HYCROFT MINING HOLDING CORP [HYMCL] Filings

10-Q 1 hymc-20230930.htm 10-Q hymc-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			FORM 10-Q


			(Mark One)


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38387


			HYCROFT MINING HOLDING CORPORATION
			(Exact name of registrant as specified in its charter)


Delaware		82-2657796
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
	4300 Water Canyon Road, Unit 1 Winnemucca, Nevada 89445
	(Address of principal executive offices) (Zip code)
	(775) 304-0260
	(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	HYMC	The Nasdaq Stock Market LLC
Warrants to purchase common stock	HYMCW	The Nasdaq Stock Market LLC
Warrants to purchase common stock	HYMCL	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None



			Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
			Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
			Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
			Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company


			If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



			Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒


			As of October 30, 2023, there were 202,132,839 shares of the Company’s common stock and no shares of the Company’s preferred stock issued and outstanding.

HYCROFT MINING HOLDING CORPORATION

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


			Page
PART	ITEM
I	1	Financial Statements	3
	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	3	Quantitative and Qualitative Disclosures about Market Risk	32
	4	Controls and Procedures	33

II	1	Legal Proceedings	35
	1A	Risk Factors	35
	2	Unregistered Sales of Equity Securities and Use of Proceeds	36
	3	Defaults Upon Senior Securities	36
	4	Mine Safety Disclosures	36
	5	Other Information	36
	6	Exhibits	37
		Signatures	38

ITEM I. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS


			Page
Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets			4
Unaudited Condensed Consolidated Statements of Operations			5
Unaudited Condensed Consolidated Statements of Cash Flows			6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity			7
Notes to Unaudited Condensed Consolidated Financial Statements			9

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HYCROFT MINING HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	September 30, 2023		December 31, 2022
	(unaudited)
Assets:
Cash and cash equivalents	$	106,911	$	141,984
Prepaids and deposits – Note 3	3,674		2,840
Materials and supplies inventories, net – Note 4	2,812		2,808
Income tax receivable	1,530		1,530
Interest receivable	518		459
Accounts receivable	—		2,771
Current assets	115,445		152,392
Property, plant, and equipment, net – Note 5	53,533		54,832
Restricted cash – Note 6	35,087		33,982
Assets held for sale – Note 7	7,148		7,148
Prepaids – Note 3	600		600
Total assets	$	211,813	$	248,954
Liabilities:
Accounts payable and accrued expenses – Note 8	$	2,542	$	5,644
Debt, net – Notes 9 and 20	2,328		2,328
Contract liabilities – Note 10	1,150		1,050
Other liabilities – Note 11	2,438		3,011
Current liabilities	8,458		12,033
Debt, net – Notes 9 and 20	140,041		132,690
Deferred gain on sale of royalty	29,837		29,837
Asset retirement obligation – Note 12	10,860		10,302
Warrant liabilities – Notes 13 and 20	21		786
Other liabilities – Note 11	17		—
Total liabilities	189,234		185,648
Commitments and contingencies – Note 22
Stockholders’ equity – Note 14
Common stock, $0.0001 par value; 1,400,000,000 shares authorized; 202,132,839 issued and outstanding at September 30, 2023, and 200,270,659 issued and outstanding at December 31, 2022	20		20
Additional paid-in capital	736,220		733,437
Accumulated deficit	(713,661)		(670,151)
Total stockholders’ equity	22,579		63,306
Total liabilities and stockholders’ equity	$	211,813	$	248,954

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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HYCROFT MINING HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues – Note 15	$	—	$	8,758	$	—	$	21,755
Cost of sales:
Production costs	—		8,803		—		22,020
Depreciation and amortization – Note 2	—		1,025		—		2,577
Mine site period costs – Note 2	—		1,409		—		10,429
Total cost of sales	—		11,237		—		35,026
Operating expenses:
Projects, exploration, and development	7,200		7,011		15,974		8,200
General and administrative	2,765		3,032		9,810		11,352
Mine site period costs – Note 2	2,694		—		9,325		—

Gain on settlement of accrued liability – Note 8	—		—		(1,151)		—
Depreciation and amortization – Note 2	726		—		2,155		—
Accretion – Note 12	186		102		558		306

Loss from operations	(13,571)		(12,624)		(36,671)		(33,129)
Other (expense) income:
Interest expense – Note 9	(4,698)		(4,459)		(13,721)		(14,003)
Interest income	2,100		826		6,159		846
Fair value adjustment to warrants – Notes 13 and 20	1		1,133		182		(482)


Gain (loss) on sale of equipment and supplies inventories, net of commissions(1)	456		(725)		541		(123)
Net loss	$	(15,712)	$	(15,849)	$	(43,510)	$	(46,891)



Loss per share:
Basic – Note 18	$	(0.08)	$	(0.08)	$	(0.22)	$	(0.29)
Diluted – Note 18	$	(0.08)	$	(0.08)	$	(0.22)	$	(0.29)
Weighted average shares outstanding:
Basic – Note 18	201,954,021		199,207,092		201,021,368		159,607,217
Diluted – Note 18	201,954,021		199,207,092		201,021,368		159,607,217

(1)Certain items from prior years were reclassified in the financial statements to conform with the current year presentation.

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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HYCROFT MINING HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows used in operating activities:
Net loss	$	(43,510)	$	(46,891)
Adjustments to reconcile net loss for the period to net cash used in operating activities:
Non-cash portion of interest expense – Note 9	9,096		10,129
(Gain) loss on fair value adjustment for warrant liabilities – Notes 13 and 20	(182)		482
Gain on settlement of accrued liability – Note 8	(1,151)		—
Depreciation and amortization – Notes 2 and 5	2,155		2,577
Stock-based compensation – Note 16	2,200		1,750

Accretion – Note 12	558		306
Gain (loss) on sale of equipment, net of commissions(1)	(541)		123
Changes in operating assets and liabilities:
Accounts receivable	2,771		(978)

Interest receivable	(59)		(294)
Production-related inventories	—		8,632
Materials and supplies inventories, net – Note 4	(4)		235
Prepaids – Note 3	(1,392)		(1,880)
Accounts payable and accrued expenses – Note 8	(1,416)		(3,835)
Contract liabilities – Note 10	100		6,682
Other liabilities – Note 11	(556)		(1,401)
Net cash used in operating activities	(31,931)		(24,363)
Cash flows (used in) provided by investing activities:
Additions to property, plant, and equipment	(851)		(913)
Proceeds from sale of equipment	559		2,007
Proceeds from assets held for sale	—		439
Net cash (used in) provided by investing activities	(292)		1,533
Cash flows (used in) provided by financing activities:
Principal payments on debt	(1,650)		(25,506)
Principal payments on notes payable	(95)		(94)
Proceeds from issuance of common stock and warrants, net of issuance costs – Note 14	—		188,860
Net cash (used in) provided by financing activities	(1,745)		163,260
Net (decrease) increase in cash, cash equivalents, and restricted cash	(33,968)		140,430
Cash, cash equivalents, and restricted cash, beginning of period	175,966		46,635
Cash, cash equivalents, and restricted cash, end of period	$	141,998	$	187,065
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	106,911	$	153,403
Restricted cash	35,087		33,662
Total cash, cash equivalents, and restricted cash	$	141,998	$	187,065

(1)Certain items from prior years were reclassified in the financial statements to conform with the current year presentation.

See Note 21 – Supplemental Cash Flow Information for additional details.

