FS June 30 2022 Q222

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# FS June 30 2022 Q222

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# FS June 30 2022 Q222
form10-q.htm 10-Q 1 of 34
08/12/2022 04:58 PM
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 333-150028
BUNKER HILL MINING CORP.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 32-0196442
(State of other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
82 Richmond Street East
Toronto, Ontario, Canada M5C 1P1
(Address of Principal Executive Offices) (Zip Code)
(416) 477-7771
(Registrant’s Telephone Number, including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”)
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically 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). Yes ☒ No ☐
to this Form 10-Q. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging Growth Company ☐
Indicate by check mark whether the Registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒
Number of shares of Common Stock outstanding as of August 12, 2022: 219,616,571
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation 25
Item 3. Quantitative and Qualitative Disclosures about Market Risk 31
Item 4. Controls and Procedures 31
PART II – OTHER INFORMATION 32
Item 1. Legal Proceedings 32
Item 1A. Risk Factors 32
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds 32
Item 3. Defaults upon Senior Securities 32
Item 4. Mine Safety Disclosure 32
Item 5. Other Information 33
Item 6. Exhibits 33
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed interim consolidated financial statements of Bunker Hill Mining Corp., (“Bunker Hill”, the “Company”, or the “Registrant”) a Nevada corporation,
included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) were
condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2021, and all amendments thereto.
3
Bunker Hill Mining Corp.
Condensed Interim Consolidated Balance Sheets
(Expressed in United States Dollars)
Unaudited
June 30, December 31,
2022 2021
ASSETS
Current assets
Cash $ 5,601,673 $ 486,063
Restricted Cash (note 6) 9,476,000 -
Accounts receivable 213,477 112,630
Prepaid expenses (note 6) 567,084 300,813
Short-term deposit (note 3) 1,000,000 68,939
Prepaid mine deposit and acquisition costs (note 5) - 2,260,463
Prepaid finance costs - 393,640
Total current assets 16,858,234 3,622,548
Non-current assets
Spare parts inventory 341,004 -
Equipment (note 3) 481,360 396,894
Right-of-use assets (note 4) - 52,353
Bunker Hill Mine and mining interests (note 5) 14,449,211 1
Process plant (note 3) 4,532,773 -
Total assets $ 36,662,582 $ 4,071,796
EQUITY AND LIABILITIES
Current liabilities
Accounts payable $ 2,193,493 $ 1,312,062
Accrued liabilities 1,334,849 869,581
EPA water treatment payable (note 6) 3,847,141 5,110,706
Interest payable (notes 6 and 7) 906,447 409,242
DSU liability (note 12) 551,842 1,531,409
Promissory notes payable (note 7) 1,500,000 2,500,000
EPA cost recovery payable - short-term (note 6) - 11,000,000
Current portion of lease liability (note 8) - 62,277
Total current liabilities 10,333,772 22,795,277
Non-current liabilities
Series 1 convertible debenture (note 7) 5,633,253 -
Series 2 convertible debenture (note 7) 14,176,578 -
Royalty convertible debenture (note 7) 7,078,596 -
EPA cost recovery liability - long-term, net of discount (note 6) 7,072,410 -
Derivative warrant liability (note 9) 11,815,548 15,518,887
Total liabilities 56,110,157 38,314,164
Shareholders’ Deficiency
Preferred shares, $0.000001 par value, 10,000,000 preferred shares authorized; Nil preferred
shares issued and outstanding (note 9) - -
Common shares, $0.000001 par value, 1,500,000,000 common shares authorized; 217,640,683
and 164,435,442 common shares issued and outstanding, respectively (note 9) 216 164
Additional paid-in-capital (note 9) 43,497,878 38,248,618
Accumulated other comprehensive income (note 7) 371,586 -
Deficit accumulated during the exploration stage (63,317,255) (72,491,150)
Total shareholders’ deficiency (19,447,575) (34,242,368)
Total shareholders’ deficiency and liabilities $ 36,662,582 $ 4,071,796
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
4
Bunker Hill Mining Corp.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Expressed in United States Dollars)
Unaudited
Three Months Ended Six Months Ended
June 30, June 30
2022 2021 2022 2021
Operating expenses
Operation and administration $ 176,892 $ 447,463 $ 436,604 $ 1,285,408
Exploration - 4,123,735 - 7,212,037
Mine preparation 1,821,223 - 4,328,302 -
Legal and accounting 401,318 318,110 764,054 537,218
Consulting 1,580,429 406,249 3,937,576 884,868
