Bunker Hill Mining (BHLL) S-1/AIPO registration (amended)

Exhibit 10.5

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE OCTOBER [●], 2022.

NEITHER THIS DEBENTURE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW, AND NO INTEREST HEREIN OR THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO DEBTOR AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO DEBTOR, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

SERIES 2 SECURED CONVERTIBLE DEBENTURE

For value received, BUNKER HILL MINING CORP. (“Debtor”) hereby promises to pay to the order of [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.] (together with its successors and assigns, “Debentureholder”), at the address listed in Section 15 (Notice), or such other place and/or Person as Debentureholder may by notice in writing to Debtor direct, the principal amount of [●] dollars (US$●) in lawful money of the United States of America (the “Principal Amount”) in the manner hereinafter provided, together with interest and other monies in the same currency which may from time to time be owing hereunder or pursuant hereto. Subject to the provisions of this series 2 secured convertible debenture no. [●] (the “Debenture”), the unpaid Principal Amount together with all accrued and unpaid interest and all other monies owing hereunder, shall become due and payable on March 31, 2025 (the “Maturity Date”). All capitalized terms not defined in the body of this Debenture, are defined in Exhibit “A” appended to this Debenture.

SILVER VALLEY METALS CORP. (“Guarantor”) is a wholly owned direct Subsidiary of Debtor and Guarantor will receive substantial direct and indirect benefits from the advance of the Principal Amount under this Debenture to Debtor. In consideration of the foregoing, and for other good and valuable consideration, Guarantor hereby covenants and agrees to guarantee the Obligations and perform and comply its other Obligations.

Any remaining balance of the Principal Amount, together with all accrued and unpaid interest thereon and all other monies owing hereunder, shall be due and payable in full on the Maturity Date.

Subject to the exercise by Debentureholder of its conversion privileges in Section 10.3 at any time prior to prepayment, Debtor may redeem or prepay this Debenture, in whole but not in part, and in cash only, prior to the Maturity Date, on not less than twenty (20) Business Days prior written notice and provided that Debtor redeems or prepays all of the outstanding Convertible Debentures at the same time. Should Debtor prepay this Debenture in whole in accordance with this Section 4, it shall do so at a price equal to the sum of (i) the Principal Amount, plus (ii) all accrued and unpaid interest on the Principal Amount, plus (iii) the Prepayment Interest Premium, and plus (iv) all other amounts owing and due hereunder. Each Obligor acknowledges and agrees that any such prepayment prior to the Maturity Date (other than a prepayment upon the exercise by Debentureholder of its conversion privileges in Section 10.3) is subject to the Prepayment Interest Premium and that such amount represents a reasonable estimate of fair compensation payable to Debentureholder for the losses suffered by early prepayment and such amount is in the nature of liquidated damages and not a penalty. Debtor may exercise its conversion privileges under Section 10.1 in respect of accrued and unpaid interest upon an early prepayment.

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE OCTOBER [●], 2022.”

THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS ENTRY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

Debentureholder may, at its option from the date hereof until the earlier of the date of (i) repayment in full of the Principal Amount, and (ii) the Maturity Date (such date is hereinafter referred to as the “Debenture Repayment Date”), elect to receive Common Shares, in lieu of cash payment of the outstanding Principal Amount at the Debentureholder Conversion Price. If Debentureholder does not elect to receive Common Shares in lieu of cash payment of the outstanding Principal Amount on or before the Debenture Repayment Date, Debtor shall repay the outstanding Principal Amount, and all accrued and unpaid interest and any other amounts owing hereunder, in cash (subject to Debtor’s right to pay accrued and unpaid interest by issuing Common Shares in accordance with Section 10.1), on the Debenture Repayment Date. For greater certainty, no Prepayment Interest Premium on any part of the Principal Amount will be owing in the event of any such election by Debentureholder to receive Common Shares in lieu of cash payment of the Principal Amount or any such repayment in cash of the Principal Amount on the Maturity Date.

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE OCTOBER ●, 2022.”

[THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS ENTRY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITITES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.]

Debtor shall not issue fractional Common Shares upon the exercise of Debtor’s interest privileges under Section 10.1 or Debentureholder’s privilege under Section 10.3. If any fractional interest in a Common Share would, except for the provisions of this Section 10.5, be deliverable upon conversion, any such fractional interest shall be rounded down to the nearest whole number of Common Shares.

The Debentureholder Conversion Price in effect at any time is subject to adjustment from time to time in the events and in the manner provided as follows:

(any of such events being called a “Common Share Reorganization”), then the Debentureholder Conversion Price will be adjusted effective immediately after the effective date or record date for the happening of a Common Share Reorganization, as the case may be, at which the holders of Common Shares are determined for the purpose of the Common Share Reorganization by multiplying the Debentureholder Conversion Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which is the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganization and the denominator of which is the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization (including, in the case where rights to acquire Common Shares or securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had all such rights been exercised to acquired Common Shares or securities been exchanged for or converted into Common Shares on such effective date or record date).