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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HYCROFT MINING HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)


	Common Stock			Additional Paid-in Capital	Accumulated Deficit		Total Stockholders’ (Deficit) Equity
	Shares	Amount
Balance at January 1, 2022(1)	60,433,455	$	6		$	540,823	$	(609,323)	$	(68,494)
Issuance of common stock and warrants – Note 14	136,370,064	14			189,398		—		189,412
Stock-based compensation costs	—	—			391		—		391
Vesting of restricted stock units	—	—			37		—		37
Net loss	—	—			—		(22,060)		(22,060)
Balance at March 31, 2022	196,803,519	$	20		$	730,649	$	(631,383)	$	99,286
Issuance of common stock and warrants – Note 14	—	—			(2,226)		—		(2,226)
Stock-based compensation costs	—	—			619		—		619
Stock issuance – other	137,500	—			158		—		158
Vesting of restricted stock units	460,858	—			40		—		40
Net loss	—	—			—		(8,982)		(8,982)
Balance at June 30, 2022	197,401,877	$	20		$	729,240	$	(640,365)	$	88,895
Issuance of common stock and warrants – Note 14	—	—			(75)		—		(75)
Vesting of restricted stock units	654,104	—			650		—		650
5-Year Private Warrants transferred to 5-Year Public Warrants	—	—			18		—		18
Stock issuance – other	1,714,678	—			1,749		—		1,749
Stock-based compensation costs	—	—			727		—		727
Net loss	—	—			—		(15,849)		(15,849)
Balance at September 30, 2022	199,770,659	$	20		$	732,309	$	(656,214)	$	76,115

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	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at January 1, 2023(1)	200,270,659	$	20	$	733,437	$	(670,151)	$	63,306

Stock-based compensation costs	—	—		608		—		608

5-Year Private Warrants transferred to 5-Year Public Warrants	—	—		531		—		531
Net loss	—	—		—		(13,909)		(13,909)
Balance at March 31, 2023	200,270,659	$	20	$	734,576	$	(684,060)	$	50,536

Stock-based compensation costs	—	—		952		—		952
Vesting of restricted stock units	1,683,362	—		—		—		—
5-Year Private Warrants transferred to 5-Year Public Warrants	—	—		15		—		15
Net loss	—	—		—		(13,889)		(13,889)
Balance at June 30, 2023	201,954,021	$	20	$	735,543	$	(697,949)	$	37,614

Vesting of restricted stock units	178,818	—		—		—		—
5-Year Private Warrants transferred to 5-Year Public Warrants	—	—		37		—		37
Stock-based compensation costs	—	—		640		—		640
Net loss	—	—		—		(15,712)		(15,712)
Balance at September 30, 2023	202,132,839	$	20	$	736,220	$	(713,661)	$	22,579

(1)The opening balance of shares of common stock outstanding for both periods presented reflects an increase of 60 shares of common stock for an adjustment made to the Company’s share ledger by its recordkeeper related to a transaction that occurred in May 2020.

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

1. Company Overview

Hycroft Mining Holding Corporation and its subsidiaries (collectively, “Hycroft”, the “Company”, “we”, “us”, “our”, “it”, or “HYMC”) is a U.S.-based gold and silver company that is focused on exploring and developing the Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. The Hycroft Mine is located in the State of Nevada and the Company’s corporate office is located in Winnemucca, Nevada.

The Company restarted pre-commercial scale open pit mining operations at the Hycroft Mine during the second quarter of 2019 and began producing and selling gold and silver during the third quarter of 2019. The Company operated the Hycroft Mine until November 2021, when it discontinued active mining operations as a result of the then-current and expected ongoing cost pressures for many of the reagents and consumables used at the Hycroft Mine and to further determine the most effective processing method for the sulfide ore. In March 2023, the Company, along with its third-party consultants, completed and filed the Hycroft Property Initial Assessment Technical Report Summary Humboldt and Pershing Counties, Nevada (“2023 Hycroft TRS”) that included a mineral resource estimate utilizing a pressure oxidation (“POX”) process for sulfide mineralization and heap leaching process for oxide and transition mineralization. The Company will continue to build on the work and investigate opportunities identified through progressing the technical and data analyses leading up to the 2023 Hycroft TRS.

In March 2022, the Company completed an equity private placement and an at-the-market public offering program (“ATM Program”) that raised gross proceeds of $194.4 million before issuance costs. The Company has used and will continue to use a portion of the proceeds from these equity offerings to conduct additional exploration, with a focus on higher-grade opportunities identified during 2021 exploration drilling, and a systematic approach to develop a better understanding of the Hycroft Mine deposit, including potential feeder systems.

2. Summary of Significant Accounting Policies

Basis of presentation

These Unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, these Financial Statements do not include all information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. These Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto as of and for the year ended December 31, 2022 (the “2022 Audited Financial Statements”), filed as a part of the Company’s annual report on Form 10-K filed with the SEC on March 28, 2023. The Company continues to follow the accounting policies set forth in the 2022 Audited Financial Statements, with updates discussed below. In the opinion of management, the accompanying Financial Statements include all adjustments that are necessary for a fair presentation of the Company’s interim financial position, operating results, and cash flows for the periods presented.

During the year ended December 31, 2022, the Company completed processing of gold and silver ore previously placed on leach pads prior to ceasing mining operations in November 2021. As a result, the Company did not generate Revenues or incur Cost of sales during the three and nine months ended September 30, 2023. Accordingly, effective January 1, 2023, the Company began reporting amounts for Mine site period costs and Depreciation and amortization as Operating expenses as this presentation aligns with the manner in which the business is currently viewed and managed while the Company conducts activities for developing the Hycroft Mine and recommencing mining operations.

Use of estimates

The preparation of the Financial Statements requires management to make estimates and assumptions that affect amounts reported in these Financial Statements and accompanying notes. The more significant areas requiring the use of management estimates and assumptions relate to the useful lives of long-lived assets; future mining and processing plans; environmental reclamation and closure costs and timing; deferred taxes and related valuation allowances; estimates of the fair value of liability classified warrants; and estimates of fair value for long-lived assets, Assets held for sale, and financial instruments. The Company bases its estimates on historical experience and other assumptions, including drilling and assay data that are believed to be reasonable at the time the estimate is made. Actual results may differ from amounts estimated in these Financial Statements, and such differences could be material. Accordingly, amounts presented in these Financial Statements may not be indicative of results that may be expected for future periods.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Recently adopted accounting pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For emerging growth companies, the new guidance is effective for annual periods beginning after January 1, 2023. The Company adopted ASU 2016-13 as of January 1, 2023, with no material impact on its Financial Statements or the related disclosures, as all outstanding Accounts receivable have been collected.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses; Topic 815, Derivatives and Hedging; and Topic 825, Financial Instruments (“ASU 2019-04”). ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. For emerging growth companies, the new guidance is effective for annual periods beginning after January 1, 2023. The Company adopted ASU 2019-04 as of January 1, 2023, with no impact on its Financial Statements or the related disclosures, as all outstanding Accounts receivable have been collected, and as such, there is no need to assess allowance for doubtful accounts.

In March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform and was effective for all entities upon issuance on March 12, 2020 through December 31, 2022. ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, defers the expiration date of Topic 848 to December 31, 2024 to realign with the revised cessation date for LIBOR. The guidance permits a company to elect certain optional expedients and exceptions when affected by the changes in reference rate reform. As of July 1, 2023, the Company amended the Second Amended and Restated Credit Agreement, dated as of March 30, 2022, by and between the Company and Sprott Private Resource Lending II (Collector), LP, Sprott Resource Lending Corp., and certain subsidiaries of the Company as guarantors (“Second A&R Agreement”), to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”) by entering into the Second Amendment to Second A&R Agreement (“Second Amendment to Second A&R Agreement”). The Company has elected to adopt the optional expedients, which allow for the update from LIBOR to SOFR in the Second A&R Agreement to be accounted for as a modification rather than an extinguishment. The Company does not expect any further impact to the Financial Statements as the Second A&R Agreement is the only debt instrument that references LIBOR.

