美國
證券交易委員會 及交易所
華盛頓特區，20549
表單
| 根據1934年證券交易法的第13或15(d)條款，季報。 |
截至年度季度結束
或
| 根據1934年證券交易法第13或15(d)條的過渡報告 |
在從 到的過渡期間
委員會
檔案編號：
(根據其章程所規定的註冊人的正確名稱)
(其他司法管轄區狀態 公司組織或註冊證明書） |
（聯邦國稅局雇主身分識別號碼） 識別號碼） |
| （總執行辦公室地址） | （郵政編碼） |
(註冊人的電話號碼，包括區號)
根據法案第12(b)條登記的證券：SECURITIES None
根據法案第12(g)條註冊的證券：SECURITIES None
請用勾號表示登記人是否為「知名資深發行人」，如《證券法》第405條所定義。 是 ☐ 否 ☒
如果依據《交易所法》第13或15(d)條，登記者無需提交報告，請打勾示意。是 ☒ 否 ☐
請以勾選標記指示登記人(1)在過去12個月內（或登記人被要求提交此類報告的較短期間內）是否已提交《1934年證券交易法》第13條或第15(d)條所要求的所有報告（“交易所法”），以及(2)在過去90天內是否一直受到此類提交要求的約束。
請以勾選方式表示，無論在前述12個月內（或登記人有需要在此期間更短的時間內提交和發布此類文件的情況下），在依據Regulation S-t規則405第232.405章要求提交並張貼在其公司網站（如有的情況下），是否已提交電子檔案和發佈每一份互動式資料文件。
至 此表格10-Q。☒
請以勾選方式表明註冊人是否為大型加速報表人、加速報表人、非加速報表人、小型報告公司或新興成長公司。請參見《交易所法》第120億2條中對「大型加速報表人」、「加速報表人」、「小型報告公司」和「新興成長公司」的定義。
| 大型 加速申报人 ☐ | 加速申报人 ☐ | |
| 較小型報告公司 | ||
| 新興
成長公司 |
請用勾選標記表示登記人是否為空殼公司，根據交易法第120億2條的定義。是 ☐ 否
截至2024年5月9日，普通股的流通股數:
目錄
| 第一部分 – 財務資訊 | 3 | |
| 項目1. 財務報表 | 3 | |
| 項目2. 管理層對財務狀況或營運計劃的討論與分析 | 20 | |
| 第三項、市場風險之定量化與定性揭露 | 23 | |
| 第四項。控制和程序 | 24 | |
| 其他資訊第二部分 | 25 | |
| 項目1. 法律訴訟 | 25 | |
| 第1A項。風險因素 | 25 | |
| 項目 2. 未登記股權銷售和款項使用 | 25 | |
| 項目 3. 高級證券違約 | 25 | |
| 項目4. 礦安披露 | 26 | |
| 項目5。其他信息。 | 26 | |
| 項目6. 附件 | 26 | |
| 2 |
第一部分 - 財務信息
項目 1. 基本報表
Bunker Hill Mining Corp.（下稱「Bunker Hill」、「本公司」或「註冊公司」）的簡明中期綜合財務報表，是根據美國通用會計準則（「U.S.」）的相關規定和監管要求，未經審計編制的。由於根據這些規則和規定，某些通常包含在按照美國通用會計原則編制的財務報表中的信息和附註被簡化或省略，因此應當參閱本公司截至2023年12月31日的年度10-k表格中包括的經審計的綜合財務報表和附註。
Bunker Hill礦業公司
簡要中期合併資產負債表
（以美元計）
未經審計
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| 資產 | ||||||||
| 流動資產 | ||||||||
| 現金 | $ | $ | ||||||
| 限制性現金 (附註8) | ||||||||
| 應收賬款及預付款 (附註3) | ||||||||
| 總流動資產 | ||||||||
| 非流動資產 | ||||||||
| 備件庫存 (注5) | ||||||||
| 開多期限存款 | ||||||||
| 設備 (注4) | ||||||||
| 使用權資產 (注4) | ||||||||
| Bunker Hill礦山和礦業權益 (注6) | ||||||||
| 加工廠 (注5) | ||||||||
| 總資產 | $ | $ | ||||||
| 所有者權益和負債 | ||||||||
| 流動負債 | ||||||||
| 應付賬款（附註16） | $ | $ | ||||||
| 應計負債 | ||||||||
| 租賃負債的流動部分 （附註7） | ||||||||
| 遞延股份單位負債 （附註12） | ||||||||
| 環境保護 機構成本收回應付款（附註8） | ||||||||
| 流動部分的流 抵債券 | ||||||||
| 應付利息 (注9) | ||||||||
| 流動負債合計 | ||||||||
| 非流動負債 | ||||||||
| 租賃負債 (注7) | ||||||||
| 第1系列可轉換債券 (注9) | ||||||||
| 第2系列可轉換債券 (注9) | ||||||||
| 流通債券 (注 9) | ||||||||
| 環保 機構成本回收負債，折現後的淨值 (注8) | ||||||||
| 遞延稅務負債 (注14) | ||||||||
| 衍生品 期權負債 (注10) | ||||||||
| 總負債 | ||||||||
| 股東欠款 | ||||||||
| 優先股，$每股面值， 普通股授權 | ||||||||
| 普通股，每股 每股面值，普通股份授權 | ||||||||
| 額外資本溢價 (附註10) | ||||||||
| 累計其他綜合收益 | ||||||||
| 累計虧損 | ( | ) | ( | ) | ||||
| 股東權益合計 股東權益赤字 | ( | ) | ( | ) | ||||
| 股東權益合計 股東權益赤字和負債 | $ | $ | ||||||
附註是這些未經審計的簡明中期合併基本報表的一部分。
| 3 |
Bunker Hill礦業公司
壓縮的 中期綜合損益表
（以美元計）
(未經審計)
| 三個月 | ||||||||
| 3月31日， | ||||||||
| 2024 | 2023 | |||||||
| 運營費用（注15） | $ | ( | ) | $ | ( | ) | ||
| 其他收入或損益（費用或虧損） | ||||||||
| 利息收入 | ||||||||
| 衍生性負債變動（注10） | ( | ) | ||||||
| 可轉換債券的公允價值變動（注9） | ( | ) | ||||||
| 修改認股權證的收益（注10） | ||||||||
| 外匯匯兌的獲利（損失） | ( | ) | ||||||
| 利息支出（附註7,8,9） | ( | ) | ( | ) | ||||
| 融資成本（附註10） | ( | ) | ||||||
| 流通可轉換債券的損失（附註9） | ( | ) | ||||||
| 債務結清的損失（附註9） | ( | ) | ( | ) | ||||
| 其他收入 | ||||||||
| 稅前期間（損失）收入 | ( | ) | ||||||
| 遞延所得稅收入（附註14） | ||||||||
| (虧損) 本期收益 | ( | ) | ||||||
| 其他全面收益（損失），淨額 | ||||||||
| 按照FV的變動 分享自身信用風險（注9） | ||||||||
| 其他 綜合收益 | ||||||||
| 全面 (虧損) 收益 | ( | ) | ||||||
| 每普通股淨虧損/收益 –基本 | $ | ( | ) | $ | ||||
| 每普通股淨虧損/收益 –攤薄 | $ | ( | ) | $ | ||||
