Bunker Hill Mining Corp. 10-Q

Item 1. Financial Statements The condensed interim consolidated financial statements of Bunker Hill Mining Corp., (“Bunker Hill”, the “Company”, or the “Registrant”) a Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2023, and all amendments thereto. Bunker Hill Mining Corp. Condensed Interim Consolidated Balance Sheets (Expressed in United States Dollars) Unaudited June 30, December 31, 2024 2023 ASSETS Current assets Cash $ 3,539,424 $ 20,102,596 Restricted cash (note 8) 4,475,000 6,476,000 Accounts receivable and prepaid expenses (note 3) 1,610,007 598,401 Total current assets 9,624,431 27,176,997 Non-current assets Spare parts inventory (note 5) 341,004 341,004 Long term deposit 254,106 249,265 Equipment (note 4) 1,303,935 946,661 Right-of-use asset (note 4) 564,375 625,022 Bunker Hill Mine and mining interests (note 6) 16,746,920 15,198,259 Process plant (note 5) 34,997,127 17,452,470 Total assets $ 63,831,898 $ 61,989,678 EQUITY AND LIABILITIES Current liabilities Accounts payable (note 16) $ 8,210,720 $ 1,788,950 Accrued liabilities 3,127,760 1,225,525 Current portion of lease liability (note 7) 91,993 353,526 Deferred share units liability (note 12) 998,244 569,327 Environment protection agency cost recovery payable (note 8) 3,000,000 3,000,000 Current portion of stream debenture 2,730,622 - Interest payable (note 9) 529,450 534,998 Total current liabilities 18,688,789 7,472,326 Non-current liabilities Lease liability (note 7) 5,063 71,808 Series 1 convertible debenture (note 9) 5,222,964 5,244,757 Series 2 convertible debenture (note 9) 13,371,724 13,458,570 Stream debenture (note 9) 48,639,378 51,138,000 Environment protection agency cost recovery liability, net of discount (note 8) 7,506,801 6,574,140 Deferred tax liability (note 14) 1,383,872 2,588,590 Derivative warrant liability (note 10) 2,423,994 1,808,649 Total liabilities 97,242,585 88,356,840 Shareholders’ Deficiency Preferred shares, $ 0.000001 par value, 10,000,000 preferred shares authorized - - Common shares, $ 0.000001 par value, 1,500,000,000 common shares authorized 338 321 Additional paid-in-capital (note 10) 59,525,717 57,848,953 Accumulated other comprehensive income 1,572,796 808,662 Accumulated deficit ( 94,509,538 ) ( 85,025,098 ) Total shareholders’ deficiency ( 33,410,687 ) ( 26,367,162 ) Total shareholders’ deficiency and liabilities $ 63,831,898 $ 61,989,678 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. 3 Bunker Hill Mining Corp. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in United States Dollars) Unaudited Three Months Ended Six Months Ended June 30, June 30 2024 2023 2024 2023 Operating expenses (note 15) $ ( 4,150,114 ) $ ( 3,336,973 ) $ ( 7,937,745 ) $ ( 5,522,461 ) Other income or gain (expense or loss) Interest income 164,381 231,133 455,711 231,133 Change in derivative liabilities (note 10) ( 351,402 ) ( 13,246,561 ) ( 615,345 ) ( 9,019,987 ) Loss on foreign exchange ( 9,704 ) ( 591 ) ( 4,050 ) ( 3,479 ) Loss on FV of debentures (note 9) ( 498,263 ) ( 1,884,232 ) ( 655,495 ) ( 194,531 ) Gain on debt settlement (note 6) - 7,117,420 - 7,117,420 Gain on warrant settlement - - - 214,714 Interest expense (note 7,8,9) ( 2,176,868 ) ( 1,388,420 ) ( 4,260,603 ) ( 2,713,049 ) Finance costs (note 9) - ( 524,130 ) - ( 1,100,881 ) Other income - 24,439 694 24,439 Gain on stream debentures (note 9) 2,748,000 - 2,531,000 - Loss on debt modification (note 9) - ( 99,569 ) - ( 99,569 ) Loss on debt settlement (note 9) ( 133,232 ) ( 241,557 ) ( 203,325 ) ( 491,643 ) Loss for the period pre tax $ ( 4,407,202 ) $ ( 13,349,041 ) $ ( 10,689,158 ) $ ( 11,557,894 ) Deferred tax recovery (expense) (note 14) 504,798 ( 3,508,741 ) 1,204,718 ( 3,508,741 ) Loss for the period $ ( 3,902,404 ) $ ( 16,857,782 ) $ ( 9,484,440 ) $ ( 15,066,635 ) Other comprehensive (loss) income, net of tax: Gain (loss) on change in FV on own credit risk 475,762 ( 373,415 ) 764,134 433,597 Other comprehensive income (loss) 475,762 ( 373,415 ) 764,134 433,597 Comprehensive Loss $ ( 3,426,642 ) $ ( 17,231,197 ) $ ( 8,720,306 ) $ ( 14,633,038 ) Net loss per common share – basic $ ( 0.01 ) $ ( 0.07 ) $ ( 0.03 ) $ ( 0.06 ) Net loss per common share – fully diluted $ ( 0.01 ) $ ( 0.07 ) $ ( 0.03 ) $ ( 0.06 ) Weighted average common shares – basic 338,800,384 258,236,840 334,103,756 247,170,167 Weighted average common shares – fully diluted 338,800,384 258,236,840 334,103,756 247,170,167 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. 