ITEM 1A. RISK FACTORS 16
ITEM 1B. UNRESOLVED STAFF COMMENTS 27
ITEM 1C. CYBERSECURITY 27
ITEM 2. PROPERTIES 28
ITEM 3. LEGAL PROCEEDINGS 38
ITEM 4. MINE SAFETY DISCLOSURES 39
ITEM 6. [RESERVED] 42
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 45
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 46
ITEM 9A. CONTROLS AND PROCEDURES 87
ITEM 9B. OTHER INFORMATION 88
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 88
PART III 89
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 89
ITEM 11. EXECUTIVE COMPENSATION 91
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 94
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 95
SIGNATURES 98
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Bunker
Hill Mining Corp. (“Bunker Hill,” “BHMC,” “we,” “us,” “our” or the “Company”)
is a U.S. domestic issuer for U.S. Securities and Exchange Commission (the “SEC”) purposes, it is required to report its
financial results under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and its shares of common stock trade
on the TSX Venture Exchange (the “TSXV”) and the OTCQB Venture Market.
This
Annual Report on Form 10-K (this “Annual Report”), including “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Item 7 of this report, contains “forward-looking statements” within
the meaning of the Securities Act (as defined below) and the Exchange Act (as defined below), and “forward-looking information”
within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Any statements that express
or involve discussions with respect to business prospects, predictions, expectations, beliefs, plans, intentions, projections, objectives,
strategies, assumptions, future events, performance or exploration and development efforts using words or phrases (including negative
and grammatical variations) such as, but not limited to, “expects,” “anticipates,” “plans,” “estimates,”
“intends,” “forecasts,” “likely,” “projects,” “believes,” “seeks,”
or stating that certain actions, events or results “may,” “could,” “would,” “should,”
“might” or “will” be taken, occur or be achieved, are not statements of historical fact and may be forward-looking
statements. Although we believe that our plans, intentions, and expectations reflected in these forward-looking statements are reasonable,
we cannot be certain that these plans, intentions, and expectations will be achieved. Actual results, performance, or achievements could
differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this Annual Report. Forward-looking
statements in this Annual Report include, but are not limited to, statements regarding the following:
● our business, prospects, and overall strategy;
Forward-looking
statements are based on our current expectations and assumptions that are subject to a variety of known and unknown risks, uncertainties
and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking
statements, including, but not limited to, the following:
● risk factors discussed in this Annual Report; and
● other factors, many of which are beyond our control.
This
list is not exhaustive of all the risk factors that may affect our forward-looking statements.
Although
we have attempted to identify important factors that could cause actual results, performance, or achievements to differ materially from
those described in forward-looking statements, there may be other factors that could cause results, performance, or achievements not
to be as anticipated, estimated, intended, or expected. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results, performance, or achievements may vary, possibly materially, from those anticipated, estimated,
intended, or expected. We caution readers not to place undue reliance on any such forward-looking statements. Except as required by law,
we disclaim any obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all of the forward-looking statements contained
in this Annual Report by the foregoing cautionary statements. We advise you to carefully review the reports and documents we file
from time to time with the SEC and with the Canadian securities regulatory authorities. The reports and documents filed by us with the
SEC are available at www.sec.gov and with the Canadian securities regulatory authorities under the Company’s profile at
www.sedarplus.ca.
Certain
statements in this report, including statements in the following discussion, are what are known as “forward looking statements”,
which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately
predict the future. Words such as “plans,” “intends,” “will,” “hopes,” “seeks,”
“anticipates,” “expects” and the like often identify such forward looking statements, but are not the only indication
that a statement is a forward-looking statement. Such forward looking statements include statements concerning the Company’s plans
and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present
and future operations will or may produce revenues, income or profits. Numerous factors and future events could cause the Company to
change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future
operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered
in light of the discussion of risks and other factors contained in this report and in the Company’s other filings with the SEC.
No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.
Cautionary
Note to U.S. Residents Concerning Disclosure of Mineral Resources
Certain
prior regulatory filings made in Canada contain or incorporate by reference therein certain disclosure that satisfies the additional
requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. Prior resource estimates included
in those Canadian filings, and in the documents incorporated by reference therein, had been prepared in accordance with Canadian National
Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of
Mining, Metallurgy and Petroleum (“CIM”) classification system. NI 43-101 is a rule developed by the Canadian Securities
Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning
mineral projects.
Canadian
standards, including NI 43-101, may differ from the requirements of subpart 1300 of Regulation S-K (“S-K 1300”). Thus, resource
information contained, or incorporated by reference, in the Company’s Canadian filings, and in the documents incorporated by reference
therein, may not be comparable to similar information disclosed by companies reporting mineral reserve and mineral resource information
under S-K 1300.
The
terms “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are Canadian mining
terms as defined in accordance with NI 43-101 and CIM standards. Pursuant to S-K 1300, the SEC now recognizes estimates of “measured
mineral resources,” “indicated mineral resources” and “inferred mineral resources.” In addition, the SEC
has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be substantially
similar to the corresponding standards of the CIM.
