Mr. Sam Ash reports

BUNKER HILL ANNOUNCES UPDATES TO EQUITY FINANCINGS AND MAJOR CAPITAL RESTRUCTURING

Bunker Hill Mining Corp. has received total financing of $10.3-million (U.S.), including a cash order book for its previously announced brokered private placement that has reached a gross amount of approximately $6.5-million (U.S.), and additional debt settlement and equity payments totalling $3.8-million (U.S.). In addition, the company announces certain updates to the overall financing initiative and capital restructuring as described in prior announcements on March 6, 2025, and March 25, 2025. The capital restructure is anchored by an equity investment by Teck Resources Ltd. and includes the conversion into equity of certain outstanding debt, and the modification of certain existing royalty and stream financing arrangements with Sprott Streaming and Royalty Corp.

"The total equity funding amount reaching above the minimum $10-million (U.S.) is a welcome milestone along the path to delivering the major capital restructuring plans announced earlier in the year," said Sam Ash, Bunker Hill's president and chief executive officer. "We look forward to working with regulators and shareholders to close this transaction in the coming weeks."

Projected highlights on final closing:

• 40-per-cent reduction in total debt, 58-per-cent reduction in gross revenue royalty costs and 22-per-cent improvement on debt-to-total capitalization ratio, leading to significant improvement in asset resilience;
• Liquidity raised is expected to be sufficient to advance the total project to 85-per-cent completion in fourth quarter 2025, with the processing plant 100 per cent complete and starting its commissioning, underground development 100 per cent complete with ore being stockpiled to support commissioning and ramp-up, and the tailings filter press 50 per cent complete with all major equipment installed;
• To bring the operation to sustainable free cash flow in first half 2026, the company intends, with the support of strategic investors, to raise an additional $30-million (U.S.) of equity by the end of fourth quarter 2025 to enable a robust ramp-up to nameplate production of 1,800 tonnes per day.

Equity financing developments

In connection with the previously announced brokered private placement led by BMO Capital Markets, CIBC Capital Markets and Red Cloud Securities Inc., as joint bookrunners, and National Bank Financial Inc., the company intends to issue up to 62,086,187 units of the company at a price of 10.51 U.S. cents (15 Canadian cents) per unit for aggregate consideration of up to approximately $6.5-million (U.S.). In connection with the brokered offering, Bunker Hill intends to grant the agents an option, exercisable by the agents in whole or in part at any time up to 48 hours before the closing date of the brokered offering, to increase the size of the brokered offering by up to 9,312,928 additional units at a price of 10.51 U.S. cents (15 Canadian cents) per additional unit for additional aggregate gross proceeds of up to approximately $977,857 (U.S.).

As previously announced, in a concurrent non-brokered private placement, Teck has agreed to contribute $2 (U.S.) for every $1 (U.S.) raised in the brokered offering and pursuant to the debt settlements and equity payment agreement (each as defined herein and further described below), for a lead order of up to 209,523,809 units at the offering price for aggregate consideration of up to approximately $22-million (U.S.) (assuming a maximum aggregate financing amount of $11-million (U.S.) composed of proceeds from the brokered offering, debt settlements and equity payment agreement). Furthermore, in connection with the brokered offering, the company is pleased to announce a lead order by Sprott Streaming for 10 million units.

Each unit issued under the offerings will consist of one share of common stock and one-half of one common share purchase warrant, with each whole warrant exercisable for one additional common share at a price of 25 cents per warrant share for a period of three years following the date of issuance.

Separately, Sprott Streaming intends to transfer up to 30 million common shares to certain investors who subscribe for and purchase units under the brokered offering. Sprott Streaming is independently making such common shares available to such investors in support of the brokered offering on a private basis and in recognition of current equity market conditions, and will not receive any direct or indirect consideration or compensation for doing so.

The company intends to use the net proceeds of the offerings to support the construction, start-up and ramp-up of the Bunker Hill zinc-silver-lead mine in the Silver Valley, Idaho. The closing of the offerings remains subject to stock exchange and regulatory approvals, and, in the case of the non-brokered offering, a minimum financing amount of $10-million (U.S.), receipt of the stockholder consent (as defined below), closing of the debt restructuring transactions (as defined below) and other customary closing conditions. There can be no assurance as to whether or when either or both of the offerings may be completed, either on the terms previously announced, described herein or at all.