| 基本加權平均稀釋普通股股份 | ||||||||
| 加權平均普通股份-完全攤薄 | ||||||||
附註是這些未經審計的簡明中期合併基本報表的一部分。
| 4 |
邦克山礦業公司
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
Unaudited
| 三個月 | 三個月 | |||||||
| 截止日期. | 截止日期. | |||||||
| 3月31日 | 3月31日 | |||||||
| 2024 | 2023 | |||||||
| 經營活動 | ||||||||
| 本期淨（虧損）收入 | $ | ( | ) | $ | ||||
| 調整淨損失爲經營活動中使用的淨現金: | ||||||||
| 股票補償 (附註10) | ||||||||
| 折舊費用 | ||||||||
| 公允價值變動 | ( | ) | ||||||
| 遞延所得稅費用 | ( | ) | ||||||
| 權證清償收益 | ( | ) | ||||||
| 因提供服務而發行的單位 | ||||||||
| 租賃負債利息費用 (附註7) | ||||||||
| 融資成本 | ( | ) | ||||||
| 債務結算虧損 | ||||||||
| 債務重組損失 | ||||||||
| 負債的增加 | ||||||||
| 衍生金融工具公允價值的損失（收益） | ( | ) | ||||||
| 經營性資產負債的變化： | ||||||||
| 應收賬款和預付費用 | ( | ) | ||||||
| 應付賬款 | ||||||||
| 應計負債 | ( | ) | ||||||
| 應付利息 | ||||||||
| 經營活動中的淨現金流出 | ( | ) | ( | ) | ||||
| 投資活動 | ||||||||
| 加工廠 | ( | ) | ( | ) | ||||
| 礦山改進 | ( | ) | ( | ) | ||||
| 購買 機械和設備 | ( | ) | ( | ) | ||||
| 投資活動使用的淨現金 | ( | ) | ( | ) | ||||
| 籌資活動 | ||||||||
| 特別認股權證發行所得款項 | ||||||||
| 認股權證行權所得款項 | ||||||||
| 付款來自本票 注意 | ||||||||
| 租賃付款 | ( | ) | ( | ) | ||||
| 籌資活動中提供/使用的淨現金 | ( | ) | ||||||
| 現金淨變化 | ( | ) | ||||||
| 期初現金 餘額 | ||||||||
| 期末現金 | $ | $ | ||||||
| 補充披露 | ||||||||
| 非現金活動 | ||||||||
| 應付賬款、應計負債和簽發特別認股權憑證結算 | $ | $ | ||||||
| 應付利息以普通股結算 | $ | $ | ||||||
| 現金流量表調節至資產負債表： | ||||||||
| 現金和受限制現金期末餘額 | $ | $ | ||||||
| 減少 受限制現金 | ||||||||
| 期末現金餘額 | $ | $ | ||||||
附註是這些未經審計的簡明中期綜合財務報表的一個組成部分。
| 5 |
Bunker Hill礦業公司
簡明的 股東權益變動綜合報表
（以美元計）
未經審計
| 累積的 | ||||||||||||||||||||||||||||
| 額外的 | 其他 | |||||||||||||||||||||||||||
| 普通股 | 實收 | 特殊 | 綜合損益 | 累積的 | ||||||||||||||||||||||||
| 股份 | 數量 | 資本 | 認股權證 | 收益 | 虧損 | 總費用 | ||||||||||||||||||||||
| 2023年12月31日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| 以股票爲基礎的報酬計劃 | ||||||||||||||||||||||||||||
| 股份發行用於支付利息 應付 | ||||||||||||||||||||||||||||
| 股份發行用於RSUs 解禁 | ( | ) | ||||||||||||||||||||||||||
| 收益 | - | |||||||||||||||||||||||||||
| 本期淨收入（損失） | - | ( | ) | ( | ) | |||||||||||||||||||||||
| 2024 年 3 月 31 日餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| 2022年12月31日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| 以股票爲基礎的報酬計劃 | ||||||||||||||||||||||||||||
| 補償選擇 | ||||||||||||||||||||||||||||
| 股份發行以換取利息 應付款 | ||||||||||||||||||||||||||||
| 用於行使認股權的股份發行 | ||||||||||||||||||||||||||||
| 特別認股權 | - | |||||||||||||||||||||||||||
| 收益 | - | |||||||||||||||||||||||||||
| 本期淨收入（虧損） | - | |||||||||||||||||||||||||||
| 2023年3月31日的結存 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
附註是這些未經審計的簡式中期合併基本報表的組成部分。
| 6 |
Bunker Hill礦業公司
基本報表附註 未經審計的簡明中期合併財務報表附註
2024年3月31日結束的三個月
（以美元計）
1. 經營的性質和持續性
Bunker
Hill Mining Corp. (該公司)是根據美國XXXX條例成立的。
該公司成立的目的是從事礦產勘探和開採活動。它繼續致力於開發其項目，以便投入生產。
2. 重要會計政策
表述基礎
該公司的附註未經審計的簡明中期合併財務報表是根據美國通用會計準則以及美國證券交易委員會的規定和規章編制的，供中期財務信息使用。因此，它們不包括所有必要的信息和附註，以全面展示財務狀況、運營結果、股東權益虧損或現金流量。然而，管理層認爲，已經作出了所有必要的重大調整（由正常重複調整組成），以進行公平的財務報表呈現。未經審計的簡明中期合併財務報表應與公司的第10-K表格中的年度經審計合併財務報表和附註，以及管理層討論與分析結合閱讀，截至2023年12月31日。2024年3月31日結束的期間的中期結果，不一定預示着全財年的結果。該未經審計的中期簡明合併財務報表以美元表示，這是該公司的功能貨幣。
使用估計值
根據美國通用會計準則編制財務報表需要管理層進行估計和假設，這些影響了財務報表和附註中報告金額的項目，例如礦產儲量、資產的預期使用壽命和折舊方法、長期資產潛在減值、礦產物業出售用於會計的轉換特許可轉換債券（「RCD」）、遞延所得稅、商品銷售的結算定價、以股票爲基礎的薪酬的公允價值、應計負債、資產退休義務和復墾責任的估計、可轉換債券、支付流義務和認股權證。估計是基於歷史經驗和公司認爲合理的各種其他假設。實際結果可能會與這些估計不符。
| 7 |
3. Accounts receivable and prepaid expenses
Accounts receivable and prepaid expenses consists of the following:
