Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background and Overview

Our focus is the development and restart of our 100% owned flagship asset, the Bunker Hill Mine, in Idaho, USA. The Bunker Hill Mine remains the largest single producing mine by tonnage in the Silver Valley region of northwest Idaho, producing over 165 million ounces of silver and 5 million tons of base metals between 1885 and 1981. The Bunker Hill Mine is located within Operable Unit 2 of the Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921), where cleanup activities have been completed.

Since early 2020, we have conducted multiple exploration campaigns, published multiple economic studies and mineral resource estimates, and advanced the rehabilitation and development of the Mine. In December 2021, we announced a project finance package with Sprott, an Amended Settlement Agreement with the EPA, and the purchase of the Bunker Hill Mine. In 2022, we completed the purchase of a package of equipment and parts inventory from Teck Resources Limited's ("Teck") Pend Oreille operation. The package comprises substantially all the mineral processing equipment including complete crushing, grinding and flotation circuits suitable for a planned ~1,500 ton-per-day operation at the Bunker Hill Mine, and total inventory of components and parts for the mill, assay lab, conveyer, field instruments, and electrical spares.

Durning the fourth quarter of 2022, we moved into the development stage concurrent with (i) purchasing the Mine and a process plant, (ii) completing successive technical and economic studies, including a Prefeasibility Study, (iii) delineating mineral reserves, and (iv) conducting the program of activities to restart the mine.

During 2024, we entered into definitive agreements with Monetary Metals Bond III LLC, an entity established by Monetary Metals & Co., for a silver loan in an amount of U.S. dollars equal to up to 1.2 million ounces of silver, to be advanced in one or more tranches, in support of the re-start and ongoing development of the Bunker Hill Mine (the "Silver Loan"). During 2024, we borrowed 1,148,784 ounces of silver under this Silver Loan in six separate tranches for net proceeds of $26,278,261. In conjunction with the borrowings under this Silver Loan, we issued 85,714 warrants , with exercise prices ranging from C$4.20 to C$6.65.

During 2025, we completed a major restructuring of our balance sheet, including the conversion of certain outstanding debt into equity, and the modification of certain existing royalty and stream financing arrangements with Sprott, and also issued 19,527,594 common shares in two private placements for net proceeds of $61,803,983, [including net proceeds from the settlement of certain amounts owing to creditors, insiders and contractors through the issuance of common shares]. Teck participated in the private placements and, as a result, became a related party alongside Sprott, holding more than 10% of our equity. See notes 10, 11 and 18 in Item 8, Financial Statements and Supplementary Data, for more detailed information. Concurrent with its balance sheet restructuring, we focused on the disciplined execution of the Bunker Hill Mine restart plan, prioritizing safety, environmental stewardship, infrastructure readiness, technical de-risking, and organizational development. The mine restart is expected to take place in 2026. However, the estimated timing of the mine restart is subject to change based on factors beyond our control.

During 2025, we also commenced discussions with the EPA and the IDEQ to advance a second amendment to the Amended Settlement Agreement. Specifically, we are seeking to restructure the ongoing obligations to the EPA and IDEQ. The EPA agreed to forebear enforcement of any late payments pursuant to the Amended Settlement Agreement to facilitate ongoing discussion of a second amendment of the Amended Settlement Agreement, including the payment due in November of 2025. The EPA reserves all rights to resume collection of late payments in the event discussion of a second amendment of the Amended Settlement Agreement fails.

During 2025, we also entered into an asset purchase agreement with Silver Dollar Resources (Idaho) Inc., a subsidiary of Silver Dollar Resources Inc. ("Silver Dollar"), to acquire the Ranger Page property which includes, six past-producing underground high-grade silver-lead-zinc mines located immediately adjacent to and to the west of the Bunker Hill Mine in the prolific Silver Valley mining district of Idaho, USA. We acquired the properties for total consideration of approximately $4,200,000 comprised of 666,667 shares of Bunker Hill's common stock, subject to the below contractual escrow.

Release Date		Payment Shares Release to Vendor Parent from Contractual Escrow
6-month anniversary from December 11, 2025		66,667 Payment Shares
9-month anniversary December 11, 2025		66,667 Payment Shares
12-month anniversary of December 11, 2025		Balance of the Payment Shares (533,334 Payment Shares)

Additionally, during 2025, we received the approval of the majority of its stockholders, by way of the Stockholder Consent, to proceed with authority to implement a reverse stock split based on a one-for-thirty five (1-for-35) consolidation. On March 5, 2026, we filed an amendment to our Certificate of Incorporation to implement the reverse stock split based on a one-for-thirty five (1-for-35) consolidation ratio on March 6, 2026. Our common shares began trading on the TSXV and OTC on a reverse split-adjusted basis under our existing trade symbol "BNKR" and "BHLL" respectively at the opening of the market on March 6, 2026. All shares and per share amounts have been presented in our financial statements on a post consolidation basis.

