UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December
31, 2024
OR
For
the transition period from to
Commission
file number: 333-150028
BUNKER
HILL MINING CORP.
(Exact
name of registrant as specified in its charter)
Vancouver, British Columbia, Canada V6E 2E9
(Address of principal executive offices) (Zip Code)
(416)477-7771
(Registrant’s
Telephone Number, including area code)
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As
of June 30, 2024, the aggregate market value of the voting and non-voting shares of common stock of the registrant issued and outstanding
on such date, excluding shares held by affiliates of the registrant as a group, was $39,640,443.
Number
of shares of common stock outstanding as of March 28, 2025: 359,438,769
TABLE
OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 3
PART I 5
ITEM 1. BUSINESS 5
ITEM 1A. RISK FACTORS 10
ITEM 1B. UNRESOLVED STAFF COMMENTS 23
ITEM 1C. CYBERSECURITY 23
ITEM 2. PROPERTIES 24
ITEM 3. LEGAL PROCEEDINGS 35
ITEM 4. MINE SAFETY DISCLOSURES 36
ITEM 6. [RESERVED] 37
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 42
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 43
ITEM 9A. CONTROLS AND PROCEDURES 80
ITEM 9B. OTHER INFORMATION 81
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 81
PART III 82
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 82
ITEM 11. EXECUTIVE COMPENSATION 84
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 90
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 90
SIGNATURES 92
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;
● availability of liquidity and capital resources;
● 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. Subject to securing additional financing discussed in Item 7, “Subsequent Events” operations are planned
to commence in 2026.
2024
Developments
Project Development
During
the course of 2024 the Wardner operating yard, the base for Bunker Hill’s future mining operations, continued to undergo
significant change as new offices were installed and major earthworks were undertaken to create the footprint for the operating
set-up. Underground, rehabilitation continued to upgrade the historic infrastructure for modern active mining and as part of this a
400hp primary ventilation fan was installed – complete with automatic air doors – and major work was undertaken to
reinforce the decline as it goes through the Cate Fault area (the one major fault high in the Mine). In parallel with this activity,
the Underground (“UG”) team continued to build up its fleet of heavy mobile equipment.
In
the main Kellogg yard, construction of the Process Plant advanced significantly with the Plant building structurally complete by
year-end. Several remaining pieces of key equipment are still to be placed with the majority of the remaining work spanning
electrical and piping installation. The Filter Plant also got underway and at year-end had complete foundations and a fully erected
main Filter Feed Tank. During the quarter ended December 31, 2024 Avista Utilities installed the main power feed from the Kellogg
substation to the yard to ensure the electrical infrastructure is set-up for the significant power draw that will come with
restart. Throughout 2024 refurbishment of Pend Oreille and other used mill equipment advanced as did procurement such that both areas were essentially complete by year ended December 31, 2024.
Financial
Instruments in 2024
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 Private Resource Streaming &
Royalty Corp. (“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 3,000,000 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.
Project
Forecast Update (December 2024)
On
December 13, 2024, the Company announced that the Bunker Hill Mine restart project underwent a strategic review resulting in an
updated timeline and capital requirements. Pursuant to this review, the Company updated its forecast for a total restart expenditure
(excluding working capital) of $103 million, up from the previously forecasted $67 million and the $56 million in the 2022
Pre-Feasibility Study (the “PFS”), with the restart project anticipated to be delayed by up to four months. To provide
sufficient project financing for the ongoing development of the Bunker Hill Mine, the Company announced its intention to draw down
in tranches on the $21 million standby facility (the “Standby Facility”) provided by Sprott and finalize the ongoing
discussions with its strategic partners for potential offtake or similar financing for an additional $30 million.
On
December 19, 2024, the Company drew $5,000,000 on the Standby 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.
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 Mine. In December 2021, it announced a project finance package with Sprott, an amended Settlement Agreement with the U.S. Environmental Protection Agency (the “EPA”),
and the purchase of the Bunker Hill Mine, setting the stage for a restart of the Mine.