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| 預付費用和存款 | $ | $ | ||||||
| 應收HSt | ||||||||
| 環保機構過付款 (注8) | ||||||||
| 總費用 | $ | $ | ||||||
4. 設備；使用權資產
設備 包括以下內容：
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Equipment | $ | $ | ||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Equipment, net | $ | $ | ||||||
The
total depreciation expense relating to equipment during the three months ended March 31, 2024, and March 31, 2023 was $
Right-of-use asset consists of the following:
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| 租賃權資產 | ||||||||
| 累計折舊較少 | ( | ) | ( | ) | ||||
| 使用權資產，淨額 | $ | $ | ||||||
截至2024年3月31日和2023年3月31日的三個月內，總折舊費用爲$
5. 處理廠
公司從泰克資源有限公司購買了一套包括設備和零部件庫存的綜合套裝。此套裝包括位於潘德奧雷礦山現場的價值設備的幾乎所有處理設備，包括適用於邦克山場地計劃中的每日~1,500噸控件運營的完整破碎、研磨和浮選迴路，以及近10,000個用於磨機、化驗室、傳送機、現場儀器和電氣備件的元件和零部件庫存。
工藝裝置以已組裝的形式在賣方地點購買，包括主要處理系統、重要的元件和大量備件庫存。公司已將其拆卸並運送到Bunker Hill現場，並將重新組裝爲公司未來運營的一個重要組成部分。公司確定該交易應視爲資產收購，工藝裝置代表單一資產，除備件庫存外，備件庫存已被分離並按照購買價格分配出現在簡化的中期合併資產負債表中，作爲非流動資產。隨着工廠的拆除、運輸和重新組裝，安裝和與這些活動相關的其他成本被記錄並作爲資產元件資本化。
| 8 |
流程 工廠包括以下內容：
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| 植物購買價格減少庫存 | $ | $ | ||||||
| 球磨機 | ||||||||
| 撤防 | ||||||||
| 場地準備費用 | ||||||||
| 資本化利息 （注9） | ||||||||
| 工藝廠 | $ | $ | ||||||
6. 邦克山礦和礦業利益
公司於2022年1月購買了邦克山礦（以下簡稱「礦山」）。
礦山的運輸成本包括以下內容：
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| Bunker Hill礦購買 | $ | $ | ||||||
| 資本化發展 | ||||||||
| 礦產物業出售 (備註9) | ( | ) | ( | ) | ||||
| Bunker Hill礦 | $ | $ | ||||||
購買和租賃土地
公司擁有一塊麪積爲225英畝的土地，價值爲其原始購買價$
2023年3月31日結束的三個月內，公司與C＆E Tree Farm LLC簽訂了一份租賃協議，租賃了公司現有礦權包中的一部分土地。公司承諾每月支付$
7. 租賃負債
截至2024年3月31日，公司的未折現租賃義務包括以下內容：
| 3月31日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| 總租賃債務 - 最低租賃支付 | ||||||||
| 1年 | $ | $ | ||||||
| 2- 3 年 | ||||||||
| 4-5年 | ||||||||
| 未來租賃債務利息支出 | ( | ) | ( | ) | ||||
| 租賃負債總額 | ||||||||
| 當前租賃負債 | ||||||||
| 非流動租賃負債 | ||||||||
| 租賃負債總額 | ||||||||
| 9 |
8. 環保母基及水處理責任（「EPA」）
隨着2021年12月19日的生效，公司與愛達荷環保署、美國司法部和EPA（「修訂結算」）訂立了修訂結算協議。修訂結算生效後，公司將全面履行對這些方當事方的付款義務。修訂結算修改了歷史環境應對成本的支付時間表和支付條款。根據修訂結算的條款，在購買Bunker Hill礦山並履行財務擔保承諾（如下述）後，公司將支付給EPA的成本支付責任。
| 日期 | 數量 | |||
| 協議簽訂後30天內 | $ | |||
| 2024年11月1日 | $ | |||
| 2025年11月1日 | $ | |||
| 2026年11月1日 | $ | |||
| 2027年11月1日 | $ | |||
| 2028年11月1日 | $ | |||
| 2029年11月1日 | $ | |||
除了付款條件和時間表的變更外，修訂後的和解協議還包括公司承諾提供
如
截至2024年3月31日（與2023年12月31日持平），該公司有兩份支付債券，金額爲美元
在修訂的和解協議項下，如果公司未能履行支付義務，環保署可以動用財務保證。 隨着個別款項的支付，債券金額將逐漸減少。
公司在3月31日結束的三個月內，對債務記錄了增加費用$
水 處理費用-愛達荷州環保母基部（"IDEQ"）
除上述成本回收義務外，公司還須支付持續的水處理費用。2021年12月31日前發生的水處理費用應支付給EPA，此後的費用應在責任由EPA於該日期移交給愛達荷州環保母基部門（"IDEQ"）後支付。
公司目前每月支付$的費用。
9. 可轉換債券
Sprott私人資源流通權與專利公司項目融資包
2021年12月20日，公司與Sprott私人資源流與皇家有限公司（"SRSR"）簽署了一份非約束性期限表，概述了一項美元
| 10 |
這個
帶有 SRSR 的非約束性條款表概述爲 $
2022年6月17日，公司完成了一項新的$
開啓
2023年6月23日，公司關閉了擴大和改善後的美元
$8,000,000 Royalty Convertible Debenture
The
Company closed the $
Concurrent
with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the RCD, including an
amendment of the
On
June 23, 2023, the funding date of the Stream, the RCD was repaid by the Company granting a royalty for
$6,000,000 Convertible Debenture (CD1)
The
Company closed the $
| 11 |
Concurrent
with the funding of the CD2 in June 2022, the Company and SRSR agreed to a number of amendments to the terms of the CD1, including that
the
Concurrent
with the funding of the Stream in June 2023, the Company and Sprott agreed to amend