4 Bunker Hill Mining Corp. Condensed Interim Consolidated Statements of Cash Flows (Expressed in United States Dollars) Unaudited Six Months Six Months Ended Ended June 30, June 30, 2024 2023 Operating activities Net loss for the period $ ( 9,484,440 ) $ ( 15,066,635 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation (note 10, 11, 12) 1,009,951 975,188 Depreciation expense 185,656 89,193 Change in fair value of derivative liabilities 615,345 9,019,987 Deferred tax (recovery) expense ( 1,204,718 ) 3,508,741 (Gain) loss on warrant extinguishment - ( 214,714 ) Units issued for services - 111,971 Interest expense on lease liability (note 7) 41,005 5,080 Loss on debt settlement 203,325 491,643 Gain on stream debenture ( 2,531,000 ) - Loss on debt modification - 99,569 Accretion of liabilities 3,209,877 855,969 Loss on fair value of debentures 655,495 194,531 Gain on debt settlement - ( 7,117,420 ) Changes in operating assets and liabilities: Accounts receivable and prepaid expenses ( 1,016,447 ) ( 470,181 ) Accounts payable 1,595,914 ( 61,969 ) Accrued liabilities ( 134,370 ) ( 118,577 ) Interest payable 1,009,728 1,041,361 Net cash used in operating activities ( 5,844,679 ) ( 6,656,263 ) Investing activities Process plant ( 10,414,510 ) ( 3,155,362 ) Mine improvements ( 1,465,994 ) ( 514,127 ) Purchase of machinery and equipment ( 441,654 ) ( 60,004 ) Net cash used in investing activities ( 12,322,158 ) ( 3,729,493 ) Financing activities Proceeds from stream obligation - 46,000,000 Transaction costs stream obligation - ( 304,156 ) Proceeds from issuance of special warrants - 3,661,822 Proceeds from warrants exercise - 837,459 Proceeds from promissory note - 390,000 Repayment of bridge loan - ( 5,000,000 ) Repayment of promissory notes - ( 654,315 ) Lease payments ( 397,335 ) ( 120,000 ) Net cash (used) provided by financing activities ( 397,335 ) 44,810,810 Net change in cash ( 18,564,172 ) 34,425,054 Cash, beginning of period 26,578,596 7,184,105 Cash, end of period $ 8,014,424 $ 41,609,159 Supplemental disclosures Cash interest paid $ - $ 322,708 Non-cash activities Accounts payable, accrued liabilities, and promissory notes settled with special warrants issuance $ - $ 874,198 Interest payable settled with common shares $ 1,015,262 $ 2,039,282 Reconciliation from Cash Flow Statement to Balance Sheet: Cash and restricted cash end of period $ 8,014,424 $ 41,609,159 Less restricted cash 4,475,000 6,476,000 Cash end of period $ 3,539,424 $ 35,133,159 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. 5 Bunker Hill Mining Corp. Condensed Interim Consolidated Statements of Changes in Shareholders’ Deficiency (Expressed in United States Dollars) Unaudited Accumulated Additional other Common stock paid-in- comprehensive Accumulated Shares Amount capital income deficit Total Balance, December 31, 2023 322,661,482 $ 321 $ 57,848,953 $ 808,662 $ ( 85,025,098 ) $ ( 26,367,162 ) Stock-based compensation - - 458,180 - - 458,180 Compensation options Shares issued for interest payable 13,791,298 14 1,218,587 - - 1,218,601 Shares issued for RSUs vested 2,646,436 3 ( 3 ) - - - Shares issued for warrant exercise Shares issued for interest payable, shares OCI - - - 764,134 - 764,134 Net (loss) for the period - - - - ( 9,484,440 ) ( 9,484,440 ) Balance, June 30, 2024 339,099,216 $ 338 $ 59,525,717 $ 1,572,796 $ ( 94,509,538 ) $ ( 33,410,687 ) Balance, December 31, 2022 229,501,661 $ 228 $ 45,161,513 $ 253,875 $ ( 71,592,559 ) $ ( 26,176,943 ) Balance 229,501,661 $ 228 $ 45,161,513 $ 253,875 $ ( 71,592,559 ) $ ( 26,176,943 ) Stock-based compensation 1,050,105 - - 1,050,105 Compensation options 111,971 - - 111,971 Shares issued for RSUs vested 5,767,218 6 ( 6 ) - - - Shares issued for interest payable 20,125,209 20 2,308,171 - - 2,308,191 Shares issued for warrant exercise 10,416,667 10 907,080 - - 907,090 OCI - - - 433,597 - 433,597 Net (loss) for the period - - - - ( 15,066,635 ) ( 15,066,635 ) Balance, June 30, 2023 265,810,755 $ 264 $ 49,538,834 $ 687,472 $ ( 86,659,194 ) $ ( 36,432,624 ) Balance 265,810,755 $ 264 $ 49,538,834 $ 687,472 $ ( 86,659,194 ) $ ( 36,432,624 ) The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. 6 Bunker Hill Mining Corp. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Three and Six Months Ended June 30, 2024 (Expressed in United States Dollars) 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 300-1055 West Hastings Street, Vancouver, British Columbia, Canada,V6E 2E9. As of the date of this Form 10-Q, 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. Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, shareholders’ deficiency, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the annual audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2023. The interim results for the period ended June 30, 2024, are not necessarily indicative of the results for the full fiscal year. The unaudited condensed interim consolidated financial statements are presented in United States dollars, which is the Company’s functional currency. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for items such as mineral reserves, useful lives and depreciation methods, potential impairment of long-lived assets, sale of mineral properties for the accounting of the conversion of the royalty convertible debenture (the “RCD”), deferred income taxes, settlement pricing of commodity sales, fair value of stock based compensation, accrued liabilities, estimation of asset retirement obligations and reclamation liabilities, convertible debentures, stream obligation, and warrants. Estimates are based on historical experience and various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates. 3. Accounts receivable and prepaid expenses Accounts receivable and prepaid expenses consists of the following: Schedule of Accounts receivable and prepaid expenses June 30, December 31, 2024 2023 Prepaid expenses and deposits $ 1,455,431 $ 382,198 HST and interest receivable 124,576 121,621 Environment protection agency overpayment (note 8) 30,000 94,582 Total $ 1,610,007 $ 598,401 4. Equipment, Right-of-Use Asset Equipment consists of the following: Schedule of Equipment June 30, December 31, 2024 2023 Equipment $ 1,914,606 $ 1,460,375 Equipment, gross 1,914,606 1,460,375 Less accumulated depreciation ( 610,671 ) ( 513,714 ) Equipment, net $ 1,303,935 $ 946,661 The total depreciation expense relating to equipment during the three and six months ended June 30, 2024, was $ 50,492 and $ 96,957 , respectively. Compared to the three and six months ended June 30, 2023, was $ 31,732 and $ 76,424 , respectively. 7 Right-of-use asset consists of the following: Schedule of Right-of-use Asset June 30, December 31, 2024 2023 Right-of-use asset 698,860 670,808 Less accumulated depreciation ( 134,485 ) ( 45,786 ) Right-of-use asset, net $ 564,375 $ 625,022 The total depreciation expense during the three and six months ended June 30, 2024, was $ 44,349 and $ 88,699 , respectively. Compared to the three and six months ended June 30, 2023, was $ 6,385 and $ 12,769 respectively. 5. Process Plant On May 13, 2022, the Company purchased a comprehensive package of equipment and parts inventory from Teck Resources Limited (“Teck”). The package comprises substantially all processing equipment of value located at the Pend Oreille mine site, including complete crushing, grinding and flotation circuits suitable for a planned ~1,500 ton-per-day operation at the Bunker Hill site, and total inventory of nearly 10,000 components and parts for mill, assay lab, conveyer, field instruments, and electrical spares. The process plant was purchased in an assembled state in the seller’s location, and included major processing systems, significant components, and a large inventory of spare parts. The Company has disassembled and transported it to the Bunker Hill site, and will be reassembling it as an integral part of the Company’s future operations. The Company determined that the transaction should be accounted for as an asset acquisition, with the process plant representing a single asset, with the exception of the inventory of spare parts, which has been separated out and appears on the condensed interim consolidated balance sheets as a non-current asset in accordance with a purchase price allocation. As the plant is demobilized, transported and reassembled, installation and other costs associated with these activities is being captured and capitalized as components of the asset. Process plant consists of the following: Schedule of Plant Asset Consists June 30, December 31, 2024 2023 Plant purchase price less inventory $ 3,633,292 $ 3,633,292 Ball Mill 1,007,544 745,626 Demobilization 2,204,539 2,204,539 Detailed engineering and construction costs 27,432,561 10,635,606 Capitalized interest (note 9) 719,191 233,407 Process Plant $ 34,997,127 $ 17,452,470 6. Bunker Hill Mine and Mining Interests The Company purchased the Bunker Hill Mine (the “Mine”) in January 2022. The carrying cost of the Mine is comprised of the following: Schedule of Mining Interests June 30, December 31, 2024 2023 Bunker Hill Mine purchase $ 14,247,210 $ 14,247,210 Capitalized development 4,271,550 2,722,889 Sale of mineral properties (note 9) ( 1,973,840 ) ( 1,973,840 ) Land 202,000 202,000 Bunker Hill mine $ 16,746,920 $ 15,198,259 Land purchase and leases The Company owns a 225-acre surface land parcel valued at its original purchase price of $ 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 six months ended June 30, 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. 8 7. Lease Liability As of June 30, 2024, The Company’s undiscounted lease obligations consisted of the following: Schedule of Lease Liability June 30, December 31, 2024 2023 Gross lease obligation – minimum lease payments 1 year $ 98,007 $ 393,673 2- 3 years 3,418 73,588 4-5 years - - Future interest expense on lease obligations ( 4,369 ) ( 41,927 ) Total lease liability 97,056 425,334 Current lease liability 91,993 353,526 Non-current lease liability 5,063 71,808 Total lease liability 97,056 425,334 Interest expense for the three and six months ended June 30, 2024, was $ 13,997 and $ 41,005 , respectively. Compared to the three and six months ended June 30, 2023, was $ 1,469 and $ 5,080 , respectively. 