UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K /A

Amendment No. 2

[ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 20172019

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

BUNKER HILL MINING CORP.

(FORMERLY LIBERTY SILVER CORP.)

 (Exact(Exact name of registrant as specified in its charter)

Securities registered under Section 12(b) of the Exchange Act:    None

Securities registered under Section 12(g) of the Exchange 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 [X ] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the [ ]Yes [X ] No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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. [X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). [X] Yes [  ] No.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer”, “smaller and smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes  [X ] No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of the last business day of the registrant’s most recently completed fourthsecond fiscalquarter US$2,316,462.CDN$6,869,022.

As of October 12, 2017,December 3, 2020 , the Issuer had 24,889,395143,117,068 shares of common stock issued and outstanding.

1

EXPLANATORY NOTE

This Amendment No. 2 to the Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K of Bunker Hill Mining Corp. for the year ended June 30, 2029 filed on October 22, 2019 (the “Form 10-K”). The purpose of this Amendment is to restate and amend previously issued financial statements. In November 2020, it was determined that the Company has underaccrued for invoices issued by the United States Environmental Protection Agency ("EPA") for excess water treatment costs relating to years ended June 30, 2018 and 2019 and interest payable on the outstanding EPA balance, which resulted in an understatement of liabilities for 2018 and 2019, an understatement of opening deficit for 2019 and closing deficit for 2018 and 2019, and an understatement of exploration expenses and net losses for 2018 and 2019.

2

PART I

ITEM 1.BUSINESS

BUSINESS

The Corporation

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.) (the “Company” or the “Corporation”) was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.  Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp.  On September 29, 2017, the Company changed its name to Bunker Hill Mining Corp. The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4, and its telephone number is 416-477-7771.

Current Operations

Overview

The Company was incorporated for the purpose of engaging in mineral exploration and development activities.  On August 28, 2017, the Company announced that it signed a definitive agreement (the “Agreement”) for the lease and option to purchase of the Bunker Hill Mine (the “Mine”) in Idaho. The “Bunker Hill Lease with Option to Purchase” is between the Company and Placer Mining Corporation (“Placer Mining”), the current owner of the Mine.

Highlights of the Agreement are as follows:

*

Effective date: November 1, 2017;

*

Initial term: 24 months;

*

The lease can be extended for another 12 months at any time byOn October 2, 2018, the Company by payingannounced that it was in default of its Lease with Option to Purchase Agreement with Placer MiningMining. The default arose as a US $600,000 bonus payment and by continuing to pay the monthly lease paymentsresult of US $100,000 per month;

*

US $1 million bonus payment to Placer Mining no later than October 31, 2017;

*

The Company shall pay Placer Mining US $100,000 upon signing themissed lease and US $100,000operating cost payments, totaling $400,000, which were due at the end of September and on October 1, 2017 for maintenance and upkeep fee of the mine;

*

The Company shall pay Placer Mining a US $500,000 bonus payment on November 15, 2017 and a US $500,000 bonus payment on December 15, 2017;

*

The Company shall pay Placer Mining US $100,000 monthly mining lease payments, which shall be paid quarterly (except for the lease payments for the months of November and December 2017, which shall be paid on or before November 1, 2017);

*

The option to purchase is exercisable at the Company’s discretion; and

*

Purchase by the Company can be made at any time during lease period and any extension thereto.

Under the terms of2018. As per the Agreement, the Company will havehad 15 days, from the rightdate notice of default was provided (September 28, 2018), to remediate the default by making the outstanding payment. While Management worked with urgency to resolve this matter, Management was ultimately unsuccessful in remedying the default, resulting in the lease being terminated. On November 13, 2018, the Company announced that it was successful in renewing the lease.

The 24-month lease continues until October 31, 2019. The lease period can be extended by a further 12 months at the Company’s discretion.  Under the revised terms of its agreement, during the term of the lease, the Company must make $60,000 monthly mining lease payments.  A monthly amount of $140,000 is deferred and becomes payable if the Company exercises its purchase option, making the deferred amount payable.  The Company is accruing for these payments and includes them in accounts payable.

The Company has an option to purchase the Bunker Hill Mine assets (“the Bunker Assets”) at any time before the end of the lease and any extension thereto for a purchase price of US $45$25 million with purchase payments to be made over a ten-year period to Placer Mining.period. Under the terms of the Agreement,agreement, there is a 3% NSRnet smelter return royalty (“NSR”) on productionsales during the Lease and a 1.5% NSR on the productionsales after the purchase option is exercised, which post-acquisition NSR is capped at US $60 million.

In addition to the payments to Placer Mining, pursuant to an agreement with the United States Environmental Protection Agency (“EPA”) whereby for so long as Bunker leases, owns and/or occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the current owner in satisfaction of the EPA’s claim for cost recovery.  These payments, if all are made, will total $20 million.  The agreement calls for payments starting with $1 million 30 days after a fully ratified agreement was signed (which payment was made) followed by $2 million on November 1, 2018 and $3 million on each of the next 5 anniversaries with a final $2 million payment on November 1, 2024.  In addition to these payments, the company is to make semi-annual payments of $480,000 on June 1 and December 1 of each year, to cover the EPA’s costs of maintaining the water treatment facility.  The November 1 and December 1, 2018 payments were not made, and the Company is having discussions with the EPA to amend and defer payments.

The Company also has received invoices from the EPA for water treatment charges for the periods from December 2017 to October 2019. This was for a total of $3,269,388, with $1,209,530 additional accruals required as at June 30, 2019. The Company is having discussions with the EPA to review and, where appropriate, have the additional water treatment charges amended. The unpaid EPA balance is subject to interest at the rate specified for interest on investments of the EPA Hazardous Substance Superfund.

Management believes this amended lease and option will provide the Company time to bothcomplete exploratory drilling, produce a mine plan and raise the money needed to move forward and that this is a strong signal to the market that the Bunker Hill Mine is back.forward.  Management is now ablecontinues to push forward and advance the time line to realizing shareholder value.

The Bunker Hill Mine was the largest producing mine in the Coeur d'Alene zinc, lead and silver mining district in northern Idaho.  Historically, the mine produced over 35M tonnes of ore grading on average 8.76% lead, 3.67% zinc, and 155 g/t silver (Bunker Hill Mines Annual Report 1980). 

The Company believes that there are numerous targets of opportunity left in the mine from top to bottom, and particularly on a strike to the west where more recent past drilling has resulted in major discoveries such as the Quill body of mineralized material.

1

The Bunker Hill Mine is now the Company’s only focus, with a view to raising capital to rehabilitate the mine and put it back into production.

The Company was previously focused on exploring and developing the Trinity Silver property located in Pershing County, Nevada (the “Trinity Project”).  The Trinity Project consists of a total of approximately 10,020 acres, including 5,676 acres of fee land and 253 unpatented mining claims located along the west flank of the Trinity Range in Pershing County, Nevada, about 25 miles by road northwest of Lovelock, NV, the county seat.    The annual cost to maintain the 253 claims is approximately $35,420 per year ($140 per claim per year).  In 2016, due to the lack of funding available to the Company, exploration progress was not on schedule with the Company’s exploration and evaluation plan and, as a result of these circumstances, the related carrying value of the properties may not be recoverable.  The Company therefore recorded an impairment charge related to the Trinity Project and reduced its carrying amount of the Trinity Project to $1 on the balance sheet for the fiscal years ended June 30, 2017 and 2016.

The Company did not commence development stage activities, but with adequate resources previous Management intended on: (i) expanding the known mineralized material through drilling, (ii) permitting for operation, if deemed economically viable, (iii) conducting metallurgical studies aimed at enhancing the recovery of the silver and by-product lead and zinc, and (iv) prepare an engineering design related to potential construction of a new mine. Exploration of the property would be conducted simultaneously with the mine development in order to locate additional mineralized materials.

With the Company’s Management focused on the Bunker Hill Mine, in September 2017, the Company agreed to relinquish its rights to the Trinity Project to Renaissance Exploration, Inc., its project partner, in return for releasing the Company from all past and future obligations.

Products

The Bunker Hill Mine is a Zinc-Silver-Lead Mine.  When back in production, the Company will mill mineralized material on-site or at a local third-party mill and plans to produce concentrates to be shipped to third party smelters for processing.

The Company will continue to explore the property with a view to proving resources.

Infrastructure

The acquisition of the Bunker Hill 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 anywhere underground at the Bunker Hill Mine Complex.  The acquisition 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. 