$15,000,000 Series 2 Convertible Debenture (CD2)
The
Company closed the $
Concurrent
with the funding of the Stream in June 2023, the Company and Sprott agreed to amend the maturity date of the CD2 from 3 quarterly payments
of $
The Company determined that in accordance with ASC 815 Derivatives and Hedging, each debenture will be valued and recorded as a single instrument, with the periodic changes to fair value accounted through earnings, profit and loss.
Consistent with the approach above, the following table summarizes the key valuation inputs as at applicable valuation dates:
Reference (1,2,3) | Valuation date | Maturity date | Contractual Interest rate | Stock price (US$) | Expected equity volatility | Credit spread | Risk-free rate | Risk- adjusted rate | ||||||||||||||||||||
| CD1 note | % | % | % | % | % | |||||||||||||||||||||||
| CD2 note | % | % | % | % | % | |||||||||||||||||||||||
| CD1 note | % | % | % | % | % | |||||||||||||||||||||||
| CD2 note | % | % | % | % | % | |||||||||||||||||||||||
| (1) | ||
| (2) | ||
| (3) |
The resulting fair values of the CD1 and CD2 at March 31, 2024, and as of December 31, 2023, were as follows:
| Instrument Description | March 31, 2024 | December 31, 2023 | ||||||
| CD1 | $ | $ | ||||||
| CD2 | ||||||||
| Total | $ | $ | ||||||
| 12 |
The
(loss) gain on changes in FV of convertible debentures recognized on the condensed interim consolidated statements of (loss) Income
during the three months ended March 31, 2024, and March 31, 2023, was $(
The Company performs quarterly testing of the covenants in the CD1 and CD2 and was in compliance with all such covenants as of March 31, 2024.
The Stream
The Company determined that in accordance with ASC 815 derivatives and hedging, the Stream does not meet the criteria for treatment as a derivate instrument as the quantities of metal to be sold thereunder are not subject to a minimum quantity, and therefore a notional amount is not determinable. The Company has therefore determined that in accordance with ASC 470, the stream obligation should be treated as a liability based on the indexed debt rules thereunder. The initial recognition has been made at fair value based on cash received, net of transaction costs, and the discount rate calibrated so that the future cash flows associated with the Stream, using forward commodity prices, equal the cash received. The measurement of the stream obligation is accounted for at amortized cost with accretion at the discount rate. Subsequent changes to the expected cash flows associated with the Stream will result in the adjustment of the carrying value of the stream obligation using the same discount rate, with changes to the carrying value recognized in the condensed interim consolidated statements of (loss) income and comprehensive (loss) income.
The
Company determined the effective interest rate of the Stream obligation to be
$21,000,000 Debt Facility
On June 23, 2023, the Company closed a $
10. Capital Stock, Warrants and Stock Options
Authorized
The total authorized capital is as follows:
| ● | Common Shares with a par value of $ per Common Share; and |
| ● | preferred shares with a par value of $ per preferred share |
| 13 |
Issued and outstanding
In January 2024, the Company issued shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending December 31, 2022.