Each Obligor hereby represents and warrants to Debentureholder as of the date of this Debenture and as of the Funding Date (unless otherwise specified in Exhibit “D”) and so long as any Obligations remain outstanding, as set out in Exhibit “D” and acknowledges that Debentureholder is relying upon such representations and warranties in entering into the transactions that give rise to the Principal Amount, which representations and warranties shall survive the execution and delivery of this Debenture.

Where any representation or warranty contained in Exhibit “D” is expressly qualified by reference to the “knowledge” of Obligors, it shall be deemed to refer to the actual knowledge of Richard Williams, as Executive Chairman of Debtor, Sam Ash, as Chief Executive Officer of Debtor and President of Guarantor, David Wiens, as Chief Financial Officer of Debtor, and Bradley Barnett, as Vice President of Sustainability of Debtor and Secretary of Guarantor, and all information which ought to have been known by each of them after conducting a reasonable inquiry into the matters in question, whether or not any such inquiry was actually made.

Debentureholder hereby represents and warrants to the Obligors that Debentureholder is an accredited investor, within the meaning of National Instrument 45-106 – Prospectus Exemptions.

Each Obligor covenants and agrees with Debentureholder that, unless compliance has been waived in writing by Debentureholder and so long as any Obligations remain outstanding:

If an Obligor fails to perform any covenant or any other provision of any of the Credit Documents, Debentureholder may, in its discretion, perform any such covenant capable of being performed by it, and if any such covenant requires the payment of money Debentureholder may, in its discretion, make any such payments. All sums so expended by Debentureholder shall be payable on demand and, until paid, shall be added to, and be deemed to be included in the Obligations and shall bear interest at the same rate applicable to principal.

Any notice or written communication given pursuant to or in connection with this Debenture shall be in writing and shall be given by delivering the same personally or by prepaid courier, prepaid registered mail, or email, addressed to the party to be notified at the following address of such party or at such other address of which such party has given notice to the other party hereto:

for an Obligor,

Bunker Hill Mining Corp.

82 Richmond St East

Toronto, ON, M5C 1P1

for Debentureholder,

[Contact information redacted]

Any such notice shall be conclusively deemed to have been given and received on the day of actual receipt by the addressee or, if given by prepaid registered or certified mail, on the fifth day following the mailing date (absent a general disruption in postal service). A Party may change its address by notice given in accordance with this Section to the other Parties.

(A) its limited partners, investors, auditor, legal counsel, lenders, underwriters, investment bankers and technical consultants, and

(B) Persons with which it is considering or intends to enter into a transaction which would be permitted hereunder without the consent of the other party under this Debenture (such Persons referred to in this Debenture, the “Proposed Transferees”) for which such non-public information would reasonably be relevant (and to advisors and representatives of any such Person),

provided that such disclosure is made on a need to know basis and that such Persons are advised of the confidential nature of the non-public information, undertake to maintain the confidentiality of it and are strictly limited in their use of the non-public information to those purposes necessary for such Persons to perform the services for which they were, or are proposed to be, retained or to consider or effect the applicable transaction, or to monitor their investments in the case of limited partners or investors, as applicable;

The Obligors will reimburse Debentureholder within thirty (30) days of Debentureholder providing a written invoice and supporting documentation in respect thereof, all of Debentureholder’s reasonable out-of-pocket costs and expenses incurred in respect of the negotiation, registration, enforcement of, or the preservation of rights under the Credit Documents, including the reasonable fees and expenses of legal counsel for Debentureholder in connection therewith.

Each Obligor hereby indemnifies Debentureholder, its affiliates and their respective directors, officers and employees, from and against, any claim, damage, loss, liability, judgment, suit, cost or expense of any kind (including reasonable fees and expenses of counsel), arising directly out of:

Any provision of this Debenture that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of that prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of that provision in any other jurisdiction.

The Credit Documents constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior agreements or understandings, written or oral, with respect thereto. Except as otherwise provided in Section 10.6(b), this Debenture shall not be amended except by the written agreement between Debentureholder and each Obligor.

The provisions of Sections 6 (Taxes), 16 (Confidentiality), 17 (Expenses), 18 (Indemnification) and 20 (Governing Law and Jurisdiction), shall in each case survive any termination of this Debenture and the payment in full of the Obligations.

Except as otherwise provided in this Debenture, to the extent that it may be necessary to convert Canadian dollars to US dollars for the purpose of making any payment or calculation in this Debenture, such conversion shall be made at the Bank of Canada daily average rate quoted for the exchange of Canadian dollars into US dollars or vice versa, on the Business Day prior to the date the conversion is to take place.

Time is and will be of the essence of each and every provision of this Debenture.

This Debenture and any schedules, certificates or other writing delivered in connection herewith, may be executed in any number of counterparts and by facsimile or electronic means, with the same effect as if all parties had all signed the same document, and all such counterparts and adopting instruments will be construed together and will constitute one and the same instrument. The execution of this Debenture and any other writing by any party hereto or thereto will not become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto.

[Signature pages immediately follow]

IN WITNESS WHEREOF each Obligor and Debentureholder has executed this Debenture under the hands of its duly authorized officers in that behalf.

The undersigned agrees to be bound by Debentureholder’s covenants contained herein.