Investors
are cautioned that while terms are substantially similar to CIM standards, there are differences in the definitions and standards under
S-K 1300 and the CIM standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report
as “proven reserves,” “probable reserves,” “measured mineral resources,” “indicated mineral
resources” and “inferred mineral resources” under NI 43-101 will be the same as the reserve or resource estimates prepared
under the standards adopted under S-K 1300.
Investors
are also cautioned that while the SEC now recognizes “measured mineral resources,” “indicated mineral resources”
and “inferred mineral resources,” investors should not assume that any part or all of mineral deposits in these categories
will ever be converted into mineral reserves.
Mineralization
described using these terms has a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of a “measured mineral resource,” “indicated mineral resource”
or “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume
that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces”
in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization
that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.
PART
I
ITEM
1. BUSINESS
Our
Business
Bunker
Hill Mining Corp. was incorporated under the laws of Nevada in 2007 under its former name Lincoln Mining Corp. We have one wholly owned
subsidiary, Silver Valley Metals Corp. Our business address is 1009 McKinley Ave, Kellogg, ID 83837, USA. The telephone number for our
office is +1 604 417 7952. We maintain a corporate website at https://bunkerhillmining.com.
Overview
The
Company’s focus is the development and restart of its 100% owned flagship asset, the Bunker Hill mine (the “Bunker Hill Mine”
or the “Mine”) in Idaho, USA. The Mine remains the largest single producing mine by tonnage in the Silver Valley region of
northwest Idaho, historically producing over 165 million ounces of silver and 5 million tons of base metals between 1885 and 1981. The
Bunker Hill Mine is located within Operable Unit 2 of the Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921),
where cleanup activities have been completed.
The
Company was incorporated for the purpose of mineral exploration at the Bunker Hill Mine. The Company has moved into the development
stage concurrent with (i) purchasing the mine and a process plant, (ii) completing successive technical and economic studies,
including a Prefeasibility Study, (iii) delineating mineral reserves, and (iv) advancing the construction of the facilities, with
planned operations to commence in 2026.
2025
Key Developments
During
2025, the Company completed a major restructuring of its balance sheet, including the conversion of certain outstanding debt into equity,
and the modification of certain existing royalty and stream financing arrangements with Sprott Streaming and Royalty Corp. (together
with its affiliates, “Sprott”) and also the issuance of 19,527,594 common shares in two private placements for net proceeds
of $61,803,983 (the “2025 Private Placements”). The 2025 Private Placements proceeds included the net proceeds from the settlement
of certain amounts owing to creditors, insiders and contractors through the issuance of common shares. Teck Resources Limited (together
with its affiliates, “Teck”) participated in the 2025 Private Placements and, as a result, became a related party alongside
Sprott, holding more than 10% of the Company’s common stock. Concurrent with the balance sheet restructuring in 2025,the Company
focused on the execution of its mine restart plan, prioritizing safety, environmental stewardship, infrastructure readiness, technical
de-risking, and organizational development. Key milestones met during =2025 included:
Safety
Leadership, Environmental Management and Community Engagement
Geology,
Engineering, and Mine Planning - Optimizing the restart plan, increasing the silver content
Underground
Mine – Preparation for Mining
Surface
Facilities – Final construction and start of commissioning
Debt
Facility
On
January 17, 2025, the Company drew $5,000,000 on the Sprott debt facility. As consideration for Sprott advancing the facility, the Company
granted a royalty for 0.5% 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. A 0.35% rate will apply to claims
outside of these areas.
On
January 31, 2025, the Company drew $6,000,000 on the Sprott debt facility.
June
2025 Equity Raise and Debt Restructuring
On
June 5, 2025, the Company completed the first of the 2025 private placements with a brokered private placement (the “Brokered
Offering”) for aggregate cash consideration of approximately $6,200,000, which included participation by Sprott, and concurrent non-brokered private placement (the
“Non-Brokered Offering” and together with the Brokered Offering, collectively, the “Equity Offerings”) with
Teck for approximately $20,500,000. As part of the Equity
Offerings, we issued an aggregate of our 7,206,165 units (“Units”) at a price of C$5.25 (or the U.S. Dollar equivalent
thereof) per Unit (the “Offering Price”). Each Unit issued under the Equity Offerings consisted of one share of our
common stock and one-half of one share of common stock purchase warrant (a “Warrant”). Each whole Warrant will be
exercisable to acquire one additional share of our common stock (a “Warrant Share”) at a price of C$8.75 per Warrant
Share for a period of three years following the date of issuance, subject to customary adjustments.
In
the Brokered Offering, 1,626,318 Units were sold at the Offering Price by a syndicate of agents led by BMO Capital Markets, CIBC
Capital Markets and Red Cloud Securities Inc., as joint bookrunners, and including National Bank Financial Inc. (collectively, the
“Agents”), of which Sprott acquired 285,715 Units (the “Sprott Subscription”). In the Non-Brokered Offering,
Teck acquired 5,579,848 Units (the “Teck Units”) at the Offering Price. The net proceeds of the Equity Offerings have
been and will primarily be used to support the construction, start-up and ramp-up of the Bunker Hill Mine.
