Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition or Plan of Operation

The following management's discussion and analysis of the consolidated financial results and condition of Bunker Hill Mining Corp. (collectively, "we," "us," "our," "Bunker Hill" or the "Company") for the three and six months ended June 30, 2026, has been prepared based on information available to us as of August 5, 2026. This discussion should be read in conjunction with the unaudited Condensed Interim Consolidated Financial Statements and notes thereto included herewith and the audited Consolidated Financial Statements of Bunker Hill for the year ended December 31, 2025, and the related notes thereto filed with our Annual Report on Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the U.S. ("US GAAP"). This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results, performance, or achievements may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this report. See "Cautionary Note Regarding Forward-Looking Statements."

All currency amounts are expressed in U.S. dollars.

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 Canadian office is located at 300-1055 West Hastings Street Vancouver, British Columbia, V6E 2E9, and its telephone number is 604.417.7952. The Company's website is www.bunkerhillmining.com. Information appearing on the website is not incorporated by reference into this report.

Overview and Outlook

Our Company is focused on the progression of its start-up of operations at its 100%-owned flagship asset, the Bunker Hill Mine (the "Mine"), located in Kellogg, Idaho, USA. The historic Bunker Hill Mine was one of the largest and most productive mines in the Coeur d'Alene Mining District, producing more than 165 million ounces of silver and over 5 million tons of zinc and lead between 1885 and 1981. The mine is located within Operable Unit 2 of the Bunker Hill Superfund Site (EPA National Priorities List IDD048340921), where remediation activities have been completed.

The Company's primary objective is to operate the Bunker Hill Mine as a modern, low-emission, long-life underground producer. Since acquiring the asset, we have completed multiple technical and economic studies, including a prefeasibility study, defined mineral reserves, constructed a new 1,800 tons per day processing facility and associated surface infrastructure, and commenced commissioning and restart activities. In 2026, we have achieved our first concentrate delivery and are progressing toward commercial production while continuing to advance exploration aimed at expanding the Mine's resource base and supporting future production growth.

Current External Factors Impacting our Business

In 2022, the United States Geological Survey included zinc as one of the primary metals at Bunker Hill along with lead and silver as a critical material that is essential to the U.S. economy and national security. Zinc uses include incorporation in metal products, rubber and medicines. About three-fourths of zinc used is consumed as metal, mainly as a coating to protect iron and steel from corrosion (galvanized metal), as alloying metal to make bronze and brass, as zinc-based die casting alloy, and as rolled zinc.

Due to the dominance of China over certain critical materials production, including zinc, the U.S. government is taking certain actions to support the domestic critical materials supply chain, including tax incentives and federal loan programs specifically designed to support critical materials producers, and to strengthen the defense industrial base with respect to critical minerals. During 2025, we have monitored the many federal actions of President Trump and his Administration, including executive orders covering critical minerals and materials, including zinc. On January 20, 2025, President Trump issued the "Unleashing American Energy" Executive Order, which included (1) several urgent critical mineral directives, including the immediate review of all agency actions that potentially burden the development of domestic energy resources with particular attention to critical minerals; (2) directing the Secretary of Energy to ensure that critical mineral projects, including the processing of critical minerals, receive consideration for federal support; and (3) directing the Secretary of Defense to consider the needs of the U.S. in supplying and maintaining the national defense stockpile to provide a robust supply of critical minerals, which will create jobs and prosperity at home, strengthen supply chains for the U.S. and its allies, and reduce the global influence of malign and adversarial states.

In March 2025, President Trump issued the "Immediate Measures to Increase American Mineral Production" Executive Order. In this Executive Order, President Trump directed the federal agencies, including the Export - Important Bank of the US ("EXIM"), to unlock the permitting, funding and issuance of off-take agreements for critical minerals. The Executive Order includes near-term actions to be determined and implemented by the federal agencies to mobilize capital for mineral producers and create off-take agreements for the strategic stockpiling of minerals critical to the United States' defense, technology and energy.

Since early 2025, the Trump Administration has announced several potential and/or increased tariffs and other trade restrictions on the imports to the United States. These restrictions are in response to China's export restrictions in critical minerals as well as other general trade negotiations with other nations. These tariffs and trade restrictions may have an impact on the Company's ability to secure materials for construction or operations of our project, and could result in additional support by the U.S. government in creating a diversified secure U.S. supplies of critical metals, including the future production of the Bunker Hill Mine.