New accounting pronouncements not yet adopted

In March 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities to Contractual Sale Restrictions (“ASU 2022-03”). For emerging growth companies, the new guidance is effective for annual periods beginning after December 15, 2023. As the Company qualifies as an emerging growth company, the Company plans to take advantage of the deferred effective date afforded to emerging growth companies. The Company is currently evaluating the impact that adopting this update will have on its Financial Statements and related disclosures.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

3. Prepaids and Deposits

The following table provides the components of current and non-current Prepaids and deposits (in thousands):


	September 30, 2023		December 31, 2022
Current prepaids and deposits:
Prepaids:
Insurance	$	2,181	$	1,221
Mining claims fees and permit fees	688		940

License fees	376		287
Other	193		154
Deposits	236		238
Total current prepaids and deposits	$	3,674	$	2,840

Non-current prepaids:
Royalty – advance payment on Crofoot Royalty	$	600	$	600

4. Materials and Supplies Inventories, Net

At both September 30, 2023 and December 31, 2022, Materials and supplies inventories, net was $2.8 million. The Company maintains inventory reserves to account for potential losses due to inventory obsolescence, damage, or other factors that could affect the value of its inventory. As of September 30, 2023, the Company’s inventory reserves were sufficient, and no further write-down was necessary.

5. Property, Plant, and Equipment, Net

The following table provides the components of Property, plant, and equipment, net (in thousands):


	Depreciation Life or Method	September 30, 2023		December 31, 2022
Production leach pads	Units-of-production	$	11,190	$	11,190
Test leach pads	18 months	6,241		6,241
Process equipment	5 - 15 years	17,556		17,302
Buildings and leasehold improvements	10 years	9,403		9,280
Mine equipment	5 - 7 years	5,070		4,872
Vehicles	3 - 5 years	1,700		1,578
Furniture and office equipment	7 years	522		370
Mineral properties(1)	Units-of-production	50		—
Construction in progress and other		35,655		35,721
		87,387		86,554
Less, accumulated depreciation and amortization		(33,854)		(31,722)
Total		$	53,533	$	54,832

(1)During the nine months ended September 30, 2023, the Company purchased a 50% undivided interest in patented mining claims located in Pershing County, Nevada for cash consideration of $0.1 million.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

During the three and nine months ended September 30, 2023, there were no events or changes in circumstances that would have required the Company to evaluate the current carrying value of its Property, plant, and equipment, net for recoverability. Depreciation expense related to Property, plant, and equipment, net was $0.7 million and $2.2 million for the three and nine months ended September 30, 2023, respectively, and $0.8 million and $2.7 million for the three and nine months ended September 30, 2022, respectively.

6. Restricted Cash

The following table provides the components of Restricted cash (in thousands):


	September 30, 2023		December 31, 2022
Reclamation and other surety bond cash collateral	$	35,034	$	33,929
Credit card collateral	53		53
Total	$	35,087	$	33,982

As of September 30, 2023 and December 31, 2022, reclamation and other surety bond cash collateral was $35.0 million and $33.9 million, respectively. As of both September 30, 2023 and December 31, 2022, credit card collateral was $0.1 million.

As of September 30, 2023 and December 31, 2022, the Company’s surface management surety bonds totaled $58.7 million, of which $58.3 million secured the financial assurance requirements for the Hycroft Mine. The remaining portion is related to the financial assurance requirements for the adjacent water supply well field and exploration. Events or circumstances that would necessitate the guarantor’s performance include a deteriorating financial condition or a breach of contract. Periodically, the Company may need to provide collateral to support these instruments. When the specified requirements are met, the party holding the related instrument cancels and/or returns it to the issuing entity. The Company is confident that it currently complies with all relevant bonding obligations and will be able to meet future bonding requirements through existing methods or alternative solutions as they arise.

During the three and nine months ended September 30, 2023, the Company earned $0.4 million and $1.1 million, respectively, of Interest income on a portion of its cash collateral. During the three and nine months ended September 30, 2022, the Company did not earn Interest income on cash collateral. Interest received on cash collateral balances is restricted as to its use and is included as an increase to Restricted cash with a corresponding recognition of Interest income when earned.

7. Assets Held For Sale

As of September 30, 2023 and December 31, 2022, the Company’s Assets held for sale was comprised of equipment not-in-use of $7.1 million

In August 2022, the Company entered into an Equipment Purchase Agreement to sell one ball mill and one semi-autogenous mill (“SAG mill”) for consideration of $12.0 million. The Company amended the Equipment Purchase Agreement in December 2022 to include one sub-station transformer for an additional amount of $1.6 million, for a total amended purchase price of $13.6 million, of which the Company had received payments totaling $1.2 million as of September 30, 2023. The Company further amended the Equipment Purchase Agreement in January 2023 to permit the buyer to extend the final payment of $12.5 million to June 30, 2023 at an interest rate of 5% per annum on the outstanding balance of the ball mill and SAG mill from January 1, 2023 through March 31, 2023 and 7.5% per annum on any outstanding balance from April 1, 2023 until June 30, 2023. In May 2023, the Company and the buyer agreed to further extend the final payment up to June 30, 2024 for an additional payment of $0.1 million and payments of up to $0.4 million for additional required non-refundable payments of $0.1 million for each $1.0 million of funds raised by buyer through equity or equity-like raises as described in the amendment. The Company will continue to receive interest of 7.5% per annum on the outstanding balance through June 30, 2024. Interest is calculated and paid monthly. The balance outstanding as of September 30, 2023 was $12.4 million and during the three and nine months ended September 30, 2023, the Company received $0.2 million and $0.6 million of interest, respectively, which is included in Interest income. The Company is also being reimbursed by the buyer for certain holding costs related to the ball mill, SAG mill, and sub-station transformer. These costs are recorded as an offset to the costs incurred within Mine site period costs.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2023, the Company held title to and risk of loss of the ball mill, SAG mill, and sub-station transformer and, as such, payments received to-date of $1.2 million toward the purchase of these assets have been included in Contract liabilities. See Note 10 – Contract Liabilities for additional details.

8. Accounts Payable and Accrued Expenses

The following table provides the components of Accounts payable and accrued expenses (in thousands):


	September 30, 2023		December 31, 2022
Accounts payable	$	911	$	1,773
Accrued expenses	1,631		3,871
Total	$	2,542	$	5,644

During the year ended December 31, 2021, the Company recorded a loss of $2.1 million related to a firm purchase commitment for crusher liners. The Company had entered into an agreement to purchase the crusher liners under consignment over a period of three years, commencing in August 2020. This loss represented the unfulfilled commitment obligation outstanding as of the date the Company terminated the agreement and was initially recognized in Accounts payable and accrued expenses with a corresponding recorded loss in the Statement of Operations.

During the nine months ended September 30, 2023, the Company reached a settlement agreement with the vendor, whereby the Company agreed to pay $1.0 million to the vendor and in return, the vendor agreed to release the Company from any future obligations. As a result of the negotiated settlement, the Company recorded a Gain on settlement of accrued liability of $1.2 million during the nine months ended September 30, 2023.

