8. Promissory Notes Payable, Convertible Debentures, and Silver Loan

$6,000,000 Convertible Debenture (“CD1”)

CD1 was closed with participation of Sprott on January 2022. CD1 bore interest at an annual rate of 7.5%, payable in cash or shares at the Company’s option on principal of $6,000,000. The CD1 is secured by a pledge of the Company’s properties and assets. In August 2024, the Company and Sprott agreed to amend the maturity date of CD1 from March 31, 2026, to March 31, 2028, and that CD1 would remain outstanding until the new maturity date unless the Company elects to exercise its option of early repayment. The Company determined that the amendments to the terms of the CD1 should not be treated as an extinguishment of the CD1 and have therefore been accounted for as a modification. The CD1 was convertible into common stock at a price of Canadian Dollars (“C$”) C$10.50 per common share, subject to stock exchange approval.

In June 2025, the Company and Sprott agreed to amend the rate of interest of CD1 reducing it from 7.5% to 5.0% per annum, and the current conversion price, being the U.S. dollar equivalent of C$10.50 per common share, was reduced to $3.675. The Company determined that the amendments to the terms of the CD1 should be treated as an extinguishment of the CD1. The new debt was bifurcated between host debt and the conversion option valued at $3,912,661 (net of transaction costs of $52,161) and $1,928,753, respectively, as of June 5, 2025. The debt and the conversion option were fair valued using a binomial lattice methodology based on a modified Cox-Ross-Rubenstein (“CRR”) approach.

$15,000,000 Series 2 Convertible Debenture (“CD2”)

CD2 was closed with Sprott on June 2022. CD2 bore interest at an annual rate of 10.5%, payable in cash or shares at the Company’s option on principal of $15,000,000. CD2 is secured by a pledge of the Company’s properties and assets.

In August 2024, the Company and Sprott agreed to amend the maturity date of CD2 from March 31, 2026, to March 31, 2029, and that CD2 would remain outstanding until the new maturity date unless the Company elects to exercise its option of early repayment. The Company determined that the amendments to the terms of the CD2 should not be treated as an extinguishment of the CD2 and have therefore been accounted for as a modification.

In June 2025, the Company and Sprott agreed to amend the rate of interest of CD2 reducing it from 10.5% to 5.0% per annum, and the current conversion price, being the U.S. dollar equivalent of C$10.15 per common share, was reduced to $3.675. The Company determined that the amendments to the terms of the CD2 should be treated as an extinguishment of the CD2. The new debt was bifurcated between host debt and the conversion option valued at $8,164,765 (net of transaction costs of $130,401) and $6,482,376, respectively, as of June 5, 2025. The debt and the conversion option were fair valued using a binomial lattice methodology based on a modified CRR approach.

Prior to the extinguishment on June 5, 2025, 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.

For the six months ended June 30, 2025, the Company recognized a loss on debt settlement in the amount of $3,077,155 on the condensed interim consolidated statements of income and comprehensive income as a result of extinguishment of CD1 and CD2.

The gain on changes in fair value of convertible debentures recognized on the condensed interim consolidated statements of income and comprehensive income during the three and six months ended June 30, 2026, was $nil (three and six months ended June 30, 2025 – gain of $1,081,127 and $1,002,763, respectively).

The portion of changes in fair value that is attributable to changes in the Company’s credit risk is accounted for within other comprehensive income. During the three and six months ended June 30, 2026, the Company recognized $nil, within other comprehensive income (three and six months ended June 30, 2025 – $255,009 and $795,907, respectively). Interest expense on the pre-extinguished CD1 and CD2 for the three and six months ended June 30, 2025 was $378,185 and $877,500, respectively.

The Company recorded accretion expense on host debt of CD1 of $164,404 and $318,663 for the three and six months ended June 30, 2026, respectively (three and six months ended June 30, 2025 – $37,911 and $37,911, respectively), bringing the net liability to $4,560,273 as of June 30, 2026.