Government Regulation and Approval

The current exploration 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 is anticipated that it may be necessary to obtain the following environmental permits or approved plans prior to commencement of mine operations:

§

ŸReclamation and Closure Plan

§

ŸWater Discharge Permit   

§

ŸAir Quality Operating Permit

§

ŸIndustrial Artificial (tailings) pond permit

§

ŸObtaining Water Rights for Operations

Property Description

The Company’s agreement with Placer Mining Corporation includes mineral rights to 434 patented mining claims covering 5769.467 acres of those 35 include surface ownership over approximately 259.1 acres.  The transaction also includes certain parcels of fee property which includes mineral and surface rights but are 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. The agreement specifically excludes the following: the Machine Shop Building and Parcel, including all fixed equipment located inside the building and personal property located upon the parcel; unmilled ore on deck and residual lead/zinc ore mined and broken, but not removed from the Bunker Hill Mine; the historic Caledonia Mine; the Crystal Vug; and the Silver Ridge exploration property.

Surface rights were originally owned by various previous owners of the claims until the acquisition of the properties by BLP.Bunker Limited Partners (“BLP”).  BLP sold off surface rights to various parties over the years while maintaining access to conduct mining operations and exploration activities as well as easements to a cross over and access other of its properties containing mineral rights. Said rights were reserved to its assigns and successors in continuous perpetuity. Idaho Law also allows mineral right holders access to mine and explore for minerals on properties to which they hold minerals rights.

Title to all patented mining claims included in the transaction was transferred from Bunker Hill Mining Co. (U.S.) Inc. by Warranty Deed in 1992. The sale of the property was properly approved of by the U.S. Trustee and U.S. Bankruptcy Court.  

Over 90% of surface ownership of patented mining claims not owned by Placer Mining Corp. is owned by different landowners. These include: Stimpson Lumber Co.; Riley Creek Lumber Co.; Powder LLC.; Golf LLC.; C & E Tree Farms; and Northern Lands LLC.

Patented mining claims in the State of Idaho do not require permits for underground mining activities to commence.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 water treatment plant.  The Company willexpects to take on the water treatment responsibility in the future and obtain an appropriate discharge permit.  If the FederalCompany is able to purchase the EPA’s water treatment plant the water discharge permit comes along with the water treatment plant.

2

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 is currently managed by Bruce Reid,John Ryan, President and CEO; Julio DiGirolamo,CEO and Wayne Parsons, Chief Financial Officer; and Howard Crosby, Executive Vice President.Officer.

Bruce Reid and Howard Crosby serve on the Company’s Board of Directors along with director, John Ryan.

Reports to Security Holders

The Company files reports with the SEC under section 15d of the Securities Exchange Act of 1934.  The reports will be filed electronically. All copies of any materials filed with the SEC may be read at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549.  Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.  The SEC also maintains an Internet site that will contain copies of the reports that are filed electronically.  The address for the SEC Internet site is http://www.sec.gov.

ITEM 1A.

RISK FACTORS

Not Applicable.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2. PROPERTIES.

 PROPERTIES.

Office Space

Effective June 1, 2017, the Company has a lease agreement for office space at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4.  The 5-year lease provides for a monthly base rent ofCDN$of CDN$12,964 for the first two years, increasing to CDN$13,504 per month for years three through five.  The Company has signed sub-leases with other companies that cover 78%69% of the monthly lease amount.

The Bunker Hill Mine

The Bunker Hill Mine is one of the most storied base metal and silver mines in American history.  Initial discovery and development of the Bunker Hill Mine property began in 1885, and from that time until the mine closed in 1981 it produced over 35.8 million tons of ore at an average mined grade of 8.76% lead, 4.52 ounces per ton silver, and 3.67% zinc (Bunker Limited Partnership,1985).  Throughout the long history of the mine, there were over 40 different orebodies discovered and mined, primarily consisting of Zinc-Lead-Silver mineralization. The Bunker Hill and Sullivan Mining Company had a strong history of regular dividend payments to shareholders from the time the Company went public in 1905 until it was acquired in a hostile takeover by Gulf Resources in 1968.  

When the mine first closed in 1981, it was estimated to still contain significant resources (Bunker Limited Partnership, 1985).  The Mine and Smelter Complex were closed in 1981 when Gulf Resources was not able to continue to comply with new regulatory structures brought on by the passage of environmental statutes and as then enforced by the Environmental Protection Agency (the “EPA”).  The Bunker Hill Lead Smelter, Electrolytic Zinc Plant and historic milling facilities were demolished about 25 years ago, and the area became part of the “National Priority List” for cleanup under EPA regulations, thereby pausing development of the Bunker Hill Mine for over 30 years.  

The majority of the cleanup of the old smelter, zinc plant, and associated sites has now been completed and the Mine is now poised for further development and an eventual return to production.  The Company has been in contact with government officials who have expressed strong support and cooperation for the Company efforts to return the mine to being a productive mining asset. 

3

History

The Bunker Hill lode in Northern Idaho was discovered on September 9, 1885 by prospectors who had journeyed to Idaho as part of a gold rush in the nearby Murray District. Early development was completed by Jim Wardner, a local mine developer who constructed the first milling facility.

In 1887 Simeon G. Reed purchased the claims and mill and incorporated the Bunker Hill and Sullivan Mining and Concentrating Company.

As the tonnage of ore in the mine increased, it became apparent that a mill of larger capacity was needed, and in 1891 a new mill of 400-ton capacity was built in the main valley below the confluence of Milo Creek with the South Fork of the Coeur d'Alene River. To transport ore to this mill, an aerial tramway with a horizontal length of 10,000 feet was constructed from Milo Gulch. This tramway served to transport all mine ore until the two-mile long Kellogg Tunnel was completed in 1902.

Two men stand out in the early history of the company. They are Frederick W. Bradley and Stanly A. Easton. Bradley first became associated with the company as a young engineer in 1890. In 1893 he was named general manager of the operation, and in 1897 he became the company's fourth president, a position he held until his death in 1933. He brought to Kellogg another young California engineer, Stanly Easton, who became general manager in 1903 and succeeded Bradley as President. Under the guidance of these two men the Bunker Hill Company grew from a small mining and concentrating venture to a large, integrated mining and smelting operation with a national presence.

On May 25, 1917, Bunker Hill and Sullivan joined with the Hecla Mining Company in forming the Sullivan Mining Company, which purchased and operated the Star mine near Mullan, Idaho, approximately 15 miles to the east. The ore from the Star mine had a relatively high zinc content and necessitated the erectionconstruction of an electrolytic zinc plant which was the first plant constructed of this type. The technological process that was devised for the plant was recognized as a significant new development in the metallurgical field and made possible the widespread use of zinc in such applications as galvanizing.

From its early days and through two major world wars the Bunker Hill Company operated as an independent and well-known mining and smelting company and was listed on the New York Stock Exchange. On June l, 1968, in one of the earliest leveraged buyouts, Bunker Hill became a wholly owned subsidiary of Gulf Resources & Chemical Corp.

Growing public concern with the environment in the 1970s compelled Bunker Hill to spend large sums on plant improvements in order to comply with newly enacted federal air and water pollution laws. The Company also made major efforts to reclaim surrounding hillsides which had been denuded by the effects of decades of airborne smelter effluents and timbering for mining purposes.

Ultimately the costs of environmental compliance and the deep recession of 1981 with resulting declines in metal prices led to Gulf Resources' decision in August 1981 to close its Bunker Hill operations and put the company up for sale. In 1982 the company was sold to the Bunker Limited Partnership (“BLP”) whose principal owners were Harry Magnuson, Duane Hagadone, Jack Kendrick and Simplot Development Company (the Simplot company dropped out of the partnership in 1987). Although the new company ultimately reopened the mine, the lead and zinc smelting and refining operations remained closed.

As noted, the mine was briefly reopened from 1988 to 1990 by BLP. This reopening resulted in a large effort being made to drill and define the zinc-rich Quill ore body and to expand and improve the ramp system for modern rubber tiredrubber-tired mining methods. Although exceptional progress was made in defining new ore reservesmineralization and in meeting other goals, the operations were underfunded and targeted production goals were not met. Combined with low metal prices due to the recession of the early 1990s, BLP closed the mine in January, 1991 and shortly thereafter filed for bankruptcy. On May 1, 1992, the Bunker Hill Mine was sold to Placer Mining Co., a Nevada corporation. This sale was of the mine only, and Pintlar, Inc., a subsidiary of Gulf Resources & Chemical, remained responsible for the EPA Superfund cleanup of the smelter site.

The Company has signed a lease with option to purchase with Placer Mining on approximately the same land package and mine infrastructure that was transferred to Placer Mining approximately 25 years ago.