9. Debt, Net

Second Amendment to Sprott Credit Agreement

On March 11, 2022, the Company entered into an agreement (the “March 2022 Sprott Agreement”) with Sprott Private Resource Lending II (Collector), L.P. (the “Lender”), as arranger, with respect to the Amended and Restated Credit Agreement, dated as of May 29, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Sprott Credit Agreement”) among the Company, the Lender, certain subsidiaries of the Company, as guarantors and the other parties thereto. On March 30, 2022, the Company, the guarantors and the Lender entered into the Second A&R Agreement, that: (i) extended the maturity date for the principal obligation under the Sprott Credit Facility by two years, to May 31, 2027; (ii) provided for the Company to prepay principal under the facility in the amount of $10.0 million promptly upon the Company’s receipt of cash proceeds from the Private Placement Offering with American Multi-Cinema, Inc. (“AMC”), a significant stockholder of the Company and 2176423 Ontario Limited, a significant stockholder of the Company and an entity affiliated with Eric Sprott (the “Initial Equity Proceeds Prepayment”) (see Note 14 – Stockholders’ Equity for additional details); (iii) provided for the Company to prepay principal under the Sprott Credit Agreement in the amount of $13.9 million (representing 10% of the subsequent issuance of its equity interests consummated on or prior to March 31, 2022) (the “Subsequent Equity Proceeds Prepayments”); and (iv) eliminated the prepayment premiums otherwise payable with respect to the Initial Equity Proceeds Prepayment, the Subsequent Equity Proceeds Prepayments and all future prepayments of principal under the Sprott Credit Facility. In addition, the Company’s obligations: (i) to prepay principal with proceeds of asset sales will be credited/offset by the aggregate amount of Initial Equity Proceeds Prepayment and the Subsequent Equity Proceeds Prepayments ($23.9 million); and (ii) to maintain a minimum amount of Unrestricted Cash (as defined in the Second A&R Agreement) was increased to $15.0 million. The Company: (i) paid the previously deferred additional interest of $0.5 million; (ii) made the Initial Equity Proceeds Prepayment of $10.0 million and paid in-kind a $3.3 million fee in connection with the modification and capitalized it to principal on March 16, 2022; and (iii) made the Subsequent Equity Proceeds Prepayment of $13.9 million on March 30, 2022. The terms of the Additional Interest remained unchanged from the Sprott Credit Agreement. The Company accounted for

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

the Second A&R Agreement as a debt modification as the Second A&R Agreement did not result in debt that was substantially different.

Second Amendment to the Second A&R Agreement

On July 1, 2023, the Company entered into the Second Amendment to the Second A&R Agreement, by and between the Company, the Lender, Sprott Resource Lending Corp. (“Arranger” and together with the Lender, the “Sprott Parties”), and certain subsidiaries of the Company as guarantors. The Second Amendment to the Second A&R Agreement amends the Second A&R Agreement dated March 30, 2022, which in turn amended the Amended and Restated Credit Agreement, dated as of May 29, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Sprott Credit Agreement”).

The Second Amendment to the Second A&R Agreement: (i) corrects a cross-reference error; and (ii) implements a replacement of LIBOR with three-month Term SOFR effective July 1, 2023.

Amendment to the 10% Senior Secured Notes and Note Exchange Agreement

On March 14, 2022, the Company entered into an amendment to the 10% Senior Secured Notes and Note Exchange Agreement (the “Note Amendment”), with (i) certain direct and indirect subsidiaries of the Company as guarantors; (ii) holders of the 10% Senior Secured Notes (the “Subordinated Notes”), including certain funds affiliated with, or managed by, Mudrick Capital Management, L.P (“Mudrick”), Whitebox Advisors, LLC (“Whitebox”), Highbridge Capital Management, LLC (“Highbridge”), and Aristeia Capital, LLC (collectively, the “Amending Holders”); and (iii) Wilmington Trust, National Association, in its capacity as collateral agent. The Note Amendment amends the Note Exchange Agreement dated as of January 13, 2020 (the “Note Exchange Agreement”) and the Subordinated Notes issued thereunder in order to extend the maturity date of the Subordinated Notes from December 1, 2025 to December 1, 2027. The Note Amendment also removed the requirement that a holder receive the consent of the Company and the other holders in order to transfer any Subordinated Note. The Amending Holders constituted all of the holders of the Subordinated Notes. The Note Amendment became effective upon the closing of a private placement upon receipt of $55.9 million gross cash proceeds (before deduction of fees and expenses).

Debt covenants

The Company’s debt agreements contain representations and warranties, events of default, restrictions and limitations, reporting requirements, and covenants that are customary for agreements of these types.

As of September 30, 2023, the Company was in compliance with all financial covenants under its debt agreements.

Debt balances

The following table summarizes the components of Debt, net (in thousands):


	September 30, 2023		December 31, 2022
Debt, net, current:
Sprott Credit Agreement	$	2,200	$	2,200
Notes payable	128		128

Total	$	2,328	$	2,328

Debt, net, non-current:
Sprott Credit Agreement, net of original issue discount of $8.8 million, net of amortization	$	42,518	$	42,503
Subordinated Notes	99,160		92,080
Notes payable	108		205
Less, debt issuance costs	(1,745)		(2,098)
Total	$	140,041	$	132,690

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes the Company’s contractual payments of Debt, net, including current maturities, for the five years subsequent to September 30, 2023 (in thousands):


October 1, 2023 through December 31, 2023	$	581
2024	2,329
2025	1,154
2026	22
2027	148,850
Total	152,936
Less, original issue discount, net of accumulated amortization of $11.3 million	(8,822)
Less, debt issuance costs, net of accumulated amortization of $3.2 million	(1,745)
Total debt, net	$	142,369

Interest expense

The following table summarizes the components of recorded Interest expense (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Sprott Credit Agreement(1)	$	1,600	$	1,261	$	4,620	$	3,848
Subordinated Notes(2)	2,418		2,514		7,085		7,279
Amortization of original issue discount(3)	562		561		1,665		2,279
Amortization of debt issuance costs(3)	117		117		346		571
Other interest expense	1		6		5		26

Total	$	4,698	$	4,459	$	13,721	$	14,003

(1)The Sprott Credit Agreement bears interest monthly at a floating rate not less than 8.5% and the current effective interest rate is 14.2%.

(2)The Subordinated Notes bear interest at 10.0% per annum (non-cash), payable in-kind on a quarterly basis.

(3)The effective interest rate for the amortization of the discount and issuance costs as of September 30, 2023 was 1.6%.

10. Contract Liabilities

The following table summarizes the components of Contract liabilities (in thousands):


	September 30, 2023		December 31, 2022
Assets held for sale
Equipment not in use(1)	$	1,150	$	1,050
Total	$	1,150	$	1,050

(1)As of September 30, 2023, the Company has received payments totaling $1.2 million in accordance with the amended sales agreement for one SAG mill, one ball mill, and one sub-station transformer. The Company will receive a final payment of $12.4 million no later than June 30, 2024. See Note 7 – Assets Held for Sale for additional details.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

11. Other Liabilities

The following table summarizes the components of Other liabilities (in thousands):


	September 30, 2023		December 31, 2022
Other liabilities, current:
Accrued compensation	$	2,399	$	2,868



Excise tax liability	—		96
Accrued directors fees	39		36
Operating lease liability	—		11
Total	$	2,438	$	3,011

Other liabilities, non-current

Operating lease liability	$	17	$	—

12. Asset Retirement Obligation

The following table summarizes changes in the Company’s Asset retirement obligation (“ARO”) (in thousands):


	September 30, 2023		December 31, 2022
Balance, beginning of period	$	10,302	$	5,193
Accretion	558		408
Change in estimates	—		4,701
Balance, end of period	$	10,860	$	10,302

During the three and nine months ended September 30, 2023, the Company did not incur additional reclamation obligations associated with additional disturbances, other regulatory requirements, or changes in estimates. The Company estimates that no significant reclamation expenditures associated with the ARO will be made until 2024 and that reclamation work will be completed by the end of 2065. During the three and nine months ended September 30, 2023, there were no events or changes to the Company’s regulatory environment, new or additional disturbances, or changes in investments that would require a change to the Company’s ARO. As a result, the Company did not record any adjustments to the ARO.