The undersigned agrees to be bound by the covenants of the Administrative Agent and the Security Agent contained herein.

EXHIBIT “A”

DEFINITIONS

“Administrative Agent” means [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.], an Ontario limited partnership, in its capacity as agent for Debentureholder hereunder, and any successor agent appointed from time to time by Debentureholder and their successors and permitted assigns.

“Affiliate” means any person which, directly or indirectly, controls, is controlled by or is under common control with another person; and, for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” or “under common control with”) means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of shares or by contract or otherwise, provided that, for the purposes of this Debenture, a Debentureholder shall not be deemed an Affiliate of any Obligor.

“Anti-Bribery Laws” has the meaning ascribed thereto in Exhibit “D”.

“Anti-Money Laundering Laws” has the meaning ascribed thereto in Exhibit “D”.

“Applicable Law” means any federal, provincial, state, local or municipal statute, law (including the common law), ordinance, rule having the force of law, regulation, by-law (zoning or otherwise) or order of any Governmental Authority or rule of any stock exchange or securities commission, applicable to a Person or any of its properties, assets, business or operations.

“Applicable Securities Legislation” means all applicable securities laws of each of the jurisdictions in which Debtor is a “reporting issuer” and the respective rules and regulations under such laws together with applicable published fee schedules, prescribed forms, policy statements, national or multilateral instruments, orders, blanket rulings and other applicable regulatory instruments of the securities regulatory authorities in any of such jurisdictions.

“Authorization” means any consent, registration, filing, agreement, certificate, license, approval, permit, authority or exemption from, by or with any Governmental Authority and all corporate, creditors’ and shareholders’ approvals or consents.

“Books and Records” means all records (whether or not recorded on computer or computer related media) in the possession or control of an Obligor relating in whole or in part to the business of an Obligor, including any business, financial, accounting or Tax records.

“Business Day” means any day, other than a Saturday, a Sunday, a statutory holiday or any day on which major banks are closed for business in Kellogg, Idaho or Toronto, Ontario.

“Capital Reorganization” has the meaning ascribed thereto in Section 10.6(b).

“Cdn.$” means the lawful currency of Canada.

“CFADS” means, with respect to the term of any proposed Funded Debt payable by, assumed by or guaranteed by any Obligor, an amount equal to (A) projected revenue (based on consensus metal pricing) reasonably expected to be generated from the sale of production from the Mine during such term, less (B) the aggregate amount of all deliveries, payments and other obligations of each Obligor under any stream, royalty or similar transaction with respect to production from the Mine including deliveries under the Stream and the Guarantor’s obligations under the Royalty, less (C) all operating expenditures of the Obligors, less (D) all sustaining capital expenditures of the Obligors, less (E) cash Taxes of the Obligors, less (F) all cash reclamation expenses of the Obligors, all calculated on a consolidated basis and based on reasonable assumptions to be agreed to, during the period commencing on the date the Funded Debt is proposed to be issued to the maturity date of the proposed Funded Debt.

“Claim” means any act, omission or state of facts and any complaint, litigation, demand, action, suit, proceeding, claim, assessment, judgement or settlement or compromise relating thereto.

“Collateral” means all property and assets (whether real, personal or other and including Equity Securities) of the Obligors in which charges, mortgages or security interests are granted or purported to be granted pursuant to the Security.

“Common Shares” has the meaning ascribed thereto in Section 10.1(a).

“Control” means the right, directly or indirectly, to direct or cause the direction of the management of the business or affairs of a Person, whether by ownership of securities, by contract or otherwise; and “Controls”, “Controlling”, “Controlled by” and “under common Control with” have corresponding meanings.

“Credit Documents” means collectively, this Debenture, the Guarantee, the Security and any documents entered into in respect of any of the foregoing and “Credit Document” means each of them.

“CSE” means the Canadian Securities Exchange.

“Cure Period” means a period of 15 Business Days following the earlier of (i) delivery by Debentureholder to the Obligors of written notice of a breach or default, and (ii) an Obligor becoming aware of such breach or default

“Debenture” has the meaning ascribed thereto in the first paragraph of this document.

“Debentureholder” has the meaning ascribed thereto in the first paragraph of this Debenture.

“Debentureholder Conversion Date” has the meaning ascribed thereto in Section 10.4(e).

“Debentureholder Conversion Form” has the meaning ascribed thereto in Section 10.4(a).

“Debentureholder Conversion Price” means the US Dollar Equivalent Amount of Cdn. $0.29 per Common Share, as such price per Common Share may be adjusted from time to time in accordance with the terms of this Debenture

“Debtor” has the meaning ascribed thereto in the first paragraph of this Debenture.

“Debtor Interest Conversion Date” has the meaning ascribed thereto in Section 10.2(b).

“Debtor Interest Conversion Form” has the meaning ascribed thereto in Section 10.2(a).

“Debtor Interest Conversion Price” means the greater of the US Dollar Equivalent Amount of (i) 90% of the 10-day volume weighted average trading price in Canadian dollars of the Common Shares of Debtor on the Stock Exchange, ending as of the sixth Business Day prior to the Debtor Interest Conversion Date; and (ii) the minimum price permitted by the Stock Exchange.