Geology and Mineralization

Geology

The Coeur d’Alene Mining District is one of the most prolific mining districts in North America. It has been in constant production since its discovery in the 1880s, historically is the second largest silver-producing area of North America,in the world, and is one of the largest zinc and lead producers as well. Over 100 mines historically have reached commercial production in the District and currently hosts two major mines, the Lucky Friday/Gold Hunter owned by Hecla Mining Company, and the Galena Mine, owned by America’s Silver are active.Silver. A number of other mines including the Sunshine, the Crescent, and the Coeur Mine have the potential to be quickly producingre-started should silver prices rise sufficiently to justify reactivation.

The District is underlain by members of the Precambrian Belt Super Group. The metasedimentary rocks are predominantly fine-grained quartzite, siltites and argillites. The District is structurally complex with multiple folding and faulting events being evident.  The WNW-trending Osburn fault runs through the district and has about 15 miles of right lateral displacement.

4

Mineralized zones in the district are generally parallel to sub-parallel to the Osburn fault. Numerous mines, including the Bunker Hill, are located south of the Osburn fault and occupy the steeply dipping to overturned north limb of a WNW-trending fold.

Mineralization

The mineralization at Bunker Hill is hosted in localized, structurally controlled shear zones and strati-form zones of significant width. The mineral bodies are grouped into three different types.

The NW trending Bluebird mineral zones are zinc rich and consist of sphalerite in excess of galena with variable amount of pyrite in a gangue of greyish quartz and minor siderite. This mineralized material is commonly localized in smaller parasitic folds, broken by reverse shears (Meyer, 1982).

The Jersey type mineral bodies consist principally of veins containing galena with lesser amounts of sphalerite, chalcopyrite and tetrahedrite (Meyer, 1981).  These NE to N trending veins are referred to as “link” veins as they extend between the NW trending Cate and Dull faults, or other faults in the mine. Gangue minerals are primarily white quartz with lesser siderite.

“Hybrid” mineral bodies comprise the third type and are associated with zones of brecciation located at the junctions of major faults. These are multi-stage systems where “Bluebird” type fracture zones were reopened and brecciated prior to flooding by galena from the newly opened ‘link’ veins. The galena penetrated and partially replaced the previous minerals and filled remaining open spaces (Meyer, 1981).

Mine and Mill Operations

Starting with the original Bunker Hill and Sullivan claims, the Bunker Hill Mine eventually encompassed 620 patented mining claims totaling 6,200 acres. From the discovery cuts some 3600 feet above sea level, over 20 major ore zones were mined to nearly 1600 feet below sea level, a vertical distance of about one mile.

Four major mining methods were historically employed in the Bunker Hill Mine. The oldest is square set or cut and fill. These methods employ support of the stope where the vein is mined with sets of timbers and/or rock bolts, and then sand-fill is pumped from the surface as the mining activity moves to a higher elevation. The broken ore was scraped into chutes by compressed air powered slushers and dropped into ore pockets on the level below.

The second method called shrink stoping is similar to the above, but no ground support is required. Instead the broken ore is used as both ground support and a mining floor and the full mining cut is completed prior to withdrawing the ore from the stope. Air powered slushers or compressed air operated mucking machines on rubber tires were historically used.

A third mining method is known as room and pillar mining. In this operation, no timber is required but pillars of ore are left in place as supports until the stoping moves to a higher elevation, at which time sand fill is pumped in to provide the floor for the next cut. As the ore is broken, rubber tired, compressed air operated mucking machines picked it up putting it into a box on the back of the loader. It was then transported to a chute in the stope where it dropped into the ore pocket on a lower level.

The fourth method is sublevel blasthole stoping. Diesel powered equipment cuts horizontal slices every forty feet in the ore zones. Then long holes are drilled in the pillars between horizontal slices. The holes are blasted allowing the ore to fall

to the bottom slice and scooped up by diesel powered loaders and transported to ore passes. This method was used above the Kellogg Tunnel, and ore was transported by gravity to the tunnel and hauled out by train to the surface.

From the ore pockets on the various levels of the mine below the Kellogg Tunnel, ore trains powered by battery driven locomotives transported the ore to ore pockets located at the shaft. In the shaft, large steel buckets, called skips, were loaded and hoisted to the Kellogg Tunnel level where the ore was dumped into two large concrete bins. Drawn from these storage areas by gravity, the ore was next transported two miles to the surface in 22-car ore trains pulled by trolley and diesel locomotives.

With the exception of the use of square set timbering, all of the above miningBlasthole stoping, cut and fill, and shrinkage stoping methods are likely to be employed in the restart of the Bunker Hill Mine. The main improvement and productivity gain over historic operations will be the widespread use of rubber-tired equipment, which will be used for mucking and transport of the broken mineralized material. The upper part of the mine is largely already developed with ramps, which will be used by the Company for rubber-tired access. Most of these ramps were completed by the Bunker Hill Company and ramp expansion also occurred during the Bunker Limited Partnership mine reopening.

Company engineers have already inspected many portions of the ramp system in the upper part of the mine and the ramps are generally in very good shape and will only require minor repair and clean-up.

Historically the Bunker Hill ore was milled in the milling facility located approximately 2000 yards from the main Kellogg Tunnel portal and the concentrate was treated at the nearby smelting and refining complex which was located approximately one mile to the west of the mill. The milling facility and smelting complex have all been razed and remediation of these sites has been largely completed.

5

An existing water treatment plant which was originally built by the Bunker Hill Company remains in operation and is operated by the United States Environmental Protection Agency (the “E.P.A.”) through a local contractor. This plant has received numerous upgrades and capacity improvements in the last twenty-five years. All mine water which is discharged from the Bunker Hill Mine has been treated by the E.P.A. during the ownership of the mine by Placer Mining.

The Company has been involved in highly productive discussions with the E.P.A., the U.S. Dept. of Justice, and Placer Mining about resolution of the past response costs for water treatment and other matters involving the process of turnover of the Bunker Hill Mine operations to the Company.

The parties have largely concluded discussions which resolve the allocation of costs of water treatment and other past response costs of Placer Mining, as well as a framework for turnover of the mine, and an absolution of liability for past response costs for the Company. These discussion as of the date of this report are now subject to drafting the required agreements between the parties. Investors and other interested parties should be cautioned that all agreements are subject to the ultimate approval of the principals of Placer Mining as well as parties at both the E.P.A. and the U.S. Dept. of Justice, who can legally bind the United States.

Index of Geologic and Mining Terms

6

Completed Work and Future Plan of Operations

Over the last six months theThe Company has undertaken a due diligence program to assure itself of the viability of a restart of the Bunker Hill Mine. This necessitated an extensive review of the records that were present primarily at the Bunker Hill Mine offices. At those offices there are tens of thousands of pages of reports and records which detail the operations of the mine from its earliest days to the time of the shutdown in 1991 by BLP.

In addition to reports, there are several thousand historical maps of all scales and sizes as well as historical mineral diagrams which detail the mineral bodies that remained in the mine at the time of closure in January, 1991. These reports are not compliant with Canada National Instrument 43-101 and cannot be used for the purposes of establishing reserves pursuant to that standard.

The Company has satisfied itself that there is a large amount of remaining zinc/lead/silver materialsmineralization in numerous mineralized zones remaining within the Bunker Hill Mine. The Company is now developing a plan to bring a number of these zones into N.I. 43-101 compliance through new sampling and drilling programs. The Company has identified several zones as having highest priority. The Company has prioritized zones capable of providing production in the nearestnear term, production as priority, these being the UTZ Zone, the Newgard Zone and the South NewgardQuill Zone. These three mineral zones will be the first to be N.I. 43-101 verified and will provide the majority of the early feed upon mine start-up.

The Bunker Hill Mine main level is termed the nine level and is the largest level in the mine and is connected to the surface by the approximately 12,000 foot-long Kellogg Tunnel. Three major inclined shafts with associated hoists and hoistrooms are located on the nine level. These are the No. 1 shaft, which is used for primary muck hoisting in the main part of the mine; the No. 2 shaft, which is a primary shaft for men and materials in the main part of the mine; and the No. 3 Shaft, which is used for men, materials and muck hoisting for development in the northwest part of the mine.

The top stations of these shafts and the associated hoistrooms and equipment have all been examined by Company personnel and are in moderately good condition. The Company believes that all three shafts remain in a condition that they are repairable and can be bought back into good working order over the next few years.

The water level in the mine is held at approximately the ten level of the mine, roughly 200 feet below the nine level. The mine was historically developed to the 27 level, although the 25 level was the last major level that underwent significant development and past mining. Each level is approximately 200 feet vertically apart.

