability 71,808 - Total lease liability 425,334 - 8. Environmental Protection Agency Effective December 19, 2021, the Company entered into an amended Settlement Agreement between the Company, Idaho Department of Environmental Quality, U.S. 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 historical environmental response costs. Pursuant to the terms of the Amended Settlement, upon purchase of the Bunker Hill Mine and the satisfaction of financial assurance commitments (as described below), the $ 19,000,000 of cost recovery liabilities will be paid by the Company to the EPA on the following dates: Schedule of Amended Settlement Environmental Protection Agency Agreement Date Amount Within 30 days of Settlement Agreement $ 2,000,000 November 1, 2024 $ 3,000,000 November 1, 2025 $ 3,000,000 November 1, 2026 $ 3,000,000 November 1, 2027 $ 3,000,000 November 1, 2028 $ 3,000,000 November 1, 2029 $ 2,000,000 plus accrued interest 58 In addition to the changes in payment terms and schedule, the Amended Settlement included a commitment by the Company to secure $ 17,000,000 of financial assurance in the form of performance bonds or letters of credit deemed acceptable to the EPA within 180 days from the effective date of the Amended Settlement. Once put in place, the financial assurance can be drawn on by the EPA in the event of non-performance by the Company of its payment obligations under the Amended Settlement (the “Financial Assurance”). The amount of the bonds will decrease over time as individual payments are made. The Company completed the purchase of the Mine (see note 6) and made the initial $ 2,000,000 cost recovery payment on January 7, 2022. Concurrent with the purchase of the Mine, the Company assumed the balance of the EPA liability totaling $ 17,000,000 , an increase of $ 8,000,000 from $ 9,000,000 . This was capitalized as $ 6,402,425 to the carrying value of the Bunker Hill Mine at time of purchase, comprised of $ 3,000,000 of incremental current liabilities and $ 5,000,000 of non-current liabilities (discounted to $ 3,402,425 ). See note 6. During 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. The collateral for the payment bonds is comprised of two letters of credit of $ 4,475,000 in aggregate, as well as land pledged by third parties with whom the company has entered into a financing cooperation agreement that contemplates a monthly fee of $ 20,000 (payable in cash or common 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. The 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 . Water Treatment Charges – Idaho Department of Environmental Quality Separate 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 that date. The Company currently makes monthly payments of $ 100,000 to the IDEQ as instalments toward the cost of treating water at the Central Treatment Plant. 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. 9. Promissory notes payable and Convertible Debentures On 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. Prior to 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 paid. The remaining principal and interest has been deferred to June 15, 2023. The Company incurred a one-time penalty of 10 % of the outstanding principal on June 30, 2023, of $ 99,569 which is included in loss on 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 sheets. 59 On 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). In 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. Project Finance Package with Sprott On December 20, 2021, the Company executed a non-binding term sheet outlining a $ 50,000,000 project finance package with Sprott. The 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 CD1 was subsequently increased to $ 6,000,000 , increasing the project financing package to $ 51,000,000 . On June 17, 2022, the Company consummated a new $ 15,000,000 convertible debenture (the “CD2”). As a result, total potential funding from Sprott was further increased to $ 66,000,000 including the RCD, CD1, CD2 and the Stream (together, the “Project Financing Package”). On 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 Package”). 