Standby facility developments

The company and Teck have agreed that the previously announced uncommitted revolving standby prepayment facility of up to $10-million (U.S.), to be provided by Teck to the company at closing of the non-brokered offering, will bear interest at a rate of 13.5 per cent per annum until June 30, 2027, and a rate equal to 15.0 per cent per annum thereafter, calculated and capitalized quarterly. The SP facility will be available to the company until the earlier of: (i) June 30, 2028; or (ii) the date on which the project hits 90 per cent of nameplate capacity or on the date on which the company is cash flow positive for a quarter, unless terminated earlier by Teck. The SP facility is to be secured by a security interest over all assets, properties and undertaking of the company and its wholly owned subsidiary Silver Valley Metals Corp. in form and scope similar to the security held by Sprott Streaming, with certain security to be held on a first priority basis. No bonus securities of the company will be issued to Teck in connection with the SP facility, nor is the SP facility convertible into securities of the company.

Offtake amendments

As announced in the company's news release dated March 6, 2025, the company has agreed to amend certain offtake agreements previously entered into with respect to the project. In connection with the non-brokered offering, the parties intend to amend the existing zinc offtake agreement (with an effective date of Nov. 10, 2023) and the lead concentrate offtake agreement (with an effective date of Nov. 20, 2023) between Teck and Silver Valley, pursuant to which, among other amendments, the offtake under each respective agreement will apply to life-of-mine production rather than the current five-year term.

Short-term bridge financing

As previously disclosed, the company and Teck agreed to a $3.4-million (U.S.) unsecured promissory note. The promissory note ensures sufficient short-term financing until the offerings close and bears interest at a rate of 12 per cent per annum, with such interest being capitalized and added to the principal amount outstanding monthly under the promissory note. The promissory note is available in multiple advances, at the discretion of Teck, and is payable by the company in cash on demand from Teck. The full principal amount of $3.4-million has been advanced under the promissory note to the company. No bonus securities of the company will be issued to Teck in connection with the promissory note, nor is the promissory note convertible into securities of the company.

Equity payment to C&E Tree Farm LLC

Silver Valley and C&E Tree Farm previously entered into an option agreement dated March 3, 2023, pursuant to which Silver Valley has an option to purchase certain real property in Idaho, United States, from C&E, upon making a cash payment of $3,129,500 (U.S.), subject to adjustment for lease payments made pursuant to a commercial lease agreement between the parties. The company wishes to satisfy a portion of the purchase price payable under the option agreement through the issuance of equity securities. Subject to the prior approval of the TSX Venture Exchange, the company, Silver Valley, and C&E intend to enter into an equity payment agreement, pursuant to which the company will issue 4,761,905 units at a deemed price of 10.5 U.S. cents per unit in satisfaction of $500,000 (U.S.) of the purchase price payable under the option agreement.

Each unit issued pursuant to the equity payment agreement will consist of one common share and one-half of warrant, with each whole warrant exercisable for one additional warrant share at an exercise price of 25 cents per warrant share for a period of three years following the date of issuance.

Additional debt settlement

Further to the company's news release dated March 25, 2025, the company intends to settle outstanding receivables and other amounts owing (including, where applicable, accrued and unpaid interest thereon) in the aggregate amounts of up to approximately $3,072,254 (U.S.) and $195,000 (Canadian) with certain creditors, insiders and contractors of the company or Silver Valley through the issuance of equity securities at the offering price. The company intends to enter into debt settlement agreements with such creditors, insiders and contractors, concurrently with the closing of the offerings to preserve its cash for the potential restart and continuing development of the project. The debt settlements remain subject to prior approval of the TSX-V.

In connection with the debt settlements, the company proposes to issue up to:

1. 761,904 units to MineWater LLC, as further described herein;
2. 4,642,857 common shares to Sprott Streaming, as further described herein;
3. 257,379 common shares to four directors of the company for their services for the period beginning on March 1, 2025, and ending on April 30, 2025; given that the amounts owed for the director services exceed the limits under the TSX-V policies in respect of debt settlements to non-arm's-length parties (being a maximum of $5,000 (Canadian) per person and, in the aggregate, $10,000 (Canadian) per issuer), the company will be seeking shareholder approval for the issuance of common shares to these directors prior to issuance; and
4. 30,302,181 units to certain other arm's-length creditors or contractors of the company.

Each unit issued pursuant to the debt settlements will consist of one common share and one-half warrant, with each whole warrant exercisable for one additional warrant share at an exercise price of 25 cents per warrant share for a period of three years following the date of issuance. In accordance with the policies of the TSX-V, non-arm's-length parties of the company will receive common shares in lieu of units in connection with the debt settlements.

MineWater financing co-operation fee

The company and Silver Valley are parties to an agreement regarding financing co-operation dated Sept. 27, 2022, by and among the company, Silver Valley, MineWater, MineWater Finance LLC and MW HH LLC. The co-operation agreement provides for, among other things, the MineWater parties providing certain collateral security to Indemnity National Insurance Company for the company and Silver Valley to obtain certain surety bonds from INIC with respect to the Bunker Hill mine. In consideration for the collateral security, the company is required to pay MineWater, on behalf of the MineWater parties, a financing co-operation fee of $20,000 (U.S.) per month, payable quarterly in arrears, during the term of the co-operation agreement.