8. Environmental Protection Agency and Water Treatment Liabilities (“EPA”) 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 In addition to the changes in payment terms and schedule, the Amended Settlement includes 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. As of June 30, 2024, the Company had two payment bonds of $ 9,999,000 and $ 7,000,000 in place to secure this liability ( as of December 31, 2023, 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 shares of the Company, at the Company’s election). The letters of credit of $ 4,475,000 in aggregate are secured by cash deposits under an agreement with a commercial bank, which comprise the $ 4,475,000 of restricted cash shown within current assets as of June 30, 2024, compared to $ 6,476,000 as of December 31, 2023. 9 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 recorded accretion expense on the liability of $ 479,854 and $ 932,661 for the three and six months ended June 30, 2024, respectively, bringing the net liability to $ 10,506,801 (previously accrued interest of $ 154,743 ) as of June 30, 2024. The Company recorded accretion expense on the liability of $ 396,663 and $ 770,969 for the three and six months ended June 30, 2023, respectively. Water Treatment Charges – Idaho Department of Environmental Quality (“IDEQ”) 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 June 30, 2024, a prepaid expense of $ 30,000 (December 31, 2023: $ 94,582 ) represented 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 condensed interim consolidated balance sheets as accounts receivable and prepaid expenses. 9. Promissory Notes Payable and Convertible Debentures Promissory Notes On September 22, 2021, the Company issued a non-convertible promissory note of $ 2,500,000 bearing interest of 15 % per annum and payable at maturity. Interest expense for the three and six months ended June 30, 2024, was $ nil and $ nil respectively. Compared to $ 54,931 and $ 110,411 for the three and six months ended June 30, 2023, respectively. 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 condensed interim consolidated statements of loss and comprehensive loss. A final principal payment of $ 1,599,569 was made during the year ended December 31, 2023. 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 per annum, payable at maturity. Both promissory notes, including interest, were settled on March 27, 2023. 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 per annum, payable at maturity. The promissory note, including interest, was settled in June 2023. Project Finance Package with Sprott Private Resource Streaming & Royalty Corp. On December 20, 2021, the Company executed a non-binding term sheet outlining a $ 50,000,000 project finance package with Sprott Private Resource Streaming and Royalty Corp. (“SRSR”). The non-binding term sheet with SRSR outlined a $ 50,000,000 project financing package that the Company expected to fulfill the majority of its funding requirements to restart the Mine. The term sheet consisted of an $ 8,000,000 royalty convertible debenture (the “RCD”), a $ 5,000,000 convertible debenture (the “CD1”), and a multi-metals stream of up to $ 37,000,000 (the “Stream”). The CD1 was subsequently increased to $ 6,000,000 , increasing the project financing package to $ 51,000,000 . On June 17, 2022, the Company consummated a new $ 15,000,000 convertible debenture (the “CD2”). As a result, total potential funding from SRSR was further increased to $ 66,000,000 including the RCD, CD1, CD2 and the Stream (together, the “Project Financing Package”). On June 23, 2023, the Company closed the upsized and improved $ 67,000,000 project finance package with SRSR, 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 debt facility (the “Debt Facility”), available for draw at the Company’s election for two years. As a result, total funding commitments from SRSR 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 to be 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. 10 $8,000,000 Royalty Convertible Debenture 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 Shares at the Company’s option, until such time that SRSR elects to convert a royalty, with such conversion option expiring at the earlier of advancement of the Stream or July 7, 2023 (subsequently amended as described below). In the event of conversion, the RCD will cease to exist, and the Company will grant a royalty for 1.85 % of life-of-mine gross revenue from mining claims considered to be historically worked, contiguous to current accessible underground development, and covered by the Company’s 2021 ground geophysical survey (the “SRSR Royalty”). A 1.35 % rate will apply to claims outside of these areas. The RCD was initially secured by a share pledge of the Company’s operating subsidiary, Silver Valley, until a full security package was put in place concurrent with the consummation 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 SRSR agreed to a number of amendments to the terms of the RCD, including an amendment of the maturity date from July 7, 2023 to March 31, 2025 . The parties also agreed to enter 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. 