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. The 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. $8,000,000 Royalty Convertible Debenture (RCD) The 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 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). In the event of conversion, the RCD will cease to exist and the Company will grant a royalty for 1.85 % of life-of-mine gross revenue from mining claims considered to be historically worked, contiguous to current accessible underground development, and covered by the Company’s 2021 ground geophysical survey (the “Sprott Royalty”). A 1.35 % rate will apply to claims outside of these areas. The RCD was initially secured by a share pledge of the Company’s operating subsidiary, Silver Valley, until a full security package was put in place concurrent with the consummation of the CD1. In the event of non-conversion, the principal of the RCD will be repayable in cash. Concurrent 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 . The parties also agreed to enter into a Royalty Put Option such that in the event the RCD is converted into a royalty as described above, the holder of the royalty will be entitled to resell the royalty to the Company for $ 8,000,000 upon default under the CD1 or CD2 until such time that the CD1 and CD2 are paid in full. The Company determined that the amendments in the terms of the RCD should not be treated as an extinguishment of the RCD, and have therefore been accounted for as a modification. 60 On June 23, 2023, the funding date of the Stream, the RCD was repaid by the Company granting a royalty for 1.85 % of life-of-mine gross revenue (the “Royalty”) from mining claims historically worked as described above. A 1.35 % rate will apply to claims outside of these areas. The Company recorded a gain on sale of mineral properties of $ 6,980,932 in the 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). $6,000,000 Series 1 Convertible Debenture (CD1) The Company closed the $ 6,000,000 CD1 on January 28, 2022, which was increased from the previously-announced $ 5,000,000 . The CD1 bears interest at an annual rate of 7.5 %, payable in cash or common stock at the Company’s option, and matures on July 7, 2023 (subsequently amended, as described below). The CD1 is secured by a pledge of the Company’s properties and assets. Until the closing of the Stream, the CD1 was to be convertible into 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, Sprott may elect to retire the CD1 with the cash proceeds from the Stream. The Company may elect to repay the CD1 early; if Sprott elects not to exercise its conversion option at such time, a minimum of 12 months of interest would apply. Concurrent 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 gain (loss) on fair value of convertible debentures line of the statement of operations for the year ended December 31, 2022. Concurrent 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 repayment. 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. $15,000,000 Series 2 Convertible Debenture (CD2) The 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 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 date. The repayment terms include 3 quarterly payments of $ 2,000,000 each beginning June 30, 2024, and $ 9,000,000 on the maturity date. Concurrent 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. The 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. 61 Consistent 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) Valuation date Maturity date Contractual Interest rate Stock price (US$) Expected equity volatility Credit spread Risk-free rate Risk- adjusted rate CD1 note(3) (2)(4)(5 )(3) 12-31-22 03-31-25 7.50 % 0.125 120 % 7.08 % 4.32 % 17.85 % RCD note (2)(4)(5) 12-31-22 03-31-25 9.00 % 0.125 120 % 7.08 % 4.32 % 17.85 % CD2 note(3) (2)(4 )(5)(3) 12-31-22 03-31-25 10.50 % 0.125 120 % 7.08 % 4.32 % 19.76 % RCD note (2)(4)(5) 06-23-23 03-31-25 9.00 % 0.169 120 % 8.28 % 4.83 % 19.37 % CD1 note(3) (2)(4)(5)(3) 12-31-23 03-31-26 7.50 % 0.098 115 % 8.41 % 4.18 % 18.89 % CD2 note(3) (2)(4)(5)(3) 12-31-23 03-31-26 10.50 % 0.098 115 % 8.41 % 4.18 % 20.79 % Convertible Debenture (2)(4)(5)(3) 12-31-23 03-31-26 10.50 % 0.098 115 % 8.41 % 4.18 % 20.79 % (1) The 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 30, 2022 (2) CD1 and RCD carry an instrument-specific spread of 7.23 %, CD2 carries an instrument-specific spread of 9.32 % (3) The 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 31, 2022. (4) A project risk rate of 13.0 % was used for all scenarios of the RCD fair value computations (5) 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. The 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 December 31, 2022 CD1 $ 5,244,757 $ 5,537,360 RCD - 10,285,777 CD2 13,458,570 14,063,525 Total $ 18,703,327 $ 29,886,662 The 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. The Company performs quarterly testing of the covenants in the CD1 and CD2, and was in compliance with all such covenants as of December 31, 2023. 