The
2025 private placements, including both the brokered and non-brokered components, were conducted on a private placement basis pursuant to applicable
exemptions from the requirements of securities laws under National Instrument 45-106 – Prospectus Exemptions and the United
States Securities Act of 1933, as amended (the “Securities Act”), in such other jurisdictions outside of Canada and the United
States pursuant to applicable exemptions from the prospectus, registration or other similar requirements in such other jurisdictions.
Brokered
Offering
On
June 5, 2025, in connection with the Brokered Offering, the Company and the Agents entered into an agency agreement (the
“Agency Agreement”), pursuant to which the Agents conducted a “best efforts” marketed private placement of
Units at the Offering Price for aggregate cash consideration of approximately $6,200,000. Pursuant to the Agency Agreement, the
Agents received cash commissions of C$461,061.
On
June 5, 2025, pursuant to the Agency Agreement, the Company entered into subscription agreements (collectively, the “Brokered Subscription
Agreements”) with certain investors, pursuant to which such investors acquired Units at the Offering Price. The Brokered Subscription
Agreements contain customary representations and warranties by us and the investors. The representations, warranties and covenants contained
in the Brokered Subscription Agreements were made solely for purposes of such agreements and as of a specific date, were solely for the
benefit of the parties to such agreements and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to security holders. Security holders should not rely on the representations, warranties, and covenants or any
descriptions thereof as characterizations of the actual state of facts or condition of us.
In
connection with the issuance of the Warrants, on June 5, 2025, the Company entered a warrant indenture (the “Warrant Indenture”)
with Computershare Trust Company of Canada, as warrant agent, to govern the issuance and management of the Warrants.
Non-Brokered
Offering
On
March 5, 2025, under the Non-Brokered Offering, we entered into a subscription agreement, as amended by an amending agreement, dated
March 24, 2025 with Teck, pursuant to which Teck (i) contributed $2.00 for every $1.00 raised in the Brokered Offering and pursuant to
the Debt Settlements and Equity Payment Agreement (each as defined herein and further described below) and (ii) acquired the Teck Units
at the Offering Price, for aggregate consideration of approximately $20,500,000.
Immediately
prior to the closing of the Non-Brokered Offering, Teck beneficially owned, directly or indirectly, or exercised control or direction
over, 679,564 shares of our common stock and warrants to purchase an additional 84,326 shares of our common stock, representing
approximately 6.6% of the issued and outstanding shares of our common stock on a non-diluted basis and approximately 7.4% on a partially
diluted basis. Upon closing of the Non-Brokered Offering, Teck now beneficially owns, directly or indirectly, or exercises control or
direction over 6,259,411 shares of our common stock and warrants to purchase an additional 2,874,250 shares of our common stock,
representing approximately 23.9% of the issued and outstanding shares of our common stock (on a non-diluted basis and, assuming the exercise
of all warrants now held by Teck, approximately 31.4% on a partially diluted basis) and is considered a “Control Person”
of us (as such term is defined in the policies of the TSX-V). We obtained written consents of our disinterested stockholders holding
a majority of our voting shares (collectively, the “Stockholder Consent”) for, among other things, the Non-Brokered Offering,
including the creation of Teck as a Control Person of us, in satisfaction of the applicable shareholder approval requirements of the
TSX-V.
Investor
Rights Agreement
On
June 5, 2025, in connection with the Non-Brokered Offering, we entered into a customary investor rights agreement (the “Teck IRA”)
with Teck pursuant to which, among other things, for as long as Teck holds 10% or more of the issued and outstanding shares of our common
stock (on a fully diluted basis), Teck will have certain pre-emptive and information rights, including the right to appoint one nominee
to the our Board of Directors (the “Board”). In addition, in accordance with the terms of the Teck IRA, we will not be permitted
to incur any additional indebtedness or grant any additional liens (other than certain permitted indebtedness and liens) nor grant any
additional royalties, enter into any streaming arrangements or conduct any non-equity financings without the prior written consent of
Teck.
Capital
Restructuring Transactions
Concurrently
with the closing of the Equity Offerings, we closed capital restructuring transactions, including the conversion into equity of certain
outstanding debt, and the modification of certain existing royalty and stream financing arrangements with Sprott, as set forth
in the recapitalization agreement, dated as of June 5, 2025, by and among us, our wholly-owned subsidiary Silver Valley Metals Corp.
(formerly American Zinc Corp.) (“Silver Valley”), Sprott Streaming, Teck, and Monetary Metals (the “Recapitalization
Agreement”) and as further discussed below.
All
securities issued pursuant to restructuring transactions described below (i) are subject to a four months plus one day holding period
in accordance with applicable Canadian securities laws and, if applicable, the policies of the TSX-V and (ii) have not been registered
under the Securities Act or any U.S. state securities laws and may not be offered or sold in the United States without registration under
the Securities Act and all applicable state securities laws or compliance with requirements of an applicable exemption therefrom.
Standby
Facility
On
June 5, 2025, we and Teck agreed that the uncommitted revolving standby prepayment facility of up to $10,000,000 (the “SP Facility”)
will bear interest at a rate of 13.5% per annum until June 30, 2027, and a rate equal to 15.0% per annum thereafter, calculated and capitalized
quarterly. The SP Facility will be available to us until the earlier of (i) June 30, 2028, and (ii) the date on which the Bunker Hill
Mine hits 90% of name plate capacity or on the date on which we are cash flow positive for a quarter, unless terminated earlier by Teck.
