2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“US GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, shareholders’ equity (deficiency), or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the annual audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2025. The interim results for the period ended June 30, 2026 are not necessarily indicative of the results for the full fiscal year. The unaudited condensed interim consolidated financial statements are presented in U.S. dollars, which is the Company’s functional currency.

Basis of Comparison

Certain prior period amounts have been reclassified to the current period presentation. In the current year, the line items “Equipment” and “Mill Facilities” were reclassified and presented as part of “Plant and equipment” on the condensed interim consolidated balance sheets. In addition, the line item “Bunker Hill Mine and mining interests” has been renamed to “Mineral properties and rights” on the condensed interim consolidated balance sheets.

Material accounting policies

The accounting policies followed in these unaudited condensed interim consolidated financial statements are consistent with those disclosed in note 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the addition of the accounting policy disclosed below as a result of the Bunker Hill Mine entering into production.

Major types of inventories include materials and supplies and metals product inventory, which is determined by the stage at which the ore is in the production process (ore stockpiles, in-process and finished goods). Inventories are valued at the lower of cost and net realizable value (“NRV”). Cost is determined on a weighted average basis and includes all costs incurred, based on a normal production capacity, in bringing each product to its present location and condition. Cost of inventories comprises direct labor, materials and contractor expenses, depreciation, depletion and amortization relating to mining operations, and site general and administrative costs.

Stockpiled ore inventory represents ore that has been mined, hauled to the surface, and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the amount of contained metal ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile’s average cost per unit.

In-process inventory represents material that is currently in the process of being converted to a saleable product. Conversion process includes milling, flotation, and concentration. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective processing plants. In-process inventory is valued at the lower of the average cost of the material fed into the process attributable to the source material coming from the mine and stockpile plus the in-process conversion costs, including applicable depreciation, depletion and amortization relating to the process facilities incurred to that point in the process, or NRV.

Finished goods inventory includes concentrates at our operations and concentrate in transit to offtakers.

Provisions to reduce inventory to NRV are recorded to reflect changes in economic factors that impact inventory value and to reflect present intentions for the use of slow moving and obsolete supplies inventory. NRV is determined with reference to relevant market prices less applicable variable selling expenses.

Use of 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.