62 $5,000,000 Bridge Loan On 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. On 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 ($ 53,985 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. The Stream On 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 CD2. 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 . The 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. The Company determined that in accordance with ASC 815 derivatives and hedging, the Stream does not meet the criteria for treatment as a derivate instrument as the quantities of metal to be sold thereunder are not subject to a minimum quantity, and therefore a notional amount is not determinable. The Company has therefore determined that in accordance with ASC 470, the stream obligation should be treated as a liability based on the indexed debt rules thereunder. The initial recognition has been made at fair value based on cash received, net of transaction costs, and the discount rate calibrated so that the future cash flows associated with the Stream, using forward commodity prices, equal the cash received. The measurement of the stream obligation is accounted for at amortized cost with accretion at the discount rate. Subsequent changes to the expected cash flows associated with the Stream will result in the adjustment of the carrying value of the stream obligation using the same discount rate, with changes to the carrying value recognized in the consolidated statements of (loss) income and comprehensive (loss) income. The 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. $21,000,000 Debt Facility On 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 . For every $ 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. Other Interest During the year ended December 31, 2023, and December 31, 2022 the Company recognized $ 1,708 and $ 72,304 respectively of other interest expense. 10. Capital stock, warrants and stock options Authorized The total authorized capital is as follows: ● 1,500,000,000 shares of common stock, with a par value of $ 0.000001 per share; and ● 10,000,000 preferred shares with a par value of $ 0.000001 per preferred share 63 Issued and outstanding In April 2022, the Company closed a private placement of 37,849,325 Special Warrants and a non-brokered private placement of 1,471,664 units of the Company for aggregate gross proceeds of approximately $ 9,384,622 (C$ 11,796,297 ). Related parties, including management, directors, and consultants, participated in the Special Warrant private placement for a total of 4,809,160 shares (included in the total above). The 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. The non-brokered 1,471,664 units were issued at a price of C$ 0.30 per unit. 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. In connection with the special warrants offering, the agents earned a cash commission in the amount of C$ 563,968 and compensation options exercisable to acquire an aggregate of 1,879,892 units of the Company at C$ 0.30 a unit until April 1, 2024. Each compensation unit consists of one 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. In 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. In April 2022, the Company issued 768,750 shares of common stock in connection with the settlement of RSUs. 64 In 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 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. In June 2022, the Company issued 1,218,000 units to contractors for bonuses during the three months ended March 31, 2022. 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. In June 2022, the Company issued 165,000 shares of common stock in connection with the settlement of RSUs. In 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. In September 2022, the Company issued 33,000 shares of common stock in connection with the settlement of RSUs. In 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. In November 2022, the Company issued 1,599,150 shares of common stock in connection with settlement of RSUs. In 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. In March 2023, the Company amended the exercise price and expiry date of 10,416,667 warrants previously issued in a private placement to Teck Resources (“Teck”) on May 13, 2022 in consideration for the Company’s acquisition of the Pend Oreille processing plant. The warrant entitled the holder to purchase one 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, 2025. The Company amended the exercise price from C$ 0.37 to C$ 0.11 per Warrant and the expiry