Loss from operations (3,979,862) (5,295,557) (9,466,536) (9,919,531)
Other income or gain (expense or loss)
Change in derivative liability 7,769,211 5,236,792 11,223,219 15,712,168
Gain (loss) on foreign exchange (249,244) 103,821 (221,324) 146,374
Gain on FV of debentures 1,813,456 - 1,739,987 -
Gain on EPA settlement 8,614,103 - 8,614,103 -
Interest expense (382,370) - (1,117,607) -
Debenture finance costs (1,099,051) - (1,166,485) -
Finance costs (455,653) - (455,653) -
Other income 24,191 - 24,191 -
Loss on debt settlement - - - (56,146)
Net income for the period $ 12,054,781 $ 45,056 $ 9,173,895 $ 5,882,865
Other comprehensive income, net of tax:
Gain on change in FV on own credit risk 371,586 - 371,586 -
Other comprehensive income 371,586 - 371,586 -
Comprehensive income $ 12,426,367 $ 45,056 $ 9,545,481 $ 5,882,865
Dilutive effect of convertible debentures (836,204) - (865,015) -
Dilutive effect of warrant $ - $ (175,816) $ - $ (520,066)
Diluted net income (loss) and comprehensive income (loss) for the
period $ 11,590,163 $ (130,760) $ 8,680,466 $ 5,362,799
Net income per common share – basic $ 0.06 $ 0.00 $ 0.05 $ 0.04
Net income per common share – fully diluted $ 0.05 $ 0.00 $ 0.04 $ 0.03
Weighted average common shares – basic 210,586,156 163,677,564 187,638,287 158,916,637
Weighted average common shares – fully diluted 245,879,831 164,381,133 214,210,598 159,944,037
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
5
Bunker Hill Mining Corp.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
Unaudited
Six Months Six Months
Ended Ended
June 30, June 30,
2022 2021
Operating activities
Net income (loss) for the period $ 9,173,895 $ 5,882,865
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation (135,128) 761,062
Depreciation expense 129,445 117,585
Change in fair value of warrant liability (11,223,219) (15,712,168)
Units issued for services 1,060,858 -
Imputed interest expense on lease liability 1,834 7,827
Finance costs 264,435 -
Foreign exchange loss (gain) 221,324 -
Foreign exchange loss (gain) on re-translation of lease (Note 8) 718 4,485
Loss on debt settlement - 56,146
Amortization of EPA discount 284,087 -
Gain on fair value of convertible debt derivatives (1,739,987) -
Gain on EPA debt extinguishment (8,614,103) -
Changes in operating assets and liabilities:
Restricted cash (9,476,000) -
Accounts receivable (100,847) -
Deposit on plant demobilization (1,000,000) -
Prepaid finance costs 393,640 -
Prepaid expenses (617,332) 79,203
Accounts payable (23,224) 565,340
Accrued liabilities 465,268 1,210,754
Accrued EPA water treatment (903,565) -
EPA cost recovery payable (2,000,000) -
Interest payable – EPA 10,341 -
Interest payable 756,614 -
Net cash used in operating activities (23,070,946) (7,040,266)
Investing activities
Purchase of spare inventory (341,004) -
Land purchase (202,000) -
Bunker Hill mine purchase (5,524,322) -
Purchase of Process plant (1,289,477) -
Purchase of machinery and equipment (161,558) (94,693)
Net cash used in investing activities (7,518,361) (94,693)
Financing activities
Proceeds from convertible debentures 29,000,000 -
Proceeds from issuance of shares, net of issue costs 7,769,745 6,008,672
Repayment of promissory note (1,000,000) -
Lease payments (64,828) (64,985)
Net cash provided by financing activities 35,704,917 5,943,687
Net change in cash 5,115,610 (1,191,272)
Cash, beginning of period 486,063 3,568,661
Cash, end of period $ 5,601,673 $ 2,377,389
Supplemental disclosures
Non-cash activities
Units issued to settle accounts payable and accrued liabilities $ 228,421 $ 188,607
Shares issued to settle interest payable 269,750 -
Mill purchase for shares and warrants 3,243,296 -
Units issued to settle DSU/RSU/Bonuses 872,399 -
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
6
Bunker Hill Mining Corp.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Deficiency
(Expressed in United States Dollars)
Unaudited
Stock
subscriptions Accumulated
Additional received for other
Common stock paid-in- units to be comprehensive Retained
Shares Amount capital issued income earnings Total
Balance, December 31, 2021 164,435,442 $ 164 $38,248,618 $ - $ - $(72,491,150) $(34,242,368)
Stock-based compensation - - 145,186 - - - 145,186
Stock subscription received for units - - - 1,775,790 - - 1,775,790
Net loss for the period - - - - - (2,880,886) (2,880,886)
Balance, March 31, 2022 164,435,442 $ 164 $38,393,804 $ 1,775,790 $ - $(75,372,036) $(35,202,278)
Stock-based compensation - - 15,922 - - - 15,922
Compensation options - - 264,435 - - - 264,435
Shares issued for interest payable 1,315,857 1 26

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