“Debtor Relief Laws” shall mean Title 11 of the United States Code entitled “Bankruptcy”, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and the Winding-Up and Restructuring Act (Canada), and all other liquidation, administration, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, judicial management or similar debtor relief laws of the United States, Canada or other applicable jurisdictions from time to time in effect including any proceeding under corporate law or other law of any jurisdiction whereby a corporation seeks a stay or a compromise of the claims of its creditors against it, each as now and hereafter in effect, any successors to such statutes and any other applicable insolvency or other similar law of any jurisdiction.

“Disclosure Letter” means the letter of disclosure (including the schedules thereto) dated on the date hereof, executed by the Obligors and delivered to Debentureholder concurrently with this Debenture.

“Disposition” means, with respect to any asset (including any Property) of any Person, any direct or indirect sale, lease (where such Person is the lessor), assignment, cession, transfer, exchange, conveyance, release or gift of such asset, including by means of a sale and leaseback transaction, or any reorganization, consolidation, amalgamation or merger of such Person pursuant to which such asset becomes the property of any other Person; and “Dispose” and “Disposed” have meanings correlative thereto.

“Effective Date” means the date of this Debenture.

“EPA” has the meaning attributed thereto in Section 2(b).

“EPA Settlement Agreement” means the Consent Decree between the United States of America and Placer Mining Company, Inc., filed with the United States District Court District of Idaho on March 3, 2018 and approved on June 19, 2018 and the Settlement Agreement And Order On Consent For Response Action By Bunker Hill Mining Corp. between the EPA and Bunker Hill Mining Corp, dated as effective May 15, 2018 (EPA Region 10 CERCLA Docket No. 10-2017-0123), as amended by the First Amendment To The Settlement Agreement And Order On Consent For Response Action By Bunker Hill Mining Corp. between the EPA and Bunker Hill Mining Corp, dated as effective December 19, 2021, and any other amendments thereto.

“Equity Securities” means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting and non-voting) of, such Person’s capital, whether outstanding on the date hereof or issued after the date hereof, including any interest in a partnership, limited partnership or other similar Person and any beneficial interest in a trust, and any and all rights, warrants, options or other rights exchangeable for or convertible into any of the foregoing.

“Event of Default” has the meaning ascribed thereto in Section 13.

“Excluded Taxes” means, with respect to Debentureholder, income or franchise Taxes imposed on (or measured by) its taxable income or capital Taxes imposed on (or measured by) its taxable capital, in each case by Canada, or by the jurisdiction under the Applicable Law of which such recipient is organized or in which its principal lending office is located.

“Exclusivity Agreement” means the exclusivity agreement dated as of January 7, 2022 between [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.] and the Obligors, as amended by First Omnibus Amendment and the Second Omnibus Amendment and as the same may be further amended, amended and restated, modified, supplemented or replaced from time to time.

“First Omnibus Amendment” means the omnibus amendment agreement dated January 28, 2022 between the Obligors, the Security Agent and [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.], as holder of the Royalty Convertible Debenture and as party to the Exclusivity Agreement, the ROFR Agreement and the Funding Indemnity.

“Funded Debt” means:

“Funding Date” has the meaning ascribed thereto in Section 2(a).

“Funding Indemnity” means funding indemnity dated January 4, 2022 made by the Obligors in favour of [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.], as the same may be amended, amended and restated, modified, supplemented or replaced from time to time.

“Good Practice Standards” means, in relation to mining (including all relevant disciplines pertaining thereto, such as metallurgy, processing, engineering, environmental and governance matters, relations with community and indigenous peoples and other social matters), those policies, practices, methods and acts engaged in or approved by a Person which, in the conduct of its undertaking, exercises that degree of safe and efficient practice, diligence, prudence, and foresight reasonably and ordinarily exercised and most commonly accepted by reputable, skilled and experienced operators engaged in the mining industry in the United States.

“Governmental Authority” means any government whether federal, provincial, state or municipal and any governmental agency, governmental authority, governmental tribunal, court, governmental commission (including a securities commission) of any kind whatsoever, any subdivision, agency, commission, board or authority of any of the foregoing or any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the amount of any of the foregoing or any stock exchange or securities commission, having jurisdiction.

“Guarantees” and “Guarantee” have the meaning ascribed thereto in Section 8.

“Hedging Contracts” means any agreement relating to a transaction of a type commonly considered to be a derivative or hedging transaction or any combination of such transactions, in each case, whether relating to one or more commodities, currencies, interest, securities or other matters, including commodity futures trading, forward sale and/or purchase contracts, spot-deferred contracts, option contracts or trading, metals trading, precious metal loans, fixed price offtake agreements or other exchange, swap, forward, cap, collar, floor, option or other hedging or similar agreement or any combination thereof, or any other similar transactions.

“Hedging Obligations” means all liabilities and other obligations, present or future, direct or indirect, absolute or contingent, matured or unmatured, at any time or from time to time due or accruing due and owing by or otherwise payable by an Obligor under, in connection with or pursuant to any and all Hedging Contracts.