date from May 12, 2025, to March 31, 2023 , resulting in a gain on modification of warrants of $ 214,714 . In March 2023, Teck exercised all 10,416,667 warrants at an exercise price of C$ 0.11 , for aggregate gross proceeds of $ 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 assumptions: volatility of 120 %, stock price of C$ 0.11 , interest rate of 3.42 % to 4.06 %, and dividend yield of 0 %. In March 2023, the Company closed a brokered private placement of special warrants (the “March 2023 Offering”), issuing 51,633,727 special warrants of the Company (“March 2023 Special Warrants”) at C$ 0.12 per March 2023 Special Warrant for $ 4,536,020 (C$ 6,196,047 ), of which $ 3,661,822 was received in cash and $ 874,198 was applied towards settlement of accounts payable, accrued liabilities and promissory notes. Each 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. In 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. 65 The Special Warrants issued on March 27, 2023 were converted to 51,633,727 shares of common stock and common stock purchase warrants on July 24, 2023. The Company determined that in accordance with ASC 815 derivatives and hedging, each Special Warrant will be valued and carried as a single instrument, with the periodic changes to fair value accounted through earnings, profit and loss until the shares of common stock and common stock purchase warrants are issued. The fair value of the Special Warrant is determined through the valuation of the Unit Share based on the observed price of the Company’s common 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. Consistent 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 Conversion Date Grant Date Expected life 977 days 1096 days Volatility 24 % 24 % Risk free interest rate 4.64 % 3.40 % Dividend yield 0 % 0 % Share price (C$) $ 0.15 $ 0.11 Fair value of March 2023 Unit $ 9,809,314 $ 4,536,020 Change in derivative liability $ 5,273,294 Common Stock $ 7,425,377 Warrant $ 2,383,937 In 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. In May 2023, the Company issued 1,318,183 shares of common stock in connection with settlement of RSUs. In June 2023, the Company issued 4,449,035 shares of common stock in connection with settlement of RSUs. In 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. In 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. In November 2023, the Company issued 42,000 shares of common stock in connection with settlement of RSUs. For 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. dollar. 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. The fair value of the warrant liabilities related to the various tranches of warrants issued during the period were estimated using the Binomial model to determine the fair value using the following assumptions on the day of issuance and as at December 31, 2023 and December 31, 2022: Schedule of Estimated Using the Binomial Model to Determine the Fair Value of Warrant Liabilities March 2023 warrants December 31, 2023 Grant Date Expected life 817 days 977 days Volatility 24 % 24 Risk free interest rate 3.88 % 4.33 Dividend yield 0 % 0 % Share price (C$) $ 0.11 $ 0.19 Fair value $ 281,085 $ 2,383,937 Change in derivative liability $ ( 2,102,852 ) 66 April 2022 special warrants issuance December 31, 2023 December 31, 2022 Expected life 457 days 822 days Volatility 110 % 120 % Risk free interest rate 3.88 % 4.06 % Dividend yield 0 % 0 % Share price (C$) $ 0.11 $ 0.17 Fair value $ 546,592 $ 2,406,104 Change in derivative liability $ ( 1,859,512 ) $ April 2022 non-brokered issuance December 31, 2023 December 31, 2022 Expected life 457 days 822 days Volatility 110 % 120 % Risk free interest rate 3.88 % 4.06 % Dividend yield 0 % 0 % Share price (C$) $ 0.11 $ 0.17 Fair value $ 21,252 $ 93,553 Change in derivative liability $ ( 72,301 ) $ May 2022 Teck issuance December 31, 2023 December 31, 2022 Expected life Exercised 864 days Volatility N/A 120 % Risk free interest rate N/A 4.06 % Dividend yield N/A 0 % Share price (C$) $ N/A $ 0.17 Fair value $ - $ 684,497 June 2022 issuance December 31, 2023 December 31, 2022 Expected life 457 days 822 days Volatility 110 % 120 % Risk free interest rate 3.88 % 3.72 % Dividend yield 0 % 0 % Share price (C$) $ 0.11 $ 0.17 Fair value $ 17,589 $ 77,429 Change in derivative liability $ ( 59,840 ) $ - February 2021 issuance December 31, 2023 December 31, 2022 Expected life 771 days 1,136 days Volatility 110 % 120 % Risk free interest rate 3.88 % 3.72 % Dividend yield 0 % 0 % Share price $ 0.11 $ 0.17 Fair value $ 367,349 $ 1,335,990 