In addition, the impacts of other external influences (such as the Russia/Ukraine war and conflicts in the Middle East, including the Israel war and Iran war) have further focused the U.S. government on the importance of implementing secure domestic supply chains, including for critical and base metal materials. The Company monitors and continues to pursue the participation in these initiatives as they are critical to the production of domestic defense and other technologies.

Results of Operations

The following discussion and analysis provides 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 and six months ended June 30, 2026, and June 30, 2025.

Comparison of the three and six months ended June 30, 2026, and 2025

Revenue

During the three and six months ended June 30, 2026, and 2025, respectively, we generated no revenue.

Expenses

During the three months ended June 30, 2026, and 2025, we reported total operating expenses of $4,419,826 and $3,110,392, respectively.

During the six months ended June 30, 2026, and 2025, we reported total operating expenses of $8,403,331 and $6,019,766, respectively. The increase in total operating expenses for the three and six months ended June 30, 2026 was primarily due to the Company expanding as it prepares for commercial production. We anticipate expense to continue to increase in future periods as the Company expands its operations.

Net Income and Comprehensive Income

We had net income of $18,189,266 for the three months ended June 30, 2026, compared to net income of $20,459,888 for the three months ended June 30, 2025. The decrease in net income for the three months ended June 30, 2026 in comparison to the three months ended June 30, 2025 was primarily due to a gain on debt settlement of $29,850,212 that occurred in the three months ended June 30, 2025. This was partially offset by (1) a gain on revaluation of the Silver Loan of $11,119,246 for the three months ended June 30, 2026, compared to a loss of $2,961,015 for the three months ended June 30, 2025; (2) a gain on revaluation of warrant liabilities of $12,517,174 for the three months ended June 30, 2026, compared to a gain of $1,832,864 for the three months ended June 30, 2025; and (3) a decrease in loss on debt settlement, a loss of $29,149 was reported for the three months ended June 30, 2026, compared to a loss of $3,077,979 for the three months ended June 30, 2025.

We had net income of $38,313,956 for the six months ended June 30, 2026, compared to net income of $14,113,675 for the six months ended June 30, 2025. The increase in net income for the six months ended June 30, 2026, in comparison to the six months ended June 30, 2025 was primarily due to (1) a gain on revaluation of warrant liabilities of $43,580,366 for the six months ended June 30, 2026, compared to a gain of $2,295,627 for the six months ended June 30, 2025; and (2) a gain on revaluation of the Silver Loan of $6,213,354 for the six months ended June 30, 2026, compared to a loss of $9,029,947 for the six months ended June 30, 2025. This was partially offset by the gain on debt settlement and stream debentures of $29,850,212 and $4,149,606, respectively, that occurred in the six months ended June 30, 2025. No comparable gains were recognized during the six months ended June 30, 2026.

We had a comprehensive income of $18,029,614 and $39,164,370 for the three and six months ended June 30, 2026, respectively (three and six months ended June 30, 2025 - comprehensive income of $23,811,117 and $19,497,446, respectively). Comprehensive income for the three and six months ending June 30, 2026 is inclusive of a $159,652 loss and $850,414 gain on change in fair value on own credit risk, respectively (three and six months ended June 30, 2025 - gain of $3,351,229 and $5,383,771, respectively)

Liquidity and Capital Resources

Current Assets and Total Assets

As of June 30, 2026, the Company had total current assets of $11,201,170, compared to total current assets of $23,296,106 at December 31, 2025 - a decrease of $12,094,936; and total assets of $174,518,250, compared to total assets of $150,958,994 at December 31, 2025 - an increase of $23,559,256. During the six months ended June 30, 2026, our current assets decreased due to cash expenditures on the process plant, filter plant, paste plant, and mine development at the Bunker Hill Mine, partially offset by warrant exercises and an equity financing that occurred during the six months ended June 30, 2026. Non-current assets increased due to additions to the process plant, filter plant, paste plant, and mine development at the Bunker Hill Mine during the six months ended June 30, 2026.