The company and Silver Valley propose to enter into a debt settlement agreement with MineWater in respect of the outstanding co-operation fee for the period beginning on Jan. 1, 2025, and ending on April 30, 2025, being $80,000 (U.S.). Pursuant to the terms of the debt settlement agreement and subject to prior acceptance of the TSX-V, the company and the MineWater parties intend to settle the outstanding co-operation fee at a deemed price equal to the offering price and on substantially the same terms as the offerings described above. The company proposes to issue 761,904 units in full and complete settlement and satisfaction of the outstanding co-operation fee for the period ending April 30, 2025.

Each unit issued pursuant to the equity payment agreement will consist of one common share and one-half of one warrant, with each whole warrant exercisable for one additional warrant share at an exercise price of 25 cents per warrant share for a period of three years following the date of issuance.

Debt restructuring developments

In connection with the previously announced debt restructuring transactions, the company now intends to issue, on a private placement basis, an aggregate of up to 263,690,476 common shares at the offering price to Sprott Streaming (excluding the securities issuable to Sprott Streaming under the brokered offering), as follows:

1. Up to 59,047,619 common shares upon Sprott Streaming's conversion of up to $6.2-million (U.S.) (which amount consists of $6-million (U.S.) principal and up to $200,000 (U.S.) of accrued and unpaid interest thereon up to May 31, 2025) outstanding under the existing senior secured loan agreement in the aggregate principal amount of $21-million (U.S.) previously advanced by Sprott Streaming;
2. 200 million common shares which, together with the previously announced: (x) issuance of two senior secured Series 3 convertible debentures in the aggregate principal amount of $4-million (U.S.); and (y) grant of the new royalty (as defined below), are being issued to Sprott Streaming in exchange of the termination of the metal purchase agreement dated June 23, 2023, between the company, Silver Valley and Sprott Streaming pursuant to which Sprott Streaming advanced the $46-million (U.S.) deposit to Silver Valley;
3. 4,642,857 common shares in full satisfaction of an aggregate of $487,500 (U.S.) of accrued and unpaid interest owing under certain outstanding secured convertible debentures of the company for the period beginning on Jan. 1, 2025, and ending on March 31, 2025.

As noted above, the company intends to grant an additional 1.65-per-cent life-of-mine gross revenue royalty on the land package (as defined below). The new royalty will apply to the primary and secondary claims comprising the project (the land package), as well as any new or complementing surface and mineral rights derived from the surface and mineral rights within the existing boundaries of the land package that are subsequently acquired by the company or Silver Valley.

The company also now intends to pay Sprott Streaming a cash fee of $2-million (U.S.), payable at maturity of the debt facility on June 30, 2030, as additional consideration for the conversion and exchange of the loan advance.

As previously disclosed, Sprott Streaming and the company intend to amend and restate the debt facility to: (i) fix the sliding scale royalty issued in connection with advances thereunder at 1.5 per cent for both the primary and secondary claims comprising the project; and (ii) cancel the royalty buyback option granted to the company thereunder, which amendments shall also be reflected in an amendment to the second royalty. In addition, the parties will be amending the debt facility to include an option, at the election of the company, to settle any accrued and unpaid interest by issuing common shares, subject to the prior approval of the TSX-V.

Additionally, in connection with the transactions, the company and Silver Valley intend to enter into: (i) an amendment to the secured promissory note purchase agreement dated Aug. 8, 2024, as previously amended by a first amendment to secured promissory note purchase agreement dated Nov. 11, 2024; and (ii) an amendment to the secured promissory note dated Aug. 8, 2024, each with Monetary Metals Bond III LLC to, amongst other things: (i) reduce the rate at which advances under the MM NPA bear interest from 15 per cent to 13.5 per cent per annum; (ii) clarify the calculation of the cash flow sweep; (iii) extend the availability date for advances thereunder from Jan. 31, 2025, to June 30, 2025; and (iv) in connection with any further advances, provide for the issuance of bonus warrants in such number and on such terms as to be agreed upon between the parties before issuance and subject to prior approval of the TSX-V. In any event, the number of bonus warrants issued or issuable to Monetary Metals will not exceed, in the aggregate, the maximum of three million allowable under the MM NPA. The MM NPA and the MM note are secured by security interests over all assets, properties and undertaking of the company and its wholly owned subsidiary Silver Valley in form and scope similar to the security held by Sprott Streaming and the security to be held by Teck.