In March 2023, the Company issued shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending March 31, 2023.
In
March 2023, the Company amended the exercise price and expiry date of
In
March 2023, the Company closed a brokered private placement of special warrants of the Company (the “March 2023 Offering”),
issuing
In
connection with the March 2023 Offering, the Company incurred share issuance costs of $
The Special Warrants issued on March 27, 2023 were converted to shares of common stock and common stock purchase warrants on July 24, 2023. The Company determined that in accordance with ASC 815 derivatives and hedging, each Special Warrant will be valued and carried as a single instrument, with the periodic changes to fair value accounted through earnings, profit and loss until the shares of common stock and common stock purchase warrants are issued.
In January 2024, the Company issued shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending December 31, 2023.
In March 2024, the Company issued shares of common stock in connection with settlement of RSUs.
In 2023 the Company has accounted for the warrants in accordance with ASC Topic 815. The warrants are considered derivative instruments as they were issued in a currency other than the Company’s functional currency of the U.S. dollar. The estimated fair value of warrants accounted for as liabilities was determined on the date of issue and marked to market at each financial reporting period. The change in fair value of the warrant is recorded in the condensed interim consolidated statements of income (loss) and comprehensive income (loss) as a gain or loss and is estimated using the Binomial model.
| 14 |
The fair value of the warrant liabilities related to the various tranches of warrants issued during the period were estimated using the Binomial model to determine the fair value using the following assumptions as at March 31, 2024 and December 31, 2023:
| March 2023 warrants | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | |||||||
| April 2022 special warrants issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
| April 2022 non-brokered issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
| June 2022 issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
| February 2021 issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
| June 2019 issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
| 15 |
| August 2019 issuance | March 31, 2024 | December 31, 2023 | ||||||
| Expected life | ||||||||
| Volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Share price (C$) | $ | $ | ||||||
| Fair value | $ | $ | ||||||
| Change in derivative liability | $ | ( | ) | |||||
Outstanding warrants at March 31, 2024 and March 31, 2023 were as follows:
| Weighted | Weighted | |||||||||||
| average | average | |||||||||||
| Number of | exercise price | grant date | ||||||||||
| warrants | (C$) | value ($) | ||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||
| Exercised | ( | ) | ||||||||||
| Balance, March 31, 2023 | $ | $ | ||||||||||
| Balance, December 31, 2023 | $ | $ | ||||||||||
| Balance, March 31, 2024 | $ | $ | ||||||||||
During the three months ended March 31, 2023, May 2022 Teck warrants were exercised.
At March 31, 2024, the following warrants were outstanding:
| Exercise | Number of | Number of warrants | ||||||||||
| Expiry date | price (C$) | warrants | exercisable | |||||||||
Compensation options
At March 31, 2024, the following broker options were outstanding:
| Weighted | ||||||||
| Number of | average | |||||||
| broker | exercise price | |||||||
| options | (C$) | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Issued – March 2023 Compensation Options (i) | ||||||||
| Balance, March 31, 2023 | ||||||||
| Balance, December 31, 2023 | ||||||||
| Expired – February 2024 | ( | ) | ||||||
| Balance, March 31, 2024 | ||||||||
| (i) |
| 16 |
| Grant Date | Risk free interest rate | Dividend yield | Volatility | Stock price | Weighted average life | |||||||||||||||
| March 2023 | % | % | % | C$ | years | |||||||||||||||
| Exercise | Number of | Grant date Fair value | ||||||||||
| Expiry date | price (C$) | broker options | ($) | |||||||||
| $ | $ | |||||||||||
| $ | $ | |||||||||||
| $ | ||||||||||||
| i) | |
| ii) |
Stock options
| Weighted | ||||||||
| average | ||||||||
| Number of | exercise price | |||||||
| stock options | (C$) | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Balance, March 31, 2023 | $ | |||||||
| Balance, December 31, 2023 | $ | |||||||
| Balance, March 31, 2024 | $ | |||||||
| Number of | ||||||||||||||||||
| remaining | Number of | options | ||||||||||||||||
| Exercise | contractual | options | vested | Grant date | ||||||||||||||
| price (C$) | life (years) | outstanding | (exercisable) | fair value ($) | ||||||||||||||
| $ | ||||||||||||||||||
The vesting of stock options during the three months ending March 31, 2024 and March 31, 2023, resulted in stock based compensation expenses of $ and $ respectively.
| 17 |
Effective March 25, 2020, the Board of Directors approved a Restricted Share Unit (“RSU”) Plan to grant RSUs to its officers, directors, key employees and consultants.
| Weighted | ||||||||
| average | ||||||||
| grant date | ||||||||
| fair value | ||||||||
| Number of | per share | |||||||
| shares | (C$) | |||||||
| Unvested as at December 31, 2022 | $ | |||||||
| Unvested as at March 31, 2023 | $ | |||||||
| Unvested as at December 31, 2023 | $ | |||||||
| Granted (i, ii) | ||||||||
| Vested | ( | ) | ||||||
| Unvested as at March 31, 2024 | $ | |||||||
| (i) | ||
| (ii) |
The vesting of RSU’s during the three months ending March 31, 2024, and March 31, 2023, resulted in stock based compensation expense of $ and $ respectively.
Effective April 21, 2020, the Board of Directors approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its directors. The DSU Plan permits the eligible directors to defer receipt of all or a portion of their retainer or compensation until termination of their services and to receive such fees in the form of cash at that time.