The SP Facility is secured by a security interest over all our assets, properties and undertakings and Silver Valley in form and scope
similar to the security held by Sprott Streaming, with certain security held on a first priority basis. No bonus securities of ours were
issued to Teck in connection with the SP Facility, nor is the SP Facility convertible into our securities.
Offtake
Amendments
We
have agreed to amend certain zinc and lead offtake agreements previously entered into with respect to the Bunker Hill Mine (the “Zinc
and Lead Offtake Agreements”). On June 5, 2025, in connection with the Non-Brokered Offering, we and Teck amended the existing
zinc offtake agreement (with an effective date of November 10, 2023) (the “Zinc Offtake Amendment”) and the lead concentrate
offtake agreement (with an effective date of November 20, 2023) (the “Lead Offtake Amendment”), in each case between Teck
and Silver Valley, pursuant to which, among other amendments, the offtake under each respective agreement will apply to life-of-mine
production rather than the current five-year term.
Amendment
of Existing Convertible Debentures
We
completed an amendment of the Series 1 CDs and Series 2 CDs (each as defined below), as further described below:
Amendments
of Existing Royalty
On
June 5, 2025, in addition to the amendment of the Second Royalty (as defined below), we amended certain existing royalty interests (collectively,
the “First Royalty”) previously granted to Sprott, which applies to certain primary, residual and other claims
comprising the Bunker Hill Mine. As a result of such amendment, the First Royalty has been consolidated into one 1.85% life-of-mine gross
revenue royalty applying to both primary and secondary claims comprising the Bunker Hill Mine.
Amendment
to the Debt Facility
On
June 5, 2025, in connection with the capital restructuring transactions (the “Capital Restructuring Transactions” and,
together with the Equity Offerings, the “Transactions”), the Company and Sprott amended and restated the senior secured loan agreement in the aggregate principal amount of
$21,000,000 (the “Debt Facility”) to (i) reduce the outstanding principal amount under the Debt Facility from
$21,000,000 to $15,000,000, (ii) increase the secondary claims percentage under the additional royalty (the “Second
Royalty”), which amendment is also reflected in an amending agreement to the Second Royalty, and (iii) cancel the royalty
buyback option granted to us thereunder, which amendment is also reflected in the amending agreement to the Second Royalty. In
addition, the Debt Facility was amended to include an option, at the Company’s election, to settle any accrued and unpaid
interest through the issuance of shares of our common stock, subject to the prior approval of the TSX-V.
Sprott
Stream Conversion
On
June 5, 2025, the existing metals purchase agreement (the “Metals Purchase Agreement”) dated June 23, 2023, by and among
us, Silver Valley, and Sprott, pursuant to which Sprott previously advanced a $46,000,000 deposit to Silver Valley,
was terminated and exchanged (the “Exchange Agreement”) for (i) 5,714,286 shares of our common stock; (ii) senior secured
Series 3 convertible debentures in the aggregate principal amount of $4,000,000 and with a maturity date of June 5, 2030 (the “Series
3 CDs”); and (iii) an additional 1.65% life-of-mine gross revenue royalty (the “New Royalty”) on primary and secondary
claims comprising the Bunker Hill Mine.
Sprott Debt Settlements
On
June 5, 2025, we and Silver Valley entered into the debt settlement agreements with Sprott (collectively, the “Sprott
Debt Settlement Agreements”), pursuant to which an aggregate of 1,819,728 shares of our common stock were issued to Sprott at the Offering Price in full satisfaction of (i) $487,500 of unpaid interest under the secured convertible debentures held by Sprott, and (ii) $6,200,000, consisting of the principal amount of $6,000,000 previously advanced to us under the Debt Facility, together
with an aggregate of $200,000 of interest accrued thereon.
Amendments
to the Monetary Metals Silver Loan
On
June 5, 2025, in connection with the Transactions, we and Silver Valley entered into (i) an amendment to the secured promissory note
purchase agreement dated August 8, 2024, as previously amended by a first amendment to secured promissory note purchase agreement dated
November 11, 2024 (the “MM NPA”), and (ii) an amendment to the secured promissory note dated August 8, 2024 (the “MM
Note”), each with Monetary Metals Bond III LLC (“Monetary Metals”) to, amongst other things, (A) reduce the rate at
which advances under the MM NPA bear interest from 15% to 13.5% per annum, (B) clarify the calculation of the cash flow sweep, (C) extend
the availability date for advances thereunder from January 31, 2025 to June 30, 2025, and (D) in connection with any further advances,
provide for the issuance of bonus warrants in such number and on such terms as to be agreed upon between the parties before issuance
and subject to prior approval of the TSX-V. In any event, the number of bonus warrants issued or issuable to Monetary Metals will not
exceed, in the aggregate, the maximum of 85,715 allowable under the MM NPA. The MM NPA and the MM Note are secured by security interests
over all our and Silver Valley’s assets, properties and undertakings, in form and scope similar to the security held by Sprott and the security held by Teck.