Pursuant to existing security arrangements, the company has granted security interests to Sprott Streaming, Monetary Metals and MineWater parties over all of the assets, properties and undertakings of the company and Silver Valley. In connection with the existing security and intercreditor arrangements among Sprott Streaming, Monetary Metals, the MineWater parties and the company, the parties intend to amend such arrangements to: (i) reflect the termination of the metal purchase agreement and other applicable debt restructuring transactions; (ii) defer certain royalty payments and restrict early principal prepayments on certain outstanding debt obligations of the company so long as amounts are outstanding under the SP facility, as described above; (iii) allow for the first priority security in favour of Teck over certain inventory and accounts receivable in connection with the SP facility; and (iv) account for Teck under such arrangements.

There can be no assurance as to whether or when the debt restructuring transactions may be completed, either on the terms previously announced, described herein or at all.

Stockholder consent

As previously announced, the company expects that Teck and Sprott Streaming will each own greater than 20 per cent of the issued and outstanding common shares following the closing of the transactions, and, therefore, each will become a control person (as defined in the TSX-V policies):

• As at the date hereof:
  • Sprott Streaming holds, directly or indirectly, approximately 42,149,875 common shares, or approximately 11.7 per cent of the outstanding common shares on a non-diluted basis, as well as warrants to purchase an additional 3,000 common shares and secured debentures convertible into up to an aggregate of approximately 98,332,299 common shares (based on the principal amount only).
  • If Sprott Streaming were to exercise all of its warrants and convert the full principal amount of its debentures, it would hold an aggregate of 140,485,171 common shares, or approximately 30.7 per cent of the outstanding common shares on a partially diluted basis.
  • Teck beneficially holds, directly or indirectly, approximately 23,784,723 common shares, or approximately 6.6 per cent of outstanding common shares on a non-diluted basis, as well as warrants to purchase an additional 2,951,389 common shares.
  • If Teck were to exercise all of its warrants, it would hold an aggregate of 26,736,112 common shares, or approximately 7.4 per cent of the outstanding common shares on a partially diluted basis.
• Assuming the completion of: (i) the maximum offering amount under the brokered offering (excluding the exercise of the agent option), including the maximum number of Sprott units; (ii) the maximum offering amount under the non-brokered offering; and (iii) the issuance of the maximum number of Sprott shares in connection with the debt restructuring transactions, the company expects that:
  • Sprott Streaming will hold, directly or indirectly, approximately 305,840,348 common shares, or approximately 32.8 per cent of the then outstanding common shares on a non-diluted basis, as well as warrants to purchase an additional 5,003,000 common shares and secured debentures convertible into up to an aggregate of approximately 228,571,429 common shares (based on the principal amount only).
  • If Sprott Streaming were to exercise all of its warrants and convert the full principal amount of its debentures then held, it would hold an aggregate of 539,414,777 common shares, or approximately 41.0 per cent of the outstanding common shares on a partially diluted basis.
  • Teck will hold, directly or indirectly, approximately 233,308,533 common shares, or approximately 25.1 per cent of the then outstanding common shares on a non-diluted basis, as well as warrants to purchase an additional 107,713,294 common shares.
  • If Teck were to exercise all of its warrants then held, it would hold an aggregate of 341,021,826 common shares, or approximately 32.8 per cent of the outstanding common shares on a partially diluted basis.

In accordance with the TSX-V policies, the approval of the company's stockholders will be required with respect to Teck and Sprott Streaming each becoming a control person. In lieu of a special meeting of its stockholders, the company intends to obtain the written consent of disinterested stockholders holding more than 50 per cent of the current issued and outstanding common shares, which stockholder consent will exclude any votes held by Teck, Sprott Streaming, and their respective affiliates or associates (each as defined in the TSX-V policies). The company also intends to rely on the stockholder consent to satisfy the required approvals for: (i) the previously announced amendment and restatement of the company's articles of incorporation; (ii) the amendments to the existing royalties held by Sprott Streaming on certain claims comprising the land package; and (iii) the grant of the new royalty to Sprott Streaming.

Related-party transactions

Each of the debt restructuring transactions with Sprott Streaming and the issuance of units or common shares under the brokered offering to Sprott Streaming and certain directors and officers of the company constitute a related-party transaction within the meaning of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The company intends to rely on the exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(g) and 5.7(e) under MI 61-101 related to the financial hardship of the company.

About Bunker Hill Mining Corp.

Bunker Hill is an American mineral exploration and development company focused on revitalizing its historic mining asset: the renowned zinc, lead and silver deposit in northern Idaho's prolific Coeur d'Alene mining district. This strategic initiative aims to breathe new life into a once-productive mine, leveraging modern exploration techniques and sustainable development practices to unlock the potential of this mineral-rich region. Bunker Hill aims to maximize shareholder value while responsibly harnessing the mineral wealth in the Silver Valley mining district by concentrating its efforts on this single, high-potential asset.

We seek Safe Harbor.