Results of Operations

The following discussion and analysis provide information that is believed to be relevant to an assessment and understanding of the results of operation and financial condition of the Company for the years ended December 31, 2025 and 2024. Unless otherwise stated, all figures herein are expressed in U.S. dollars, which is our functional currency.

Comparison of the year ended December 31, 2025, and the year ended December 31, 2024

Revenue

During the years ended December 31, 2025, and December 31, 2024, we generated no revenue.

Expenses

During the years ended December 31, 2025 and December 31, 2024, we reported total operating expenses of $13,595,412 and $15,649,142, respectively. The operating expenses were lower year over year as activities in the current year focused on capital projects and therefore were capitalized into property plant and equipment.

Net Income and Comprehensive Income

We experienced a net loss of $93,132,015 for the year ended December 31, 2025 (compared to a net loss of $25,341,623 for the year ended December 31, 2024). In addition to the decrease in operating expenses (as described above), net loss for the year ended December 31, 2025 was primarily impacted by $49,386,219 loss on the fair value of the silver loan compared to a loss of $2,820,533 for the year ended December 31, 2024, due to the increase in spot and future estimated silver prices. Additionally, we recognized $6,469,025 loss on issuance of warrants relating to the bought deal equity raise compared to $nil for the year ended December 31, 2024. Financing costs increased $2,737,639 relating to the debt and equity transactions we closed during the year ended December 31, 2025. The change in derivative liabilities increased the loss in 2025 by $42,593,254 due to the increased number of warrants outstanding and the updates to key assumptions including the price of one common share of our stock (compared to a gain of $838,378 for the year ended December 31, 2024). The net loss for the year ended December 31, 2025, was offset by a gain on debt settlement of the stream debenture of $29,580,954, compared to $nil in the 2024 period due to the restructuring and a gain on revaluation of stream debenture of $4,149,606 compared to loss of $230,000 for the year ended December 31, 2024, due to updated key assumptions including commodity prices and timing of production.

We had a comprehensive loss of $90,410,580 and $29,152,646 for the year ended December 31, 2025, and December 31, 2024, respectively. Comprehensive (loss) income for the year ended December 31, 2025 and December 31, 2024, is inclusive of a $2,721,435 and ($3,811,023) change in fair value on own credit risk, respectively.

Liquidity and Capital Resources

Current Assets and Total Assets

As of December 31, 2025, the we had (i) total current assets of $23,296,106, compared to total current assets of $9,332,639 at December 31, 2024, an increase of $13,963,467; and (ii) total assets of $150,958,994, compared to total assets of $97,601,550 at December 31, 2024, an increase of $53,357,444. During the year ended December 31, 2025, our current assets increased due to cash proceeds from debt and equity offerings partially offset by cash expenditures on the process plant, purchasing of equipment and additions to the Bunker Hill Mine. Total assets increased as we completed some key infrastructure projects at Bunker Hill Mine in preparation of production commencing in 2026.

Current Liabilities and Total Liabilities

As of December 31, 2025, our total current liabilities were $16,838,089 and total liabilities were $207,030,036, compared to total current liabilities of $29,644,412 and total liabilities of $149,736,915 as of December 31, 2024. Total liabilities increased due to change in valuation inputs in the Silver Loan, the valuation of the loan was heavily correlated to the increase in the spot price of silver that occurred throughout the year ending December 31, 2025 and the issuance of warrants classified as a liability. This was partially offset by the repayment of the stream debenture, as well as a decrease in accounts payable and accruals due to timing of invoices and payments.

As of December 31, 2025, our total liabilities include $75,156,975 of warrants that are classified as a liability under US GAAP, as the instrument is exposed to foreign currency risks other than the changes in the value of the entity's equity because the strike price of the warrants is denominated in C$ versus US$. Although classified as a liability, it does not represent a future cash outflow to the Company. We will settle any warrant exercises received with the issuance of our own shares together with the receipt of cash for those warrants exercised.

Working Capital and Shareholders' Deficit

As of December 31, 2025, we had a working capital of $6,458,017 and a shareholders' deficiency of $56,071,042, compared to working capital deficit of $20,311,773 and a shareholders' deficiency of $52,135,365 as of December 31, 2024. The shareholders' deficiency decreased due to equity raises we closed during the year ended December 31, 2025, partially offset by the net loss incurred in the same period.

Cash Flow

During the year ended December 31, 2025, we had a net cash increase of $14,155,628, primarily due to cash provided by financing activities relating to drawings on the loan facility and equity raises, partially offset by cash expenditures on the process plant, purchasing of equipment, and additions to the Bunker Hill Mine.

Subsequent Events

On January 5, 2026, the Company issued 45,098 shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ended December 31, 2025.