13. Warrant Liabilities

The following tables summarize the Company’s outstanding warrants (in thousands, except warrant amounts):


	Balance at			Fair Value			Transfers to an			Balance at
	December 31, 2021			Adjustments(1)			5-Year Public Warrants			September 30, 2022
	Warrants	Amount		Warrants	Amount		Warrants	Amount		Warrants	Amount
5-Year Private Warrants	9,478,830	$	664	—	$	482	(75,201)	$	(18)	9,403,629	$	1,128
Seller Warrants(1)	12,721,901	5		—	—		—	—		12,721,901	5
Total	22,200,731	$	669	—	$	482	(75,201)	$	(18)	22,125,530	$	1,133


	Balance at			Fair Value			Transfers to			Balance at
	December 31, 2022			Adjustments(1)			5-Year Public Warrants			September 30, 2023
	Warrants	Amount		Warrants	Amount		Warrants	Amount		Warrants	Amount
5-Year Private Warrants	9,126,515	$	786	—	$	(182)	(8,159,424)	$	(583)	967,091	$	21

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(1)Liability classified warrants are subject to fair value remeasurement at each balance sheet date in accordance with FASB Accounting Standard Codification (“ASC”) Topic 815-40, Contracts on Entity’s Own Equity. As a result, fair value adjustments related exclusively to the Company’s liability classified warrants. See Note 20 – Fair Value Measurements for further detail on the fair value of the Company’s liability classified warrants.

The following table summarizes additional information on the Company’s outstanding warrants as of September 30, 2023:

Exercise Price

Exercise Period

Expiration Date

Warrants Outstanding(1)

5-Year Private Warrants

11.50

5 years

May 29, 2025

967,091

(1)On October 22, 2022, the Seller Warrants expired pursuant to their terms and as of such time were no longer exercisable or outstanding. The remaining 5-Year Private Warrants outstanding totaled 9,403,629 at the time of the Seller Warrants expiration.

5-Year Private Warrants

The 5-Year Private Warrants cannot be redeemed and can be exercised on a cashless basis if the 5-Year Private Warrants are held by the initial purchasers or their permitted transferees. If the 5-Year Private Warrants are transferred to someone other than the initial purchasers or their permitted transferees, such warrants become redeemable by the Company under substantially the same terms as the 5-Year Public Warrants. Since the original issue of private warrants, transfers from 5-Year Private Warrants totaled 9,272,909, including 8,159,424 during the nine months ended September 30, 2023, and therefore became classified as 5-Year Public Warrants.

14. Stockholders’ Equity

Amendment to the Company’s Second Amended and Restated Certificate of Incorporation

On March 11, 2022, the Board approved an amendment to the Company’s Second Amended and Restated Certificate of Incorporation increasing the number of authorized shares of the Company’s common stock by 1,000,000,000 to a total of 1,400,000,000 (the “Certificate of Incorporation Amendment”) and directed that the Certificate of Incorporation Amendment be submitted for consideration by the Company’s stockholders. On March 15, 2022, AMC, 2176423 Ontario Limited, and entities affiliated with Mudrick, who together constituted the holders of a majority of the issued and outstanding common stock, approved the Certificate of Incorporation Amendment by written consent. The Certificate of Incorporation Amendment became effective upon filing of the Certificate of Incorporation Amendment with the Delaware Secretary of State on April 22, 2022, 20 days after the Company commenced distribution of an Information Statement on Schedule 14C to the stockholders of the Company.

Common stock

Private placement offering

On March 14, 2022, the Company entered into subscription agreements with AMC and 2176423 Ontario Limited pursuant to which the Company agreed to sell the entities an aggregate of 46,816,480 units at a purchase price per unit of $1.193 with each unit consisting of one share of the Company’s common stock and one warrant to purchase a share of common stock and the shares issuable upon exercise of the Warrants (the “Warrant Shares”), providing for a total purchase price of approximately $55.9 million (the “Private Placement Offering”). The Warrants have an exercise price of $1.068 per Warrant Share and will expire five years after issuance. On March 15, 2022, the Private Placement Offering closed and the Company received gross proceeds of $55.9 million before deducting expenses incurred in connection therewith. Net proceeds were $53.6 million, after deducting legal and other fees of $2.3 million (including a non-cash $1.8 million financial advisor fee related to the Private Placement Offering).

At-the-market offering

On March 15, 2022, the Company implemented an ATM Program by entering into an At Market Issuance Sales Agreement (“Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”). Under the terms of the Sales Agreement, the Company may from time to time through the Agent, acting as sales agent or principal, offer and sell shares of its Class A common stock, par value $0.0001 per share, having a gross sales price of up to $500.0 million. Shares of common stock sold under the Sales Agreement were issued pursuant to the Company’s shelf registration statement on Form S-3 (No. 333-257567) that the SEC

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

declared effective on July 13, 2021, including the prospectus, dated July 13, 2021, and the prospectus supplement, dated March 15, 2022. The Company received total gross proceeds, before deducting fees and expenses of the ATM Program, of $138.6 million from the sale of 89,553,584 shares of the Company’s common stock, and approximately $361.4 million of shares of common stock remain available for future issuance under the Sales Agreement. Net proceeds to date, after deducting commissions and fees of $5.0 million were $133.5 million.

Equity Classified Warrants

The following tables summarize the Company’s outstanding equity classified warrants included in Additional paid-in capital on the Condensed Consolidated Balance Sheets (in thousands, except warrant amounts):


	Balance at December 31, 2021			Warrant Issuances			Transfers from 5-Year Private Warrants(1)			Balance at September 30, 2022
	Warrants	Amount		Warrants	Amount		Warrants	Amount		Warrants	Amount
5-Year Public Warrants	24,811,068	$	28,912	—	$	—	75,201	$	18	24,886,269	$	28,930
Public Offering Warrants	9,583,334	12,938		—	—		—	—		9,583,334	12,938
Private Placement Offering Warrants	—	—		46,816,480	25,604		—	—		46,816,480	25,604
Total	34,394,402	$	41,850	46,816,480	$	25,604	75,201	$	18	81,286,083	$	67,472


	Balance at December 31, 2022			Transfers from 5-Year Private Warrants(1)				Balance at September 30, 2023

	Warrants	Amount			Warrants	Amount			Warrants	Amount
5-Year Public Warrants	25,163,383	$	28,954		8,159,424	$	583		33,322,807	$	29,537
Public Offering Warrants	9,583,334	12,938			—	—			9,583,334	12,938
Private Placement Offering Warrants	46,816,480	25,604			—	—			46,816,480	25,604
Total	81,563,197	$	67,496		8,159,424	$	583		89,722,621	$	68,079

(1)See Note 13 – Warrant Liabilities for additional details regarding transfers from 5-Year Private Warrants.