Lease
and Purchase of the Bunker Hill Mine
Prior
to purchasing 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 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 Agreement also required payments pursuant to an agreement with the EPA whereby for so long as the Company leases, owns and/or
occupies the Mine, the Company would make payments to the EPA on behalf of Placer Mining in satisfaction of the EPA’s claim for
historical water treatment cost recovery in accordance with the Settlement Agreement reached with the EPA in 2018. Immediately prior
to the purchase of the Mine, the Company’s liability to 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 with 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 EPA Settlement Agreement
Bunker
Hill entered into a Settlement Agreement and Order of Consent with the EPA on May 15, 2018. This agreement limits the Company’s
exposure 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 include:
In
December 2021, the Company entered into an amended Settlement Agreement (the “Amendment”) 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 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 to be paid in 2024 through 2029 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 in the amount of $3,000,000. As a result, the remainder of the
payment obligation is $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 January 20, 2025 the collateral for the payment bonds are comprised of $2,975,000 letter of credits
and land pledged by third parties, with whom the Company has entered into a financing cooperation agreement that contemplates a
monthly fee of $20,000 (payable in cash or common stock of the Company, at the Company’s election).
2023 Financings
In
March 2023, the Company amended the exercise price and expiry date of 10,416,667 warrants previously issued in a private placement
to Teck Resources Limited (“Teck”) on May 13, 2022 in consideration for the Company’s acquisition of the Pend
Oreille processing plant. The warrant entitled the holder to purchase one share of common stock of the Company at an exercise price
of C$0.37 per Warrant at any time on or prior to May 12, 2025. The Company amended the exercise price from C$0.37 to C$0.11 per
Warrant and the expiry date from May 12, 2025, to March 31, 2023. In March 2023, Teck exercised all 10,416,667 warrants at an
exercise price of C$0.11, for aggregate gross proceeds of $837,459 (C$1,145,834) to the Company.
In
March 2023, the Company closed a brokered private placement of special warrants (the “March 2023 Offering”), issuing 51,633,727
special warrants of the Company (“March 2023 Special Warrants”) at C$0.12 per March 2023 Special Warrant for $4,536,020 (C$6,196,047),
of which $3,661,822 was received in cash and $874,198 was applied towards settlement of accounts payable, accrued liabilities and promissory
notes. Each March 2023 Unit consists of one share of common stock of the Company (each, a “Unit Share”) and one common stock
purchase warrant of the Company (each, a “Warrant”). Each whole Warrant entitles the holder thereof to acquire one share
of common stock of the Company (a “Warrant Share”, and together with the Unit Shares, the “Underlying Shares”)
at an exercise price of C$0.15 per Warrant Share until March 27, 2026, subject to adjustment in certain events. 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.
On June 23, 2023, the Company
closed the upsized and improved $67,000,000 project finance package with Sprott, consisting of a $46,000,000 stream and a $21,000,000
new debt facility. The Bridge Loan was repaid from the proceeds of the Stream. The parties also agreed to extend the maturities of the
CD1 and CD2 debentures to March 31, 2026, when the full $6 million and $15 million, respectively, will become due.
During 2023 a subsidiary of Teck exercised its option for a minimum 5-year, 100% offtake of Bunker Hill’s zinc and lead
concentrates at its smelter in Trail, British Columbia, ensuring a long-term, sustainable revenue source.
Process
Plant Purchase
On
May 13, 2022, the Company completed the purchase of a comprehensive package of equipment and parts inventory from Teck’s Pend Oreille
site (the “Process Plant”) in eastern Washington State. The package comprised substantially all processing equipment including
complete crushing, grinding and flotation circuits suitable for a planned ~1,500 ton-per-day operation at Bunker Hill, and nearly 10,000
components and parts for mill, assay lab, conveyer, field instruments, and electrical spares.