Amendments
to Existing Security and Intercreditor Arrangements
Pursuant
to existing security arrangements, we have granted security interests to Sprott, Monetary Metals, and MineWater LLC (“MineWater,”
and together with Sprott and Monetary Metals, the “Original Intercreditor Parties”) over all our and Silver Valley’s
the assets, properties and undertakings. On June 5, 2025, in connection with the existing security and intercreditor arrangements among
the Original Intercreditor Parties and us, the parties amended and restated such arrangements to, among other things, (i) reflect the
termination of the Metals Purchase Agreement and other applicable Capital Restructuring Transactions; (ii) defer certain royalty payments
and restrict early principal prepayments on certain outstanding debt obligations of ours for so long as amounts are outstanding under
the SP Facility, as described above; (iii) allow for the first priority security in favor of Teck over certain inventory and accounts
receivable in connection with the SP Facility; and (iv) account for Teck under such arrangements (collectively, the “A&R Intercreditor
and Subordination Agreement”).
Sprott
Investor Rights Agreement
On
June 5, 2025, we entered into a customary investor rights agreement (the “Sprott IRA”) with Sprott pursuant to
which, among other things, Sprott has the right to appoint one nominee (or an observer) to the Board, subject to certain customary
exceptions.
In
connection with the transactions described herein (including the Sprott Subscription), Sprott was issued an aggregate of 742,294 shares
of our common stock, 142,858 Warrants and convertible debentures of which the principal amount is convertible into up to 1,094,858 shares
of our common stock. As a result, Sprott now owns or exercises control over approximately 29.6% of the issued and outstanding shares
of our common stock (or, assuming the exercise of all warrants and the conversion of the full principal amount of the convertible debentures
now held by Sprott, approximately 39.1% on a partially diluted basis) and is considered a “Control Person” of us. We obtained
the Stockholder Consent for, among other things, the restructuring transactions with Sprott and the Sprott Subscription, including the
creation of Sprott as a Control Person of us, in satisfaction of the applicable shareholder approval requirements of the TSX-V.
Given
that Sprott is a “Non-Arm’s Length Party” (as such term is defined in the policies of the TSX-V), the amendment
and restatement of the Debt Facility and the granting of the Second Royalty each constituted a “Reviewable Disposition” under
TSX-V Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets and were therefore subject to the TSX-V requirement
to provide evidence of value. We satisfied this requirement by way of the Stockholder Consent.
Additional
Debt Settlements
The Company
and Silver Valley have agreed to settle outstanding receivables and other amounts owing (including, where applicable, accrued and unpaid
interest thereon) in aggregate amounts of approximately $80,000, $3,072,254 and C$195,000 with certain creditors, contractors, and directors,
respectively, of ours or Silver Valley through the issuance of equity securities at the Offering Price. On June 5, 2025, concurrently
with the closing of the Equity Offerings, we entered into debt settlement agreements (collectively, the “Debt Settlement Agreements”)
with such creditors, contractors, and directors (collectively, the “Debt Settlements”) in order to preserve cash for
the potential restart and ongoing development of the Bunker Hill Mine.
In
connection with the Debt Settlements, the Company issued:
(a) 21,769 Units to MineWater, as further described herein;
Each
Unit issued pursuant to the Debt Settlements consisted of one share of our common stock and one-half of Warrant, with each whole Warrant
exercisable for one additional Warrant Share at an exercise price of C$8.75 per Warrant Share for a period of three years following the
date of issuance. The Participating Directors, each being a Non-Arm’s Length Party (as such term is defined in the policies of
the TSX-V), received share, but no warrant of our common stock in lieu of Units. We satisfied the shareholder approval requirements of the TSX-V applicable
to the issuance of the shares of our common stock to the Participating Directors, as Non-Arm’s Length Parties, by way of the Stockholder
Consent.
Equity
Payment for Land Purchase Option Agreement
Silver
Valley and C & E Tree Farm, L.L.C. (“C&E”) previously entered into an option agreement dated March 3, 2023 (the “Option
Agreement”), pursuant to which Silver Valley has an option to purchase certain real property in Idaho, USA, from C&E upon making
a cash payment of $3,129,500, subject to adjustment for lease payments made pursuant to a commercial lease agreement between the parties.
We wanted to satisfy a portion of the purchase price payable under the Option Agreement through the issuance of equity securities. Accordingly,
on June 5, 2025, we, Silver Valley and C&E entered into an equity payment agreement (the “Equity Payment Agreement”),
pursuant to which we issued 136,055 Units to C&E at a deemed price equal to the Offering Price to satisfy $500,000 of the purchase
price payable under the Option Agreement. Each Unit issued pursuant to the Equity Payment Agreement consists of one share of our common
stock and one-half of one Warrant, with each whole Warrant exercisable for one additional Warrant Share at an exercise price of C$8.75
per Warrant Share for a period of three years following the date of issuance, being June 5, 2028.
Amended
and Restated Articles of Incorporation
On
June 5, 2025, in connection with the June 2025 equity raise and debt restructuring, we amended and restated the Company’s
articles of incorporation (the “A&R Articles”) to, among other things, increase the total number of shares of
capital stock that the Company is authorized to issue from 43,142,858 shares to 71,714,286 shares and make certain other
non-substantive amendments. The Company obtained shareholder approval of the A&R Articles pursuant to the Stockholder Consent.