“Indebtedness” means, with respect to each Obligor, all and any indebtedness of such Obligor, whether absolute or contingent.

“Indemnified Taxes” means all Taxes other than Excluded Taxes.

“Indemnities” means, collectively, the indemnity agreements made by the Obligors in favour of the Sureties in respect of the surety or performance bonds to be provided to the EPA and referred to in paragraph (iv) of the definition of Permitted Indebtedness, and “Indemnity” means any one of them.

“Insolvency Event” means, in respect of any Person, any one or more of the following events or circumstances whereby such Person (i) becomes insolvent or generally does not or becomes unable to pay its debts or meet its liabilities as the same become due; (ii) admits in writing its inability to pay its debts generally or declares any general moratorium on its indebtedness or proposes a compromise or arrangement between it and any class of its creditors or makes a general assignment for the benefit of creditors; (iii) institutes or has instituted against it any proceeding seeking (x) to adjudicate it as bankrupt or insolvent, (y) liquidation, dissolution, winding-up, administration, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief under any Debtor Relief Law, or (z) the entry of an order for relief or the appointment of or the taking of possession by, a receiver, receiver-manager, administrator, custodian, monitor, trustee or other similar official for the Person or any substantial part of its respective property and, in the case of any such proceeding instituted against it (but not instituted by it) either such petition, application or proceeding continues undismissed, or unstayed and in effect, for a period of forty-five (45) days after the institution thereof, such Person fails to diligently and actively oppose such proceeding, or any of the actions sought in such proceeding (including the entry of an order for relief against it or the appointment of a receiver, receiver-manager, administrator, custodian, monitor, trustee or other similar official for it or for any substantial part of its properties and assets) occurs, or such Person files an answer admitting the material allegations of a petition or motion filed against it in any such proceeding; (iv) takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described in the foregoing paragraphs (i) through (iii) or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner in defense thereof.; or (v) such Person’s working capital is negative in its most recent annual financial statements and quarterly financial statements, where working capital is the current assets less the current liabilities (both as defined by US GAAP).

“Legal Proceedings” means any action, suit, proceeding, demand, assessment, judgment, litigation, hearing, Claim, grievance, arbitration or administrative proceeding or other proceeding or dispute resolution process and includes any appeal, settlement or compromise relating then or review and any application for same.

“Lien” means, (a) with respect to any asset, any mortgage, deed of trust, lien, pledge, hypothec (whether movable or immovable), hypothecation, encumbrance, charge, security interest, adverse claim, defect to title or right of set off in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease, title retention agreement or consignment agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to any asset, (c) any purchase option, call or similar right of a third party with respect to such asset, (d) any netting arrangement, defeasance arrangement or reciprocal fee arrangement, and (e) any other arrangement having the effect of providing security.

“Loan Life Coverage Ratio” means, with respect to the incurrence by any Obligor of any proposed Funded Debt, the ratio of A to B, where:

“A” is the net present value of CFADS over the term to maturity of the proposed Funded Debt (calculated using a discount rate equal to the interest rate payable on such proposed Funded Debt); and

“B” is the sum of (i) the aggregate principal amount of the proposed Funded Debt, plus (ii) the aggregate principal amount of any outstanding Funded Debt payable by, assumed by or guaranteed by any Obligor on a consolidated basis that is not being refinanced by the proposed Funded Debt.

For greater certainty “B” shall exclude the delivery obligations under the Stream and the Obligors’ obligations under the Royalty.

“Material Adverse Effect” means any event, occurrence, change or effect that, when taken individually or together with all other events, occurrences, changes or effects:

provided that (x) changes to commodity prices and (y) events, occurrences, changes or effects affecting operators of mining and processing facilities in the US similar to those related to the Project generally, which do not have a disproportionate effect on the Obligors, shall not be a Material Adverse Effect or be taken into account in determining whether there has been or will be a Material Adverse Effect.

“Maturity Date” has the meaning ascribed thereto in the first paragraph of this Debenture.

“Mine” has the meaning set forth in Section 2(b).

“Mining Rights” means any mining claims, mining leases, mineral claims, mining concessions, mineral concessions, exploration permits or licenses, mining licenses, forms of mineral tenure or other rights to Products or to access and work upon lands, such as ownership and ancillary rights, surface rights, leasing agreements, lands temporal occupation agreements or otherwise, for the purpose of exploring, exploiting or benefiting Products, under the terms of Applicable Laws, whether contractual, statutory or otherwise, or any interest therein whether now owned or hereafter acquired. “Mining Rights” includes any amendments, relocations, adjustments, resurvey, additional locations, consolidation, derived rights or conversions of, or any renewal, replacement, amendment or other modification or extensions of any of the foregoing.

“Mortgage” means the mortgage, assignment of production, assignment of leases and rents, security agreement, financing statement and fixture filing dated as of January 28, 2022 between Mine Owner and the Security Agent; as amended by the Second Omnibus Amendment and as the same may be further amended, amended and restated, modified, supplemented or replaced from time to time.

“Obligations” means all indebtedness, liabilities and other obligations of Obligors to Debentureholder hereunder and under the other Credit Documents.