The southeastern part of the mine was historically serviced by the Cherry Raise, which consisted of a two-compartment shaft with double drum hoisting capability that ran at an incline up from the nine level to the four level. The central part of the mine was serviced upward by the Last Chance Shaft from the nine level to the historic three or four level. Neither the Cherry Raise or the Last Chance shaft are serviceable at this time. However, the upper part of the mine from nineeight level up to the four level has been developed by past operators by a thorough-going rubber tire ramp system, which is judged to be about 65% complete.

The Company has already repaired the first several thousand feet of the Russell Tunnel, which is a large rubber tire capable tunnel with an entry point at the head of Milo Gulch. This tunnel will provide early access to the UTZ and Newgard/South Newgard mineral zones.Zone. The Company has inspected a great deal of the ramp system between the nineeight level and the four level, and the ramps are in good shape with only minor repair and rehabilitation needed. The Company has made development plans to provide interconnectivity of the ramp system from the Russell Tunnel at the four level down to the eight level, with further plans to extend the ramp down to the nine level. Thus rubber-tired equipment will be used for mining and haulage throughout the upper mine mineral zones, which have already been identified, and for newly found zones.

7

The Kellogg Tunnel will be used as a tracked rail haulage tunnel for supply of men and materials into the mine and for haulage of mined material out of the mine. Historically the Kellogg Tunnel (or “KT” for short) was used in this manner when the mine was producing upwards of 3000 tons per day of mined material. The Company has inspected the KT for its entire length and has determined that significant timbered sections of the tunnel will need extensive repairs. These are areas that intersect various faults passing through the KT at normal to oblique angles and create unstable ground.

The Company has also determined that all of the track, as well as spikes, plates and ties holding the track will need to be replaced. Additionally, the water ditch that runs parallel to the track will need to be thoroughly cleaned out and new timber supports and boards that keep the water contained in its path will need to be installed. All new water lines, compressed air lines and electric power feeds will also need to be installed. The total cost estimate for this KT work is still in process at the time of the date of this report, but the time estimate for these repairs is approximately eighteen months.

It is anticipated that earliest production will come from the upper levels of the mine where company personnel have observed mining faces of mineralized material that are readily mineable, as they were left behind by past operators in a more or less fully developed state. These upper mineralized material zones could achieve limited mining at perhaps a rate of 500 tons per day by haulage out through the Russell Tunnel and then trucked from the Milo Gulch landing to one or more potential nearby custom milling facilities.

Although the Company believes that the potential does exist for early production by shipping mineralized material to a custom mill, the Company has not yet undertaken discussions with mill owners, but anticipates such discussions could occur within the next one to three months. Longer term, theThe Company anticipates constructing its own milling facility near the mouth of the Kellogg Tunnel. Initially the mill capacity will be 1500 tons per day, and the mill will be designed for ready expansion when needed.

The Company has identified multiple tailings disposal sites to the west-northwest of where the mill will be located. Ultimately the Company believes the existing Central Impoundment Area or “CIA” (which was the tailings disposal area for the historic mine) might once again be available for new tailings disposal. However, with pragmatic use of the existing identified sites, the Company is confident it will have tailings disposal adequate for approximately ten years of production. Down the road alternatives involve the use again of the CIA or the use of “dry stack” tailings disposal.

As noted above, the E.P.A.EPA for several decades has provided mine water treatment services for the Bunker Hill Mine. When the Company begins its lease of the mine, it is planned that the E.P.A.EPA will be providing water treatment services under contract with the Company and such services will continue for at least five years or more. Although no firm agreement has yet been reached, recent discussions with the E.P.A.EPA also indicate that overflows from the mill or decant from the tailings facilities could also be treated at the water treatment plant under the same treatment contract.

If all of the mine water, mill outflows, and tailings discharges can be treated by the E.P.A.EPA treatment plant as currently contemplated, the Company will be initially relieved of the need to obtain a water discharge permit. This will simplify the permitting required to return the mine to production and to build a mill and associated tailings ponds because a water discharge permit is often a difficult permit to obtain and is highly dependent on the characteristics of the surrounding watersheds and the capacity of these watersheds to tolerate additional discharges.

Upon initiating mine production from the UTZ, Newgard, and South NewgardQuill zones at rates of approximately 1500 tons per day, the Company would anticipate mining approximately 450,000540,000 tons per year of material. The three aforementioned zones are believed to have sufficient mineral to supply the Company mining needs for at least five years and beyond.approximately 8 years.

Once the repairs are completed to the Kellogg Tunnel, mineralized material haulage will be able to immediately occur out of this tunnel, which will enhance the production capabilities of the mine by several magnitudes. Some mineralized material will continue to be transported by rubber-tired equipment directly out the Russel Tunnel, but the majority of mineralized material will be dropped down existing internal passes and be hauled out of the KT on rail. By this time in the restart program the Company would expect to be in production at around 1500 tons per day, which is approximately the planned mill capacity. If all items proceed as planned, the Company believes a steady state production of 1500 tons per day is achievable in approximately 36 months from the time of takeover of operations.

Additionally, once the KT repairs are completed, work on the repairs of the shafts and hoists can proceed with greater speed and the lower levels of the mine can be dewatered. The shaft work and pumping should commence at about year two of mine operations. Additionally, exploration and development work can begin on a major zinc mineral body, the “Quill”, which is already partly developed between the nine level and the fifteen level of the mine. This mineral body is expected to be in excess of 4 million tons of mineralized material and is primarily zinc.

Numerous other past-producing mineral bodies will begin to be revealed as the water levels are lowered and the mine is drained to the fullest. Some of these mineral bodies are lead-silver rich zones such as the Emery, Shea, Veral and the “J”, while others will add more material containing zinc such as the Tallon, Rosco, or Tony, while still others are best described as polymetallic such as the New Landers or the Francis.

The Company geologists and engineering personnel have studied the past records thoroughly and conclude that very good exploration and discovery potential exists at depth on downward rakes of known structures. Strata-bound zones such as the Newgard, Quill and Tallon await drilling to the west, while both the southeast and northwest limits of the main original Bunker Hill structure, in the heart of the Cate/Dull fault system, still remain viable as targets for future discovery of new mineral bodies or extensions of past mined structures.

Technical Report

AsOn September 6, 2018, the Company filed on SEDAR a National Instrument 43-101 (“NI 43-101”) technical report on its Bunker Hill property.

The technical report included:

1.A 10-12 million ton Exploration Target comprised of the Quill/Newgard zones.  For comparison purposes, the historical resource estimate for the whole Bunker Hill property is 9.1 million tons grading 5.08% Zn, 2.35% Pb and 40 g/t Ag (or 1.29 ounces per ton); 

2.Results of Independent Sampling showing grades for the Quill/Newgard zones (Levels 9 & 10) averaging 20% Zn, 14%  

8

Pb and 247 g/t Ag (or 7.90 ounces per ton), which exceed average historic grades; and

3.a Plan for a US$7.7 million Exploration Program to upgrade the historic resources to a NI 43-101 Indicated Resource. 

Additionally, as noted, the Company currently has in its possession, and has had access to, numerous historical technical reports that were completed in the past by highly qualified parties. The company does not currently have a technical report on the Bunker Hill Mine that is compliant with Canada National Instrument 43-101. The Company anticipates completing a compliant report within 3 to 4 months of the filing of this report, which will cover mineral zones that are adequately assessable for sampling and drilling. As repairs and improvements are made, additional mineral zones will be opened and subsequently drilled and sampled, and the resulting date will be used from time to time to update the N.I. 43-101 report as needed.

ITEM 3.

LEGAL PROCEEDINGS.

The Company is currently a party to litigation, which it initiated against Liberty International Underwriters, Inc., the underwriter of its directors and officers liability insurance.  The case is captioned:  Liberty Silver Corp. v. Liberty International Underwriters, Court File No. CV-15-529239 and was filed on May 29, 2015, in the Ontario Superior Court of Justice.   In this legal action, the Company is seeking payment of legal fees incurred in connection with SEC and OSC cease trade orders.  In connection with the substantial legal fees incurred by the Company with various law firms, the Company has entered into an assignment agreement (the “Assignment Agreement”) with the various law firms that are owed these fees.  Pursuant to the Assignment Agreement, the Company has irrevocably assigned the net proceeds of the Company’s action against the insurance underwriter to each of the law firms that are owed fees in connection with the SEC and OSC cease trade orders.  Each of the law firms have agreed, pursuant to the terms of the Assignment Agreement, to fully and finally release the Company from any and all claims, demands and causes of action, in respect of the accounts rendered by the law firms. 

Neither the Company nor its property is the subject of any othercurrent or pending legal proceedings, and no other such proceeding is known to be contemplated by any governmental authority.  The Company is not aware of any other legal proceedings in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of the Company’s voting securities, or any associate of any such director, officer, affiliate or security holder of the Company, is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

ITEM 4.