September
2025 Equity Raise
On
September 29, 2025, the Company completed a “bought deal” private placement (the “September 2025 Offering”)
for aggregate cash consideration of $37,378,645, which included participation by Teck for $19,494,060.
As
part of the September 2025 Offering, we issued an aggregate of 12,321,429 units (“Units”) at a price of $3.05 per Unit.
Each Unit consists of one share of our common stock and one common stock purchase warrant of the Company (a “Warrant”).
Each Warrant entitled the holder thereof to purchase one share of our common stock (a “Warrant Share”) at an exercise
price of C$5.95 per Warrant Share for 60 months after issuance. In connection with the closing of the September 2025 Offering, the
Company paid a syndicate of underwriters (the “Underwriters”) aggregate cash fees in the amounts of C$1,437,808 and
$1,175,985 and issued to the Underwriters an aggregate of 713,191 non-transferrable compensation options (the “Compensation
Options”), representing (i) 6% of the gross proceeds of the September 2025 Offering, other than the gross proceeds raised from
certain sales pursuant to a president’s list (the “President’s List Sales”); and (ii) 3.0% of the gross
proceeds raised from President’s List Sales. Each Compensation Option is exercisable to acquire one share of common stock of
the Company at a price of C$4.20 per share at any time on or before September 29, 2027, less any amount of cash fees and
Compensation Options paid and issued to a finder. In addition, the Company paid a finder a cash fee of C$52,005, representing 3.333%
of the gross proceeds of the Canadian dollar-denominated portion of the September 2025 Offering from subscribers introduced by such
finder to the Company (the “Introduced Subscribers”), and issued to certain principals of such finder an aggregate of
520,052 Compensation Options, representing 4.0% of the Units sold under the September 2025 Offering to the Introduced
Subscribers.
Silver
Loan
On
November 10, 2025, the Company closed the sixth tranche of the Silver Loan in the principal amount of $2,521,215, being the number of
US dollars equal to 50,384 ounces of silver. After deduction of financing costs and the three months ending November 8, 2025 interest
payment on 1,098,399 ounces, the Company received $nil.
Ranger
Page Property Purchase
On
December 12, 2025, we entered into an asset purchase agreement with Silver Dollar Resources (Idaho) Inc., a subsidiary of Silver Dollar
Resources Inc. (“Silver Dollar”), to acquire the Ranger Page property which includes, six past-producing underground high-grade
silver-lead-zinc mines located immediately adjacent to and to the west of the Bunker Hill Mine in the prolific Silver Valley mining district
of Idaho, USA. The Company acquired the properties for total consideration of approximately $4,200,000 comprised of 666,667 shares of
Bunker Hill’s common stock, subject to the below contractual escrow.
Release Date Payment Shares Release to Vendor Parent from Contractual Escrow
6–month anniversary from December 11, 2025 66,667 Payment Shares
Reverse
Stock Split
In
January 2026, we received the written approval of the majority of the Company’s stockholders, by way of the Stockholder Consent,
to proceed with authority to implement a reverse stock split based on a one-for-thirty five (1-for-35) consolidation. On March 5,
2026, we filed an amendment to our Certificate of Incorporation to implement the reverse stock split based on a one-for-thirty five (1-for-35)
consolidation ratio on March 6, 2026. Our common shares began trading on the TSXV and OTCQB on a reverse split-adjusted basis under our
existing trade symbol “BNKR” and “BHLL” respectively at the opening of the market on March 6, 2026. All shares
and per share amounts have been presented in our financial statements on a post consolidation basis.
Company
History
In
early 2020, a management team comprised of former executives from Barrick Gold Corp. assumed leadership of the Company. Since that
time, the Company conducted multiple exploration campaigns, economic studies and mineral resource estimates, and advanced the
rehabilitation and development of the Bunker Hill Mine. In December 2021, the Company announced a project finance package with
Sprott, an amended Settlement Agreement (“Amended Settlement Agreement”) with the EPA, and the planned purchase of the
Bunker Hill Mine, setting the stage for a restart of the Mine. The Company had established the foundation for planned restart of the historic Bunker Hill Mine.
Lease
and Purchase of the Bunker Hill Mine
Prior
to completing the purchase of the Mine in January 2022, 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 dated 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 Placer Mining 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 shares of common stock of the Company. The Company agreed to make an advance payment
of $2,000,000, credited toward the purchase price of the Mine, which had the effect of decreasing the remaining amount to an aggregate
of $3,400,000 payable in cash and $2,000,000 in common stock of the Company.
The
Amended Placer Mining Agreement also required the Company to make payments pursuant to an agreement between the Company and the EPA whereby for so long
as the Company leases, owns and/or occupies the Mine, the Company would make payments to the EPA on behalf of Placer Mining in
satisfaction of the EPA’s claim for historical water treatment cost recovery in accordance with a Settlement Agreement
reached with the EPA in 2018. Immediately prior to the purchase of the Mine, the Company’s liability to the EPA totaled
$11,000,000.
The
Company completed the purchase of the Bunker Hill 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 between the Company and the EPA
that was executed in December 2021 (see “EPA 2018 Settlement Agreement & 2021 Amended Settlement Agreement” section below).