“Obligors” means, collectively, Debtor and Guarantor and “Obligor” means any one of them.

“Other Rights” means all licenses, approvals, authorizations, consents, rights (including surface rights, access rights and rights of way), privileges, concessions or franchises held by the Obligors or required to be obtained from any Person (other than a Governmental Authority), for the construction, development and operation of the Mine, as such construction, development and operation is contemplated by the current or then applicable development or mine plan, as the case may be.

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Debenture or any other Credit Document;

“Pending Event of Default” means an event which, but for the requirement for the giving of notice, lapse of time, or both, or, but for the satisfaction of any other condition subsequent to that event, would constitute an “Event of Default”.

“Permitted Indebtedness” means:

“Permitted Liens” means:

“Person” shall be broadly interpreted and includes an individual, body corporate, partnership, joint venture, trust, association, unincorporated organization, any Governmental Authority or any other entity recognized by law.

“PF Obligations” means, collectively, all indebtedness, liabilities and other obligations, present or future, direct or indirect, absolute or contingent, matured or unmatured, at any time or from time to time due or accruing due and owing by or otherwise payable by an Obligor to the Sprott Entities, or any of them, under, in connection with or pursuant to the Project Finance Documents (including the Obligations and all such indebtedness, liabilities and obligations that accrue after the commencing by or against any Obligor of any insolvency or similar proceeding).

“Positive CFADS Test” means, as of last day of any calendar quarter, the achievement by the Obligors on a consolidated basis of positive cumulative CFADS for that calendar quarter and each of the preceding three calendar quarters.

“Prepayment Interest Premium” means, as of the date of prepayment or repayment in accordance with Section 3.1 or Section 13, as applicable, an amount equal to twelve (12) months interest on the Principal Amount calculated in accordance with Section 2(c) less the amount of interest received by Debentureholder on the Principal Amount prior to the date of prepayment.

“Principal Amount” has the meaning ascribed thereto in the first paragraph of this Debenture less any payments on account of principal or reduction of principal by way of conversion, made from time to time.

“Products” means any and all metals, minerals and products or by-products thereof, of whatever kind and nature and in whatever form or state, in, under or upon the surface or subsurface of the Property (including ore, metals, precious metals, base metals, uranium, industrial minerals, concentrates, gems, diamonds, commercially valuable rock, aggregate, clays and other minerals that are mined, excavated, extracted, recovered or otherwise produced from the Property and any ore, concentrates and other products resulting from the milling, processing or other beneficiation of such metals, minerals, products and by-products).

“Project” means the construction and development of the Mine, including the acquisition of the Mine and the settlement of liabilities owing to the EPA, when due.

“Project Assets” means, collectively:

“Project Finance Documents” means the Series 2 Convertible Debentures (including this Debenture), the Series 1 Convertible Debentures, the Royalty Convertible Debenture, the Exclusivity Agreement, the ROFR Agreement, the Royalty Put Option, the Stream, the Security granted in connection herewith and therewith and all other agreements, instruments and documents from time to time (both before and after the date of this Debenture) delivered to or in favour of any Sprott Entity in connection with any of the foregoing agreements and includes without limitation any agreement designated from time to time by the Obligors and the Security Agent as a “Project Finance Document” for purposes of the Security.

“Project Mining Claims” means the Mining Rights described in Exhibit “E”.

“Property” means, collectively:

“Quarter End” means the last day of each of March, June, September and December of each calendar year.

“Real Property” means the Property and all other interests in and rights to property described in Exhibits “A-1”, “A-2” and “A-3”to the Mortgage.

“Related Party” means, with respect to any Obligor, any director, officer, employee, shareholder, partner or Affiliate of any Obligor or any other Person not dealing at arm’s length with such Obligor (within the meaning of the Income Tax Act (Canada)).

“Required Authorizations” means any and all Authorizations required to be obtained by any Obligor for the construction, development and operation of the Mine, as such construction, development and operation is contemplated by the current or then applicable development or mine plan, as the case may be.

“Restricted Person” means any Person that:

“ROFR Agreement” means the ROFR agreement dated as of January 7, 2022 between [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.] and the Obligors, as amended by First Omnibus Amendment and the Second Omnibus Amendment and as the same may be further amended, amended and restated, modified, supplemented or replaced from time to time.

“Royalty” means a gross revenue royalty on all minerals produced and sold from the Project Mining Claims granted by the Obligors to a Sprott Entity and to be entered into pursuant to the Royalty Convertible Debenture.

“Royalty Convertible Debenture” means the secured royalty convertible debenture in the principal amount of US$8,000,000 issued by the Obligors in favour of [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.], as amended by First Omnibus Amendment and the Second Omnibus Amendment, and as the same may be further amended, amended and restated, supplemented or modified from time to time.

“Royalty Put Option” means a royalty put option agreement to be entered into between the Obligors and the holder of the Royalty Convertible Debenture pursuant to which the Obligors agree that the holder of the Royalty may require the Obligors to repurchase the Royalty upon the occurrence of any Event of Default under any Series 1 Convertible Debentures or any Series 2 Convertible Debenture for a purchase price of US$8 million in consideration of the holder of the Royalty Convertible Debenture agreeing to elect to receive the Royalty in satisfaction of the principal amount owing under the Royalty Convertible Debenture on or before the advance of the deposit under the Stream Agreement.