MINE SAFETY DISCLOSURES.

The enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act”) requires the operators of mines to include in each periodic report filed with the Securities and Exchange Commission certain specified disclosures regarding the Company’s history of mine safety. The Company currently does not operate any mines and, as such, is not subject to disclosure requirements regarding mine safety that were imposed by the Act.

9

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Effective May 19, 2017, the Company’s shares were listed for trading on the Canadian Securities Exchange under the symbol “LSL”.

Until August 5, 2014, the Company’s common stock was quoted on the Toronto Stock Exchange under the Symbol “LSL” and on occasion traded by appointment on the Grey Market under the Symbol "LBSV". Prior to October 15, 2012, the Company’s shares were traded on the OTC Bulletin Board (“OTCBB”).

On October 5, 2012, Liberty Silver Corp. was named in an Order of Suspension of Trading (the “Order”) from the US Securities and Exchange Commission.  Pursuant to the Order, trading in the Company’s securities was suspended from October 5, 2012 through October 18, 2012.  Furthermore, effective October 11, 2012, the Company had its stock quotation under the symbol “LBSV” removed from the OTC Bulletin Board (the “OTCBB”) as it became ineligible for quotation on OTCBB due to quoting inactivity under Securities and Exchange Commission Rule 15c2-11.  The Company continues to consider its circumstances and review the requirements necessary to permit its stock to resume trading on the OTCBB or a stock exchange in the United States and, in due course, will determine the most appropriate course of action.  There is no assurance as to when or whether the Company’s stock will resume trading in the United States.

On October 12, 2012, the Ontario Securities Commission issued a cease trade order providing that trading in the securities of Liberty Silver Corp. (excepting issuances from treasury) shall cease until 11:59 pm EST on October 18, 2012 (the “OSC Order”).  The OSC Order was effective for the same time frame as the Order of Suspension of Trading imposed by the SEC.  Trading in the Company’s shares on the TSX in Canada resumed on October 22, 2012.   

On July 2, 2014, the Company announced that the Toronto Stock Exchange (“TSX”) had decided to delist the Company’s common shares effective the close of business on August 5, 2014 as a result of the failure by the Company to meet the continued listing requirements of the TSX.  The Company appealed that decision, and on August 11, 2014, it was announced that the Appeals Committee of the TSX determined that the Company’s shares would not be relisted.

The quotations set forth below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.  As a result of the Company’s common stock being delisted from the TSX and the OTCBB, there is no trading information available for almost three years.  The high and low closing prices of the Company’s common stock on the Toronto Stock Exchange and the OTC Bulletin Board or the Grey Market for the periods indicated below are as follows:

Bunker Hill Mining Corp. (formerly(Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 20172019 and 20162018

(Expressed in United States Dollars)

Note 1 – 1.Nature and Continuancecontinuance of Operationsoperations and Going Concerngoing concern

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.) (the “Company”) was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.  Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp., and on September 29, 2017 the Company changed its name to Bunker Hill Mining Corp.  The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4, and its telephone number is 888-749-4916.  As of the date of this Form 10-K, the Company had one subsidiary,two subsidiaries, Bunker Hill Operating LLC, a Colorado corporation that is currently dormant, and American Zinc Corp., an Idaho corporation created to facilitate the work being conducted at the Bunker Hill Mine in Idaho.

The Company was incorporated for the purpose of engaging in mineral exploration activities.  It continues to work at developing its projectsproject with a view towards putting themit into production.

These consolidated financial statements have been prepared on a going concern basis.  The Company has incurred losses since inception resulting in an accumulated deficit of $18,390,651$ 32,602,628 (restated) and further losses are anticipated in the development of its business.  The Company does not have sufficient working capital needed to meet its current fiscal obligations and commitments.  In order to continue to meet its fiscal obligations in the current fiscal year and beyond, the Company must seek additional financing.  This raises substantial doubt about the Company’s ability to continue as a going concern.  Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management is considering various financing alternatives including, but not limited to, raising capital through the capital markets and debt financing.  These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves.

Note 2 - Significant Accounting Policies

The following is a summaryThese financial statements of significant account policies used in the preparationCompany for the year ended June 30, 2019 were approved and authorized for issue by the Board of these financial statements.Directors of the Company on December 3, 2020 ..

a.2. Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises.  The consolidated financial statements are expressed in U.S. dollars, the functional currency.  The Company’s fiscal year end is June 30.

b.3.Significant accounting policies

The following is a summary of significant account policies used in the preparation of these consolidated financial statements.

Basis of consolidation

These consolidated financial statements include the assets, liabilities and expenses of the Company and its wholly owned subsidiary,subsidiaries, American Zinc Corp. and Bunker Hill Operating LLC.  All intercompany transactions and balances have been eliminated on consolidation.

20

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

c.3.Significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents may include highly liquid investments with original maturities of three months or less.

25

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 2 - Significant Accounting Policies - continued

d.Mineral rights, property and acquisition costs

The Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties.

The Company capitalizes acquisition and option costs of mineral rights as intangible assets.  Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights.  If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time.

The costs of acquiring mining properties are capitalized upon acquisition.  Mine development costs incurred to develop and expand the capacity of mines, or to develop mine areas in advance of production, are also capitalized once proven and probable reserves exist and the property is a commercially mineable property.  Costs incurred to maintain current exploration or to maintain assets on a standby basis are charged to operations.  Costs of abandoned projects are charged to operations upon abandonment.  The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.  Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (FASB ASC) 360-10-35,Impairment or Disposal of Long-Lived Assets.Assets.

e.

Equipment

Equipment is stated at cost less accumulated depreciation.  Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 5 years. The cost of repairs and maintenance is charged to expense as incurred.  Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense)or gain (expense or loss).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of equipment or whether the remaining balance of the eequipmentequipment should be evaluated for possible impairment.  If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the equipment in measuring their recoverability.  

f.

Impairment of long-lived assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable.  The assets are subject to impairment consideration under FASB ASC 360-10-35,Measurement of an Impairment Loss,, if events or circumstances indicate that their carrying amount might not be recoverable.  When the Company determines that an impairment analysis should be done, the analysis is performed using the rules of FASB ASC 930-360-35,Extractive Activities - Mining,, and 360-10-15-3 through 15-5,Impairment or Disposal of Long-Lived Assets.Assets.

Various factors could impact the Company’s ability to achieve forecasted production schedules.  Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment.  The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

21

26

Bunker Hill Mining Corp. (formerly(Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 20172019 and 20162018

(Expressed in United States Dollars)

3.Significant accounting policies (continued)

Note 2 - Significant Accounting Policies - continuedFair value of financial instruments

f. Impairment of long-lived assets - continued

As of June 30, 2016, due to the lack of funding available to the Company, exploration progress at the Trinity Project was not on schedule with the Company’s exploration and evaluation plan.  Consequently, management determined that the related carrying values of the properties may not be recoverable which resulted in an impairment charge of $2,550,739 for the year ended June 30, 2016.  During the year ended June 30, 2017, no impairment charge was incurred.

g.Fair Value of Financial instruments

The Company adopted FASB ASC 820-10-50,Fair Value Measurements.This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

·

*Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·

*Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·

*Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the consolidated balance sheets for the cash and cash equivalents, accounts receivable, other assets,accounts payable, accrued liabilities, interest payable, convertible loan payable, and current liabilities,derivative liability, all of which qualify as financial instruments, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and current market rate of interest.

h.

Environmental expenditures

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs.  Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable.  The Company’s policy is to meet, or if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits.  Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.  No costs have been recognized by the Company for environmental expenditures.

i.

Income taxes

The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes ("FASB ASC 740"), on a tax jurisdictional basis.  The Company files income tax returns in the United States.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse.  A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

27

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 2 - Significant Accounting Policies - continued

i. Income taxes - continued

The Company assesses the likelihood of the consolidated financial statements effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date.  The Company is subject to examination by taxing authorities in jurisdictions such as the United States.  Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying consolidated financial statements.  The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense.

22

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

3.Significant accounting policies (continued)

FSAB ASC 740 prescribes recognition threshold and measurement attributes for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in periods, disclosure and transition.  At June 30, 20172019 and June 30, 2016,2018 , the Company has not taken any tax positions that would require disclosure under FASB ASC 740. 

j.

Basic and diluted net loss per share

The Company computes net loss per share of common stock in accordance with FASB ASC 260, Earnings per Share (“ASC 260”). Under the provisions of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period.  Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period.  Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible loan payable.  As of June 30, 2017, 2,291,0002019, 287,100 stock options and 13,046,484 warrants were considered in the calculation but not included, as they were anti-dilutive (June 30, 20162018 - 1,182,667287,100 stock options and 13,333663,496 warrants).  

k. Stock-Based

Stock-based compensation

In December 2004, the FASB issued FASB ASC 718 “Compensation – Stock Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.  FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements.  That cost will be measured based on the fair value of the equity or liability instruments issued.

l.