Change in derivative liability $ ( 968,641 ) $ - August 2020 issuance December 31, 2023 December 31, 2022 Expected life Expired 243 days Volatility N/A 120 % Risk free interest rate N/A 4.06 % Dividend yield N/A 0 % Share price N/A $ 0.17 Fair value $ - $ 903,697 Change in derivative liability $ ( 903,697 ) $ 67 June 2019 issuance December 31, 2023 December 31, 2022 Expected life 731 days 1,096 days Volatility 110 % 120 % Risk free interest rate 3.88 % 3.82 % Dividend yield 0 % 0 % Share price $ 0.11 $ 0.17 Fair value $ 226,570 $ 725,737 Change in derivative liability $ ( 499,167 ) $ - August 2019 issuance (ii) December 31, 2023 December 31, 2022 Expected life 731 days 1,096 days Volatility 110 % 120 % Risk free interest rate 3.88 % 3.82 % Dividend yield 0 % 0 % Share price $ 0.11 $ 0.17 Fair value $ 348,211 $ 1,115,369 Change in derivative liability $ ( 767,158 ) $ - Warrants Schedule of Warrant Activity Weighted Weighted average average Number of exercise price grant date warrants (C$) value ($) Balance, December 31, 2021 111,412,712 $ 0.54 $ 0.18 Issued 50,955,636 0.37 0.15 Expired ( 239,284 ) 0.70 0.21 Balance, December 31, 2022 162,129,064 $ 0.49 $ 0.17 Issued 51,633,727 0.15 0.05 Exercised ( 10,416,667 ) 0.11 0.12 Expired ( 58,284,148 ) 0.50 0.27 Balance, December 31, 2023 145,061,976 $ 0.37 $ 0.09 During the year ended December 31, 2023, 58,284,148 August 2020 warrants expired. During the year ended December 31, 2022, 239,284 February 2020 broker warrants expired. 68 At December 31, 2023, the following warrants were outstanding: Schedule of Warrants Outstanding Exercise Price Exercise Number of Number of warrants Expiry date price (C$) warrants exercisable April 1, 2025 0.37 40,538,969 40,538,969 December 31, 2025 0.59 32,895,200 32,895,200 February 9, 2026 0.60 17,112,500 17,112,500 February 16, 2026 0.60 2,881,580 2,881,580 March 27, 2026 0.15 51,633,727 51,633,727 145,061,976 145,061,976 Compensation options At December 31, 2023, the following compensation options were outstanding: Schedule of Compensation Options Weighted Number of average broker exercise price options (C$) Balance, December 31, 2021 3,590,907 $ 0.35 Issued – April 2022 Compensation Options (i) 1,879,892 0.30 Balance, December 31, 2022 5,470,799 0.34 Issued – March 2023 Compensation Options (ii) 2,070,258 0.15 Expired – August 2020 Compensation Options ( 3,239,907 ) 0.35 Balance, December 31, 2023 4,301,150 $ 0.24 (i) The grant date fair value of the April 2022 Compensation Options were estimated at $ 264,435 using the Black-Scholes valuation model with the following underlying assumptions: Schedule of Estimated Using Black-Scholes Valuation Model for Fair Value of Broker Options Grant Date Risk free interest rate Dividend yield Volatility Stock price Weighted average life April 2022 2.34 % 0 % 120 % C$ 0.30 2 years (ii) The 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: Grant Date Risk free interest rate Dividend yield Volatility Stock price Weighted average life March 2023 3.4 % 0 % 120 % C$ 0.11 3 years Schedule of Broker Exercise Prices Exercise Number of Fair value Expiry date price (C$) broker options ($) February 16, 2024 (i) $ 0.40 351,000 $ 68,078 April 1, 2024 (ii) $ 0.30 1,879,892 $ 264,435 March 27, 2026 (iii) $ 0.15 2,070,258 $ 111,971 4,301,150 $ 444,484 (i) Exercisable into one February 2021 Unit (ii) Exercisable into one April 2022 Unit (iii) Exercisable into one March 2023 Unit 69 Stock options The following table summarizes the stock option activity during the years ended December 31, 2023 and 2022: Schedule of Stock Options Weighted average Number of exercise price stock options (C$) Balance, December 31, 2021 9,053,136 $ 0.58 Granted (i) 700,000 $ 0.15 Expired, May 1, 2022 ( 47,000 ) $ 10.00 Forfeited, November 25, 2022 ( 150,000 ) $ 0.15 Expired, December 31, 2022 ( 235,500 ) $ 0.50 Balance, December 31, 2022 9,320,636 $ 0.51 Expired September 30, 2023 ( 200,000 ) 0.60 Expired November 25, 2023 ( 150,000 ) 0.15 Balance, December 31, 2023 8,970,636 $ 0.52 (i) On 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 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 (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 date. 