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 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 shares at the Company’s option, and matures on July 7, 2023 (subsequently amended, as described below). The CD1 is secured by a pledge of the Company’s properties and assets. Until the closing of the Stream, the CD1 was to be convertible into Common Shares at a price of C$ 0.30 per Common Share, subject to stock exchange approval (subsequently amended, as described below). Alternatively, SRSR may elect to retire the CD1 with the cash proceeds from the Stream. The Company may elect to repay the CD1 early; if SRSR elects not to exercise its conversion option at such time, a minimum of 12 months of interest would apply. Concurrent with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the CD1, including that the maturity date would be amended from July 7, 2023 to March 31, 2025 , and that the CD1 would remain outstanding until the new maturity date regardless of whether the Stream is advanced, unless the Company elects to exercise its option of early repayment. The Company determined that the amendments in the terms of the CD1 should not be treated as an extinguishment of the CD1 and have therefore been accounted for as a modification. 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. $15,000,000 Series 2 Convertible Debenture (CD2) The Company closed the $ 15,000,000 CD2 on June 17, 2022. CD2 bears interest at an annual rate of 10.5 %, payable in cash or shares at the Company’s option, and matures on March 31, 2025 . The CD2 is secured by a pledge of the Company’s properties and assets. The repayment terms include 3 quarterly payments of $ 2,000,000 each beginning June 30, 2024, and $ 9,000,000 on the maturity date. 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 CD2 is convertible into Common Shares at a price of C$ 0.29 per Common Share, subject to stock exchange approval. 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. 11 The Company determined that in accordance with ASC 815 Derivatives and Hedging, each debenture will be valued and recorded as a single instrument, with the periodic changes to fair value accounted through earnings, profit and loss. Consistent with the approach above, the following table summarizes the key valuation inputs as at applicable valuation dates using the binomial lattice methodology based on a Cox-Ross-Rubenstein (“CRR”) approach: Schedule of Key Valuation Inputs Reference (1,2,3) Valuation date Maturity date Contractual Interest rate Stock price (US$) Expected equity volatility Credit spread Risk-free rate Risk- adjusted rate CD1 note (1)(2)(3) 12-31-23 03-31-26 7.50 % 0.098 115 % 8.41 % 4.18 % 18.89 % CD2 note (1)(2)(3) 12-31-23 03-31-26 10.50 % 0.098 115 % 8.41 % 4.18 % 20.79 % CD1 note (1)(2)(3) 03-31-24 03-31-26 7.50 % 0.100 110 % 10.07 % 4.59 % 20.77 % CD2 note (1)(2)(3) 03-31-24 03-31-26 10.50 % 0.100 110 % 10.07 % 4.59 % 22.65 % CD1 note (1)(2)(3) 06-30-24 03-31-26 7.50 % 0.117 100 % 13.61 % 4.80 % 24.13 % CD2 note (1)(2)(3) 06-30-24 03-31-26 10.50 % 0.117 100 % 13.61 % 4.80 % 25.97 % Convertible Debenture (1)(2)(3) 06-30-24 03-31-26 10.50 % 0.117 100 % 13.61 % 4.80 % 25.97 % (1) The CD1 carried a Discount for Lack of Marketability (“DLOM”) of 5.0 % as of the issuance date. The CD2 carried a DLOM of 10.0 % as of the issuance date. (2) CD1 carries an instrument-specific spread of 7.23 %, CD2 carries an instrument-specific spread of 9.32 % (3) The conversion price of the CD1 is $ 0.219 and CD2 is $ 0.212 as of June 30, 2024. The conversion price of the CD1 is $ 0.227 and CD2 is $ 0.219 as of December 31, 2023. The resulting fair values of the CD1 and CD2 at June 30, 2024, and as of December 31, 2023, were as follows: Schedule of Fair Value Derivative Liability Instrument Description June 30, 2024 December 31, 2023 CD1 $ 5,222,964 $ 5,244,757 CD2 13,371,724 13,458,570 Total $ 18,594,688 $ 18,703,327 The (loss) gain on changes in FV of convertible debentures recognized on the condensed interim consolidated statements of loss and comprehensive loss during the three and six months ended June 30, 2024, was ($ 498,263 ) and ($ 655,495 ), respectively, and ($ 1,884,232 ) and ($ 194,531 ) for the three and six month ended June 30, 2023, 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 (loss) income during the three and six months ended June 30, 2024, was $ 475,762 and 764,134 respectively. Compared to three and six months ended June 30, 2023, was ($ 373,415 ) and $ 433,597 , respectively. Interest expense for the three and six months ended June 30, 2024, was $ 504,863 and $ 1,009,726 , respectively. Compared to the three and six months ended June 30, 2023, was $ 670,562 and $ 1,347,411 , respectively. At June 30, 2024 interest of $ 504,863 ($ 510,411 at December 31, 2023) is included in interest payable on the condensed interim consolidated balance sheets. Interest is due on a quarterly basis. For the three and six months ended June 30, 2024, the Company recognized $ 133,232 and $ 203,325 , respectively, loss on debt settlement in the condensed interim consolidated statements of loss and comprehensive loss, as a result of settling interest by issuance of shares. Compared to the three and six months ended June 30, 2023, was $ 18,803 and $ 268,889 , respectively. The Company performs quarterly testing of the covenants in the CD1 and CD2 and was not in compliance with the working capital covenant require as of June 30, 2024, however, each debenture holder agreed to waive the working capital covenant for the period of June 30, 2024. It is probable that the violation will be cured by September 30, 2024. 