As discussed above, pursuant to the Private Placement Offering, the Company issued 46,816,480 Warrants with an exercise price of $1.068 per Warrant Share that expire five years from the date of issuance. The Warrants are deemed freestanding, equity-linked financial instruments that do not require liability classification under ASC Topic 480-10 Overall Debt because: (1) they are not mandatory redeemable shares; (2) they do not obligate the Company to buy back shares; and (3) they are not settled in a variable number of shares. As a result, the Company allocated the gross proceeds of $55.9 million from the Private Placement Offering between the Warrants and common stock as of the closing date of March 15, 2022. The Company used the Black-Scholes option pricing model to determine the fair value of the Warrants upon the issuance date using the following assumptions:


	March 15, 2022
Expected term (years)	5
Risk-free interest rate	2.1	%
Expected volatility	118.4	%
Expected dividend yield	—

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes additional information on the Company’s outstanding warrants as of September 30, 2023:


	Exercise price		Exercise period	Expiration date	Warrants outstanding
5-Year Public Warrants	$	11.50	5 years	May 29, 2025	33,322,807
Public Offering Warrants	$	10.50	5 years	October 6, 2025	9,583,334
Private Placement Offering Warrants	$	1.068	5 years	March 15, 2027	46,816,480

15. Revenues

The table below is a summary of the Company’s gold and silver sales (in thousands, except ounces sold amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	Amount		Ounces Sold	Amount		Ounces Sold	Amount		Ounces Sold	Amount		Ounces Sold
Gold sales	$	—	—	$	8,456	4,817	$	—	—	$	21,057	11,557
Silver sales	—		—	302		15,131	—		—	698		32,010
Total	$	—		$	8,758		$	—		$	21,755

While the Company is not obligated to sell any of its gold and silver to one customer, the majority of gold and silver sales during both the three and nine months ended September 30, 2022 were to two customers. For the three and six months ended September 30, 2022, 98.9% and 51.3% of revenue was attributable to sales to one customer, respectively.

16. Stock-Based Compensation

HYMC 2020 Performance and Incentive Pay Plan (“PIPP”)

On June 2, 2022, the Company’s stockholders approved an amendment to the PIPP that increased the number of authorized shares of common stock available for issuance by 12.0 million shares of common stock. As a result, 14,508,002 shares are authorized for issuance under the PIPP. As of September 30, 2023, all awards granted under the PIPP were in the form of restricted stock units to employees, directors, or consultants of the Company. As of September 30, 2023, there were 5,135,882 shares available for issuance under the PIPP.

For restricted stock units granted prior to August 2020, a price per share was not determined upon the grant date. The number of shares of common stock of the Company to be issued upon vesting was calculated on the vesting date that was either the second or third anniversary of the date of the grant or the annual date the compensation committee determined the achievement of the corporate performance targets. Such unvested restricted stock unit awards were included in Other liabilities until each vesting date when the amount was transferred to Additional paid-in capital. As of September 30, 2023 and 2022, there were no remaining restricted stock unit grants outstanding required to be accounted for as Other liabilities. Prior to each vesting date, the Company estimated the number of shares of common stock to be issued upon vesting using the closing share price of its common stock on the last day of each reporting period as quoted on the Nasdaq Capital Market.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes the Company’s unvested share awards outstanding under the PIPP:


	Nine Months Ended September 30,
	2023	2022
Unvested at beginning of year(1)	3,547,153	2,210,911
Granted	5,016,912	3,007,069
Impact of fluctuations in share price(2)	—	(515,198)
Canceled/forfeited	(600,527)	(282,500)
Vested	(1,831,028)	(1,141,980)
Unvested end of period(1)	6,132,510	3,278,302

(1)As of September 30, 2022, unvested at the beginning of year and unvested end of period includes liability-based awards for which the number of units awarded was not determined until the vesting date. The number of liability-based award units included in this amount are estimated using the market value of the Company’s common shares as of the end of each reporting period.

(2)As of September 30, 2022, the impact of fluctuations in share price represents the difference between liability-based awards estimated as of June 30, 2022 and December 31, 2021.

17. Income Taxes

The Company’s anticipated annual tax rate is impacted primarily by the amount of taxable income associated with each jurisdiction in which its income is subject to income tax and permanent differences between the financial statement carrying amounts and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company incurred no net income tax expense or benefit for the three and nine months ended September 30, 2023 and 2022. The effective tax rate for both the three and nine months ended September 30, 2023 and 2022 was Nil. The effective tax rate differed from the statutory rate during each period primarily due to changes in the valuation allowance established to offset net deferred tax assets.

18. Loss Per Share

The table below summarizes the Company’s basic and diluted loss per share calculations (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(15,712)	$	(15,849)	$	(43,510)	$	(46,891)

Weighted average shares outstanding
Basic	201,954,021		199,207,092		201,021,368		159,607,217
Diluted	201,954,021		199,207,092		201,021,368		159,607,217

Basic loss per common share	$	(0.08)	$	(0.08)	$	(0.22)	$	(0.29)
Diluted loss per common share	$	(0.08)	$	(0.08)	$	(0.22)	$	(0.29)

Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Due to the Company’s net loss during the three and nine months ended September 30, 2023 and 2022, respectively, there was no dilutive effect of common stock equivalents because the effects of such would have been anti-dilutive. The following table summarizes the shares excluded from the weighted average number of shares of common stock outstanding, as the impact would be anti-dilutive (in thousands):


	September 30,
	2023	2022
Warrants(1)	90,690	94,296
Restricted stock units	6,133	3,278
Total	96,823	97,574

(1)See Note 13 – Warrant Liabilities for adjustments to the Seller Warrants for common stock issuable upon exercise.

19. Segment Information

The Company’s reportable segments are comprised of operating units that have revenues, earnings or losses, or assets exceeding 10% of the respective consolidated totals, and are consistent with the Company’s management reporting structure. Each segment is reviewed by the executive decision-making group to make decisions about allocating the Company’s resources and to assess their performance. The tables below summarize the Company’s segment information (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	Hycroft Mine		Corporate and Other		Total		Hycroft Mine		Corporate and Other		Total
2023

Operating costs	$	10,806	$	2,765	$	13,571	$	26,861	$	9,810	$	36,671

Loss from operations	(10,806)		(2,765)		(13,571)		(26,861)		(9,810)		(36,671)
Interest expense – Note 9	—		(4,698)		(4,698)		—		(13,721)		(13,721)
Interest income	638		1,462		2,100		1,714		4,445		6,159
Fair value adjustment to warrants – Notes 10 and 18	—		1		1		—		182		182
Gain on sale of equipment and supplies inventories, net of commissions	456		—		456		541		—		541




Net loss	$	(9,712)	$	(6,000)	$	(15,712)	$	(24,606)	$	(18,904)	$	(43,510)

2022
Revenue - Note 14	$	8,758	$	—	$	8,758	$	21,755	$	—	$	21,755
Cost of sales	11,237		—		11,237		35,026		—		35,026
Other operating costs	7,113		3,032		10,145		8,506		11,352		19,858
Loss from operations	(9,592)		(3,032)		(12,624)		(21,777)		(11,352)		(33,129)
Loss on sale of equipment and supplies inventories, net of commissions	(725)		—		(725)		(123)		—		(123)
Interest expense – Note 9	(3)		(4,456)		(4,459)		(9)		(13,994)		(14,003)
Fair value adjustments to warrants – Notes 10 and 18	—		1,133		1,133		—		(482)		(482)
Interest income	153		673		826		173		673		846



Net loss	$	(10,167)	$	(5,682)	$	(15,849)	$	(21,736)	$	(25,155)	$	(46,891)


	September 30, 2023						December 31, 2022
	Hycroft Mine		Corporate and Other		Total		Hycroft Mine		Corporate and Other		Total
Total Assets	$	74,746	$	137,067	$	211,813	$	102,057	$	146,897	$	248,954

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

20. Fair Value Measurements

Recurring fair value measurements

The following table sets forth by level within the fair value hierarchy, the Company’s liabilities measured at fair value on a recurring basis (in thousands).