Use of estimates and assumptions

Many of the amounts included in the consolidated financial statements require management to make judgments and/or estimates.  These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.  Actual results may differ from the amounts included in the consolidated financial statements.

28

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 2 - Significant Accounting Policies - continued

l. Use of estimates and assumptions - continued

Areas of significant judgment and estimates affecting the amounts recognized in the consolidated financial statements include:

Impairment of mining interests

The Company’s fair value measurement with respect to the carrying amount of mining interests is based on numerous assumptions and may differ significantly from actual fair values.  The fair values are based, in part, on certain factors that may be partially or totally outside of the Company’s control.  This evaluation involves a comparison of the estimated recoverable amount of mining interests to their carrying values.  The Company’s fair value estimates are based on numerous assumptions.

Convertible loans and warrants

Estimating the fair value of warrants and conversion feature derivative liability requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance.  This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants and conversion feature derivative liability, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value of warrants and conversion feature derivative liability are disclosed in notes 8 and 9 ..

The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on the Company’s balance sheets and the consolidated statements of operations.  Assets are reviewed for an indication of impairment at each reporting date.  This determination requires significant judgment. Factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends, interruptions in exploration activities or a significant drop in precious metal prices.prices

23

m.

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

3.Significant accounting policies (continued)

Concentrations of credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents.  The Company places its cash and cash equivalents with financial institutions of high credit worthiness.  At times, its cash equivalents with a particular financial institution may exceed any applicable government insurance limits.  The Company’s management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.

n.

Risks and uncertainties

The Company operates in the mineralized material exploration industry that is subject to significant risks and uncertainties, including financial, operational, and other risks associated with operating a mineralized material exploration business, including the potential risk of business failure.  

o.

Foreign currency transactions

The Company from time to time will receive invoices from service providers that are presenting their invoices using the Canadian dollar.  The Company will use its US dollars to settle the Canadian dollar liabilities and any differences resulting from the exchange transaction are reported as gain or loss on foreign exchange.  The gain or loss reported by the Company in the consolidated financial statements represents transaction gain or loss.

p.

Segment reporting

FASB ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s consolidated financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company does not have any reportable segments.

Convertible loan payable

The Company reviews the terms of its convertible loans payable to determine whether there are embedded derivatives, including the embedded conversion option, that are required to be bifurcated and accounted for as individual derivative financial instruments. In circumstances where the convertible debt contains embedded derivatives that are to be separated from the host contracts, the total proceeds received are first allocated to the fair value of the derivative financial instruments determined using the binomial model. The remaining proceeds, if any, are then allocated to the debenture cost contracts, usually resulting in those instruments being recorded at a discount from their principal amount. This discount is accreted over the expected life of the instruments to profit (loss) using the effective interest method.

The debenture host contracts are subsequently recorded at amortized cost at each reporting date, using the effective interest method. The embedded derivatives are subsequently recorded at fair value at each reporting date, with changes in fair value recognized in profit (loss).

29

The Company presents its embedded derivatives and related debenture host contracts as separate instruments on the consolidated balance sheets.

24

Bunker Hill Mining Corp. (formerly(Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 20172019 and 20162018

(Expressed in United States Dollars)

Note 3 – 4. New and Recently Adopted Technicalrecently adopted technical and Accounting Pronouncements

In August 2014, the FASB issued a new financial accounting standard on going concern, ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Sub-Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The standard provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about the organization’s ability to continue as a going concern. The amendments in this Update apply to all companies. They become effective in the annual period ending after December 15, 2016, with early application permitted. The Company has adopted this ASU No. 2014-15 as at and for the year ended June 30, 2017. There was no material effect on the consolidated financial position or the consolidated results of operations and comprehensive loss.pronouncements

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires that deferred tax liabilities and assets be classified on our Consolidated Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction. ASU No. 2015-17 is effective for the fiscal year commencing after December 15, 2017. The Company does not anticipate that the adoption of ASU No. 2015-17 willdid not have a material effect on the consolidated financial position or the consolidated results of operations.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This ASU provides eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for the fiscal year commencing after December 15, 2017. The adoption of ASU 2016-15 did not have on the consolidated statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases. This update requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosure about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is still assessing the impact that the adoption of ASU 2016-02 will have on the consolidated financial position and the consolidated results of operations.

5. Restatement of previously issued financial statements

In March 2016,November 2020, it was determined that the FASBCompany has underaccrued for invoices issued ASU 2016-09, “Compensation - Stock Compensation: Improvementsby the United States Environmental Protection Agency ("EPA") for excess water treatment costs relating to Employee Share-Based Payment Accounting”. Several aspectsyears ended June 30, 2018, 2019 and 2020 and interest payable on the outstanding EPA balance, which resulted in an understatement of liabilities for 2018 and 2019, an understatement of opening deficit for 2019 and closing deficit for 2018 and 2019, and an understatement of exploration expenses and net losses for 2018 and 2019.

The following tables present the impact of the accounting for share-based payment award transaction are simplified, including (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classificationrestatement adjustments on the statement of cash flows. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is still assessing the impact that the adoption of ASU 2016-09 will have on theCompany's previously issued consolidated financial positionstatements for the years ended June 30, 2018 and 2019.

Impact to Consolidated Statements of Loss and Comprehensive Loss

25

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

5. Restatement of previously issued financial statements (continued)

Impact to Consolidated Balance Sheets

Impact to Consolidated Statements of Cash Flows

Impact to Consolidated Statements of Changes in Shareholders' Deficiency

26

Bunker Hill Mining Corp. (Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

Years Ended June 30, 2019 and 2018

(Expressed in United States Dollars)

5. Restatement of previously issued financial statements (continued)

The circumstances associated with the adjustments also created errors in each of the previously reported quarters in 2018 and 2019, which have also been restated on a quarterly basis as disclosed in note 14.

In addition, subsequent to the year end, the Company amended its articles of incorporation to change the authorized capital and the par values, which have been retrospectively applied in these amended and restated consolidated resultsfinancial statements (note 9).

6 .. Equipment

Equipment consists of operations.the following:

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This ASU provides eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for the fiscal year commencing after December 15, 2017. The Company is still assessing the impact that the adoption of ASU 2016-15 will have on the consolidated statements of cash flows.

Note 4 –7. Mining Interestsinterests (restated)

Bunker Hill Mine Complex

On November 27, 2016, the Company entered into a non-binding letter of intent with Placer Mining Corp. (“Placer Mining”), which letter of intent was further amended on March 29, 2017, to acquire the Bunker Hill Mine in Idaho and its associated milling facility located in Kellogg, Idaho, in the Coeur d’Alene Basin (the “Letter of Intent”).  Pursuant to the terms and conditions of the Letter of Intent, the acquisition, which was subject to due diligence, would include all mining claims, surface rights, fee parcels, mineral interests, existing infrastructure, machinery and buildings at the Kellogg Tunnel portal in Milo Gulch, or anywhere underground at the Bunker Hill Mine Complex.  The acquisition would also include 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.

30

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

ForDuring the Fiscal Years Endedfiscal year ended June 30, 2017, and 2016

Note 4 – Mining Interests - continued

Thethe Company made certain payments totaling $300,000 as part of this Letter of Intent. These amounts were initially capitalized and subsequently written off during fiscal 2018 and are included in exploration expenses.

On August 28, 2017, the Company announced that it signed a definitive agreement (the “Agreement”) for the lease and option to purchase the Bunker Hill Mine assets (the “Bunker Assets”) (note 8).

Under the terms of the Agreement, the Company iswas required to make a US$1$1 million bonus payment to Placer Mining no later than October 31, 2017, which payment was made, along with two additional $500,000 bonus payments in December 2017.  The 24-month lease commences November 1, 2017 and continues until October 31, 2019.  The lease period can be extended by a further 12 months at the Company’s discretion.  During the term of the lease, the Company must make $100,000 monthly mining lease payments, paid quarterly.

The Company has an option to purchase the Bunker Assets at any time before the end of the lease and any extension for a purchase price of $45 million with purchase payments to be made over a ten-year period to Placer Mining. Under terms of the agreement, there is a 3% net smelter return royalty (“NSR”) on sales during the Lease and a 1.5% NSR on the sales after the purchase option is exercised, which post-acquisition NSR is capped at $60 million.