Business
Operations
The
Mine is a zinc-lead-silver mine. When in production, the Company intends to mill polymetallic mineralizaton on-site to produce
both zinc and lead-silver concentrates which will then be shipped to Teck’s Trail smelter for processing as per the underlying
off-take agreement.
Infrastructure
The
Mine includes all mining rights and claims, surface rights, fee parcels, mineral interests, easements, existing infrastructure at Milo
Gulch, and the majority of machinery and buildings at the Kellogg Tunnel portal level, as well as all equipment and infrastructure underground at the Bunker Hill Mine Complex. It also includes all current and historic data relating to the Bunker Hill Mine Complex,
such as drill logs, reports, maps, and similar information located at the Mine site or any other location. 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 which 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 being
handled by 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
The
Company had forty full time employees as of December 31, 2024. The balance of the Company’s operations is comprised of
contracted labor and consultants.
Available
Information
We make available, free of charge, on
or through our Internet website, at www.bunkerhillmining.com, our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act. Our website and the information contained therein or connected thereto are not intended to be, and are not, incorporated into this
Annual Report.
Our reports and other information can
be inspected on the SEC’s website at www.sec.gov. The Company also files reports under Canadian regulatory requirements
on the System for Electronic Document Analysis and Retrieval (“SEDAR+”). The Company’s reports which are filed on SEDAR+
can be found under the Company’s SEDAR+ profile at www.sedarplus.ca.
ITEM
1A. RISK FACTORS
Our
business activities and the value of our securities are subject to significant hazards and risks, including those described below. If
any of such events should occur, our business, financial condition, liquidity, and/or results of operations could be materially harmed,
and holders and purchasers of our securities could lose part or all of their investments. Our risk factors are grouped into the following
categories:
● General Risk Factors;
● Risks Related to Mining and Exploration; and
● Risks Related to the Company’s Common Stock.
General
Risk Factors
There
is substantial doubt about our ability to continue as a going concern.
To
date, the Company has earned no revenue from operations and has an accumulated deficit of $110,366,721 as of December 31, 2024. In addition,
the Company has limited financial resources. As of December 31, 2024, the Company had cash and equivalents of $3,786,277 (excluding $4,474,000
of restricted cash) and a working capital deficit of $20,311,773. Continuation as a going concern is dependent upon achieving future
financing or strategic transactions, including but not limited to a possible debt funding package from the Export-Import Bank of the
United States (“EXIM”), a restructuring of the Company’s outstanding debt alongside
an equity financing and new standby facility. However, there is no assurance that the Company will be able to successfully complete these financing and/or strategic transactions. Accordingly, there is substantial doubt as to whether existing cash resources and working
capital are sufficient to enable the Company to continue its operations for the next 12 months as a going concern. Ultimately, if the
Company is unable to secure sufficient additional financial resources, the Company may need to curtail or suspend its development or
operations plans regarding the Bunker Hill Mine. The accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The consolidated financial statements do not include any adjustments that may result from
the outcome of this uncertainty. Such adjustments could be material.
The Company’s
consolidated financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities
in other than the normal course of business and at amounts different from those reflected in the accompanying Financial Statements.
The Company’s planned debt restructure
and equity financing may not be finalized, or timely finalized, which could lead to the Company being required to cease development activities
and place the Mine on care and maintenance or require the Company to enter reorganization and/or liquidation proceedings.
The Company plans to restructure its debt, raise equity
and/or engage in other restructuring/financing activities. If these financing efforts are delayed or are not successful, there is risk
that, among other things:
Additionally, in accordance with the TSX-V policies,
the approval of the Company’s stockholders will be required with respect to any Control Person (as defined in the TSX-V policies)
with over 20% ownership in the Company as a result of these equity/debt financing transactions. In lieu of a special meeting of its stockholders,
the Company intends to obtain the written consent of disinterested stockholders holding more than 50% of the current issued and outstanding
Common Shares, which stockholder consent will exclude any votes held by a Control Person (each as defined in the TSX-V policies). There
can be no assurance that this stockholder consent will be successfully obtained upon the completion of these equity/debt financing transactions.