“Second Omnibus Amendment” means the second omnibus amendment agreement dated as of the date hereof between the Obligors, the Security Agent and certain other Sprott Entities.

“Securities Pledge Agreement” means the pledge agreement dated as of January 7, 2022 made between the Debtor and the Security Agent, as amended by First Omnibus Amendment and the Second Omnibus Amendment and as the same may be further amended, amended and restated, modified, supplemented or replaced from time to time.

“Security” means, collectively, (i) any one or more guarantees made from time to time by an Obligor in favour of the Sprott Entities or any of them, in respect of any Obligations; and (ii) any one or more assignments, deeds of trust, mortgages, account control agreements, pledges and other security agreements, determined by the Security Agent, acting reasonably, pursuant to which an Obligor grants to the Security Agent for the benefit of the Sprott Entities mortgages, charges, pledges and/or security interests in all or some of its present and after acquired property as security for the PF Obligations, in each case, in form and substance satisfactory to the Security Agent acting reasonably.

“Security Agent” means [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.], an Ontario limited partnership, in its capacity as security agent for the benefit of the Sprott Entities under the Security, and any successor agent appointed pursuant to the Security Sharing Agreement, and their successors and permitted assigns

“Security Agreement” means the security agreement dated January 28, 2022 and made by the Obligors in favour of the Security Agent, as amended by the Second Omnibus Amendment, and as the same may be further amended, amended and restated, modified, supplemented or replaced from time to time.

“Security Sharing Agreement” means the security sharing agreement dated January 28, 2022 between the Security Agent, the holder of the Royalty Convertible Debenture, each CD Holder and other Sprott Entities party thereto from time to time, as creditors, and acknowledged and agreed by the Obligors, as amended by the Second Omnibus Amendment and as the same may be further amended, restated, supplemented or modified from time to time.

“Series 1 CD Holders” means the holders from time to time of the Series 1 Convertible Debentures.

“Series 1 Convertible Debentures” means the secured convertible debentures in the aggregate principal amount of $6,000,000.00 bearing interest at 7.5% per annum payable quarterly in arrears, issued on January 28, 2022 by the Obligors and convertible at the option of the holder into Common Shares.

“Series 2 CD Holders” means the holders from time to time of the Series 2 Convertible Debentures (including Debentureholder).

“Series 2 Convertible Debentures” means, collectively, the series 2 secured convertible debentures (including this Debenture), in the initial aggregate principal amount of up to US$20,000,000.00, that bear interest at 10.5% per annum payable quarterly in arrears, issued during the period commencing June 17, 2022 and ending on the date that is 45 days thereafter (or such later date as [Redacted – Affiliate of Sprott Private Resource Streaming & Royalty Corp.] may agree in its sole discretion) and convertible at the option of the holder into Common Shares.

“Sprott Entities” means, collectively, the Administrative Agent, the Security Agent, the Series 1 CD Holders, the Series 2 CD Holders, any Affiliate of Sprott Inc. and any fund managed or sub-managed by an Affiliate of Sprott Inc. which in each case is party to a Project Finance Document together with any successor, assign or transferee thereof that is party from time to time to any Project Finance Document and “Sprott Entity” means any one of them.

“Stock Exchange” means the CSE or any stock exchanges upon which the Common Shares are listed from time to time.

“Stream” means a metals stream agreement to be entered into between the Obligors and a Sprott Entity pursuant to which an Obligor will agree to sell and the Sprott Entity will agree to purchase an agreed amount of refined metals produced from the Project.

“Stream Advance Date” means the date upon which the initial upfront deposit is paid by a Sprott Entity to an Obligor pursuant to the Stream.

“Subsidiary” means each Person directly or indirectly Controlled by Debtor.

“Sureties” means, collectively, Northbridge General Insurance Corporation, Trisura Guarantee Insurance Company, Trisura Insurance Company and any other issuer of surety or performance bonds to be provided to the EPA and referred to in paragraph (iv) of the definition of Permitted Indebtedness, and “Surety” means any one of them.

“Taxes” means all present or future taxes, rates, levies, royalties, imposts, duties, deductions, assessments, withholdings, dues, fees and other charges of any nature, including any interest, fines, penalties or other liabilities with respect thereto, imposed, levied, collected, withheld or assessed by any Governmental Authority (of any jurisdiction), and whether disputed or not, including sales or value-added taxes, goods and services taxes, stamp taxes and royalties.

“Total Secured Debt” means, with respect to any date and the incurrence by any Obligor of any proposed Funded Debt, the sum of (i) an amount equal to the uncredited upfront deposit (under and calculated in accordance with the Stream) multiplied by 1.5; plus (ii) the aggregate principal amount of the proposed Funded Debt to be secured by a Lien over any Project Asset, if any, plus (iii) the aggregate principal amount of any outstanding Funded Debt secured by a Lien over any Project Asset and payable by, assumed by or guaranteed by any Obligor that is not being refinanced by the proposed Funded Debt; plus (iv) the amount of any Hedging Obligations secured by a Lien over any Project Asset.