The Company recorded accretion expense on host debt of CD2 of $346,673 and $670,803 for the three and six months ended June 30, 2026, respectively (three and six months ended June 30, 2025 – $79,002 and $79,002, respectively), bringing the net liability to $9,522,815 as of June 30, 2026.

As at June 30, 2026 interest of $265,417 ($268,333 at December 31, 2025) is included in interest payable on the condensed interim consolidated balance sheets. For the three and six months ended June 30, 2026, the Company recognized $29,149 and $29,149, respectively, as a loss on debt settlement on the condensed interim consolidated statements of income and comprehensive income as a result of settling interest by issuance of shares (three and six months ended June 30, 2025 – $824 and $285,565, respectively).

$4,000,000 Series 3 Convertible Debenture (“CD3”)

The Company closed the $4,000,000 CD3 on June 5, 2025 (note 9) with Sprott. CD3 bears interest at an annual rate of 5.0%, payable in cash or shares at the Company’s option, and matures on June 5, 2030. CD3 is secured by a pledge of the Company’s properties and assets and CD3 is convertible into common stock at a price of $0.105 per common share, subject to the stock exchange approval. The new debt was bifurcated between host debt and the conversion option valued at $2,268,397 (net of transaction costs of $174,576) and $1,558,941, respectively, as of June 5, 2025. The debt and the conversion option were fair valued using a binomial lattice methodology based on a modified CRR approach.

The accretion expense on host debt of CD3 of $292 and $122,404 for the three and six months ended June 30, 2026, respectively, is capitalized into plant and equipment (note 5) on the condensed interim consolidated balance sheets, bringing the net liability to $2,518,765 as of June 30, 2026. The Company recorded accretion expense on host debt of CD3 of $28,545 and $28,545 for the three and six months ended June 30, 2025, respectively. As at June 30, 2026 and December 31, 2025, no interest is included in interest payable on the condensed interim consolidated balance sheets.

The Company performs quarterly testing of the covenants in the CD1, CD2 and CD3 and was in compliance with all such covenants as of June 30, 2026.

The Stream

On June 23, 2023, all conditions were met for the closing of the Stream, and $46,000,000 was advanced to the Company. The Stream was secured by the same security package that is in place with respect to the RCD, CD1, and CD2. The Stream was repayable by applying 10% of all payable metals sold until a minimum quantity of metal is delivered consisting of, individually, 63.5 million pounds of zinc, 40.4 million pounds of lead, and 1.2 million ounces of silver (subsequently amended, as described below). Thereafter, the Stream was repayable by applying 2% of payable metals sold. The delivery price of streamed metals was 20% of the applicable spot price. The Company incurred $740,956 of transactions costs directly related to the Stream which were capitalized against the initial recognition of 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 income and comprehensive income.

On June 5, 2025, the existing metals purchase agreement (the “Metals Purchase Agreement”) dated June 23, 2023, by and among the Company, Silver Valley, and Sprott Streaming, pursuant to which Sprott Streaming previously advanced a $46,000,000 deposit to Silver Valley, was terminated and exchanged (the “Exchange Agreement”) for (i) 200,000,000 shares of the Company’s common stock; (ii) the CD3; and (iii) an additional 1.65% life-of-mine gross revenue royalty (note 7) on primary and secondary claims comprising the Bunker Hill Mine.

During the year ended December 31, 2025, the Company determined the effective interest rate of the Stream obligation to be 10.6% and recorded accretion expense on the liability of $625,279 and $1,570,574 for the three and six months ended June 30, 2025, respectively, recognized in the consolidated statement of income and comprehensive income, accretion expense on the liability of $407,721 and $971,426, for the three and six months ended June 30, 2025, respectively, capitalized into plant and equipment (note 5) on the condensed interim consolidated balance sheets and gain (loss) on revaluation of the liability of $549,854 and $4,149,606, for the three and six months ended June 30, 2025, respectively. The revaluation resulted from the change in projections of the key assumptions.