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 (loss) income and comprehensive (loss) income. The fair value of these stock options was determined on the date of grant using the Black-Scholes valuation model, and using the following underlying assumptions: Schedule of Estimated Using Black-Scholes Valuation Model for Fair value of Stock Options Risk free interest rate Dividend yield Volatility Stock price Weighted average life October 2019 1.54 % 0 % 100 % C$ 0.50 5 years April 2020 0.44 % 0 % 100 % C$ 0.50 5 years February 2021 0.64 % 0 % 100 % C$ 0.34 5 years November 2022 3.22 % 0 % 120 % C$ 0.15 5 years 70 The following table reflects the actual stock options issued and outstanding as of December 31, 2023: Schedule of Actual Stock Options Issued and Outstanding Number of Remaining Number of options Exercise contractual options vested Grant date price (C$) life (years) outstanding (exercisable) fair value ($) 0.60 0.82 1,575,000 1,575,000 435,069 0.55 1.30 5,957,659 4,468,245 1,536,764 0.335 0.84 1,037,977 1,037,977 204,213 0.15 3.90 400,000 300,000 37,387 8,970,636 7,381,222 $ 2,213,433 The 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). 11. Income per Share Potentially 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. Schedule of Income Per Share Year ended December 31, 2023 Year ended December 31, 2022 Net (loss) income for the year ( 13,432,539 ) 898,591 Basic (loss) income per share Weighted average number of shares of common stock - basic 280,354,631 205,950,811 Net (loss) income per share – basic ( 0.05 ) 0.00 Net (loss) income for the period ( 13,432,539 ) 898,591 Dilutive effect of convertible debentures - ( 370,121 ) Dilutive effect of warrants on net income - - Diluted net (loss) income for the year ( 13,432,539 ) 528,470 Weighted average number of shares of common stock - basic 280,354,631 205,950,811 Diluted effect: Stock options and RSUs - 63,850,470 Weighted average number of shares of common stock - fully diluted 280,354,631 269,801,281 Net (loss) income per share - fully diluted ( 0.05 ) 0.00 12. Restricted share units Effective March 25, 2020, the Board of Directors approved a RSU Plan to grant RSUs to its officers, directors, key employees and consultants. The following table summarizes the RSU activity during the year ended December 31, 2023: Schedule of Restricted Share Units Weighted average grant date fair value Number of per share shares (C$) Unvested as at December 31, 2021 576,000 $ 0.62 Granted 6,620,641 0.17 Vested ( 2,373,900 ) 0.18 Unvested as at December 31, 2022 4,822,741 $ 0.22 Granted 10,844,993 0.23 Vested ( 5,809,217 ) 0.24 Forfeited ( 2,813,990 ) 0.20 Unvested as at December 31, 2023 7,044,527 $ 0.24 (i) 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 (loss) income and comprehensive (loss) income. 71 (ii) On April 29, 2022, the Company granted 76,750 RSUs to certain consultants of the Company, vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 16,800 for the year ended December, 2022, which is included in operation and administration expenses on the consolidated statements of (loss) income and comprehensive (loss) income. (iii) On June 30, 2022, the Company granted 15,000 RSUs to a consultant of the Company, vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 2,328 for the year ended December 31, 2022, which is included in operation and administration expenses on the consolidated statements of (loss) income and comprehensive (loss) income. (iv) On September 29, 2022 the Company granted 33,000 RSUs to two consultants of the Company, vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 2,889 for the year ended December 31, 2022, which is included in operation and administration expenses on the consolidated statements of (loss) income and comprehensive (loss) income. (v) On October 31, 2022 the Company granted 1,599,150 RSUs to two consultants of the Company, vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 111,304 for the year ended December 31, 2022, which is included in operation and administration expenses on the consolidated statements of (loss) income and comprehensive (loss) income. (vi) On November 17, 2022 the Company granted 4,396,741 RSUs to certain key management of the Company. The RSUs vest in one third increments upon each anniversary of the grant date. The vesting of these RSUs resulted in stock-based compensation of $ 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. (vii) On June 1, 2023, the Company granted 4,067,637 RSUs to executives and employees of the Company, which vested immediately. The vesting 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. (viii) 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, 2023, which is included in operation and administration expenses on the consolidated statements of (loss) income and comprehensive (loss) income. (ix) 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. The vesting of RSUs during the year ended December 31, 2023, resulted in stock-based compensation expense of $ 949,114 ( 383,015 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). 