EPA
2018 Settlement Agreement & 2021 Amended Settlement Agreement
The
Company entered into a Settlement Agreement and Order of Consent with the EPA on May 15, 2018. This agreement set forth the
Company’s obligations and rights relating to the Comprehensive Environmental Response, Compensation, and Liability Act
(“CERCLA”) liability for past environmental damage to the mine site and surrounding area to obligations that
included, but were not limited to:
● Conducting a work program as set forth in the Settlement Agreement
In
December 2021, the Company entered into an Amended Settlement Agreement between the Company, Idaho Department
of Environmental Quality, U.S. Department of Justice (the “DOJ”) and the EPA modifying the payment schedule and terms for
recovery of historical environmental response costs at Bunker Hill Mine incurred by the EPA. With the purchase of the Mine, the remaining
payments of the EPA cost recovery liability were assumed by the Company, resulting in a total of $19,000,000 liability to the Company,
an increase of $8,000,000. The new payment schedule included a $2,000,000 payment to the EPA within 30 days of execution of the amendment,
which was made.
Pursuant
to the December 2021 Amended Settlement Agreement, the remaining $17,000,000 would be paid on the following dates:
Date Amount
The
changes in payment terms and schedule were contingent upon the Company securing financial assurance in the form of performance bonds
or letters of credit deemed acceptable to the EPA totaling $17,000,000, corresponding to the Company’s cost recovery obligations as outlined above. In June 2022, the Company was successful in obtaining financial assurance. The amount
of the bonds or letters of credit will decrease over time as individual payments are made.
In
December 2024, the Company made the second payment under the 2021 Amended Settlement Agreement for $3,000,000. As a result, the remainder
of the payment obligation was $14,000,000. As of December 31, 2024, the Company had two payment bonds of $9,999,000 and $4,001,000 in
place to secure this liability. As of December 31, 2025 the collateral for the payment bonds are comprised of $2,975,000 of restricted
cash and land pledged by third parties, with whom the Company has entered into an agreement that contemplates a monthly fee of $20,000
(payable in cash or common stock of the Company, at the Company’s election) the “Financing Cooperation Agreement”.
In the fourth quarter of 2025 the EPA agreed to forebear enforcement of any late payments pursuant to the first amendment of the Amended
Settlement Agreement to facilitate ongoing discussion of a potential second amendment to the Amended Settlement Agreement, including
the payment due in November 2025. The EPA reserved all rights to resume collection of late payments in the event a Second Amendment of
the 2021 Amended Settlement Agreement is not finalized.
2024
Financings
On
August 8, 2024, the Company and its subsidiary Silver Valley Metals Corp. (formerly American Zinc Corp.) (“Silver Valley”)
entered into a secured promissory note purchase agreement with Monetary Metals Bond III LLC (“Monetary Metals”), a Delaware
limited liability company established by Monetary Metals & Co., pursuant to which Monetary Metals agreed to purchase, and Silver
Valley agreed to issue and sell to Monetary Metals, a secured promissory note (the “Note”) in a private placement. Pursuant
to the Note, Monetary Metals agreed to loan to Silver Valley, in one or more tranches, up to an aggregate principal amount of U.S. dollars
equal to 1.2 million ounces of silver (the “Silver Loan”). On August 8, 2024, the Company closed the first tranche of the
Silver Loan in the principal amount of $16,422,039, being the number of U.S. dollars equal to 609,805 ounces of silver. After deduction
of financing costs and the first-year interest, the Company received $13,225,005. The Silver Loan is for a term of three years, secured
against the Company’s assets and repayable in cash or silver ounces. The Silver Loan bears interest at the rate of 15% per annum,
payable in cash or silver ounces on the last day of each quarterly interest period. On September 25, 2024, the Company closed the second
tranche Silver Loan in the principal amount of $6,369,000, being the number of U.S. dollars equal to 200,000 ounces of silver. After
deduction of financing costs and the first-year interest the Company received $5,352,438. On November 6, 2024, the Company closed the
third tranche Silver Loan in the principal amount of $6,321,112, being the number of U.S. dollars equal to 198,777 ounces of silver.
After deduction of financing costs and the first-year interest the Company received $5,422,474. On November 8, 2024, the Company closed
the fourth tranche Silver Loan in the principal amount of $1,250,000, being the number of U.S. dollars equal to 39,620 ounces of silver.
After deduction of financing costs and the first-year interest the Company received $1,076,563. On December 30, 2024, the Company closed
the fifth tranche Silver Loan in the principal amount of $1,478,847, being the number of U.S. dollars equal to 50,198 ounces of silver.
After deduction of financing costs and the first-year interest the Company received $1,201,781.