12 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. 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 condensed interim consolidated statements of loss and comprehensive loss. The Company determined the effective interest rate of the Stream obligation to be 10.7 % and recorded accretion expense on the liability of $ 1,178,156 and $ 2,277,216 for the three and six months ended June 30, 2024, respectively ($ nil and $ nil for the three and six months ended June 30, 2023) recognized in the condensed interim consolidated statements of loss and comprehensive loss, accretion expense on the liability of $ 226,840 and $ 485,784 for the three and six months ended June 30, 2024 ($ nil and $ nil for the three and six months ended June 30, 2023) capitalized into the process plant (note 5) on the condensed interim consolidated balance sheets and gain on revaluation of the liability of $ 2,748,000 and $ 2,531,000 for the three and six months ended June 30, 2024, respectively ($ nil and $ nil for the six months ended June 30, 2023), bringing the liability to $ 51,370,000 as of June 30, 2024. 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 1.16 $/lb to 1.21 $/lb for zinc, 0.93 $/lb to 0.95 $/lb for lead, and 24.00 $/oz to $28.00 $/oz for silver. $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 of 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 repaid the outstanding principal and interest on the Bridge Loan recognizing a loss on extinguishment of debt of $ 222,754 in the condensed interim consolidated statements of loss and comprehensive loss. Interest expense for three and six months ended June 30, 2024, was $ nil and $ nil respectively. Compared to the three and six months ended June 30, 2023, was $ 168,166 and $ 346,550 respectively. $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 and June 30, 2024, 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 June 30, 2024, as no amount has been drawn from the facility. 13 10. Capital Stock, Warrants and Stock Options Authorized The total authorized capital is as follows: ● 1,500,000,000 Common Shares with a par value of $ 0.000001 per Common Share; and ● 10,000,000 preferred shares with a par value of $ 0.000001 per preferred share Issued and outstanding In January 2023, the Company issued 6,377,272 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 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 March 2023, the Company amended the exercise price and expiry date of 10,416,667 warrants which were 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 process plant. The warrant entitled the holder thereof to purchase one share of Common Share 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 of the warrants 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 C$ 1,145,834 to the Company. During the quarter ended March 31, 2023, the Company recognized a change 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 of the Company (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. In connection with the March 2023 Offering, each March 2023 Special Warrant is automatically exercisable (without payment of any further consideration and subject to customary anti-dilution adjustments) into one unit of the Company (a “March 2023 Unit”). 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 $ 585,765 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$ 0.15 into one Unit Share and one Warrant Share. 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. 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 ending June 30, 2023. 14 In January 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 ending December 31, 2023. In March 2024, the Company issued 2,546,436 shares of common stock in connection with settlement of RSUs. In April 2024, the Company issued 100,000 shares of common stock in connection with settlement of RSUs. In April 2024, the Company issued 6,398,439 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, 2024. In 2024, the Company has accounted for the warrants in accordance with ASC Topic 815. The warrants are considered derivative instruments as they were issued in a currency other than the Company’s functional currency of the 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 condensed interim consolidated statements of loss and comprehensive loss as a gain or loss and is estimated using the Binomial model. The fair value of the warrant liabilities related to the various tranches of warrants issued during the period were estimated using the Binomial model to determine the fair value using the following assumptions as at June 30, 2024 and December 31, 2023: Schedule of Estimated Using the Binomial Model to Determine the Fair Value