72 13. Deferred share units Effective April 21, 2020, the Board of Directors approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its directors. The DSU Plan permits the eligible directors to defer receipt of all or a portion of their retainer or compensation until termination of their services and to receive such fees in the form of cash at that time. Upon 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 stock on the date of redemption in exchange for cash. The following table summarizes the DSU activity during the years ended December 31, 2023 and 2022: Schedule of Deferred Share Units Weighted average grant date fair value Number of per share shares (C$) Unvested as at December 31, 2021 5,625,000 $ 1.03 Granted (i) 210,000 0.20 Vested (ii)(iii) ( 3,125,000 ) 1.03 Unvested as at December 31, 2022 2,710,000 $ 0.97 Granted (i) 1,875,280 0.22 Vested (ii)(iii) ( 3,071,826 ) 0.55 Unvested as at December 31, 2023 1,495,454 $ 0.90 (i) On March 31, 2022, the Board approved the early vesting of 625,000 DSUs for one of the Company’s Directors. 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. (ii) On July 4, 2023, 1,611,826 DSUs were issued to the Company’s Directors which vested immediately. (iii) On July 6, 2023, 245,454 DSUs were issued to one of the Company’s Directors which vests on July 6, 2024. (iv) On April 21, 2023, 1,250,000 DSUs for one of the Company’s Directors vested. (v) On July 1, 2023, 210,000 DSUs for one of the Company’s Directors vested. The 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. 14. Commitments and contingencies As stipulated in the agreement with the EPA and as described in Note 8, the Company is required to make two types of payments to the EPA and IDEQ, one for historical water treatment cost-recovery to the EPA, and the other for ongoing water treatment. Water treatment costs incurred through December 2021 are payable to the EPA, and water treatment costs incurred thereafter are payable to the IDEQ. The IDEQ (as done formerly by the EPA) invoices the Company on an annual basis for the actual water treatment costs, which may exceed the recognized estimated costs significantly. When the Company receives the water treatment invoices, it records any liability for actual costs over and above any estimates made and adjusts future estimates as required based on these actual invoices received. The Company is required to pay for the actual costs regardless of the periodic required estimated accruals and payments made each year. 73 On 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. The lawsuit alleges that Placer Mining and Robert Hopper Jr. intentionally flooded the Crescent Mine during the period from 1991 and 1994, and that the Company is jointly and severally liable with the other defendants for unspecified past and future costs associated with the presence of acid mine drainage (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 U.S. 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 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 Mining Corp. for Crescent’s trespass, nuisance and negligence claims. Crescent later filed an amended complaint on April 1, 2022. Placer Mining Corp. and Bunker Hill Mining Corp are named as co-defendants. Bunker Hill responded to the amended filing, refuting and denying all allegations made in the complaint except those that are assertions of fact as a matter of public record. The Company believes Crescent’s lawsuit is without merit and intends to vigorously defend itself, as well as Placer Mining Corp. pursuant to the Company’s indemnification of Placer Mining Corp in the sale and purchase agreement executed between the companies for the Mine on December 15, 2021. 15. Income taxes As at December 31, 2023, and December 31, 2022, the Company had no accrued interest and penalties related to uncertain tax positions. The income tax provision differs from the amount of income tax determined by applying the U.S. federal tax rate of 21.0 % (December 31, 2022 – 21.0 %) to pretax loss from operations for the periods ended December 31, 2023 and December 31, 2022: Schedule of Income Tax Provision Year Year Ended Ended December 31, December 31, 2023 2022 (Loss) income before income taxes $ ( 10,843,949 ) $ 898,591 Expected income tax (recovery) expense ( 2,277,229 ) 188,704 Change in estimates in respect of prior periods ( 340,768 ) ( 41,351 ) Change in tax rate - 133,687 Change in fair value of derivative