Upon vesting of the DSUs or termination of service as a director, the director will be able to redeem DSUs based upon the then market price of the Company’s Common Share on the date of redemption in exchange for cash.
| Weighted | ||||||||
| average | ||||||||
| grant date | ||||||||
| fair value | ||||||||
| Number of | per share | |||||||
| shares | (C$) | |||||||
| Unvested as at December 31 2022, and March 31, 2023 | $ | |||||||
| Unvested as at December 31 2023, and March 31, 2024 | $ | |||||||
| 18 |
The vesting of DSU’s during the three months ended March 31, 2024 resulted in stock based compensation expense of $ and a recovery of stock-based compensation of $ for the three months ended March 31, 2023. The fair value of each DSU is $ as of March 31, 2024, and $ as of March 31, 2023.
13. Commitments and Contingencies
As stipulated in the agreement with the EPA and as described in note 8, the Company is required to make two types of payments to the EPA and IDEQ, one for historical water treatment cost-recovery to the EPA, and the other for ongoing water treatment. Water treatment costs incurred through December 2021 are payable to the EPA, and water treatment costs incurred thereafter are payable to the IDEQ. The IDEQ (as done formerly by the EPA) invoices the Company on an annual basis for the actual water treatment costs, which may exceed the recognized estimated costs significantly. When the Company receives the water treatment invoices, it records any liability for actual costs over and above any estimates made and adjusts future estimates as required based on these actual invoices received. The Company is required to pay for the actual costs regardless of the periodic required estimated accruals and payments made each year.
On July 28, 2021, a lawsuit was filed in the US District Court for the District of Idaho brought by Crescent Mining, LLC (“Crescent”). The named defendants include Placer Mining, Robert Hopper Jr., and the Company. The lawsuit alleges that Placer Mining and Robert Hopper Jr. intentionally flooded the Crescent Mine during the period from 1991 and 1994, and that the Company is jointly and severally liable with the other defendants for unspecified past and future costs associated with the presence of AMD in the Crescent Mine. The plaintiff has requested unspecified damages. On September 20, 2021, the Company filed a motion to dismiss Crescent’s claims against it, contending that such claims are facially deficient. On March 2, 2022, Chief US District Court Judge, David C. Nye granted in part and denied in part the Company’s motion to dismiss. The court granted the Company’s motion to dismiss Crescent’s Cost Recovery claim under CERCLA Section 107(a), Declaratory Judgment, Tortious Interference, Trespass, Nuisance and Negligence claims. These claims were dismissed without prejudice. The court denied the motion to dismiss filed by Placer Mining Corp. for Crescent’s trespass, nuisance and negligence claims. Crescent later filed an amended complaint on April 1, 2022. Placer Mining Corp. and Bunker Hill Mining Corp are named as co-defendants. Bunker Hill responded to the amended filing, refuting and denying all allegations made in the complaint except those that are assertions of fact as a matter of public record. The Company believes Crescent’s lawsuit is without merit and is vigorously defending itself, as well as Placer Mining Corp. pursuant to the Company’s indemnification of Placer Mining Corp in the Sale and Purchase agreement executed between the companies for the Mine on December 15, 2021. The lawsuit is currently in the discovery phase, in which information is gathered and exchanged.
14. Deferred tax liability
The
Company incurred income tax recovery of $
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will likely ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.
| 19 |
15. Operating Expenses
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| Salaries, wages, and consulting fees | $ | $ | ||||||
| General administration expenses | ||||||||
| Total | $ | $ | ||||||
16. Related party transactions
The Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities of the Company and consists of the Company’s executive management team and management directors.
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| Consulting Fees and Salaries | $ | $ | ||||||
At
March 31, 2024 and March 31, 2023, $
17. Subsequent Events
Share Issuance
On April 1, 2024, the Company granted DSUs to certain members of the board of directors of the Company. The DSUs vested immediately.
On April 4, 2024, the Company issued shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending March 31, 2024.
On
April 5, 2024, the $
On April 16, 2024, the Company issued shares to a member of the executive team for the vesting of RSUs.
Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report, including statements in the following discussion, are what are known as “forward looking statements”, which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as “plans,” “intends,” “will,” “hopes,” “seeks,” “anticipates,” “expects “and the like often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward looking statements include statements concerning the Company’s plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. Numerous factors and future events could cause the Company to change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report and in the Company’s other filings with the SEC. No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.
Description of Business
Corporate Information
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. On February 11, 2010, the Company changed its name to Liberty Silver Corp and subsequently, 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 82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1, and its telephone number is 416-477-7771. The Company’s website is www.bunkerhillmining.com. Information appearing on the website is not incorporated by reference into this report.
| 20 |
Overview
The Company’s sole focus is the development and restart of its 100% owned flagship asset, the Bunker Hill mine (the “Bunker Hill Mine” or the “Mine”) in Idaho, USA. The Mine remains the largest single producing mine by tonnage in the Silver Valley region of northwest Idaho, producing over 165 million ounces of silver and 5 million tons of base metals between 1885 and 1981. The Bunker Hill Mine is located within Operable Unit 2 of the Bunker Hill Superfund site (EPA National Priorities Listing IDD048340921), where cleanup activities have been completed.
The Company was incorporated for the initial purpose of engaging in mineral exploration activities at the Mine. The Company has moved into the development stage concurrent with (i) purchasing the Mine and a process plant, (ii) completing successive technical and economic studies, including a Prefeasibility Study, (iii) delineating mineral reserves, and (iv) conducting the program of activities outlined above.
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 three months ended March 31, 2024 and March 31, 2023. Unless otherwise stated, all figures herein are expressed in U.S. dollars, which is the Company’s functional currency.
Comparison of the three months ended March 31, 2024 and 2023
Revenue
During the three months ended March 31, 2024, and 2023, respectively, the Company generated no revenue.