The
Bunker Hill Mine restart has been delayed to 2026. Further changes to this timeline, or other factors impacting the
restart project budget, will increase the Company’s required capital needs through the completion of the project, which would
adversely affect the Company’s ability to secure additional funding, thereby adversely affecting its financial
condition.
On December 13, 2024 the Company announced that the Bunker Hill Mine restart
project underwent a strategic review resulting in an updated timeline and capital requirements. Pursuant to this review, the Company now
forecasts a total restart expenditure (excluding working capital) of $103,000,000, up from the previously forecasted $67,000,000 and $56,000,000
in the PFS, with the restart project anticipated to be delayed by up to four months. To provide sufficient project financing for the ongoing
development of the Bunker Hill Mine, the Company has been drawing down in tranches on the Standby Facility provided by Sprott and seeking
to finalize the ongoing discussions with its strategic partners for potential offtake or similar financing for up to an additional $40,000,000.
However,
the estimated timing of the Bunker Hill Mine restart is subject to change further based on factors beyond the Company’s
control, including but not limited to supply chain dynamics. In addition, the Company’s pre-production budget estimates are
subject to change further based on factors beyond its control, including but not limited to cost inflation and supply chain
dynamics. Any further increase in the Company’s pre-production budget estimates could have a materially adverse impact on the
Company’s ability to secure additional financing. This could have a material adverse effect on the Company’s financial
condition, results of operations, or prospects. Sales of substantial amounts of securities will have a highly dilutive effect on the
Company’s ownership or share structure. Sales of a large number of shares of Company common stock in the public markets, or
the potential for such sales, could decrease the trading price of the common stock and could impair the Company’s ability to
raise capital through future sales of common stock. The Company is a pre-production development company, and has not yet commenced
commercial production and, therefore, has not generated positive cash flows and has no reasonable prospects of doing so unless
successful commercial production can be achieved at the Mine. The Company expects to continue to incur negative investing and
operating cash flows until such time as it enters into successful commercial production. This will require the Company to deploy its
working capital to fund such negative cash flow and to possibly seek additional sources of capital. There is no assurance that
additional capital will be available or sufficient to meet the Company’s requirements, or if available, upon terms acceptable
to the Company. There is no assurance that the Company will be able to continue to raise equity capital, secure additional debt
financing, or secure other financing. As a result the Company may not be able to timely continue its development plans or continue
as a going concern.
Payment
bonds securing $14,000,000 due by the Company to the EPA for cost recovery may not be renewable or may only be renewable on terms
that are unfavorable to the Company, which would adversely affect its financial condition or cause a default under the revised
settlement agreement with the EPA and Sprott.
In
2022, the Company secured financial assurance in the form of payment bonds in accordance with the revised settlement agreement with
the EPA, in relation to $14,000,000 of payments due to the EPA for cost recovery between 2025 and 2029. These bonds are renewed
annually, and as of December 31, 2024, require $4,475,000 of collateral in the form of letters of credit. To the extent that the
parties providing the payment bonds demand additional collateral beyond the current requirements, or other unfavorable terms or
conditions, the Company may not be able to renew the payment bonds on favorable conditions, or at all. This could have a materially
adverse impact on the Company, including a potential default under the revised settlement agreement with the EPA.
The
Company has no recent operating history on which to base an evaluation of its business and prospects.
Since
its inception, the Company has had no revenue from operations. The Company has no history of producing concentrates from the Bunker Hill
Mine. The Mine is a historic, past producing mine with limited exploration work since its closure in 1981. Advancing the Mine through the development
stage will require significant capital and time, and successful commercial production from the Mine will be subject to completing the
requisite studies, permitting and re-commissioning, constructing a processing plant, and completing other related works and
infrastructure. As a result, the Company is subject to all of the risks associated with developing and establishing new mining operations
and business enterprises, including:
The
costs, timing, and complexities of exploration, development, and construction activities may be increased by the location of the Company’s
properties and demand by other mineral exploration and mining companies. It is common in exploration programs to experience unexpected
problems and delays during drill programs and, if commenced, development, construction, and mine start-up. In addition, the Company’s
management and workforce will need to be expanded, and support systems for its workforce will have to be
established. This could result in delays in the commencement of mineral production and increased costs of production. Accordingly, the
Company’s activities may not result in profitable mining operations, and it may not succeed in establishing mining operations or
profitably producing base metal concentrates at any of its current or future properties, including the Mine.