	Hierarchy Level	September 30, 2023		December 31, 2022
5-Year Private Warrants	2	$	21	$	786

The 5-Year Private Warrants are valued using a Black-Scholes model that requires a variety of inputs including the Company's stock price, the strike price of the 5-Year Private Warrants, the risk-free rate, and the implied volatility. As the terms of the 5-Year Private Warrants are identical to the terms of the 5-Year Public Warrants except that the 5-Year Private Warrants, while held by certain holders or their permitted transferees, are precluded from mandatory redemption and are entitled to be exercised on a “cashless basis” at the holder’s election, the implied volatility used in the Black-Scholes model is calculated using a Monte-Carlo model of the 5-Year Public Warrants that factors in the restrictive redemption and cashless exercise features of the 5-Year Private Warrants. The Company updates the fair value calculation on at least a quarterly basis, or more frequently if changes in circumstances and assumptions indicate a change from the existing carrying value.

Items disclosed at fair value

Debt, net

The Sprott Credit Agreement and the Subordinated Notes are privately held and, as such, there is no public market or trading information available for such debt instruments. As of September 30, 2023 and December 31, 2022, the fair value of the Company’s debt instruments was $118.6 million and $130.7 million, respectively, compared to the carrying value of $141.7 million and $134.7 million as of September 30, 2023 and December 31, 2022, respectively. The fair value of the principal of the Company’s debt instruments, including capitalized interest, was estimated using a market approach in which pricing information for publicly traded, non-convertible debt instruments with speculative ratings were analyzed to derive a mean trading multiple to apply to the September 30, 2023 balances.

21. Supplemental Cash Flow Information

The following table provides supplemental cash flow information (in thousands):


	Nine Months Ended September 30,
	2023		2022
Cash interest paid	$	4,625	$	3,858

Significant non-cash financing activities:

Debt issuance costs paid in-kind	—		3,300
Liability based restricted stock units transferred to equity	—		727
Stock issuance – other	—		1,908

22. Commitments and Contingencies

Legal proceedings

From time to time the Company may be involved in various legal actions related to our business, some of which are class action lawsuits. The Company does not believe, based on currently available information, that contingencies related to any pending or threatened legal matter will have a material adverse effect on the Company’s Financial Statements, although a contingency could be material to the Company’s results of operations or cash flows for a particular period depending on its results of operations and cash flows for such period. Regardless of the outcome, litigation can have a material adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The Company expenses legal fees and other costs associated with legal proceedings as incurred. The Company assessed, in conjunction with its legal counsel, the need to record a liability related to the Complaints and determined that a loss was not probable nor reasonably estimable. Litigation accruals are recorded when, and if, it is determined that a loss related matter is both probable and reasonably estimable. Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure. No losses have been recorded during the three and nine months ended September 30, 2023 and 2022 with respect to litigation or loss contingencies.

Insurance

The Company has deductible-based insurance policies for certain losses related to general liability, workers’ compensation, automobile coverage, and directors and officers. The Company records accruals for contingencies related to its insurance policies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using historical loss development factors and actuarial assumptions followed in the insurance industry.

Financial commitments and contingencies not recorded in the Financial Statements

As of September 30, 2023 and December 31, 2022, the Company’s off-balance sheet arrangements consisted of a net smelter royalty arrangement and a net profit royalty arrangement.

Crofoot Royalty

A portion of the Hycroft Mine is subject to a 4% net profit royalty be paid to the previous owner of certain patented and unpatented mining claims (“Crofoot Royalty”). The mining lease also requires an annual advance payment of $120,000 every year mining occurs on the leased claims. All advance annual payments are credited against the future payments due under the 4% net profit royalty. An additional payment of $120,000 is required for each year total tons mined on the leased claims exceeds 5.0 million tons. As the Company ceased mining operations in November 2021, the Company was not required to pay the annual advance payment of $120,000 in 2022 or 2023. The total payments due under the mining lease are capped at $7.6 million, of which the Company has paid or accrued $3.3 million and included $0.6 million in Prepaids in the Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023.

Net smelter royalty

Pursuant to the Sprott Royalty Agreement in which the Company received cash consideration in the amount of $30.0 million, the Company granted a perpetual royalty equal to 1.5% of the Net Smelter Returns from the Hycroft Mine, payable monthly. The royalty is accounted for as a deferred gain liability. Net Smelter Returns for any given month are calculated as Monthly Production multiplied by the Monthly Average Gold Price and the Monthly Average Silver Price, minus Allowable Deductions, as such terms are defined in the Sprott Royalty Agreement. The Company is required to remit royalty payments to the payee free and clear and without any present or future deduction, withholding, charge or levy on account of taxes, except Excluded Taxes as such term is defined in the Sprott Royalty Agreement.

At both September 30, 2023 and December 31, 2022, the estimated net present value of the Company’s net smelter royalty was $146.7 million. The net present value of the Company’s net smelter royalty was modeled using the following level 3 inputs: (i) market consensus inputs for future gold and silver prices; (ii) a precious metals industry consensus discount rate of 5.0%; and (iii) estimates of the Hycroft Mine’s life-of-mine gold and silver production volumes and timing.

23. Related Party Transactions

As of September 30, 2023, Ausenco Engineering South USA, Inc. (“Ausenco”) and AMC were considered related parties. The Company’s President and Chief Executive Officer is currently a non-executive director for Ausenco’s parent company Board of Directors. Additionally, an AMC representative serves on the Company’s Board of Directors. During the three and nine months ended September 30, 2023, the Company paid an aggregate of $0.1 million to Ausenco for the preparation of the 2023 Hycroft TRS and AMC for director fees. During the three and nine months ended September 30, 2022, the Company paid $0.1 million and $1.2 million to Ausenco for work performed on preparing an Acid POX milling technical study and Nil and

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HYCROFT MINING HOLDING CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

$0.1 million to AMC for director fees. As of September 30, 2023, AMC is entitled to receive 180,069 shares of common stock upon the future vesting of restricted stock units.

Certain amounts of the Company’s indebtedness have historically, and with regard to the $80.0 million of Subordinated Notes, been held by five financial institutions. As of September 30, 2023, none of the financial institutions held more than 10% of the common stock of the Company. As of September 30, 2022, one of the financial institutions, Mudrick, held more than 10% of the common stock of the Company and, as a result, was considered a related party in accordance with ASC 850, Related Party Disclosures. For the three and nine months ended September 30, 2022, Interest expense included $1.0 million and $3.0 million, respectively, for the debt held by Mudrick and as of December 31, 2022, Mudrick held $42.9 million of Debt, net.

24. Subsequent Events

On the October 26, 2023, the Company announced a reverse stock split with a ratio of 1-for-10. The reverse stock split is scheduled to go into effect on November 14, 2023.The earnings per share figures herein have not been adjusted.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion, which has been prepared based on information available to us as of October 30, 2023, provides information we believe is relevant to an assessment and understanding of our consolidated operating results and financial condition. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 (the “Financial Statements”) and the notes thereto (the “Notes”) included in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023, as well as our other reports filed with the SEC from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2022. Terms not defined herein have the same meaning defined in the Financial Statements and the Notes.

Introduction to the Company

We are a U.S.-based gold and silver exploration and development company that owns the Hycroft Mine in Nevada, USA. We are focused on exploring the Hycroft Mine’s mining claims comprising approximately 64,085 acres, developing the Hycroft Mine in a safe, environmentally responsible, and cost-effective manner and building a multi-asset mining company. We ceased mining activities in November 2021, and completed processing of gold and silver ore previously placed on leach pads as of December 31, 2022. We do not expect to generate revenues from gold and silver sales until after further developing the Hycroft Mine and recommencing mining and processing operations.