Current Liabilities and Total Liabilities

As of June 30, 2026, our total current liabilities of $22,987,002 and total liabilities of $163,495,119, compared to total current liabilities of $16,838,089 and total liabilities of $207,030,036 at December 31, 2025.

Total liabilities decreased due to change in derivative liabilities of $43,580,366 in the six months ended June 30, 2026, compared to $2,295,627 in the same period in 2025, driven by a decrease in Bunker Hill Mining Corp.'s stock, which is the key input into the valuation of the warrants. In addition, a decrease in silver price resulted in a decrease to the silver loan of $6,213,354 in the six months ended June 30, 2026, compared to an increase to the silver loan of $9,029,947 in the same period in 2025. These decreases were partially offset by an increase in accounts payable and accrued liabilities due to timing of expenses and payments and additions to lease liabilities for mining-related mobile equipment which the company leases from Caterpillar Inc.

As of June 30, 2026, our total liabilities include $32,622,414 of warrants that are classified as a liability under US GAAP, as the instrument is exposed to foreign currency risks other than the changes in the value of the entity's equity because the strike price of the warrants is denominated in C$ versus US$. Although classified as a liability, it does not represent a future cash outflow to the Company. The Company 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' Equity

As of June 30, 2026, we had working capital deficit of $11,785,832 and a shareholders' equity of $11,023,131, compared to working capital of $6,458,017 and shareholders' deficiency of $56,071,042 as of December 31, 2025. The working capital deficit as of June 30, 2026, was primarily due to cash expenditures on the process plant, filter plant, paste plant, and mine development at the Bunker Hill Mine, partially offset by the equity financings from a brokers and non-brokered private placement. The shareholders' equity position was primarily due to the net income for the period ended June 30, 2026.

In July 2026, we completed our first sale of concentrate marking a pivotal milestone following six years of redevelopment, infrastructure modernization, permitting, financing, and underground rehabilitation. We expect to be at commercial production - defined as achieving 90 days at >65% of 1800tpd throughput and associated operating stability - by the end of 2026. In addition, on July 30, 2026, the Company drew $5,000,000 on the Teck Standby Facility to support our working capital requirements as operations continued ramp up towards full production. There is an additional $5,000,000 under the Teck Standby Facility available to the Company as may be required. These factors are expected to provide sufficient liquidity to support our ongoing operations and working capital requirements beyond the next 12 months.

Discussions continue regarding a modification and/or restructuring of the Silver Loan with Monetary Metals & Co. ("Monetary Metals"). Repayment of amounts owed may require securing additional capital from equity, and/or debt if the Company and Monetary Metals are unable to agree to a modification and/or restructuring prior to maturity. There can be no assurance that the Silver Loan will be modified and/or restructured or any such source of funds will be secured.

Cash Flow

During the six months ended June 30, 2026, we had a net cash decrease of $12,784,774 compared to net cash increase of $2,327,904 during the six months ended June 30, 2025. The decrease was primarily due to cash used in operating and investing activities primarily related to expenditures on the process plant, filter plant, paste plant, and mine development at the Bunker Hill Mine, partially offset by cash provided by financing activities, specifically proceeds from the issuance of shares of common stock.

Subsequent Events

On July 10, 2026, the Company issued 522,296 shares of common stock in connection with its election to satisfy interest payments under the outstanding convertible debentures for the three months ended June 30, 2026 and the Sprott Debt Facility for the twelve months ended June 30, 2026.

On July 30, 2026, the Company drew $5,000,000 on the Teck Standby Facility. The amount drawn bears interest at a rate of 13.5% per annum and is repayable in accordance with the repayment terms described in note 8 of the unaudited condensed interim consolidated financial statements.

Critical accounting estimates

The preparation of unaudited condensed interim consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed interim consolidated financial statements and accompanying notes for items such as allowances on credit losses, recoverable concentrate in stockpile and in-process inventory, mineral reserves, useful lives and depreciation methods, potential impairment of long-lived assets, deferred income taxes, settlement pricing of commodity sales, fair value of stock-based compensation, accrued liabilities, estimation of asset retirement obligations and reclamation liabilities, convertible debentures, stream obligation, and warrants. Estimates are based on historical experience and various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.