A
series of related transactions also took place concurrently with closing of the Silver Loan in August 2024 to amend certain terms of
the existing financing package with Sprott. Firstly, the maturity
dates of the series 1 convertible debentures and series 2 convertible debentures (together, the “Debentures”) previously
issued by the Company to Sprott were extended from March 31, 2026 to March 31, 2028 and March 31, 2029, respectively. Additionally, the
termination date of the royalty put option (the “Royalty Put Option”) previously granted by the Company to Sprott was amended
from the later of the payment in full of the Debentures and the exercise of the Royalty Put Option, to the later of the payment in full
of the Debentures and March 31, 2029. The Company also amended certain terms of the existing loan agreement (the “Sprott Loan”)
dated as of June 23, 2023, by and among (i) the Company, (ii) Silver Valley, and (iii) Sprott Private Resource Streaming and Royalty
(US Collector), LP and Sprott Private Resources Streaming and Royalty Annex (US Collector), LP (collectively, the “Sprott Lenders”)
to extend the maturity date of the Sprott Loan from June 30, 2027 to June 30, 2030 and increase the interest payable from June 30, 2027
onwards from 10% to 15%.
As
consideration for advancing the Silver Loan, the Company agreed to issue to Monetary Metals, subject to prior TSXV approval, non-transferable
bonus share purchase warrants (the “Bonus Warrants”) in one or more tranches. The number of Bonus Warrants issued in each
tranche will be equal to (a) in connection with the first tranche, two times the number of ounces of silver advanced by Monetary Metals
under the first tranche (the “Base Warrants”) and a bonus ratchet of (i) 2.5% of the Base Warrants if at least 500,000 and
up to 599,999 silver ounces are advanced, (ii) 5.0% of the Base Warrants if up at least 600,000 and up to 699,999 silver ounces are advanced,
(iii) 10.0% of the Base Warrants if at least 700,000 and up to 799,999 silver ounces are advanced, and (iv) 15.0% of the Base Warrants
if at least 800,000 silver ounces are advanced; and (b) in connection with any additional tranches, two times the number of ounces of
silver advanced under such tranche. In any event, the number of Bonus Warrants issuable to Monetary Metals is subject to a cap of 85,715
Bonus Warrants.
On
December 12, 2024, the Company drew $5,000,000 on the Sprott debt facility. As consideration for Sprott advancing the facility, the Company
granted a royalty for 0.5% 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. A 0.35% rate will apply to claims
outside of these areas.
On
December 19, 2024, the Company drew $5,000,000 on the Sprott debt facility. As consideration for Sprott advancing the facility, the Company
granted a royalty for 0.5% 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. A 0.35% rate will apply to claims
outside of these areas.
Business
Operations
The
Bunker Hill Mine is a zinc-lead-silver mine. The Company intends to mine and mill polymetallic mineralization on-site to produce both
zinc and lead-silver concentrates which is planned to be transported to Teck’s Trail smelter for processing pursuant to an off-take
agreement.
Infrastructure
The
Bunker Hill Mine includes all, surface rights, fee parcels, mineral claims, easements, existing infrastructure at Milo Gulch, and the
majority of equipment, machinery, and building Structures at the Kellogg Tunnel portal level, as well as all equipment and infrastructure
underground at the Bunker Hill Mine Complex. The Mine also includes all current and historic data and technical information relating
to the Bunker Hill Mine Complex, such as drill logs, reports, maps, and similar information located at the Mine site or any other location.
For further detail, please refer to the “Project Infrastructure” section in Item 2 below.
Government
Regulation and Approval
Exploration
and development activities, and any future mining operations, are subject to extensive laws and regulations governing the protection
of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. The Company
has made, and expects to make in the future, significant expenditures to comply with such laws and regulations. Future changes in applicable
laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on the Company’s
financial condition or results of operations.
It
will be necessary to obtain one additional operations permit, the air quality permit, from the IDEQ prior to commencement of mine operations.
As the air quality permit is required for operations, there can be no assurance that the Company will be able to obtain it in a timely
manner or at all. For further detail, please refer to the “Environmental Studies and Permitting” section of the “Technical
Report Summary” in Item 2 below.
Property
Description
The
Company has mineral rights to 440 patented mining claims covering over 5,700 acres. Of these claims, 35 include surface ownership of
approximately 259 acres. It also has certain parcels of fee property that include mineral and surface rights but not patented mining
claims. Mining claims and fee properties are located in Townships 47, 48 North, Range 2 East, Townships 47, 48 North, Range 3 East, Boise
Meridian, Shoshone County, Idaho.
Patented
mining claims in the State of Idaho do not require permits for underground mining activities to commence on private lands. Other
permits associated with underground mining may be required, such as water discharge and site disturbance permits. The water
discharge is the responsibility of the EPA at the existing CTP. The Company expects to be responsible for water treatment in the
future and obtain an appropriate discharge permit.
For
further detail, please refer to the “Property Description and Ownership” section of the “Technical Report Summary”
in Item 2 below.
Competition
The
Company competes with other mining and exploration companies in connection with the acquisition of mining claims and leases on zinc and
other base and precious metals prospects as well as in connection with the recruitment and retention of qualified employees. Many of
these companies are much larger than the Company, have greater financial resources and have been in the mining business for much longer
than it has. As such, these competitors may be in a better position through size, finances and experience to acquire suitable exploration
and development properties. The Company may not be able to compete against these companies in acquiring new properties and/or qualified
people to work on its current project, or any other properties that may be acquired in the future.
Given
the size of the world market for base precious metals such as silver, lead and zinc, relative to the number of individual producers and
consumers, it is believed that no single company has sufficient market influence to significantly affect the price or supply of these
metals in the world market.
Employees