liability ( 495,605 ) ( 3,296,242 ) State and local taxes, net of federal benefit 463,643 ( 709,272 ) Loss (gain) on debt settlement 124,154 - Other ( 75,605 ) 308 Change in valuation allowance 5,190,000 3,724,166 Total $ 2,588,590 $ - 74 The components of deferred tax assets and liabilities are as follows: Schedule of Components of Deferred Tax Assets and Liabilities December 31, December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 15,583,299 $ 10,291,114 Mining interests 7,000,260 8,391,938 EPA liabilities 2,565,870 2,068,062 Stream debenture 13,903,560 - Lease liabilities 113,990 - Other deferred tax assets 993,979 851,563 Total deferred tax assets 40,160,958 21,602,677 Valuation allowance ( 29,214,112 ) ( 21,501,015 ) Total deferred tax assets 10,946,846 101,662 Deferred tax liabilities: Deferred revenue ( 12,526,577 ) - Convertible debentures ( 615,508 ) - Right of use assets and lease obligations ( 167,506 ) - Equipment ( 224,553 ) - Unrealized foreign exchange gain ( 1,292 ) ( 101,662 ) Total deferred tax liabilities ( 13,535,436 ) ( 101,662 ) Net deferred tax liabilities $ ( 2,588,590 ) $ - The potential income tax benefit of these losses has been offset by a full valuation allowance. As 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 , respectively, that is available to offset future taxable income. The net operating loss carryforwards generated before 2018 expire between 2031 and 2037. The losses generated in 2018 and later tax years do not expire. The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The 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 assets. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2015 through 2023. 16. Related party transactions The Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities of the Company and consists of the Company’s executive management team and management directors. Schedule of Related Party Transactions Year Ended Year Ended December 31, December 31, 2023 2022 Consulting fees, wages and bonus $ 1,104,075 $ 1,429,326 75 At 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. (i) 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, 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. During 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 RSUs resulted in stock-based compensation of $ 103,688 for the year ended December 31, 2023. During the year ended December 31, 2023, 894,199 restricted share units (RSUs) were issued to Richard Williams which vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 157,765 for the year ended December 31, 2023. During 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. (ii) 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, 2023, $ nil (December 31, 202 - $ nil ) is payable and included in accrued liabilities. During 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. During the year ended December 31, 2023, 945,841 restricted share units (RSUs) were issued to Sam Ash which vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 166,876 for the year ended December 31, 2023. During 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. (iii) 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. (iv) 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. During 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. During the year ended December 31, 2023, 902,365 restricted share units (RSUs) were issued to David Wiens which vested immediately. The vesting of these RSUs resulted in stock-based compensation of $ 159,206 for the year ended December 31, 2023. 76 During 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 31, 2025. 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. (v) 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. (vi) 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. On July 4, 2023, the Company issued 431,739 DSU’s to Cassandra Joseph. (vii) 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. (viii) 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 5, 2023, the Company issued 245,454 DSU’s to Paul Smith. (ix) 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. 17. Subsequent events Share Issuance On 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. On 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Effective September 2, 2014, the Company appointed the firm of MNP LLP, Chartered Professional Accountants, as the Company’s principal independent accountant to audit the Company’s financial statements. The Company has had no disagreements with its accountants that would require disclosure pursuant to Item 304 of Regulation S-K.