The
Company has a history of losses and expects to continue to incur losses in the future.
The
Company has incurred losses since inception, has had negative cash flow from operating activities, and expects to continue to incur losses
in the future. The Company has incurred the following losses from operations during each of the following periods:
The
Company expects to continue to incur losses unless and until such time as the Mine enters into commercial production and generates sufficient
revenues to fund continuing operations. The Company recognizes that if it is unable to generate significant revenues from mining operations
and dispositions of its properties, the Company will not be able to earn profits or continue operations. At this early stage of its operation,
the Company also expects to face the risks, uncertainties, expenses, and difficulties frequently encountered by smaller reporting companies.
The Company cannot be sure that it will be successful in addressing these risks and uncertainties and its failure to do so could have
a materially adverse effect on its financial condition.
Government actions, such as tariffs and/or foreign
policy actions could adversely and unexpectedly impact the Company’s business.
As a result of the 2024 United States federal election,
there is an increased risk that the United States could implement new and/or increased tariffs and other trade restrictions on all exports
to the United States or that other counties could implement reciprocal measures on imports from the United States. The extent of such
measures and their impact is unknown, and there is a risk that they could have a significant effect on the Company’s financial performance
and/or business outlook.
Risks
Related to Mining and Exploration
The
Company is in the development stage.
The
nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses.
Exploration
for and the production of minerals is highly speculative and involves much greater risk than many other businesses. Most exploration
programs do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality
to be profitably mined. The Company’s operations are, and any future development or mining operations the Company may conduct will
be, subject to all of the operating hazards and risks normally incidental to exploring for and development of mineral properties, including,
but not limited to:
● economically insufficient mineralized material;
● fluctuation in production costs that make mining uneconomical;
● labor disputes;
● unanticipated variations in grade and other geologic uncertainties;
● environmental hazards;
● water conditions;
● difficult surface or underground conditions;
● industrial accidents;
● metallurgic and other processing problems;
● mechanical and equipment performance problems;
● unusual or unexpected rock formations; and
● personal injury, fire, flooding, cave-ins and landslides.
Any
of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates,
costs and expenditures, potential revenues, and production dates. If the Company determines that capitalized costs associated with any
of its mineral interests are not likely to be recovered, the Company would incur a write-down of its investment in these interests. All
these factors may result in losses in relation to amounts spent that are not recoverable, or that result in additional expenses.
Commodity
price volatility could have dramatic effects on the results of operations and the Company’s ability to execute its business plan.
The
price of commodities varies on a daily basis. The Company’s future revenues, if any, will be derived from the extraction
and sale of base and precious metals. The price of those commodities has fluctuated widely, particularly in recent years, and is affected
by numerous factors beyond the Company’s control, including economic and political trends, expectations of inflation, currency
exchange fluctuations, interest rates, global and regional consumptive patterns, speculative activities and increased production due
to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious
metals, and therefore the economic viability of the Company’s business, could negatively affect its ability to secure financing
or its results of operations.
The
Company’s development and production plans, and cost estimates, in the Technical Report Summary may vary and/or not be achieved.
There
is no certainty that the results in the Technical Report Summary (as defined below) will be realized. The decision to implement the
Mine restart scenario to be included in the Technical Report Summary was not based on a feasibility study of mineral reserves
demonstrating economic and technical viability, and therefore there is increased risk that the Technical Report Summary results will
not be realized. If the Company is unable to achieve the results in the Technical Report Summary, it may have a material negative