of Warrant Liabilities March 2023 warrants June 30, 2024 December 31, 2023 Expected life 635 days 817 days Volatility 24 % 24 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 1,169,464 $ 281,085 Change in derivative liability $ 888,379 April 2022 special warrants issuance June 30, 2024 December 31, 2023 Expected life 275 days 457 days Volatility 85 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 271,004 $ 546,592 Change in derivative liability $ ( 275,588 ) April 2022 non-brokered issuance June 30, 2024 December 31, 2023 Expected life 275 days 457 days Volatility 85 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 10,537 $ 21,252 Change in derivative liability $ ( 10,715 ) 15 June 2022 issuance June 30, 2024 December 31, 2023 Expected life 275 days 457 days Volatility 85 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 8,721 $ 17,589 Change in derivative liability $ ( 8,868 ) February 2021 issuance June 30, 2024 December 31, 2023 Expected life 589 days 771 days Volatility 100 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 395,879 $ 367,349 Change in derivative liability $ 28,530 June 2019 issuance June 30, 2024 December 31, 2023 Expected life 549 days 731 days Volatility 100 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 224,051 $ 226,570 Change in derivative liability $ ( 2,519 ) August 2019 issuance June 30, 2024 December 31, 2023 Expected life 549 days 731 days Volatility 100 % 110 % Risk free interest rate 3.99 % 3.88 % Dividend yield 0 % 0 % Share price (C$) $ 0.16 $ 0.11 Fair value $ 344,338 $ 348,211 Change in derivative liability $ ( 3,873 ) Outstanding warrants at June 30, 2024 and June 30, 2023 were as follows: Schedule of Warrant Activity Weighted Weighted average average Number of exercise price grant date warrants (C$) value ($) Balance, December 31, 2022 162,129,064 $ 0.49 $ 0.17 Exercised ( 10,416,667 ) 0.11 0.12 Balance, June 30, 2023 151,712,397 $ 0.50 $ 0.17 Balance, December 31, 2023 145,061,976 $ 0.37 $ 0.09 - - - Balance, June 30, 2024 145,061,976 $ 0.37 $ 0.09 During the six months ended June 30, 2023, 10,416,667 May 2022 Teck warrants were exercised. 16 At June 30, 2024, the following warrants were outstanding: Schedule of Warrants Outstanding Exercise Price Exercise Number of Number of warrants Expiry date price (C$) warrants exercisable April 1, 2025 0.37 40,538,969 40,538,969 December 31, 2025 0.59 32,895,200 32,895,200 February 9, 2026 0.60 17,112,500 17,112,500 February 16, 2026 0.60 2,881,580 2,881,580 March 27, 2026 0.15 51,633,727 51,633,727 145,061,976 145,061,976 Compensation options At June 30, 2024, the following broker options were outstanding: Schedule of Compensation Options Weighted Number of average broker exercise price options (C$) Balance, December 31, 2022 5,470,799 $ 0.34 Issued – March 2023 Compensation Options (i) 2,070,258 0.15 Balance, June 30, 2023 7,541,057 0.28 Balance, December 31, 2023 4,301,150 0.24 Expired – February 2024 ( 351,000 ) 0.50 Expired – April 2024 ( 1,879,892 ) 0.30 Balance, June 30, 2024 2,070,258 0.15 (i) The grant date fair value of the March 2023 Compensation Options was estimated at $ 111,971 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 March 2023 3.4 % 0 % 120 % C$ 0.11 3 years Schedule of Broker Exercise Prices Exercise Number of Grant date Fair value Expiry date price (C$) broker options ($) March 27, 2026 (i) $ 0.15 2,070,258 $ 111,971 2,070,258 $ 111,971 17 i) Exercisable into one March 2023 Unit Stock options The following table summarizes the stock option activity during the six months ended June 30, 2024, and June 30 2023: Schedule of Stock Options Weighted average Number of exercise price stock options (C$) Balance, December 31, 2022 9,320,636 $ 0.51 Balance, June 30, 2023 9,320,636 $ 0.51 Balance, December 31, 2023 8,970,636 $ 0.52 Balance, June 30, 2024 8,970,636 $ 0.52 The following table reflects the actual stock options issued and outstanding as of June 30, 2024: 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 0.32 1,575,000 1,575,000 435,069 0.335 0.34 1,037,977 1,037,977 204,213 0.55 0.81 5,957,659 4,468,245 1,536,764 0.15 3.40 400,000 300,000 37,387 8,970,636 7,381,222 $ 2,213,433 The vesting of stock options during the three and six months ending June 30, 2024, resulted in stock based compensation expense of $ 6,423 and $ 31,516 , respectively ($ 34,441 and $ 93,140 for the three and six months ending June 30, 2023, respectively). 