Expenses
During the three months ended March 31, 2023, and 2022, the Company reported total operating expenses of $3,787,631 and $2,185,488, respectively.
The increase in total operating expenses was primarily due to increase in the volume of transactions as the mine continues to develop. Operation and administration expenses increased by $1,018,781 ($1,898,773 for the three months ended March 31, 2024, compared to $879,992 for the three months ended March 31, 2023). Legal and accounting fees increased by $411,553 ($946,464 for the three months ended March 31, 2024, compared to $534,911 for the three months ended March 31, 2023) primarily because of the Company’s uplisting from the Canadian Stock Exchange to the Toronto Stock Exchange Venture which occurred in September of 2023. Consulting and wages increased by $171,809 ($942,394 for the three months ended March 31, 2024, compared to $770,585 for the three months ended March 31, 2023) also increased to increased head count as the Bunker Hill Mine moves towards production.
Net Income and Comprehensive Income
The Company had net loss of $5,582,036 for the year three months ended March 31, 2024 (compared to net income of $1,791,147 for the three months ended March 31, 2023). In addition to the increase in operating expenses (as described above), net loss for the three months ended March 31, 2024 was impacted by increase in interest expense of $759,106 ($2,083,735 and $1,324,629 for the three months ended March 2024 and 2023 respectively), a decrease in change in derivative liability of $4,490,517 (loss of $263,943 for the three months ended March 31, 2024 compared to a gain of $4,226,574 for the three months ended March 31, 2023), driven by a proportionally greater decline in the Company’s share price in Q1 2023 relative to Q1 2024. Additionally, a loss on fair value of the convertible debenture of $263,943 was recognized for the three months ended March 31, 2024, compared to a gain of $4,226,574 for the three months ended March 31, 2024. The three months ended March 31, 2024, also includes $217,000 ($nil for the three months ended March 31, 2023) loss on revaluation of the stream debenture due to updated key assumptions such as commodity prices. Net loss for the three months ending March 31, 2024, includes a deferred tax recovery of $699,920 and interest income of $291,330 compared to $nil and $nil respectively for three months ended March 31, 2023. Additionally, net loss for the three months ended March 31, 2024, includes $nil of financing costs compared to $576,751 for the three months ended March 31, 2023.
| 21 |
The Company had comprehensive loss of $5,293,664 for the three months ended March 31, 2024 (comprehensive income of $2,598,159 for the month three ended March 31, 2023). Comprehensive income for the three months ended March 31, 2024, is inclusive of a $288,372 gain on change in fair value on own credit risk ($807,012 for the three months ended March 31, 2023).
Liquidity and Capital Resources
Current Assets and Total Assets
As of March 31, 2024, the Company had total current assets of $20,863,546, compared to total current assets of $27,176,997 at December 31, 2023 – a decrease of $6,313,451; and total assets of $61,649,028, compared to total assets of $61,989,678 at December 31, 2023 – an decrease of $340,650. During the three months ended March 31, 2024, the Company’s current assets decreased due to cash expenditures on the process plant, purchasing of equipment and additions to the Bunker Hill Mine. Total assets remained constant as the increase in property plant and equipment was offset by the decrease in cash.
Current Liabilities and Total Liabilities
As of March 31, 2024, the Company had total current liabilities of $12,201,846 and total liabilities of $92,467,400, compared to total current liabilities of $7,472,326 and total liabilities of $88,356,840 at December 31, 2023. Total liabilities increased because of accretion on the stream debenture and environmental protection agency payable as well as an increase in accounts payable and accruals due to timing of invoices and payments.
Working Capital and Shareholders’ Deficit
As of March 31, 2024, the Company had working capital of $8,661,700 and a shareholders’ deficiency of $30,818,372 compared to a working capital of $19,704,671 and a shareholders’ deficiency of $26,367,162 as of December 31, 2023. The working capital balance decreased during the three months ended March 31, 2024, primarily due to cash expenditures on the process plant, purchasing of equipment, and additions to the Bunker Hill Mine. The shareholders’ deficiency increased primarily due to the net loss in the 2024 quarter.
Cash Flow
During the three months ended March 31, 2024, the Company had a net cash decrease of $6,418,054, primarily due to cash expenditures on the process plant, purchasing of equipment, and additions to the Bunker Hill Mine.
Subsequent Events
On April 1, 2024, the Company granted 2,527,888 DSUs to certain members of the board of directors of the Company. The DSUs vested immediately.
On April 1, 2024, the Company appointed Brenda Dayton as its Vice President Investor Relations.
On April 4, 2024, the Company issued 6,398,439 shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ending March 31, 2024.
On April 5, 2024, the $2,001,000 letter of credit, in place to secure the environment protection agency cost recovery payable was returned to the Company and cancelled. As a result of this transaction the restricted cash balance was decreased by $2,001,000 (from $6,476,000 to $4,475,000) and the cash and cash equivalents was increased by the corresponding amount.
On April 16, 2024, the Company issued 100,000 shares to a member of the executive team for the vesting of RSUs.
On April 30, 2024, the Company received approval to commence construction from the Idaho Department of Environmental Quality (IDEQ, Air Quality Division) in accordance with IDAPA 58.01.01.213, Rules for the Control of Air Pollution in Idaho. The Company will continue to work with IDEQ regarding issuance of the full Air Permit.
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Critical accounting estimates
The preparation of the interim condensed 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, spot and futures prices of minerals, expected equity volatility, expected volatility in minerals prices, discount for lack of marketability, credit spread, expected mineral production over the life of the mine, and project risk/estimation risk factors.
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 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.
Accrued liabilities
The Company has to 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.