Silver Loan

On August 8, 2024, the Company entered into definitive agreements with Monetary Metals Bond III LLC (“Monetary Metals”), 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”).

In June 2025, the Company and Monetary Metals & Co. agreed to amend the rate of interest of the Silver Loan reducing it from 15% to 13.5% effective August 9, 2025. In consideration for Monetary Metals’ participation in the June 5, 2025 restructuring transactions of Bunker Hill and Silver Valley, Bunker Hill agreed to pay the following fees to Monetary Metals: a fee in the amount of $249,000 due and payable on August 8, 2025 and $249,000 due and payable on August 8, 2026. The Company determined that the amendments to the terms of the Silver Loan should not be treated as an extinguishment of the Silver Loan and have therefore been accounted for as a modification. On January 30, 2026, the Company drew 50,958 ounces of silver on the Silver Loan, equal to an amount of $4,763,110 in U.S. dollars. After deduction of financing costs and the three months ending February 8, 2026 interest payment on the principal amount of ounces outstanding and prepaying some of the May 8, 2026 interest payment the Company received $nil. As of June 30, 2026, the principal outstanding on the Silver Loan is 1.2 million ounces of silver (1.195 million ounces of silver at December 31, 2025).

The Company determined that in accordance with ASC 815 Derivatives and Hedging, the Silver Loan is valued and recorded as a single instrument, with the periodic changes to fair value accounted through earnings, profit and loss.

The fair value of the Silver Loan was determined using the Black-Derman-Toy (“BDT”) model. BDT models the evolution of interest rates over time using a binomial tree structure by capturing level of interest rates and volatility and estimates the value of the prepayment option by assessing how the borrower’s incentive to prepay changes with interest rate movements. The key inputs include:

 Schedule of Estimates Value of Prepayment Option by Assessing Interest Rate Movements

The resulting fair values of the Silver Loan at June 30, 2026, and December 31, 2025, were as follows:

 Schedule of Fair Value of Silver Loan

The gain on changes in fair value of Silver Loan recognized on the condensed interim consolidated statements of income and comprehensive income during the three and six months ended June 30, 2026, were $11,119,246 and $6,213,354, respectively (three and six months ended June 30, 2025 – loss of $2,961,015 and $9,029,947, respectively). The portion of changes in fair value that is attributable to changes in the Company’s credit risk is accounted for within other comprehensive income during the three and six months ended June 30, 2026, were a loss of $159,652, and a gain of $850,414, respectively (three and six months ended June 30, 2025 – loss of $3,096,220, and $4,587,864, respectively).

During the three and six months ended June 30, 2026, the Company paid interest on the Silver Loan in the amount of $2,272,450 and $2,272,450 (three and six months ended June 30, 2025 – $nil), respectively.

The Company performs quarterly testing of the covenant in the Silver Loan and was in compliance with all such covenants as of June 30, 2026.

$15,000,000 Sprott Debt Facility

On June 23, 2023, the Company closed a $21,000,000 debt facility (“Sprott Debt Facility”) with Sprott which was available for draw at the Company’s election for a period of 2 years. Any amounts drawn will bear interest of 10% per annum, from the later of the Funding Date and June 30, 2027, to the date of repayment in full, at the rate of per cent 15.0% per annum, which is payable annually in cash or capitalized at the Company’s election. The maturity date of any drawings under the Sprott Debt Facility will be June 30, 2030. For every $5,000,000 or part thereof advanced under the Sprott Debt Facility, the Company will grant a new 0.5% life-of-mine gross revenue royalty, on the same terms as the Royalty, to a maximum of 2.0% on the Primary Claims and 1.4% on the Secondary Claims. The Company may buy back 50% of these royalties for $20,000,000.