11. Restricted Share Units Effective March 25, 2020, the Board of Directors approved a Restricted Share Unit (“RSU”) Plan to grant RSUs to its officers, directors, key employees and consultants. The following table summarizes the RSU activity during the six months ended June 30, 2024, and June 30, 2023: Schedule of Restricted Share Units Weighted average grant date fair value Number of per share shares (C$) Unvested as at December 31, 2022 4,822,741 $ 0.22 Granted 4,109,637 0.24 Vested ( 5,767,218 ) 0.24 - - Unvested as at June 30, 2023 3,165,160 $ 0.22 Unvested as at December 31, 2023 7,044,527 $ 0.24 Granted (i, ii) 9,720,403 0.11 Forfeited ( 50,000 ) 0.50 Vested ( 2,646,436 ) 0.23 Unvested as at June 30, 2024 14,068,494 $ 0.15 (i) On January 29, 2024, the Company granted 672,450 RSUs to the CFO of the Company, which vest on January 29, 2025. The vesting of these RSUs resulted in stock-based compensation of $ 12,432 and $ 21,311 , respectively, for the three and six months ended June 30, 2024, which is included in operating expenses condensed interim consolidated statements of loss and comprehensive loss. 18 (ii) On March 13, 2024, the Company granted 9,047,953 RSUs to certain executives and employees of the Company, which vest in one-third increments on March 13 of 2025, 2026 and 2027. The vesting of these RSUs resulted in stock-based compensation of $ 112,334 and $ 134,554 , respectively, for the three and six months ended June 30, 2024, which is included in operating expenses condensed interim consolidated statements of loss and comprehensive loss. The vesting of RSU’s during the three and six months ending June 30, 2024, resulted in stock based compensation expense of $ 189,808 and $ 426,664 respectively ($ 419,754 and $ 594,724 for the three and six months ending June 30, 2023, respectively). 12. 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 Share on the date of redemption in exchange for cash. The following table summarizes the DSU activity during the six months ended June 30, 2024, and 2023: Schedule of Deferred Share Units Weighted average grant date fair value Number of per share shares (C$) Unvested as at December 31 2022 2,710,000 $ 0.97 Vested ( 1,250,000 ) $ 1.03 Unvested as at June 30, 2023 1,460,000 $ 1.00 Unvested as at December 31 2023 1,495,454 $ 0.90 Granted 1,907,840 $ 0.13 Vested ( 3,157,840 ) $ 0.67 Unvested as at June 30, 2024 245,454 $ 0.22 The vesting of DSU’s during the three and six months ended June 30, 2024, resulted in stock based compensation expense of $ 476,794 and $ 551,772 , respectively. The vesting of DSU’s during the three and six months ending June 30, 2023, resulted in stock based compensation expense of $ 486,602 and $ 287,324 , respectively. The fair value of each DSU is $ 0.12 as of June 30, 2024, and $ 0.17 as of June 30, 2023. 13. 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. 19 On July 28, 2021, a lawsuit was filed in the US District Court for the District of Idaho brought by Crescent Mining, LLC (“Crescent”). The named defendants include Placer Mining, Robert Hopper Jr., and the Company. The lawsuit alleges that Placer Mining and Robert Hopper 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 US District Court Judge, David C. Nye granted in part and denied in part the Company’s motion to dismiss. The court granted the Company’s motion to dismiss Crescent’s Cost Recovery claim under CERCLA Section 107(a), Declaratory Judgment, Tortious Interference, Trespass, Nuisance and Negligence claims. 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 is vigorously defending 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. The lawsuit is currently in the discovery phase, in which information is gathered and exchanged. 14. Deferred tax liability The Company recorded income tax recovery (expense) of $ 504,798 and $ 1,204,718 for the three and six months ended June 30, 2024, and incurred income tax expense of $ 3,508,741 and $ 3,508,741 for the three and six months ended June 30, 2023. The Company’s effective income tax rate for the first six months of 2024 was 10.3 % compared to - 30.29 % for the first six months of 2023. The effective tax rate during the first six months of 2024 differed from the statutory rate primarily due to the recognition of deferred tax assets available to offset the deferred tax liability associated with the Stream Obligation. The Company maintains a valuation allowance against net operating losses subject to Section 382 of the Internal Revenue Code and other deferred tax assets. The effective tax rate during the first six months of 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. A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will likely ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. 15. Operating Expenses Schedule of Operating Expenses 2024 2023 2024 2023 Three Months Ended Six Months Ended June 30, June 30 2024 2023 2024 2023 Operating expenses General administration expenses $ 3,342,235 $ 2,392,681 $ 6,187,472 $ 3,807,584 Salaries, wages, and consulting fees 807,879 944,292 1,750,273 1,714,877 Total 4,150,114 3,336,973 7,937,745 5,522,461 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 Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2024 2023 2024 2023 Consulting fees & wages $ 353,417 $ 357,468 $ 827,610 $ 572,917 At June 30, 2024 and June 30, 2023, $ 88,796 and $ 52,148 , respectively, is owed to key management personnel with all amounts included in accounts payable and accrued liabilities. 17. Subsequent Events Share Issuance On July 8, 2024, the Company issued 4,653,409 shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending June 30, 2024. 20