During the month of January 2026, the Company issued 122,858 shares of common stock in connection with a stockholder's warrant exercises.

On January 30, 2026, the Company closed the final tranche of the Silver Loan in the principal amount of $4,763,110, being the number of U.S. dollars equal to 50,958 ounces of silver. After deduction of financing costs and the three months ending February 8, 2026 interest payment on the principle amount of ounces outstanding and prepaying some of the May 8, 2026 interest payment we received $nil.

In February 2026 571,259 warrants expired unexercised.

During the month of February 2026, the Company issued 187,345 and 1,956 shares of common stock in connection with a stockholder's warrant and compensation option exercises, respectively.

On February 26, the Company exercised its option by paying C & E $1,939,627 to purchase the leased land parcel from C & E overlaying a portion of the Company's existing mineral claims package.

On March 5, 2026, the Company closed private placement offering of units (the "LIFE Units") of the Company. The Company issued 4,308,809 LIFE Units at a price of C$6.30 for gross proceeds of C$27,145,500 (the "Brokered Offering"), which included the full exercise of the agents' overallotment option. Each LIFE Unit consists of one share of common stock of the Company (a "Common Share") and one-half common share purchase warrant of the Company (a "Warrant"). Each Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of C$10.50 for a period of 36 months from issuance.

The Company also issued 255,048 LIFE Units at a price of C$6.30 for gross proceeds of C$1,606,800 under a concurrent private placement, on a non-brokered basis (the "Non-Brokered Offering", and together with the Brokered Offering, the "Offering"). Each LIFE Unit consists of one share of common stock of the Company (a "Common Share") and one-half common share purchase warrant of the Company (a "Warrant"). Each Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of C$10.50 for a period of 36 months from issuance.

In connection with the closing of the Brokered Offering, the Company paid to the Agents aggregate cash fees in the amount of C$1,786,390 and issued to the Agents an aggregate of 258,271 non-transferrable compensation options ("Compensation Options"), representing: (i) 6.0% of the gross proceeds of the Brokered Offering, other than the gross proceeds raised from certain sales pursuant to a president's list (the "President's List Sales"); and (ii) 3.0% of the gross proceeds raised from President's List Sales. Each Compensation Option is exercisable to acquire one Common Share at a price of C$6.30 per share for a period of 24 months from issuance.

Concurrently with the Offering, The Company issued 840,336 shares to a cornerstone investor who exercised existing common share purchase warrants at C$5.95 for proceeds to the Company of C$5,000,000.

The effective date of the Company's Reverse Stock Split based on a one-for-thirty five (1-for-35) consolidation ratio is March 6, 2026. The Company's common shares began trading on the TSXV and OTC on a reverse split-adjusted basis under the Company's existing trade symbol "BNKR" and "BHLL" respectively at the opening of the market on March 6, 2026. All shares and per share amounts have been presented in these financial statements on a post consolidation basis.

Critical accounting estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:

Share-based payments

Management determines costs for share-based payments using market-based valuation techniques. The fair value of the share awards and warrant liabilities are determined at the date of grant using generally accepted valuation techniques and for warrant liabilities at each balance sheets date thereafter. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price and expected dividend yield. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

Convertible Loans, Promissory Notes, Stream Obligation and Warrants

Estimating the fair value of derivative warrant liability requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the issuance. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the warrants derivative liability, volatility and dividend yield and making assumptions about them.

The fair value estimates of the convertible loans use inputs to the valuation model that include risk-free rates, equity value per share of common stock, USD-CAD exchange rates, expected equity volatility, discount for lack of marketability, credit spread.

The stream obligation inputs used to determine the future cash flows and effective interest for the amortized cost calculation include futures prices of minerals and expected mineral production over the life of the mine.

The fair value estimates of the silver loan use inputs to the valuation model that include risk-free rates, spot and futures prices of minerals, and expected volatility in minerals prices.

The fair value estimates may differ from actual fair values and these differences may be significant and could have a material impact on our 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.

Accrued liabilities

We make estimates to accrue for certain expenditures due to delay in receipt of third-party vendor invoices. These accruals are made based on trends, history and knowledge of activities. Actual results may be different.

We make monthly estimates of its water treatment costs, with a true-up to the annual invoice received from the IDEQ. Using the actual costs in the annual invoice, we will then reassess its estimate for future periods. Given the nature, complexity and variability of the various actual cost items included in the invoice, we used the most recent invoice as its estimate of the water treatment costs for future periods.

Incremental Borrowing rate

We estimate the incremental borrowing rate to determine the present value of future lease payments. Actual results may be different from estimates.

Borrowing Cost Capitalization rate

We make estimates to determine the percentage of borrowing costs that are capitalized into property plant and equipment. Actual results may be different.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.