The Company makes 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, the Company will then reassess its estimate for future periods. Given the nature, complexity and variability of the various actual cost items included in the invoice, the Company has used the most recent invoice as its estimate of the water treatment costs for future periods.
Incremental Borrowing rate
The Company estimates the incremental borrowing rate to determine the present value of future lease payments. Actual results may be different from estimates.
Borrowing Cost Capitalization rate
The Company makes 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
The Company has no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission (“SEC”) defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, the Company made an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures over financial reporting for the timely alert to material information required to be included in the Company’s periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified. This evaluation resulted in the conclusion that the design and operation of the disclosure controls and procedures were effective as of March 31, 2024.
Internal Control Over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this report. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company’s internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the Company; and iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Management, including the CEO and CFO, does not expect that the Company’s disclosure controls, procedures and internal control over financial reporting will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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With the participation of the CEO and CFO, the Company’s management evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2024 to ensure that information required to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including to ensure that information required to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Company’s CEO and CFO have concluded that the internal control over financial reporting was effective as of March 31, 2024.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Other than as described below, neither the Company nor its property is the subject of any current, pending, or threatened legal proceedings. 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.
On July 28, 2021, a lawsuit was filed in the US District Court for the District of Idaho brought by Crescent Mining, LLC (“Crescent”). The named defendants include Placer Mining, Robert Hopper Jr., and the Company. The lawsuit alleges that Placer Mining and Robert Hopper Jr. intentionally flooded the Crescent Mine during the period from 1991 and 1994, and that the Company is jointly and severally liable with the other defendants for unspecified past and future costs associated with the presence of AMD in the Crescent Mine. The plaintiff has requested unspecified damages. On September 20, 2021, the Company filed a motion to dismiss Crescent’s claims against it, contending that such claims are facially deficient. On March 2, 2022, Chief US District Court Judge, David C. Nye granted in part and denied in part the Company’s motion to dismiss. The court granted the Company’s motion to dismiss Crescent’s Cost Recovery claim under CERCLA Section 107(a), Declaratory Judgment, Tortious Interference, Trespass, Nuisance and Negligence claims. These claims were dismissed without prejudice. The court denied the motion to dismiss filed by Placer Mining Corp. for Crescent’s trespass, nuisance and negligence claims. Crescent later filed an amended complaint on April 1, 2022. Placer Mining Corp. and Bunker Hill Mining Corp are named as co-defendants. Bunker Hill responded to the amended filing, refuting and denying all allegations made in the complaint except those that are assertions of fact as a matter of public record. The Company believes Crescent’s lawsuit is without merit and is vigorously defending itself, as well as Placer Mining Corp. pursuant to the Company’s indemnification of Placer Mining Corp in the Sale and Purchase agreement executed between the companies for the Mine on December 15, 2021.
On October 26, 2021, the Company asserted claims against Crescent in a separate lawsuit, which has been consolidated into the Crescent lawsuit. The Company commenced Bunker Hill Mining Corporation v. Venzee Technologies Inc. et al, Case No. 2:21-cv-209-REP, in the US District Court for the District of Idaho on May 14, 2021. The Company has subsequently executed a tolling agreement with Venzee in exchange for dropping its claims against Venzee. The Company originally filed this lawsuit on May 14, 2021 against other parties but has since filed an amended complaint to include its claims against Crescent. The Court consolidated the two lawsuits on April 19, 2022. The consolidated lawsuits are currently in the discovery phase, in which information is gathered and exchanged.
Item 1A. Risk Factors
There have been no changes to our risk factors as reported in our annual report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
Not Applicable.
Item 3. Defaults upon Senior Securities
None.
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Item 4. Mine Safety Disclosure
Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the Mine Safety and Health Administration (the “MSHA”), as well as related assessments and legal actions, and mining-related fatalities.
The following table provides information for the three months ended March 31, 2024.
| Mine | Mine Act §104 Violations (1) | Mine Act §104(b) Orders (2) | Mine Act §104(d) Citations and Orders (3) | Mine Act §110(b)(2) Violations (4) | Mine Act §107(a) Orders (5) | Proposed Assessments from MSHA (In dollars $) | Mining Related Fatalities | Mine Act §104(e) Notice (yes/no) (6) | Pending Legal Action before Federal Mine Safety and Health Review Commission (yes/no) | |||||||||||||||||||||||||
| Bunker Hill Mine | 1 | 0 | 0 | 0 | 0 | 143 | 0 | 0 | No | |||||||||||||||||||||||||
| (1) | The total number of violations received from MSHA under §104 of the Mine Act, which includes citations for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated. |
| (2) | The total number of orders issued by MSHA under §104(b) of the Mine Act, which represents a failure to abate a citation under §104(a) within the period of time prescribed by MSHA. |
| (3) | The total number of citations and orders issued by MSHA under §104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards. |
| (4) | The total number of flagrant violations issued by MSHA under §110(b)(2) of the Mine Act. |
| (5) | The total number of orders issued by MSHA under §107(a) of the Mine Act for situations in which MSHA determined an imminent danger existed. |
| (6) | A written notice from the MSHA regarding a pattern of violations, or a potential to have such pattern under §104(e) of the Mine Act. |
Item 5. Other Information
None.
Item 6. Exhibits
| Exhibit No. | Document | |
| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act | |
| 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act | |
| 32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: May 9, 2024 | ||
| BUNKER HILL MINING CORP. | ||
| By | /s/ Sam Ash | |
| Sam Ash, Chief Executive Officer and President | ||
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: May 9, 2024 | ||
| BUNKER HILL MINING CORP. | ||
| By | /s/ Gerbrand van Heerden | |
| Gerbrand van Heerden, Chief Financial Officer and Corporate Secretary | ||
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