On December 12, 2024, the Company drew $5,000,000 on the Sprott Debt Facility. On December 19, 2024, the Company drew $5,000,000 on the Sprott Debt Facility. On January 17, 2025, the Company drew $5,000,000 on the Sprott Debt Facility. On January 31, 2025, the Company drew $6,000,000 on the Sprott Debt Facility. The proceeds from each draw down were bifurcated between host debt and the underlying sale of mineral interest to Sprott (note 7). On June 5, 2025, the Company repaid $6,000,000 of principal and $200,000 of interest owed on the Sprott Debt Facility by issuing 57,142,857 and 1,904,762 common stock, respectively.

On June 5, 2025, the Company and Sprott agreed to amend the terms of the Sprott Debt Facility, the Company agreed to changes to the interest payment mechanism, specifically the removal of capitalized interest and the insertion of the ability to pay interest via shares in addition to a $2,000,000, payable at maturity of the Sprott Debt Facility on June 30, 2030. The Company determined that the amendments to the terms of the Sprott Debt Facility should not be treated as an extinguishment of the Sprott Debt Facility and have therefore been accounted for as a modification.

Accretion on the liability of $614,460 and $1,200,566 for the three and six months ended June 30, 2026, respectively (three and six months ended June 30, 2025 – $334,440 and $578,975, respectively), was capitalized into the plant and equipment (note 5) bringing the net liability to $14,840,344 as of June 30, 2026. The Company recorded accretion expense on the Sprott Debt Facility of $342,371 and $681,596 for the three and six months ended June 30, 2025, respectively. As at June 30, 2026, interest of $1,520,833 ($766,667 at December 31, 2025) is included in interest payable on the condensed interim consolidated balance sheets.

The Company performs quarterly testing of the covenants in the Sprott Debt Facility and was in compliance with all such covenants as of June 30, 2026.

Teck Promissory Note

On March 21, 2025, the Company closed an unsecured promissory note for an aggregate principal amount of up to $3,400,000 (the “Note”). The Note bore interest at 12% per annum, with such interest capitalized and added to the principal amount outstanding under the Note monthly. The Note was available in multiple advances at the discretion of Teck and was paid on demand on June 6, 2025. On March 21, 2025, the Company received $763,000 in advance from Teck. On March 25, 2025, the Company received the remaining $2,325,000 on the Note from Teck. On May 21, 2025, the Note was amended to increase the aggregate principal amount to $4,400,000, concurrently $1,000,000 was advanced from Teck under the Note. On June 6, 2025, the Company repaid principal and accrued interest on the unsecured Note. As of June 30, 2026, the principal and interest outstanding on the unsecured Note is $nil ($nil at December 31, 2025) on the condensed interim consolidated balance sheets. No interest expense was accrued for the three and six months ended June 30, 2026 (three and six months ended June 30, 2025 – $80,064 and $87,160, respectively).

$10,000,000 Teck Standby Facility

On June 5, 2025, the Company closed an uncommitted demand standby prepayment credit facility with Teck for $10,000,000 (the “Teck Standby Facility”). The Teck Standby Facility will bear interest at a rate of 13.5% per annum until June 30, 2027, and a rate equal to 15.0% per annum thereafter, calculated and capitalized quarterly. The Teck Standby Facility will be available to the Company, until the earlier of (i) June 30, 2028, or (ii) the date on which the Bunker Hill project hits 90% of name plate capacity or on the date on which the Company is cash flow positive for a quarter, whichever is sooner, unless terminated earlier by Teck. Any amounts advanced under the Teck Standby Facility and any accrued and unpaid interest are repayable on demand by Teck. As of June 30, 2026, and December 31, 2025, no advances have been made on the facility. The Company determined that no recognition is required on the financial statements as of June 30, 2026, as no amount has been drawn from the facility. Subsequent to June 30, 2026, the Company drew $5,000,000 on the Teck Standby Facility, refer to note 16.

No interest expense was accrued for the three and six months ended June 30, 2026 (three and six months ended June 30, 2025 – no interest expense, respectively).