“Total Secured Debt to Total Security Percentage” means, with respect to any date and the incurrence by any Obligor of any proposed Funded Debt on such date, the ratio of Total Secured Debt to Total Security Exposure where (i) current liabilities included in the calculation of Total Security Exposure excludes any liabilities included in the calculation of Total Secured Debt, and (ii) all such calculations of Total Secured Debt and Total Security Exposure are made with respect to any Obligor on a consolidated basis.

“Total Security Exposure” means, with respect to any date, the sum of (i) the net present value (calculated using a discount rate of 8%) of (x) CFADS, plus (y) the delivery obligations under the Stream, plus (z) without duplication, any other cash flow streams of any Obligor, plus Debtor’s current assets less current liabilities (net working capital).

“Transaction Documents” means the Credit Documents and the Royalty which shall be deemed for the purpose of this definition and the context in which this definition is used, to be a valid and enforceable agreement between the Obligors and Debentureholder.

“US Dollar Equivalent Amount” means (i) with respect to the calculation of the Debtor Interest Conversion Price, the amount obtained in US dollars when the 10-day volume weighted average of the trading price in Canadian dollars referred to in paragraph (a) of the definition of “Debtor Interest Conversion Price” is converted into US dollars using the daily average rate for the exchange of Canadian dollars into US dollars of the Bank of Canada on the last of such 10 day period; and (ii) with respect to the calculation of the Debentureholder Conversion Price, the amount obtained in US dollars when the Debentureholder Conversion Price is converted into US dollars using the daily average rate for the exchange of Canadian dollars into US dollars of the Bank of Canada on Business Day prior to the date the conversion is to take place.

“US GAAP” means, in relation to any Person at any time, accounting principles generally accepted in the United States applied on a basis consistent with the most recent audited financial statements of such Person and, if applicable, its consolidated affiliates (except for changes disclosed in the notes to such financial statements).

EXHIBIT “B”

DEBTOR INTEREST CONVERSION FORM

TO: [●] [or assignee]

All terms used herein but not defined shall have the meanings ascribed thereto in the Series 2 Secured Convertible Debenture dated as of [●], 2022 issued by Silver Valley Metals Corp. and Bunker Hill Mining Corp. to [●] (the “Debenture”).

Pursuant to Section 10.1 of the Debenture, the undersigned, being the Debtor, hereby certifies as follows:

DATED this _____ day of _________________________, 20__.

EXHIBIT “C”

DEBENTUREHOLDER CONVERSION FORM

TO: Bunker Hill Mining Corp. (the “Debtor”)

REFERENCE IS MADE TO the Series 2 Secured Convertible Debenture dated [●], 2022 issued by Debtor in favour of the undersigned (the “Debentureholder”) in the original principal amount of US$[●] (the “Debenture”). Capitalized terms used but not defined herein have the respective meanings ascribed to those terms in the Debenture.

THE UNDERSIGNED, being the registered Debentureholder of the Debenture hereby irrevocably:

DATED this ____ day of ___________________, 20__.

EXHIBIT “D”

OBLIGORS’ REPRESENTATIONS AND WARRANTIES

Each of Debtor and Guarantor (each an “Obligor” and collectively, the “Obligors”) hereby represents and warrants as follows to Debentureholder, and acknowledges and agrees that Debentureholder is relying upon such representations and warranties in connection with entering into of this Debenture:

Corporate Organization and Authority

Tax Matters

Non-Contravention

Regulatory Compliance

Legal Proceedings

Material Information

Project

Common Shares

Other

EXHIBIT “E”
PROJECT MINING CLAIMS

Primary Claims

This Primary Claims set contains all resource material included in the 2021 PEA Mineral Resource Estimate, as well as those areas listed in the historic 1991 reserves. Due to the inconsistent orientation and nature of the mineralization underlying the above parcels, the Primary Royalty rate will be applied to all extracted and processed mineralized material lying under and within Primary Claims’ area, up to 90 degrees nadir along the Primary Claims’ boundaries.

In order to accommodate the down-dip potential on structures included within the 2021 PEA Mineral Resource Estimate and historic 1991 historic reserves report, all material processed interstitial to existing development, along strike but within the Primary Claims’ boundary restrictions listed in the above paragraph, and continuously down-dip to the termination of the structure, the following zones will constitute Primary Claims and be assigned a 1.85% royalty rate: Shea, Tallon, Ike/Truman, Emery, J, Mac, Francis/FW Francis. These names are taken to be the names used during past production and denote discrete mineralized structures. This rule is added to the overlying royalty rate’s material restrictions to reflect a more typical “Apex Law” situation for tabular mineralized zones and applies only to those structures listed above. Splays and associated structures that connect geologically to those listed above will receive the Primary Royalty rate of the main structure.

GGS Claims

The GGS Royalty rate will apply to all GGS Claims either partly or wholly-covered by the ground geophysical survey announced on June 16, 2021

Residual Claims