Trinity Project27

The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement.  On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company beneficially owned by another Nevada company AuEx Ventures, Inc.  AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project.  As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company, Renaissance Exploration Inc. (“Renaissance”) was spun out, and on July 1, 2010 AuEx, Inc. assigned all of its interest in the Trinity Project and the Earn-In Agreement to Renaissance, who currently holds a 100% leasehold interest in the Trinity Project.  The Minerals Lease and Sublease grants to Newmont, a right of first offer on any transfer of AuEx, Inc.’s interests in the Trinity Project to any non-affiliate of AuEx, Inc., and also gives Newmont a right to either enter into a joint venture agreement covering the Trinity Project and any other real property interests that AuEx, Inc. holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties.  Currently the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc.  The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project (the “70% Interest”).

Under the Earn-In Agreement, the Company may earn-in the 70% Interest in the Trinity Project during a 6-year period in consideration of (1) a signing payment of $25,000, which has been made, (2) an expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Trinity Project by March 29, 2016, including a minimum of $500,000 which must be expended within one year from the effective date of the Agreement, and (3) completion of a bankable feasibility study on the Trinity Project on or before the 7^th anniversary date of the Agreement.  Item (1) has been completed by the Company, and the Company has satisfied item (2), and has reported its compliance as of March 29, 2013, which is the end of the third year from the inception of the Earn-in Agreement.

31

Bunker Hill Mining Corp. (formerly(Formerly Liberty Silver Corp.)

Amended and Restated Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 20172019 and 20162018

(Expressed in United States Dollars)

7.Mining interests (restated) (continued)

Note 4 – Mining Interests - continuedBunker Hill Mine Complex (continued)

Trinity Project – continued

On October 15, 2012,2, 2018, the Company entered into and closed aannounced that it was in default of its Lease with Option to Purchase Agreement (the “Purchase Agreement”) with Primus Resources, L.C. (“Primus”)Placer Mining. The default arose as a result of missed lease and James A. Freeman (collectively “Seller”) to acquire unpatented mining claims, Nevada BLM Serial No. 799907, 799908, 799909, 799910,operating cost payments, totaling $400,000, which were due at the end of September and 799911 covering approximately 100 acres of property located adjacent toon October 1, 2018. As per the former Trinity Silver mine on the Company’s Trinity Project (the “Hi Ho Properties”).  The Hi Ho Properties were previously the only acreage not controlled by the Company or its joint venture partner Renaissance Exploration Inc. in the Trinity Project.  Under the terms of the Purchase Agreement, the Company had 15 days, from the date notice of default was provided cash consideration(September 28, 2018), to remediate the default by making the outstanding payment. While Management worked with urgency to resolve this matter, Management was ultimately unsuccessful in remedying the default, resulting in the lease being terminated.

On November 13, 2018, the Company announced that it was successful in renewing the lease, effectively with the original Agreement intact, except that monthly payments are reduced to $60,000 per month for 12 months, with the accumulated reduction in payments of $250,000 and issued 2,583,333 restricted shares of common stock$140,000 per month (“deferred payments”) added to the purchase price of the Company to the Seller.  On March 1, 2013,mine should the Company issued an additional 277,778 of the Company’s common shareschoose to Primus, pursuant to a Registration Rights Agreement. In addition, the Seller was granted a 2% NSR on future production from the Hi Ho Properties pursuant to the terms of a Deed With Reservation of Royalty Hi Ho Silver Claims.

The Trinity Project consists of a total of approximately 10,020 acres, including 5,676 acres of fee land and 254 unpatented mining claims.

On August 31, 2017, the Company and Renaissance Exploration Inc. signed a notice of termination and release of exploration Earn-In Agreement.  Upon signing this agreement, the Company has terminated the March 29, 2010 Earn-In Agreement.  

During the year ended June 30, 2016, the Company wrote downexercise its mining interests to $1, and recorded an impairment of mining interest of $2,550,739.

During the year ended June 30, 2017, the Company had incurred approximately $150,861 (2016 - $128,690) in exploration related expenditures on the Trinity Project, which were reported under various line items on the statement of operations and comprehensive loss.

Note 5 – Promissory Notes Payable

On February 9, 2017 and February 17, 2017, the Company issued unsecured promissory notes in the amounts of $40,000 and $60,000 respectively.  The promissory notes bore interest at a rate of 11% per annum, with no specific terms of repayment.  Effective April 5, 2017, the Company repaid the principal amount of $100,000 and accrued interest of $1,513 for both promissory notes.

Note 6 – Convertible Loan Payable

On October 17, 2014, the Company amended and restated its agreement in relation to an existing $1,210,000 principal amount secured loan facility (the “Original Loan”) made available by BG Capital Group Ltd. (“BGCG”).  Under the terms of the revised agreement, BGCG has made available to the Company a committed non-revolving term credit facility in the principal amount of $1,250,000 (the “New Loan”), which bore interest at a rate of 11% per annum and which was secured by a charge on all of the assets of the Company.  The Company repaid the indebtedness to BGCG under the Original Loan by converting the principal amount of the Original Loan, together with all accrued and unpaid interest thereon, being $1,248,654 (the “Debt”), into 6,659,487 common shares of the Company (“Common Shares”) at a price of $0.1875 per Common Share, in full satisfaction of the Debt under the Original Loan.

A New Loan was obtained of up to $1,250,000 of new credit facilities, of which $25,000 had been advanced to the Company pursuant to a promissory note, which was superseded by the New Loan and became part of the first advance under the New Loan in the aggregate amount of $350,000.  

32

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 6 – Convertible Loan Payable - continued

The key terms of the New Loan were as follows:

·

the principal amount of the New Loan obtained from BGCG on October 15, 2014 of $1,250,000, which has been fully utilized;

·

the outstanding principal amount bore interest at 11% per annum from date of advance and became due and payable in its entirety one year following the closing date of the New Loan (the “Maturity Date”).  The Company exercised its option to extend the Maturity Date by six months, with interest payable at 15% per annum accruing on the outstanding principal amount during such extension period;

·

the New Loan was secured by a charge on all of the assets of the Company; and

·

BGCG, at any time up to one business day prior to the Maturity Date, at its sole option, shall be entitled to convert all or any portion of the outstanding principal amount of the New Loan advanced to the Company (including all deferred interest), together with all accrued interest, into Common Shares, on the basis of $0.1875 per Common Share.  The conversion rights are subject to the Company having sufficient authorized capital available to satisfy the exercise of the conversion rights from time to time.  To the extent there is not sufficient authorized capital at any time to permit the full exercise of all conversion rights available to BGCG at such time, the Company shall take all reasonable commercial efforts to hold, as expeditiously as possible, a shareholders’ meeting to approve the necessary increase to the authorized capital in order that the conversion rights available to BGCG may be exercised to its fullest extent.

The carrying value of the conversion option equity component of the convertible loan was determined to be $nil and the carrying value of the liability component was $1,400,000.  The effective interest rate on the liability component of the convertible loan was 11% for the period ending October 15, 2015 and 15% per annum during the extended period beginning October 15, 2015.

The lender pursuant to the amended New Loan is BGCG.  Immediately following the closing date, BGCG and certain of its related parties owned, directly and indirectly, 8,657,417 Common Shares, which represented approximately 70.1% of the Company’s 12,353,972 issued and outstanding Common Shares on the closing date of the New Loan.  Other than pursuant to the New Loan, the Company does not have any contractual or other relationship with BGCG.

As at April 15, 2016, the Second Maturity Date, the Company had not repaid the loan and BGCG had not called the loan nor converted any portion of the outstanding balance into common shares.  In accordance with the default provision of the agreement, the loan was repayable on demand and from April 15, 2016, accrued interest until such time as the loan was repaid or converted into common shares.

Effective November 30, 2016, the Company reached an agreement with BGCG to amend the terms of the New Loan.  Under the terms of the agreed upon amendments (the “Amendment”), the principal amount of the loan of $1,250,000, as it was under the New Loan, increased to $1,400,000 (the “New Principal Amount”) to include an advance of $150,000 made by BGCG to the Company on November 28, 2016. The New Principal Amount and the accrued interest were convertible into common shares of the Company at BGCG’s election.

Effective January 20, 2017, BGCG elected to convert the entire indebtedness under the New Loan Agreement, as amended by the Amendments (the “Indebtedness”) into common shares of the Company (“Shares”) pursuant to the terms of the New Loan (the “Loan Conversion”).  The Company approved the Loan Conversion and the issuance thereunder of Shares to BGCG and parties named thereby as assignees of portion of the Indebtedness.  Under the terms of the Loan Conversion, the Indebtedness, being $1,685,810 converted into 8,990,986 Shares at the conversion price of $0.1875 per Share.