Health and Safety

We believe safety is a core value and support that belief through our philosophy of safe work performance. Our mandatory mine safety and health programs include employee engagement and ownership of safety performance, accountability, employee and contractor training, risk management, workplace inspection, emergency response, accident investigation, anti-harassment, and program auditing. This integrated approach is essential to ensure that our employees, contractors, and visitors operate safely.

We reported no lost time incidents during the nine months of 2023 and achieved one million workhours without a lost time incident in the second quarter of 2023. The Hycroft Mine’s total recordable injury frequency rate (“TRIFR”) for the trailing 12 months, which includes other reportable incidents, is one of the metrics we use to assess safety performance, and it is well below industry averages and significantly below pre-2021 historical levels experienced at the Hycroft Mine. During the nine months of 2023, we continued our critical focus on safety, including allocating personnel, resources, workforce time, and communications to operate safely. These actions contributed to maintaining our TRIFR of Nil (0.00) at September 30, 2023 and December 31, 2022. We will continue to evolve our safety efforts as needed to keep our workforce, contractors, and visitors safe.

Executive Summary

During the third quarter of 2023, we continued Phase 2 of the 2022-2023 exploration drill program, completed portions of the metallurgical and variability test work, and continued to analyze drill assay data and information received during Phase 1 and Phase 2 of the 2022-2023 exploration drill program involving reverse circulation (“RC”) and core drilling that began in the third quarter of 2022. In March 2023, the Company completed the Hycroft Property Initial Assessment Technical Report Summary (“2023 Hycroft TRS”) utilizing a conventional crushing, grinding, and flotation circuit that generates a concentrate to be fed to a pressure oxidation (“POX”) autoclave facility commonly used for refractory gold ores.

Recent Developments

2022-2023 exploration drill program

In July 2022, the Company launched its 2022-2023 exploration drill program, which is the largest exploration program at the Hycroft Mine in nearly a decade. The 2022-2023 exploration drill program is comprised of RC drilling and core drilling. The overall focus of the 2022-2023 exploration drill program is to improve the understanding of the higher-grade intercepts, determine the sequencing of mine planning, develop opportunities to mine higher-grade ore early in the mine plan enhancing the project’s economics, and test exploration targets outside the currently known deposits. To date, results are generally higher grade than reflected in the current model. As part of Phase 2 drilling in 2023, approximately 11,100 meters of RC drilling were completed and approximately 3,000 meters of core drilling have been completed on targets within the resource area focused on enhancing project economics and approximately 1,000 meters of core drilling have been completed on exploration targets

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outside the resource area. Additional exploration work completed in advance of drilling outside of the resource area includes geophysics and soil sample programs in high priority target areas highlighted from the hyperspectral work completed in 2022.

Exploration drill permits

During the third quarter of 2023, the Company obtained drill permits for step-out exploration targets that currently lie outside of the current resource footprint, targeting potential high-grade deposits. The Company continues to identify additional high-potential exploration targets outside the current plan of operations through exploration groundwork, geophysics, and continued review of the data with the goal of enhancing our resource portfolio and identifying additional avenues for sustainable growth.

Finalized Initial Assessment Technical Report

The Company and its consultants filed the 2023 Hycroft TRS with the SEC, effective as of March 27, 2023. It provided a mineral resource estimate for the Hycroft Mine utilizing a conventional POX process. The TRS included measured, indicated, and inferred mineral resources of gold and silver, found in various types of ore. Independent Mining Consultants, Inc. created a resource block model using data from 1981 to 2022, obtained from 5,601 drill holes. These estimates comply with the SEC’s Modernization of Property Disclosures for Mining Registrants as set forth in subpart 1300 of Regulation S-K (“Modernization Rules”).

Metallurgical and variability test work

During the nine months ended September 30, 2023, the Company completed a substantial portion of the metallurgical and flotation variability test work necessary for designing a sulfide milling operation. This work established (i) a comprehensive understanding of how each geologic domain will perform during operations; and (ii) the processing components and reagents required to optimize gold and silver recoveries. Metallurgical and flotation tests produced promising results, with confirmed average flotation recoveries increasing to 89% for gold and 93% for silver, up from 80% for both in the March 2023 Technical Report. These findings inform further process development, pressure oxidation testing, and refining of crushing and grinding studies. Combined with data from the 2022-2023 exploration drill program, these results will guide mine plan design, mill circuit configuration, and ore haul truck specifications, among other engineering considerations, to enhance the value of the Hycroft Mine.

2023 Outlook

The Company’s current plan is to operate safely as it undertakes Phase 2 of the 2022-2023 exploration drill program and finalize the process flow sheet for a pre-feasibility study for recovering gold and silver from sulfide ore. Utilizing the assay results from the 2022-2023 drill program and variability test work program, the pre-feasibility study will include trade-off studies and alternative analyses. Some alternative analyses currently contemplated include evaluating grinding methods including high-pressure grinding rolls, reviewing alternative flotation cell configurations, and completing a trade-off study for roasting equipment. The pre-feasibility study is currently targeted for completion by the end of the first half of 2024.

Results of Operations

Operations

The following table provides a summary of gold and silver revenues and operating results for the Hycroft Mine (in thousands, except ounces and per ounce amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Gold revenue	$	—	$	8,456	$	—	$	21,057
Gold ounces sold	—		4,817		—		11,557
Average realized price (per ounce)	$	—	$	1,756	$	—	$	1,822

Silver revenue	$	—	$	302	$	—	$	698
Silver ounces sold	—		15,131		—		32,010
Average realized price (per ounce)	$	—	$	19.96	$	—	$	21.82

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		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Ounces recovered – gold	(oz)	—		3,480		—		14,404
Ounces recovered – silver	(oz)	—		3,743		—		34,258

Ounces sold – gold	(oz)	—		4,817		—		11,557
Ounces sold – silver	(oz)	—		15,131		—		32,010

Average realized sales price – gold	($/oz)	$	—	$	1,756	$	—	$	1,822
Average realized sales price – silver	($/oz)	$	—

HYCROFT MINING HOLDING CORP [HYMCL] Filings
HYCROFT MINING HOLDING CORP [HYMC] Filings
HYCROFT MINING HOLDING CORP [HYMCW] Filings
10-Q	[2023-10-31]
10-Q	[2023-07-26]
10-Q	[2023-05-01]
10-K	[2023-03-28]
10-Q	[2022-11-01]
10-Q	[2022-08-04]
10-Q	[2022-05-04]
S-1	[2022-04-14]
10-K	[2022-03-31]
10-Q	[2021-11-12]
10-Q	[2021-08-04]
10-Q	[2021-05-17]
10-K	[2021-03-24]
10-Q	[2020-11-09]
S-1	[2020-09-01]
10-Q	[2020-08-10]
S-1	[2020-07-13]
10-Q	[2020-05-08]
10-K	[2020-03-12]
10-Q	[2019-11-07]
10-Q	[2019-08-14]
10-Q	[2019-05-13]
10-K	[2019-03-25]
10-Q	[2018-11-13]
10-Q	[2018-08-10]
10-Q	[2018-05-14]
S-1	[2018-01-16]

HYCROFT MINING HOLDING CORP [HYMCL] Filings

HYCROFT MINING HOLDING CORP [HYMC] Filings

HYCROFT MINING HOLDING CORP [HYMCW] Filings