33

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 6 – Convertible Loan Payable - continued

The 8,990,986 Shares issuable under the terms of the Loan Conversion were to be issued to BGCG; however, 4,500,000 Shares were distributed directly to third parties at the request of BGCG, and 4,490,986 Shares were issued to BGCG. Prior to the Loan Conversion BGCG directly or indirectly held 8,817,419 of the Shares, representing approximately 71.37% of the total number of issued and outstanding Shares at that time. Following the issuance of Shares in connection with the Loan Conversion, BGCG held 13,308,405 Shares representing approximately 62.35% of the 21,345,483 Shares that were issued and outstanding immediately following the completion of the Loan Conversion.

Note 7 - Capital Stock, Warrants and Stock Options

Authorized

The total authorized capital is as follows:

-

300,000,000 common shares with a par value of $0.001 per common share; and

-

10,000,000 preferred shares with a par value of $0.001 per preferred share

Issued and outstanding

option. As at June 30, 2017, there were 24,889,395 (2016 – 12,354,497) common shares issued and outstanding and 6,500,000  (2016 – Nil) shares held in escrow.  

On January 20, 2017, BGCG elected to convert2019, the entire indebtedness into common shareCompany has accrued for $1,373,000 of the Company. Underdeferred payments and is included in accounts payable.

In addition to the termspayments to Placer Mining, and pursuant to an agreement with the United States Environmental Protection Agency (“EPA”) whereby for so long as Bunker leases, owns and/or occupies the Bunker Hill Mine, the Company will make payments to the EPA on behalf of the Loan Conversion,current owner in satisfaction of the Indebtedness,EPA’s claim for cost recovery.  These payments, if all are made, will total $20 million.  The agreement calls for payments starting with $1 million 30 days after a fully ratified agreement was signed followed by payment schedule detailed below:

In addition to these cost recovery payments, the Company is to make semi-annual payments of $480,000 on June 1 and December 1 of each year, to cover the EPA’s costs of operating and maintaining the water treatment facility that treats the water being $1,685,809 converted into 8,990,986 Sharesdischarged from the Bunker Hill Mine. Of these, $560,000 is outstanding as at June 30, 2019 (June 30, 2018 - $80,000). The Company also has received invoices from the EPA for water treatment charges for the periods from December 2017 to October 2019. This was for a total of $3,749,388, with $1,209,530 additional accruals required as at June 30, 2019 (June 30, 2018 - $546,125). The Company is having discussions with the EPA to review and, where appropriate, have the additional water treatment charges amended. The unpaid EPA balance is subject to interest at the deemed pricerate specified for interest on investments of $0.1875 per Share.

On March 27, 2017, the Company issued 1,515,000 common shares pursuant to a non-brokered private placement. The shares were issued at CAD $1 per share raising gross proceeds of CAD $1,515,000 (USD $1,132,917).

On April 19, 2017, the Company issued 330,000 common shares upon the exercise of stock options granted.

On May 8, 2017, the Company issued 1,698,912 common shares pursuant to a non-brokered private placement. The shares were issued at CAD $1 per share raising gross proceeds of CAD $1,698,912 (USD $1,247,511).

Warrants

EPA Hazardous Substance Superfund. As at June 30, 2016,2019, the aggregate weighted average intrinsic value of 13,333 warrants outstanding was $0, and the weighted average grant date fair value of each warrant outstanding was CAD $11.25.  The 13,333 warrants expired on August 4, 2016.  As at June 30, 2017, the Company did not have any warrants outstanding.

Stock Options

On February 17, 2015, the Company granted a total of 1,182,667 stock options to purchase common shares to directors, officers and an employee of the Company, at an exercise price of $0.1875 per share and for a term of 5 years.

The Company reached an agreement with certain optionees to surrender their options in consideration of $0.05 per option.  On April 26, 2017, the Company issued payment of $39,833 to the optionees for the surrender of 796,667 options.  Further, in May 2017, an optionee exercised 330,000 stock options at an exercise price of $0.1875 per share, for gross proceeds of $61,875.  Subsequent to the surrender and exercise of options, 56,000 options remained outstanding with an exercise price of $0.1875 per share.  The shares issued upon exercise of options were not registered under the Securities Act of 1933 in reliance upon the exemptions from registration contained in Regulation S under the Securities Act of 1933.

34

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 7 - Capital Stock, Warrants and Stock Options - continued

In April 2017, the Company granted a total of 2,235,000 stock options to purchase common shares to directors, officers and employees of the Company, at an exercise price of CDN$1.00 per share, for a term of 5 years and vest immediately.

Stock based compensation expense, resulting from the vesting of stock options for the year ended June 30, 2017 was $1,215,401 (2016 - $60,961), which is included in operation and administration expenseinterest accrued on the consolidated statements of operations and comprehensive loss.unpaid EPA balance is $13,061 (June 30, 2018 - $607).

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

The following table summarizes the stock option activity during the period being reported on and ending June 30, 2017 and 2016:

The following table summarizes the information on stock options outstanding at June 30, 2017:

Trinity Project

35

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 8 – Commitments and Contingencies

Effective June 1, 2017, the Company has a lease agreement for office space at 401 Bay Street, Suite 2702, Toronto, Ontario, Canada, M5H 2Y4.  The 5-year lease provides for a monthly base rent of CDN$12,964 for the first two years, increasing to CDN$13,504 per month for years three through five.  The Company has signed sub-leases with other companies that cover 78% of the monthly lease amount.

Effective November 1, 2017, the Company signed an Agreement for the lease and option to purchase of the Bunker Hill Mine (the “Mine”) in Idaho. The “Bunker Hill Lease with Option to Purchase” is between the Company and Placer Mining Corporation (“Placer Mining”), the current owner of the Mine.

Payments during the Lease are as follows:

*

$1 million bonus payment to Placer Mining no later than October 31, 2017

*

$100,000 monthly mining lease payments, paid quarterly

The 24-month lease commences November 1, 2017 and continues until October 31, 2019, and contains an option to purchase the Mine on defined payment terms.  The Lease period can be extended by a further 12 months at the Company’s discretion.

Under the terms of the Agreement, the Company will have the right to purchase the Mine at any time before the end of the lease and any extension for a purchase price of US $45 million with purchase payments to be made over a ten-year period to Placer Mining. Under terms of the agreement, there is a 3% NSR on production during the Lease and a 1.5% NSR on the production after the purchase option is exercised, which post-acquisition NSR is capped at US $60 million.

The Company had incurred substantial legal fees in prior fiscal years in connection with SEC and OSC cease trade orders issued in October 2012, and until March 31, 2016, those fees were being reported in accounts payable in the prior years.  As the legal fees were incurred, the Company submitted a claim for reimbursement from the insurance underwriter pursuant to the terms of its directors’ and officers’ insurance policy.  The insurance underwriter denied coverage of this claim and the Company has since retained legal counsel, on a contingent fee basis, and is challenging the position taken by Liberty International Underwriters Inc., the insurance underwriter, through litigation.  In connection with the substantial legal fees incurred by the Company with various law firms, the Company has entered into an assignment agreement (the “Assignment Agreement”) with the various law firms that are owed these fees.  Pursuant to the Assignment Agreement, the Company has irrevocably assigned the net proceeds of the Company’s action against the insurance underwriter to each of the law firms that are owed fees in connection with the SEC and OSC cease trade orders.  Each of the law firms have agreed, pursuant to the terms of the Assignment Agreement, to fully and finally release the Company from any and all claims, demands of causes of action, in respect of the accounts rendered by the law firms.  As a result of entering into the Assignment Agreement with the various law firms that were owed fees in connection with the SEC and OSC cease trade orders, the Company was able to extinguish approximately $708,000 of liabilities from its balance sheet and record a corresponding legal fees expense recovery in the statements of operations for the year ended June 30, 2016.  Without considering the legal fees expense recovery, the Company incurred approximately $41,834 in other legal fees related to normal operations for the year ended June 30, 2016.

Additionally, in the normal course of operations, certain other contingencies may arise relating to legal actions undertaken against the Company. In the opinion of management, whether the impact of such potential legal actions would have a material adverse effect on the Company's results of operations, liquidity, or its financial position, cannot be determined in advance.

36

Bunker Hill Mining Corp. (formerly Liberty Silver Corp.)

Notes to Consolidated Financial Statements

For the Fiscal Years Ended June 30, 2017 and 2016

Note 9 - Income Taxes

As at June 30, 2017 and 2016, the Company had no accrued interest and penalties related to uncertain tax positions.  The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 35% (2016 - 35%) to pretax loss from operations for the years ended June 30, 2017 and 2016 due to the following:

Deferred tax assets and the valuation account are as follows:

The components of income tax expense are as follows: