Company Quick10K Filing
Mudrick Capital Acquisition
Price1.00 EPS-2,307,762
Shares-0 P/E-0
MCap-0 P/FCF0
Net Debt-0 EBIT3
TEV-0 TEV/EBIT-0
TTM 2019-09-30, in MM, except price, ratios
S-1 2020-09-01 Public Filing
S-1 2020-07-13 Public Filing
10-Q 2020-06-30 Filed 2020-08-10
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-12
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-13
10-K 2018-12-31 Filed 2019-03-25
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-10
10-Q 2018-03-31 Filed 2018-05-14
S-1 2018-01-16 Public Filing
8-K 2020-09-08 Exhibits
8-K 2020-08-31 Regulation FD, Exhibits
8-K 2020-08-10
8-K 2020-07-08 Accountant
8-K 2020-07-01 Regulation FD, Exhibits
8-K 2020-06-01
8-K 2020-05-29
8-K 2020-05-14
8-K 2020-02-26
8-K 2020-02-12
8-K 2020-02-10
8-K 2020-01-13
8-K 2020-01-02
8-K 2019-12-19
8-K 2019-11-26
8-K 2018-03-08
8-K 2018-02-28
8-K 2018-02-12
8-K 2018-02-07

MUDS Filing

Note 1. Basis of Presentation
Note 2. Adjustments To The Unaudited Pro Forma Condensed Combined Balance Sheet As of December 31, 2019
Note 3. Adjustments To The Unaudited Pro Forma Condensed Statement of Operations for The Year Ended December 31, 2019
Note 4. Pro Forma Loss per Share
Note 1.Basis of Presentation
Note 2. Adjustments To The Unaudited Pro Forma Condensed Combined Balance Sheet As of March 31, 2020
Note 3. Adjustments To The Unaudited Pro Forma Condensed Statement of Operations for The Three Months Ended March 31, 2020
Note 4. Adjustments To The Unaudited Pro Forma Condensed Statement of Operations for The Year Ended December 31, 2019
Note 5. Pro Forma Loss per Share
Part II
Item 13. Other Expenses and Issuance and Distribution
Item 14. Indemnification of Directors and Officers
Item 15. Recent Sales of Unregistered Securities.
Item 16. Exhibits and Financial Statement Schedules
Item 17. Undertakings.
EX-1.1 hymc-20200814xex1d1.htm
EX-5.1 hymc-20200814xex5d1.htm
EX-23.1 hymc-20200814xex23d1.htm
EX-23.2 hymc-20200814xex23d2.htm
EX-23.4 hymc-20200814xex23d4.htm
EX-23.5 hymc-20200814xex23d5.htm
EX-23.6 hymc-20200814xex23d6.htm
EX-23.7 hymc-20200814xex23d7.htm
EX-23.8 hymc-20200814xex23d8.htm
EX-23.9 hymc-20200814xex23d9.htm
EX-99.1 hymc-20200814xex99d1.htm

Mudrick Capital Acquisition Filing 2020-09-01

S-1 1 hymc-20200814xs1.htm FORM S-1

As filed with the Securities and Exchange Commission on August 31, 2020

Registration No. 333-      

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933


HYCROFT MINING HOLDING CORPORATION


(Exact name of registrant as specified in its charter)

Delaware

    

1040

    

82-2657796

(State or Other Jurisdiction of Incorporation or Organization)

(Primary Standard Industrial Classification Code Number)

(I.R.S. Employer Identification No.)

8181 E. Tufts Ave., Suite 510

Denver, Colorado 80237

(303) 253-3267


(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Stephen M. Jones

President and Chief Executive Officer

Hycroft Mining Holding Corporation

8181 E. Tufts Ave., Suite 510

Denver, Colorado 80237

(303) 524-1947


(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Neal, Gerber & Eisenberg LLP

2 N. LaSalle Street, Suite 1700

Chicago, IL 60602

Attention: David S. Stone, Esq.

Tel: (312) 269-8000


Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

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 7(a)(2)(B) of the Securities Act.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities
to be Registered

Proposed Maximum Aggregate Offering Price(1)(2)

Amount of Registration Fee

Class A common stock, par value $0.0001 per share

$74,750,000

$9,702.55

(1)Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)

Includes Class A common stock issuable upon exercise of the underwriters’ option to purchase additional Class A common stock.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 31, 2020

Preliminary Prospectus

$65,000,000

Graphic

HYCROFT MINING HOLDING CORPORATION

Class A Common Stock

We are offering [●] shares of our Class A common stock.

Our Class A common stock and warrants are listed on the Nasdaq Capital Market under the symbols “HYMC” and “HYMCW,” respectively. The Seller warrants (as defined herein) have been approved for listing on the Nasdaq Capital Market under the symbol “HYMCZ” and will commece trading on September 1, 2020. On August 28, 2020, the closing price of our Class A common stock was $9.63 per share and the closing price of our warrants was $1.55.

We are an “emerging growth company” under federal securities laws and are subject to reduced public company reporting requirements. Investing in our Class A common stock involves a high degree of risk. See “Risk Factors” beginning on page 7 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

    

Per Share

    

Total

Public offering price

$

$

Underwriting discounts and commissions (1)

$

$

Proceeds, before expenses, to us

$

$


(1)We have also agreed to reimburse certain expenses of the underwriters. See “Underwriting” beginning on page 99 of this prospectus for additional information regarding underwriting compensation.

We have granted the underwriters an option to purchase up to an additional [●] shares of Class A common stock from us at the public offering price, less the underwriting discounts and commissions, within [●] days of this prospectus to cover over-allotments, if any.

The underwriters expect to deliver the shares of Class A common stock to investors on or about September [●], 2020, subject to customary closing conditions.


BMO Capital Markets

Stifel

Canaccord Genuity

The date of this prospectus is [●], 2020


TABLE OF CONTENTS

About This Prospectus

ii

Market, Ranking and Other Industry Data

ii

Selected Definitions

ii

Cautionary Notes Regarding Forward-Looking Statements

1

Prospectus Summary

3

The Offering

7

Risk Factors

8

Use of Proceeds

24

Capitalization

24

Dilution

25

Description of Business

27

Description of Property

42

Legal Proceedings

56

Market Price of and Dividends on Common Stock and Related Stockholder Matters

57

Management’s Discussion and Analysis of Financial Condition and Results of Operations

57

Management

76

Executive Compensation

80

Certain Relationships and Related Party Transactions

90

Security Ownership of Certain Beneficial Owners and Management

94

United States Federal Income Tax Considerations

96

Description of Securities

99

Underwriting

101

Interest of Named Experts

107

Legal Matters

107

Where You Can Find Additional Information

107

Change in Auditor

108

Index to Financial Statements

F-1

We are responsible for the information contained in this prospectus. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of our Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock. Our business, operating results or financial condition may have changed since such date.


ABOUT THIS PROSPECTUS

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”

On May 29, 2020, the entity formerly known as Mudrick Capital Acquisition Corporation (the “Company”), consummated the transactions contemplated by the Purchase Agreement, dated as of January 13, 2020, by and among the Company, MUDS Acquisition Sub, Inc. (“Acquisition Sub”) and Hycroft Mining Corporation, a Delaware corporation (the “Seller”), as amended by that certain Amendment to Purchase Agreement, dated as of February 26, 2020 (as amended, the “Purchase Agreement”). Pursuant to the Purchase Agreement, Acquisition Sub acquired all of the issued and outstanding equity interests of the direct subsidiaries of Seller and substantially all of the other assets and assumed substantially all of the liabilities of Seller, a U.S.-based gold and silver producer operating the Hycroft Mine located in the mining region of northern Nevada. In connection with the completion of the business combination transaction contemplated by the Purchase Agreement (the “Recapitalization Transaction”), the Company changed its name from Mudrick Capital Acquisition Corporation to Hycroft Mining Holding Corporation. The above description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by the full text of the Purchase Agreement, which is included as Exhibit 2.1 and Exhibit 2.2 to the registration statement of which this prospectus forms a part. Common terms and their meaning are set forth below under the heading “Selected Definitions.”

MARKET, RANKING AND OTHER INDUSTRY DATA

Certain market, ranking and industry data included in this prospectus, including the size of certain markets and our size or position and the positions of our competitors within these markets, including its products and services relative to its competitors, are based on estimates of our management. These estimates have been derived from our management’s knowledge and experience in the markets in which we operate, as well as information obtained from surveys, reports by market research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate, which, in each case, we believe are reliable.

We are responsible for all of the disclosure in this prospectus and while we believe the data from these sources to be accurate and complete, we have not independently verified data from these sources or obtained third-party verification of market share data and this information may not be reliable. In addition, these sources may use different definitions of the relevant markets. Data regarding our industry is intended to provide general guidance, but is inherently imprecise.

Assumptions and estimates of our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk factors—Risks Related to Our Business.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Statement Regarding Forward-Looking Statements.”

SELECTED DEFINITIONS

Unless stated in this prospectus or the context otherwise requires, references to:

1.25 Lien Exchange” means the exchange by the 1.25 Lien Noteholders of the outstanding 1.25 Lien Notes for the Subordinated Notes.

1.25 Lien Exchange Agreement” means that certain Note Exchange Agreement, dated as of January 13, 2020, by and among Seller and certain investment funds affiliated with or managed by Mudrick Capital, Whitebox, Highbridge, Aristeia and Wolverine, as amended, pursuant to which the 1.25 Lien Exchange occurred immediately prior to the consummation of the Recapitalization Transaction.

1.25 Lien Notes” means the notes issued pursuant to the Note Purchase Agreements, dated as of February 22, 2019, May 21, 2019, June 27, 2019, August 6, 2019, August 29, 2019, September 25, 2019, October 16, 2019, November 21, 2019, December 17, 2019, January 17, 2020, February 7, 2020, March 12, 2020, April 16, 2020 and May 7, 2020 between Seller, the guarantors and the purchasers named therein and WBox 2015-5 Ltd., as collateral agent.

1.25 Lien Noteholders” means the holders of the 1.25 Lien Notes and, subsequent to the 1.25 Lien Exchange, the holders of the Subordinated Notes.

1.5 Lien Notes” means the notes issued pursuant to the Note Purchase Agreements, dated as of May 3, 2016, July 29, 2016, September 22, 2016, November 30, 2016, February 2, 2017, April 12, 2017, June 30, 2017, July 14, 2017, December 20, 2017,

ii


March 8, 2018, May 10, 2018, July 10, 2018, August 22, 2018, November 1, 2018, and December 19, 2018 between Seller, the guarantors and the purchasers named therein and WBox 2015-5 Ltd., as collateral agent.

1.5 Lien Noteholders” means certain investment funds affiliated with Mudrick Capital, Whitebox, Highbridge, Aristeia and Wolverine that hold the 1.5 Lien Notes.

Amended and Restated Registration Rights Agreement” means that certain Amended and Restated Registration Rights Agreement entered into at the closing of the Recapitalization Transaction, by and among the Company and the restricted stockholders.

Acquisition Sub” means MUDS Acquisition Sub, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of the Company now known as Autar Gold Corporation.

Aristeia” means Aristeia Capital, LLC.

Board” means the board of directors of Hycroft Mining Holding Corporation.

business day” means a day, other than Saturday, Sunday or such other day on which commercial banks in New York, New York are authorized or required by applicable laws to close.

Cantor” means Cantor Fitzgerald & Co.

“Common Stock” means the Class A common stock, par value $0.0001 per share, of the Company.

conversion” means the conversion of the Second Lien Notes into shares of Seller common stock, pursuant to the terms of the Second Lien Conversion Agreement.

DGCL” means the General Corporation Law of the State of Delaware.

debt and warrant assumption” means the assignment by Seller and the assumption by the Company of (x) $80,000,000 in aggregate principal amount of Subordinated Notes, (y) the Sprott Credit Agreement and (z) Seller’s liabilities and obligations under the Seller Warrant Agreement.

effective time” means 9:00 a.m. New York time on May 29, 2020.

employee benefit plan” means any material “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

Excess Noteholders” means the holders of the Excess Notes.

Excess Notes” means the $48,459,232 in aggregate principal amount of Subordinated Notes exchanged pursuant to the Exchange Agreement.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exchange Agreement” means that certain Exchange Agreement, dated as of January 13, 2020, by and among Seller, Acquisition Sub, the 1.5 Lien Noteholders and the 1.25 Lien Noteholders, as amended.

First Lien Credit Agreement” means the first lien term loan credit agreement between Seller and The Bank of Nova Scotia, as administrative agent, and other lenders.

First Lien Notes” means the notes under the First Lien Credit Agreement.

forward purchase” means the issuance to sponsor of shares of Common Stock pursuant to the terms of the Forward Purchase Contract.

Forward Purchase Contract” means the Forward Purchase Contract, dated January 24, 2018, by and between the Company and sponsor, pursuant to which sponsor purchased 3,125,000 shares of Common Stock and 2,500,000 forward purchase warrants exercisable at $11.50 per share, for gross proceeds of $25,000,000, concurrently with the consummation of the Recapitalization Transaction.

forward purchase warrants” means the warrants to purchase one share of Common Stock at a price of $11.50 per share issued to the sponsor upon consummation of the Recapitalization Transaction pursuant to the Forward Purchase Contract.

founder shares” means shares of Class B common stock, par value $0.0001 per share, of the Company initially purchased by sponsor which were redeemed or converted into shares of Common Stock upon the consummation of the Recapitalization Transaction.

GAAP” means generally accepted accounting principles in the United States.

Highbridge” means Highbridge Capital Management, LLC.

iii


HRD” means Hycroft Resources & Development, LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of the Company.

Hycroft,” “Company,” “we,” “our,” or “us,” means Hycroft Mining Holding Corporation, a Delaware corporation.

Hycroft Mine” means the Hycroft Open Pit Mine, located in Winnemucca, Nevada that produces gold and silver using a heap leach mining process.

Hycroft Technical Report” means that certain Technical Report Summary, Heap Leaching Feasibility Study prepared for Seller with an effective date of July 31, 2019 by M3 Engineering and Technology Corporation and other qualified persons, prepared in accordance with the requirements of the Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K.

Incentive Plan” means the HYMC 2020 Performance and Incentive Pay Plan.

initial stockholders” means holders of founder shares prior to the IPO.

Initial Subscribers” means investment funds affiliated with or managed by Mudrick Capital, Whitebox, Highbridge, Aristeia and Wolverine (together with any permitted assigns under the Subscription/Backstop Agreements).

IPO” means the Company’s initial public offering, consummated on February 12, 2018, through the sale of 20,800,000 public units (including 800,000 units sold pursuant to the underwriters’ partial exercise of their overallotment option) at $10.00 per unit.

JOBS Act” means the Jumpstart our Business Startups Act of 2012.

Lender” means Sprott Private Resource Lending II (Collector), LP.

Mudrick Capital” means Mudrick Capital Management, L.P., a Delaware limited partnership, an affiliate of sponsor.

Nasdaq” means The Nasdaq Stock Market LLC.

New Mining Rules” means the Modernization of Property Disclosures for Mining Registrants final rule promulgated by the SEC.

Note exchange” means the exchange of the 1.5 Lien Notes and the Excess Notes, if any, for shares of Common Stock valued at $10.00 per share pursuant to the terms of the Exchange Agreement.

Parent Sponsor Letter Agreement” means that certain letter agreement, dated as of January 13, 2020, by and between the Company and sponsor, as amended from time to time.

PIPE warrants” means the warrants to purchase one share of Common Stock at a price of $11.50 per share issued to the Initial Subscribers in the private investment.

private investment” means the equity financing through a private placement of equity securities in the Company pursuant to Section 4(a)(2) of the Securities Act, for gross proceeds to the Company in an aggregate amount of approximately $76.0 million funded in accordance with the terms of the Subscription/Backstop Agreements.

private placement warrants” means the warrants issued to sponsor and Cantor in a private placement simultaneously with the closing of the IPO.

public shares” means shares of Common Stock sold as part of the units in the IPO.

public units” means one share of Common Stock and one redeemable public warrant of the Company, whereby each public warrant entitles the holder thereof to purchase one share of Common Stock at an exercise price of $11.50 per share of Common Stock, sold in the IPO.

public warrants” means the warrants included in the units issued in the IPO, where one warrant entitles the holder thereof to purchase one share of Common Stock at an exercise price of $11.50 per share of Common Stock in accordance with the terms of the Warrant Agreement.

Purchase Agreement” means that certain Purchase Agreement, dated January 13, 2020, as amended on February 26, 2020, by and among the Company, Acquisition Sub and Seller.

Recapitalization Transaction” means the transactions contemplated by the Purchase Agreement, the Exchange Agreement and the Second Lien Conversion Agreement consummated on May 29, 2020.

representatives” means a Person’s officers, directors, employees, accountants, consultants, agents, legal counsel, and other representatives.

iv


restricted stockholders” means, collectively, sponsor, Cantor, certain directors and officers of the Company (as set forth in the Amended and Restated Registration Rights Agreement), the 1.5 Lien Noteholders, certain stockholders of Seller that receive Common Stock in the Recapitalization Transaction, the Initial Subscribers pursuant to the private investment, and Lender.

SEC” means the United States Securities and Exchange Commission.

Second Amended and Restated Charter” means the Second Amended and Restated Certificate of Incorporation of the Company filed with the Delaware Secretary of State on May 29, 2020.

Second Lien Conversion Agreement” means that certain Note Conversion and Consent Agreement by and among Seller and the Second Lien Noteholders, dated January 13, 2020.

Second Lien Notes” means the notes issued pursuant to (a) that certain Note Purchase Agreement, dated as of October 22, 2015, by and among Seller, certain of its affiliates and the purchasers named therein and (b) that certain Note Purchase Agreement, dated as of December 2, 2015, by and among Seller, certain of Seller’s subsidiaries and the purchasers named therein, in each case, entered into pursuant to the 15% Senior Secured Convertible Notes Due 2020 Indenture, dated as of October 22, 2015, by and among Seller, the guarantors (as defined therein) and Wilmington Trust, National Association, as trustee and collateral agent as of January 6, 2016 and March 24, 2016.

Second Lien Noteholders” means certain funds affiliated with Mudrick Capital, Whitebox, Highbridge, Aristeia and Wolverine and two additional noteholders.

Securities Act” means the Securities Act of 1933, as amended.

Seller” means Hycroft Mining Corporation, a Delaware corporation.

Seller common stock” means Seller’s common stock, par value $0.001 per share.

Seller warrants” means a warrant to purchase shares of Common Stock issued pursuant to the Seller Warrant Agreement following the assumption of the Seller Warrant Agreement by the Company pursuant to the Purchase Agreement and effective as of the consummation of the Recapitalization Transaction.

Seller Warrant Agreement” means that certain warrant agreement, dated as of October 22, 2015, by and between Seller and Computershare Inc., a Delaware corporation, and its wholly owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company, collectively as initial warrant agent; such warrant agreement was assumed by the Company pursuant to the Purchase Agreement and Continental Stock Transfer & Trust Company, LLC is the successor warrant agent.

sponsor” means Mudrick Capital Acquisition Holdings LLC, a Delaware limited liability company, which is 100% owned by investment funds and separate accounts managed by Mudrick Capital.

Sprott Credit Agreement” means that certain amended and restated credit agreement, dated as of May 29, 2020, between Hycroft Mining Holding Corporation, as borrower, MUDS Acquisition Sub, Inc., MUDS Holdco, Inc., Hycroft Resources & Development, LLC, a Delaware limited liability company, and Allied VGH LLC, a Delaware limited liability company, as guarantors, Sprott Private Resource Lending II (Collector), LP, as lender, and Sprott Resource Lending Corp., as arranger.

Sprott Royalty Agreement” means that certain royalty agreement between the Company, Hycroft Resources & Development, LLC, a Delaware limited liability company and Sprott Private Resource Lending II (Co), Inc.

Subordinated Notes” means the $80.0 million in aggregate principal amount of 10% payment in-kind subordinated notes issued pursuant to the 1.25 Lien Exchange Agreement and assigned to, and assumed by, the Company in connection with the Recapitalization Transaction.

Subscription/Backstop Agreements” means those certain Subscription/Backstop Agreements, dated as of January 13, 2020, by and among the Company and the Initial Subscribers, as amended on May 28, 2020.

Treasury Regulations” means the regulations promulgated by the U.S. Department of the Treasury pursuant to and in respect of provisions of the U.S. Tax Code.

trust account” means the trust account of the Company that held the proceeds from the IPO.

U.S. Holder” means a beneficial owner of the Company’s securities who or that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust, if (a) a court within the United States is able to exercise primary supervision over the administration of the trust or one or more U.S. persons (as defined in the U.S. Tax

v


Code) have authority to control all substantial decisions of the trust or (b) it has a valid election in effect under Treasury Regulations to be treated as a U.S. person.

U.S. Tax Code” means the Internal Revenue Code of 1986, as amended.

Warrant Agreement” means the Warrant Agreement, dated February 7, 2018, by and between Mudrick Capital Acquisition Corporation and Continental Stock Transfer & Trust Company, LLC.

Warrants” means, unless the context indicates otherwise, the public warrants, private placement warrants, forward purchase warrants, PIPE warrants and Seller warrants.

Whitebox” means Whitebox Advisors, LLC.

Wolverine” means Wolverine Asset Management, LLC.

vi


CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS

We make “forward-looking statements” in the “Summary,” “Risk Factors,” “Description of Business,” “Description of Property,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere throughout this prospectus. All statements, other than statements of historical facts, included in this prospectus and in press releases and public statements by our officers or representatives, that address activities, events or developments that our management expects or anticipates will or may occur in the future, are forward-looking statements, including but not limited to such things as future business strategy, plans and goals, competitive strengths and expansion and growth of our business.

The words “estimate”, “plan”, “anticipate”, “expect”, “intend”, “believe” “target”, “budget”, “may”, “schedule” and similar words or expressions identify forward-looking statements. Forward-looking statements in this prospectus may include, for example, statements about:

Use of proceeds from this offering;
Industry-related risks including:
oFluctuations in the price of gold and silver;
oUncertainties concerning estimates of reserves and mineralized material;
oUncertainties relating to the a novel coronavirus (“COVID-19”) pandemic;
oThe intense competition within the mining industry and state of Nevada;
oThe inherently hazardous nature of mining activities, including environmental risks;
oOur insurance may not be adequate to cover all risks associated with our business, or cover the replacement costs of our assets;
oPotential effects on our operations of U.S. federal and state governmental regulations, including environmental regulation and permitting requirements;
oCost of compliance with current and future government regulations;
oUncertainties relating to obtaining or retaining approvals and permits from governmental regulatory authorities;
oPotential challenges to title in our mineral properties;
oRisks associated with proposed legislation in Nevada that could significantly increase the costs or taxation of our operations; and
oChanges to the climate and regulations and pending legislation regarding climate change.
Business-related risks including:
oRisks related to our liquidity and going concern considerations;
oRisks related to the heap leaching process at the Hycroft Mine and estimates of production;
oOur ability to achieve our estimated production and sales rates and stay within our estimated operating and production costs and capital expenditure projections;
oRisks related to our limited experience with a largely untested process of oxidizing and heap leaching sulfide ores;
oThe decline of our gold and silver production;
oRisks related to our reliance on one mine with a new process;
oUncertainties and risks related to our reliance on contractors and consultants;
oUncertainties related to our ability to replace and expand our ore reserves;
oThe costs related to our land reclamation requirements;
oAvailability and cost of equipment, supplies, energy, or commodities;
oThe commercial success of, and risks relating to, our development activities;
oRisks related to slope stability;
oOur ability to raise capital on favorable terms or at all;


oRisks related to our substantial indebtedness, including cross acceleration and our ability to generate sufficient cash to service our indebtedness;
oUncertainties resulting from the possible incurrence of operating and net losses in the future;
oRisks related to disruption of our business due to the historical chapter 11 proceedings;
oThe loss of key personnel or our failure to attract and retain personnel;
oRisks related to technology systems and security breaches;
oRisks related to current and future legal proceedings;
oOur current intention or future decisions whether or not to use streaming or forward-sale arrangements;
oRisks associated with possible future joint ventures; and
oRisks that our principal stockholders will be able to exert significant influence over matters submitted to stockholders for approval.
Risks related to our Common Stock and warrants, including
oVolatility in the price of our common stock;
oRisks related to a lack of liquidity in the trading of our common stock;
oPotential declines in the value of our common stock due to substantial future sales of our common stock and/or warrants;
oDilution of your investment;
oWe do not intend to pay cash dividends; and
oAnti–takeover provisions could make a third party acquisition of us difficult.

These statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause our actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on current expectations. Although our management believes that its expectations are based on reasonable assumptions, we can give no assurance that these expectations will prove correct. Please see “Risk Factors” below for more information about these and other risks. Potential investors are cautioned against attributing undue certainty to forward-looking statements. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that our forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our and Seller’s consolidated financial statements and related notes.

As used in this prospectus, unless the context otherwise requires or indicates, references to “Hycroft,” “Company,” “we,” “our,” and “us,” refer to Hycroft Mining Holding Corporation and its subsidiaries. “Seller” refers to Hycroft Mining Corporation.

Overview

We are a U.S.-based gold producer that is focused on operating and developing our wholly owned Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. Gold and silver sales represent 100% of our operating revenues and the market prices of gold and silver significantly impact our financial position, operating results and cash flows. The Hycroft Mine is located in the state of Nevada.

During the second quarter of 2019, we restarted open pit mining operations at the Hycroft Mine, and, during the third quarter of 2019, produced and sold gold and silver which we have continued to do on an approximate weekly basis since restarting. As part of the 2019 restart of mining operations, existing equipment was re-commissioned, including haul trucks, shovels and a loader, upgrades were made to the crushing system and new leach pad space was added to the existing leach pads. During the first half of 2020, we continued to increase our operations by mining more tons, procuring additional mobile equipment rentals, and increasing our total headcount. During the first six months of 2020 the Hycroft Mine produced 12,342 ounces of gold and 73,717 ounces of silver and sold 10,797 ounces of gold and 70,703 ounces of silver.

As of June 30, 2019, based on the Hycroft Technical Report, the Hycroft Mine had proven and probable mineral reserves of 12.0 million ounces of gold and 481.4 million ounces of silver, which are contained in oxide, transition and sulfide ores. The Hycroft Mine ranks among one of the 20 largest gold deposits in the world, and the second largest in the United States, based on resource sizes. Pursuant to the current 34-year life of mine plan in the Hycroft Technical Report, once fully operational, mining will range from approximately 85 – 100 million tons per year. As set forth in the Hycroft Technical Report, during the initial five-year ramp-up we expect mining will be performed by a contract mining company or we will primarily use a short-term equipment rental fleet using customary truck and shovel open pit mining methods. After the initial ramp-up, we expect to self-perform mining with our own equipment fleet.

Effective July 31, 2019, M3 Engineering and Technology Corporation (“M3 Engineering”), in conjunction with SRK Consulting (U.S.), Inc. (“SRK”) and Seller, completed the Hycroft Technical Report Summary, Heap Leaching Feasibility Study prepared for Seller with an effective date of July 1, 2019, and prepared in accordance with the requirements of the Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K, for a two-stage, heap oxidation and subsequent leaching of transition and sulfide ores.

Our sole mining property is located in Nevada. We currently have one operating property, which is the Hycroft Mine as discussed herein.

Recent Developments

On May 29, 2020, we completed the Recapitalization Transaction described below in the Section entitled “Description of Business.”

On July 1, 2020, Randy Buffington, our former Chairman, President, and CEO departed the Company. Mr. Buffington is assisting us during this transition period and has entered into a consulting agreement for 24 months, through July 1, 2022. See Note 22 — Subsequent Events to the Notes to Unaudited Consolidated Financial Statements.

On August 31, 2020, the Company announced that it will appoint Diane R. Garrett, Ph.D, as the Company’s President and Chief Executive Officer and as a director, effective as of September 8, 2020. For more information about Dr. Garrett’s biography and compensation arrangements, see “Management” and “Executive Compensation — Compensation Arrangements with Diane R. Garrett,” respectively.

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Risk Factors

An investment in our Common Stock involves substantial risk. The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may have a material adverse effect on our business, cash flows, financial condition and results of operations. Important factors and risks that could cause actual results to differ materially from those in the forward-looking statements include, among others:

Industry-related risks including:

Fluctuations in the price of gold and silver;
Uncertainties concerning estimates of reserves and mineralized material;
Uncertainties relating to the ongoing COVID-19 pandemic;
The intense competition within the mining industry and state of Nevada;
The inherently hazardous nature of mining activities, including environmental risks;
Our insurance may not be adequate to cover all risks associated with our business, or cover the replacement costs of our assets;
Potential effects on our operations of U.S. federal and state governmental regulations, including environmental regulation and permitting requirements;
Cost of compliance with current and future government regulations;
Uncertainties relating to obtaining or retaining approvals and permits from governmental regulatory authorities;
Potential challenges to title in our mineral properties;
Risks associated with proposed legislation in Nevada that could significantly increase the costs or taxation of our operations; and
Changes to the climate and regulations and pending legislation regarding climate change.

Business-related risks including:

Risks related to our liquidity and going concern considerations;
Risks related to the heap leaching process at the Hycroft Mine and estimates of production;
Our ability to achieve our estimated production and sales rates and stay within our estimated operating and production costs and capital expenditure projections;
Risks related to our limited experience with a largely untested process of oxidizing and heap leaching sulfide ores;
The decline of our gold and silver production;
Risks related to our reliance on one mine with a new process;
Uncertainties and risks related to our reliance on contractors and consultants;
Uncertainties related to our ability to replace and expand our ore reserves;
The costs related to our land reclamation requirements;
Availability and cost of equipment, supplies, energy or commodities;
The commercial success of, and risks relating to, our development activities;
Risks related to slope stability;
Our ability to raise capital on favorable terms or at all;
Risks related to our substantial indebtedness, including cross acceleration and our ability to generate sufficient cash to service our indebtedness;
Uncertainties resulting from the possible incurrence of operating and net losses in the future;

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Risks related to disruption of our business due to the historical chapter 11 proceedings;
The loss of key personnel or our failure to attract and retain personnel;
Risks related to technology systems and security breaches;
Risks related to current and future legal proceedings;
Our current intention or future decisions whether or not to use streaming or forward-sale arrangements;
Risks associated with possible future joint ventures; and
Risks that our principal stockholders will be able to exert significant influence over matters submitted to stockholders for approval.

Risks related to our Common Stock and this offering, including:

Volatility in the price of our Common Stock;
Risks related to a lack of liquidity in the trading of our Common Stock;
Potential declines in the value of our Common Stock due to substantial future sales of our Common Stock and/or warrants;
Dilution of your investment;
We do not intend to pay cash dividends; and
Anti-takeover provisions could make a third party acquisition of us difficult.

You should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 7 of this prospectus.

Implications of Being An Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the “JOBS Act.” An emerging growth company may take advantage of specified reduced requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

we may present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of Financial Condition and Results of Operations;
we are exempt from the requirement to obtain an attestation report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;
we are permitted to provide less extensive disclosure about our executive compensation arrangements; and
we are not required to give our stockholders non-binding votes on executive compensation or "golden parachute" arrangements.

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We may take advantage of these provisions for up to five full fiscal years or such earlier time that we are no longer an emerging growth company. We may choose to take advantage of some but not all of these reduced burdens. We would cease to be an emerging growth company if we have $1.07 billion or more in annual revenues, have more than $700 million in market value of our shares of common stock held by non-affiliates, or issue more than $1 billion of non-convertible debt over a three-year period. The Company has elected not to opt out of the extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Corporate Information

We were incorporated on August 28, 2017 as a Delaware corporation under the name “Mudrick Capital Acquisition Corporation” and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On May 29, 2020, in connection with the consummation of the Recapitalization Transaction, we changed our name to “Hycroft Mining Holding Corporation.”

Our principal executive offices are located at 8181 E. Tufts Ave., Suite 510, Denver, Colorado, and our telephone number is (303) 253-3267. Our website is www.hycroftmining.com. The information found on, or that can be accessed from or that is hyperlinked to, our website is not part of this prospectus.

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THE OFFERING

The following summary contains general information about this offering. The summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus.

Shares of Common Stock offered by us

    

[●] shares

Underwriters’ option to purchase additional shares

We have granted the underwriters a 30-day option to purchase up to an additional [●] shares from us at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.

Common stock to be outstanding immediately after this offering

[●] shares (or [●] shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds

We estimate that the net proceeds from the sale of shares of our Common Stock in this offering will be approximately $[●] million (or approximately $[●] million if the underwriters’ option to purchase additional shares in this offering is exercised in full), based upon an assumed public offering price of $[●] per share, which was the closing sale price of our Common Stock on the Nasdaq Capital Market on [●], 2020, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We currently intend to use the net proceeds of this offering to fund working capital expenditures as we seek to continue to ramp up operations at the Hycroft Mine and to construct a new leach pad and associated infrastructure. See the section of this prospectus entitled “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering.

Risk factors

See the section of this prospectus entitled “Risk Factors” beginning on page 7 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock.

Except as otherwise indicated, the information in this prospectus reflects or assumes the following:

no exercise of warrants outstanding as of [●], 2020; and
no exercise by the underwriters of their option to purchase up to an additional [●] shares of our Common Stock in this offering.

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RISK FACTORS

Investing in our securities involves a high degree of risk. Investors should carefully consider the risks described below and all of the other information set forth in the registration statement of which this prospectus forms a part, including our and Seller’s financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our Common Stock. If any of the events or developments described below occur, our business, financial condition, or results of operations could be materially or adversely affected. As a result, the market price of our Common Stock could decline, and investors could lose all or part of their investment. The risks and uncertainties described below are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Notes Regarding Forward-Looking Statements” above.

Risks Related To Our Industry

The market prices of gold and silver are volatile. A decline in gold and silver prices could result in decreased revenues, decreased net income, increased losses and decreased cash inflows, which would negatively affect our business.

Gold and silver are commodities. Their prices fluctuate and are affected by many factors beyond our control, including interest rates, expectations regarding inflation, speculation, currency values, central bank activities, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors. The prices of gold and silver, as quoted by The London Bullion Market Association on August 28, 2020, December 31, 2019 and December 31, 2018, were $1,957, $1,515 and $1,279 per ounce for gold, respectively, and $27.35, $18.05 and $15.46 per ounce for silver, respectively. The prices of gold and silver may decline in the future. A substantial or extended decline in gold or silver prices would adversely impact our financial position, revenues, net income and cash flows, particularly in light of our current strategy of not engaging in hedging transactions with respect to gold or silver. In addition, sustained lower gold or silver prices may:

reduce revenue potential due to cessation of the mining of deposits, or portions of deposits, that have become uneconomic at the then-prevailing gold or silver price;
reduce or eliminate the profit, if any, that we currently expect from mining operations;
halt, delay, modify, or cancel plans for the mining of oxide and sulfide ores or the development of new and existing projects;
make it more difficult for us to satisfy and/or service our debt obligations;
reduce existing reserves by removing ores from reserves that can no longer be economically processed at prevailing prices; and
cause us to recognize an impairment to the carrying values of mineral properties and long-lived assets.

Reserve and other mineralized material calculations are estimates only, and are subject to uncertainty due to factors including metal prices, inherent variability of the ore and recoverability of metal in the mining process.

The calculation of mineral reserves, mineral resources and grades are estimates and depend upon geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis, which may prove to be unpredictable. There is a degree of uncertainty attributable to the calculation of mineral reserves and mineral resources, and corresponding grades. Until mineral reserves and mineral resources are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of mineral reserves and mineral resources may vary depending on metal prices, which largely determine whether mineral reserves and other mineralized materials are classified as ore (economic to mine) or waste (uneconomic to mine). A decline in metal prices may result in previously reported mineral reserves (ore) becoming uneconomic to mine (waste). Current reserve estimates were calculated using a $1,200 per ounce gold price and $16.50 per ounce silver price. A material decline in the current price of gold or silver could require a reduction in our reserve estimates. Any material change in the quantity of mineral reserves, mineral resources, mineralization, grade or stripping ratio may affect the economic viability of our properties. In addition, we can provide no assurance that gold and silver recoveries experienced in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.

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Our activities may be adversely affected by the ongoing COVID-19 pandemic, whether those effects are local, nationwide or global. Matters outside our control may prevent us from executing on our mining operations, limit travel of Company representatives, adversely affect the health and welfare of Company personnel or prevent important vendors and contractors from performing normal and contracted activities, including mining operations.

Our business could be adversely impacted by the effects of the ongoing COVID-19 pandemic. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States. Efforts implemented by local and national governments, as well as businesses, including temporary closures, are expected to have adverse impacts on local, national and the global economies. The extent to which the COVID-19 pandemic impacts our business, including our operations and the market for our securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time. Uncertainties include the duration, severity and scope of the outbreak and the actions taken to contain or treat the COVID-19 outbreak. In particular, the continued spread of COVID-19 could materially and adversely impact our business including without limitation, employee health, limitations on travel, the availability of industry experts and personnel, restrictions to planned drill programs, assaying, and other factors that will depend on future developments beyond our control that may have a material and adverse effect on its business, financial condition and results of operations. There can be no assurance that our personnel will not be impacted by such disease and we may ultimately see our workforce productivity reduced or incur increased medical and related costs as a result of these health risks. In addition, a significant outbreak of COVID-19 could result in a widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have an adverse effect on the demand for precious metals and our future prospects.

Moreover, the actual and threatened spread of the COVID-19 pandemic globally has had a material adverse effect on the global economy, could continue to negatively impact stock markets, including the trading price of our shares, could adversely impact our ability to raise capital, could cause continued interest rate volatility and movements that could make obtaining financing or refinancing our debt obligations more challenging or more expensive and could result in any operations affected by COVID-19 becoming subject to quarantine. Any of these developments, and others, could have a material adverse effect on our business and results of operations.

We face intense competition in the mining industry.

The mining industry is intensely competitive. As a result of this competition, some of which is with large established mining companies with substantial mining capabilities and with greater financial and technical resources than ours, we compete with other mining companies in the recruitment and retention of qualified managerial and technical employees and in acquiring attractive mining claims. If we are unable to successfully attract and retain qualified employees, our development programs and/or our operations may be slowed down or suspended, which may adversely impact our development, financial condition and results of operations.

Mining development and processing operations pose inherent risks and costs that may negatively impact our business.

Mining development and processing operations involve many hazards and uncertainties, including, among others:

metallurgical or other processing problems;
ground or slope failures;
industrial accidents;
unusual and unexpected rock formations or water conditions;
environmental contamination or leakage;
flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of nature;
fires;
seismic activity;
organized labor disputes or work slow-downs;
mechanical equipment failure and facility performance problems; and
the availability of critical materials, equipment and skilled labor.

These occurrences could result in damage to, or destruction of, our properties or production facilities, personal injury or death, environmental damage, delays in mining or processing, increased production costs, asset write downs, monetary losses and legal liability, any of which could have an adverse effect on our results of operations and financial condition and adversely affect our projected development and production estimates.

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Our insurance may not cover all of the risks associated with our business.

The mining business is subject to risks and hazards, including, but not limited to, construction risks, environmental hazards, industrial accidents, the encountering of unusual or unexpected geological formations, slide-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Insurance fully covering many of these risks is not generally available to us and if it is, we may elect not to obtain it because of the high premium costs or commercial impracticality. We do not currently carry business interruption insurance and have no plans to obtain such insurance in the future. Any liabilities incurred for these risks and hazards could be significant and could adversely affect our results of operation, cash flows and financial condition.

Environmental regulations could require us to make significant expenditures or expose us to potential liability.

To the extent we become subject to environmental liabilities, the payment of such liabilities or the costs that we may incur, including costs to remedy environmental pollution, would reduce funds otherwise available to us and could have a material adverse effect on our financial condition, results of operations, and liquidity. If we are unable to fully remedy an environmental violation or release of hazardous substances, we might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy or corrective action. The environmental standards that may ultimately be imposed at a mine site can vary and may impact the cost of remediation. Actual remedial costs may exceed the financial accruals that have been made for such remediation. The potential exposure may be significant and could have a material adverse effect on our financial condition and results of operations.

Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property or natural resources and injury to persons resulting from the environmental, health and safety impacts of our past and current operations, which could lead to the imposition of substantial fines, remediation costs, penalties, injunctive relief and other civil and criminal sanctions. Substantial costs and liabilities, including those required to restore the environment after the closure of mines, are inherent in our operations. We cannot provide any assurance that any such law, regulation, enforcement or private claim will not have a negative effect on our business, financial condition or results of operations.

Our operations are subject to extensive environmental regulations, which could result in the incurrence of operational delays, penalties and costs.

All phases of our operations are subject to extensive federal and state environmental regulation, including those enacted under the following laws:

Comprehensive Environmental Response, Compensation, and Liability Act;
The Resource Conservation and Recovery Act;
The Clean Air Act;
The National Environmental Policy Act;
The Clean Water Act; and
The Safe Drinking Water Act.

Additional regulatory authorities also have jurisdiction over some of our operations and mining projects including the Environmental Protection Agency, the Nevada Division of Environmental Protection, the U.S. Fish and Wildlife Service, the U.S. Bureau of Land Management (the “BLM”), and the Nevada Department of Wildlife.

These environmental regulations require us to obtain various operating permits, approvals and licenses and also impose standards and controls relating to development and production activities. For instance, we are required to hold a Nevada Reclamation Permit with respect to the Hycroft Mine. This permit mandates concurrent and post-mining reclamation of mines and requires the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. Changes to the amount required to be posted for reclamation bonds for our operations at the Hycroft Mine could materially affect our financial position, results of operations, cash flows and liquidity. Also, the U.S. Fish and Wildlife Service may designate critical habitat and suitable habitat areas it believes are necessary for survival of a threatened or endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to land use and may materially delay or prohibit land access for our development. For example, we had to obtain certain permits associated with mining in the area of an eagle habitat. Failure to obtain such required permits or failure to comply with federal and state regulations could also result in delays in beginning or expanding operations, incurring additional costs for investigation or

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cleanup of hazardous substances, payment of penalties for non-compliance or discharge of pollutants, and post-mining closure, reclamation and bonding, all of which could have an adverse impact on our financial performance, results of operations and liquidity.

Compliance with current and future government regulations may cause us to incur significant costs.

Our operations are subject to extensive federal and state legislation governing matters such as mine safety, occupational health, labor standards, prospecting, exploration, production, exports, toxic and hazardous substances, explosives, management of natural resources, land use, water use, air emissions, waste disposal, environmental review and taxes. Compliance with this and other legislation could require us to make significant financial outlays. The enactment of new legislation or more stringent enforcement of current legislation may increase costs, which could have a negative effect on our financial position, results of operations, and liquidity. We cannot provide any assurances that we will be able to adapt to these regulatory developments on a timely or cost-effective basis. Violations of these laws, regulations and other regulatory requirements could lead to substantial fines, penalties or other sanctions, including possible shut-down of the Hycroft Mine or future operations, as applicable.

Changes in environmental regulations could adversely affect our cost of operations or result in operational delays.

The regulatory environment in which we operate is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. New environmental laws and regulations or changes in existing environmental laws and regulations could have a negative effect on exploration activities, operations, production levels and methods of production.

We cannot provide any assurance that future changes in environmental laws and regulations will not adversely affect our current operations or future projects. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements.

Our operations are subject to numerous governmental permits that are difficult to obtain and we may not be able to obtain or renew all of the permits we require, or such permits may not be timely obtained or renewed.

In the ordinary course of business we are required to obtain and renew governmental permits for our operations, including in connection with our plans for heap leaching our transition and sulfide ores at the Hycroft Mine. We will also need additional governmental permits to accomplish our long-term plans to mine sulfide ores, including without limitation, permits to allow construction of additional leach pad space. Obtaining or renewing the necessary governmental permits is a complex and time-consuming process involving costly undertakings by us. The duration and success of our efforts to obtain and renew permits are contingent upon many variables not within our control, including the interpretation of applicable requirements implemented by the permitting authority and intervention by third parties in any required environmental review. We may not be able to obtain or renew permits that are necessary to our operations on a timely basis or at all, and the cost to obtain or renew permits may exceed our estimates. Failure to comply with the terms of our permits may result in injunctions, fines, suspension or revocation of permits and other penalties. We can provide no assurance that we have been, or will at all times, be in full compliance with all of the terms of our permits or that we have all required permits. The costs and delays associated with compliance with these permits and with the permitting process could alter the mine plan, delay or stop us from proceeding with the operation or development of the Hycroft Mine or increase the costs of development or production, any or all of which may materially adversely affect our business, results of operations, financial condition and liquidity.

There are uncertainties as to title matters in the mining industry. Any defects in such title could cause us to lose our rights in mineral properties and jeopardize our business operations.

Our mineral properties consist of private mineral rights, leases covering private lands, leases of patented mining claims and unpatented mining claims. Areas of the Hycroft Mine are unpatented mining claims located on lands administered by the BLM, Nevada State office to which we have only possessory title. Because title to unpatented mining claims is subject to inherent uncertainties, it is difficult to determine conclusively ownership of such claims. These uncertainties relate to such things as sufficiency of mineral discovery, proper location and posting and marking of boundaries, and possible conflicts with other claims not determinable from descriptions of record. We believe a substantial portion of all mineral exploration, development and mining in the United States now occurs on unpatented mining claims, and this uncertainty is inherent in the mining industry.

The present status of our unpatented mining claims located on public lands allows us the right to mine and remove valuable minerals, such as precious and base metals, from the claims conditioned upon applicable environmental reviews and permitting programs. We also are generally allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the land remains with the United States. We remain at risk that the mining claims may be forfeited either to the United States or to rival private claimants due to failure to comply with statutory requirements. Prior to

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1994, a mining claim locator who was able to prove the discovery of valuable, locatable minerals on a mining claim, and to meet all other applicable federal and state requirements and procedures pertaining to the location and maintenance of federal unpatented mining claims, had the right to prosecute a patent application to secure fee title to the mining claim from the Federal government. The right to pursue a patent, however, has been subject to a moratorium since October 1994, through federal legislation restricting the BLM from accepting any new mineral patent applications. If we do not obtain fee title to our unpatented mining claims, we can provide no assurance that we will be able to obtain compensation in connection with the forfeiture of such claims.

There may be challenges to title to the mineral properties in which we hold a material interest. If there are title defects with respect to any properties, we might be required to compensate other persons or perhaps reduce our interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert our management’s time from ongoing production and development programs.

Legislation has been proposed periodically that could, if enacted, significantly affect the cost of our operations on our unpatented mining claims or the amount of Net Proceeds of Mineral Tax we pay to the State of Nevada.

Members of the U.S. Congress have periodically introduced bills which would supplant or alter the provisions of the Mining Law of 1872. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Such proposed legislation could change the cost of holding unpatented mining claims and could significantly impact our ability to develop mineralized material on unpatented mining claims. A majority of our mining claims are unpatented claims. Although we cannot predict what legislated royalties might be, the enactment of these proposed bills could adversely affect the potential for development of our unpatented mining claims and the economics of our existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our financial performance and results of operations.

We pay Net Proceeds of Mineral Tax (“NPT”), to the State of Nevada on up to 5% of net proceeds generated from the Hycroft Mine. Net proceeds are calculated as the excess of gross yield over direct costs. Gross yield is determined as the value received when minerals are sold, exchanged for anything of value or removed from the state. Direct costs generally include the costs to develop, extract, produce, transport and refine minerals. From time to time Nevada legislators introduce bills which aim to increase the amount of NPT that mining companies operating in the state pay. Recently a resolution was introduced in each of the Assembly and Senate of the state of Nevada to repeal the NPT and replace it with a tax on gross revenue. If legislation is passed that increases the NPT we pay to the state of Nevada or if the NPT is replaced with a tax on gross revenue, our business, results of operations, and cash flows could be negatively impacted.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such regulations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation.

Climate change could have an adverse impact on our cost of operations.

The potential physical impacts of climate change on our operations are highly uncertain and would be particular to the area in which we operate. These climate changes may include changes in rainfall and storm patterns and intensities, water shortages and changing temperatures. These changes in climate could adversely affect our mining operations, including by affecting the moisture levels and pH of ore on our leach pads, increase the cost of production at the Hycroft Mine and adversely affect the financial performance of our operations.

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Risks Related to Our Business

Due to uncertainty surrounding our ability to achieve sales, production, cost and other operating targets, as well as our ability to raise sufficient additional working capital in this offering to fund construction of a leach pad, substantial doubt exists as to our ability to continue as a going concern. Our plans to alleviate the substantial doubt about our ability to continue as a going concern may not be successful, and we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations and financial condition.

The consolidated financial statements as of and for the periods ended June 30, 2020 included in this prospectus have been prepared on a “going concern” basis, which contemplates the presumed continuation of the Company even though events and conditions exist that, when considered individually or in the aggregate, raise substantial doubt about our ability to continue as a going concern because it is probable that, without sufficient additional capital injections, we will be unable to meet our obligations as they become due within one year after the date that such financial statements were issued.

For the six months ended June 30, 2020, we incurred a net loss of $84.4 million and the cash used in operating activities was $57.6 million. As of June 30, 2020, we had available cash on hand of $47.3 million, working capital of $68.0 million, total liabilities of $195.4 million, and an accumulated deficit of $468.8 million. Although we recently completed the Recapitalization Transaction, using our internal forecasts and cash flow projection models, we now project, without the net proceeds from this offering, there is insufficient cash to meet our future obligations as they become due or ramp up the Hycroft Mine’s operations from current levels or to levels which are contemplated by the Hycroft Technical Report.

Our ability to continue as a going concern is contingent upon achieving sales, production, cost, and other operating targets, as well as the success of this offering to provide additional capital financing for working capital and construction of a leach pad. If we are unable to secure sufficient additional financing or capital on terms favorable to us, we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations, financial condition and liquidity.

In addition, the consolidated financial statements contained herein do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of any liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern. As such, recorded amounts in these financial statements (including without limitation, stockholders’ equity) have been prepared in accordance with GAAP on a historical-cost basis, as required, which do not reflect or approximate the current fair value of our assets or management’s assessment of our overall enterprise or equity value. As a result, the amounts recorded for such assets, liabilities and adjustments as of the date of the consolidated financial statements herein may not be indicative of the values in the future which could be materially impacted if we do not secure sufficient additional funding or capital.

Our ability to continue as a going concern is dependent on, among other things, generating profitable operating results, having sufficient liquidity, and maintaining compliance with the covenants and other requirements under the Sprott Credit Agreement and the Subordinated Notes. As of June 30, 2020, we had recorded $139.0 million of debt on our condensed consolidated balance sheets, comprised of the carrying value of the obligations under the Sprott Credit Agreement and the Subordinated Notes, which were $63.1 million and $80.7 million, respectively, and debt issuance costs of $4.8 million. The documents governing these obligations contain various operating and financial covenants, the breach of which would result in a default under such agreements, and in certain cases, cross-defaults under other agreements. As of June 30, 2020, we were in compliance with all applicable indebtedness covenants but no assurances can be given that such compliance will continue if we are unable to secure sufficient additional financing or capital. If we default under such indebtedness, it would have a material adverse impact on our operations, financial condition and results of operations. In addition, the terms of certain additional financing or capital available to us may not be permitted under the Sprott Credit Agreement and the Subordinated Notes and/or we may be unable to obtain waivers of such covenants to allow for us to secure additional financing or capital, which events would have a material adverse impact on our results of operations, financial condition and liquidity.

The estimation of the ultimate recovery of gold and silver from the Hycroft Mine, although based on standard industry sampling and estimating methods, is subjective. Our results of operations, liquidity, and financial position may be negatively impacted if actual recoveries are lower than initial estimations.

The Hycroft Mine historically utilized a heap leach process to extract gold and silver from ore. Our new plans outlined in the Hycroft Technical Report are also based on a heap leach process. The heap leach process extracts gold and silver by placing ore on an impermeable pad and applying a dilute cyanide solution that dissolves a portion of the contained gold and silver, which are then recovered in metallurgical processes. We use several integrated steps in the process of extracting gold and silver to estimate the metal content of ore placed on the leach pad. Although we refine our estimates as appropriate at each step in the process, the final amounts are not determined until a third-party smelter refines the doré and/or metal-laden carbon and determines the final ounces of gold and

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silver available for sale. We then review this end result and reconcile it to the estimates we developed and used throughout the production process. Based on this review, we adjust our estimation procedures when appropriate. Due to the complexity of the estimation process and the number of steps involved, among other things, actual recoveries can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on our financial condition, results of operations and liquidity.

We may not achieve our production and/or sales estimates and our costs may be higher than our estimates, thereby reducing our cash flows and negatively impacting our results of operations and liquidity.

We prepare estimates of future production, sales, and costs for our operations. We develop our estimates based on, among other things, mining experience, mineral reserve and resource estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence of certain metallurgical characteristics), costs to construct new leach pads and estimated rates and costs of mining and processing. All of our estimates are subject to numerous uncertainties, many of which are beyond our control. Our actual production and/or sales may be lower than our estimates and our actual costs may be higher than our estimates, which could negatively impact our cash flows and results of operations. While we believe that our estimates are reasonable at the time they are made, actual results will vary and such variations may be material. These estimates are speculative in nature, and it may be the case that one or more of the assumptions underlying such projections and estimates may not materialize. You are cautioned not to place undue reliance on the projections and estimates set forth in this prospectus.

We may need to raise additional capital after this offering but such additional capital may not be available on favorable terms or at all.

The continuing operation of the Hycroft Mine under the new mine plan will require significant investment. Failure to obtain sufficient financing may result in the delay or indefinite postponement of development or production at the Hycroft Mine. The covenants in the Sprott Credit Agreement and the Sprott Royalty Agreement could significantly limit our ability to secure new or additional credit facilities, increase our cost of borrowing, and make it difficult or impossible to raise additional capital on favorable terms or at all.

Our primary future cash requirements will be to fund working capital as we ramp up operations at the Hycroft Mine and to fund future and sustaining capital expenditures. Using current metal price levels and our estimates of future metal sales, production and operating costs, expenses, and project, development, and capital expenditures contemplated under our plan for the second half of 2020, we currently expect recurring negative monthly cash flows for the remainder of 2020. You are cautioned that management’s expectations regarding our liquidity and capital resources are based on a number of assumptions that we believe are reasonable but could prove to be incorrect. For example, our expectations are based on assumptions regarding commodity price levels, gold and silver recovery percentages and rates, production estimates, timing of oxidation, anticipated costs and other factors that are subject to a number of risks, many of which are beyond our control. If our assumptions prove to be incorrect, we may require additional financing sooner than we expect to continue to operate our business, which may not be available on favorable terms or at all and which could have a material adverse effect on our results of operations, financial condition and liquidity.

Cost estimates of operating the Hycroft Mine are uncertain, which may adversely affect our expected production and profitability.

The expenditures to implement our new two-stage pre-oxidation and leach process, and access our transition and sulfide ores, are considerable and changes in costs, construction schedules, commodity prices and other factors can adversely affect project economics and expected production and profitability. There are a number of factors that can affect costs and construction schedules and result in our assumptions and estimates about the anticipated benefits of a project being incorrect, including, among others:

changes in input commodity prices and labor costs;
oxidation rates and recovery rates of gold and silver from the ore;
available leach pad space on which to place ore for leaching and recovery of gold and silver;
availability and terms of financing;
availability of labor, energy, transportation, equipment, and infrastructure;
changes in anticipated tonnage, grade and metallurgical characteristics of the ore to be mined and processed;
difficulty of estimating construction costs over a period of years;
delays in completing any environmental review or in obtaining environmental or other governmental permits;
weather and severe climate impacts; and

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potential delays related to social and community issues.

We have previously recovered gold and silver from oxide and transition ores at the Hycroft Mine through our heap leach operations. In connection with our restarted mining operations, in addition to mining oxide ore, we are also mining gold and silver from transition and sulfide ores using a modified heap leach process, in which soda ash is being used to manage pH and alkalinity in a two-stage oxidation and leach process, in accordance with the Hycroft Technical Report. However, it is important to note that the economic parameters described in a feasibility study, such as the Hycroft Technical Report, include a number of assumptions and estimates that could prove to be incorrect. We use feasibility studies to make a reasoned determination of whether to proceed with a project and to support the required financing for a project but you should not assume that the economic analysis contained in a feasibility study is a guarantee of future performance or that the estimated net present value or internal rates of return will be achieved. Actual results may differ materially. In particular, the processing of sulfide ore and additional transition ore at the Hycroft Mine is uncertain and, therefore, the costs and timing of the commencement of the production of sulfide ore and additional transition ore operations at the Hycroft Mine could vary greatly from our estimates.

There is only limited experience of recovering gold and silver from sulfide ores using a heap leaching process and we may not be able to economically recover gold and silver.

Under our current mine plan, we have begun to mine and extract gold and silver from transition and sulfide ores using a two-step pre-oxidation process on transition and sulfide ores using soda ash to manage pH and alkalinity during the oxidation process in accordance with the methods set forth in the Hycroft Technical Report. However, the economic parameters described in the Hycroft Technical Report include a number of assumptions and estimates that could prove to be incorrect. Additionally, this two-step process to oxidize transition and sulfide ores before heap leaching to extract gold and silver is a new and relatively untested process, is used only on a limited basis worldwide and has not been widely accepted as a viable process. We cannot provide any assurance that the development and advancement of the Hycroft Mine transition and sulfide ores leaching operations will result in economically viable mining operations, yield new mineral reserves or other mineralized material, enable us to convert other mineralized material (included within mineral resources identified by the Hycroft Technical Report), or be implemented on an economic and profitable basis.

We currently depend on a single mine and there is no assurance that we will not incur any interruptions or stoppages in our mining activities which would have a material adverse effect on our results of operations and financial condition.

The Hycroft Mine is our only mining property. We can provide no assurance that we will be successful in profitably operating the Hycroft Mine using the sulfide leaching process. Further, any interruption in our ability to operate the Hycroft Mine, such as, but not limited to, a natural disaster, pandemic (such as the ongoing COVID-19 outbreak), loss of material permits, processing interruptions or difficulties or labor strike would have a materially adverse effect on our ability to produce gold and silver and to generate revenue.

Our reliance on third party contractors and consultants to conduct our operations and construction projects exposes us to risks.

In connection with the operation of the Hycroft Mine, we will contract and engage third party contractors and consultants to assist with aspects of our operations and related construction projects, including construction of the new leach pad, repair of the crushing facility, and mining of our ore and waste. As a result, our operations and construction projects are subject to a number of risks, some of which are outside our control, including:

negotiating agreements with contractors and consultants on acceptable terms;
the inability to replace a contractor or consultant and their operating equipment in the event that either party terminates the agreement;
reduced control over those aspects of operations which are the responsibility of the contractor or consultant;
failure of a contractor or consultant to perform under their agreement or disputes relative to their performance;
interruption of operations or increased costs in the event that a contractor or consultant ceases their business due to insolvency or other unforeseen events;
failure of a contractor or consultant to comply with applicable legal and regulatory requirements, to the extent they are responsible for such compliance; and
problems of a contractor or consultant with managing their workforce, labor unrest or other employment issues.

In addition, we may incur liability to third parties as a result of the actions of our contractors or consultants. The occurrence of one or more of these risks could decrease our gold and silver production, increase our costs, interrupt or delay our mining operations or our ability to access our ores, and adversely affect our liquidity, results of operations and financial position.

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Our lack of exploration activities will lead to our inability to replace depleted reserves.

To maintain production levels over time we must replace depleted reserves by exploiting known ore bodies and locating new deposits. Pursuant to Seller’s emergence from bankruptcy, all exploration properties other than those associated with the Hycroft Mine were sold in the chapter 11 proceedings. We have no current plans to continue further exploration other than related to the mining and processing of gold and silver contained in ore within the Hycroft Mine, and there can be no assurance that such projects will be successful. Our mineral base will decline if reserves are mined without adequate replacement, and we may not be able to sustain production beyond the currently contemplated mine life, based on projected production rates.

Land reclamation requirements for the Hycroft Mine may be burdensome and expensive.

Land reclamation requirements are generally imposed on companies with mining operations in order to minimize long-term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents; treat ground and surface water to drinking water standards; and reasonably re-establish pre-disturbance land forms and vegetation.

In order to carry out reclamation obligations imposed on us in connection with our activities, we must allocate financial resources that might otherwise be spent on further development programs. We have established a provision for our reclamation obligations on the Hycroft Mine property, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

The sale by Seller of mineral properties and suspension of acquisition and exploration activities greatly limit our ability to generate new reserves or identify other mineralized materials to replace or expand our current reserves.

The Hycroft Mine has a limited life based on proven and probable mineral reserves and resources. Identifying promising mining properties to expand and replace our mineral reserves and resources is difficult and speculative. As part of Seller’s emergence from federal bankruptcy proceedings, pursuant to its plan of reorganization, Seller sold its remaining exploration properties. The sale of such mineral properties greatly limits our ability to develop or grow our reserves or identify new mineral resources. As a result, our revenues from the future sale of gold and silver may decline, resulting in lower income and reduced growth. Further, we expect to encounter strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing gold and silver.

Although we are not currently conducting any acquisition and exploration activities, if or when those activities are resumed, we will face competition from many of these companies that have greater financial resources than we do. Consequently, we may be unable to replace and expand current ore reserves through the acquisition of new mining properties or interests therein on terms we consider acceptable.

A shortage of equipment and supplies and/or the time it takes such items to arrive at the Hycroft Mine could adversely affect our ability to operate our business.

We are dependent on various supplies and equipment to engage in mining and development operations. The shortage of such supplies, equipment and parts and/or the time it takes such items to arrive at the Hycroft Mine could have a material adverse effect on our ability to carry out our operations and develop the Hycroft Mine, and therefore limit or increase the cost of production. Such shortages could also result in increased construction costs and cause delays in expansion projects.

The inability to obtain soda ash or delays in obtaining soda ash could adversely affect our ability to profitably operate our business.

There are a limited number of suppliers that produce and supply soda ash and, to our knowledge, such suppliers do not typically mine soda ash in excess of what they believe they can sell. We have entered into a three-year agreement with a soda ash supplier to provide soda ash for our operations. However, if the contracted supplier cancels the contract, is unable to produce and supply enough soda ash or ceases operations because of the large quantities of soda ash required in our operations, we may have to temporarily stop mining until we can obtain a new contract to purchase soda ash. Further, we cannot provide any assurance as to the costs that we might incur in obtaining soda ash from a substitute supplier which could adversely affect the profitability and cash flow of our mining operations.

Changes in the cost or supply of energy or commodities used in operations may adversely affect the profitability of our operations and our financial condition.

Our mining operation is an intensive user of energy. Our principal energy sources are electricity and diesel fuel. We rely upon third parties for our supply of energy resources consumed in our mining activities. Energy prices can be affected by numerous factors beyond our control, including global and regional supply and demand, political and economic conditions, including the impact of

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global public health crises such as the spread of COVID-19 on the global economy, and applicable regulatory regimes. The prices of various sources of energy may increase significantly from current levels. An increase in energy prices could materially and adversely affect our results of operations and financial condition.

Disruptions in the supply of our energy resources could temporarily impair our ability to produce gold and silver or delay any construction or expansion projects or plans. Our mining operation is in a remote location requiring the long distance transmission of power. A disruption in the transmission of energy, inadequate energy transmission infrastructure or the termination of any of our energy supply contracts could interrupt our energy supply and adversely affect our operations or expansion projects.

Our production costs are also affected by the prices of commodities we consume or use in our operations, such as diesel fuel, sodium cyanide, soda ash, lime, tires, and explosives. The prices of such commodities are influenced by supply and demand trends affecting the mining industry in general and other factors outside our control. Increases in the price for materials consumed in our mining and production activities could materially and adversely affect our liquidity, results of operations, financial condition and cash flows.

We cannot be certain that our future development activities will be commercially successful.

Substantial expenditures are required to construct additional leach pads to extract gold and silver from our transition and sulfide ore utilizing the new metallurgical processes to extract gold and silver from the transition and sulfide ores described in the Hycroft Technical Report, to further develop the Hycroft Mine to identify new mineral reserves and resources, and to expand or establish mineral reserves and resources through drilling and analysis. We cannot provide assurance that our process to extract gold and silver from transition and sulfide ores using a heap leach process can be maintained on an economic and profitable basis, that any mineral reserves or resources discovered will be in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on a timely or economic basis. A number of factors, including costs, actual mineralization, consistency and reliability of ore grades and commodity prices affect successful project development. The efficient operation of processing facilities, the existence of competent operational management, as well as the availability and reliability of appropriately skilled and experienced consultants also can affect successful project development. We can provide no assurance that the development and advancement of the Hycroft Mine sulfide leaching operations will result in economically viable mining operations or yield new mineral reserves or resources.

We may be adversely affected by challenges relating to slope stability.

Our open pit mine gets deeper as we mine it, presenting certain geotechnical challenges including the possibility of slope failure. If we are required to decrease pit slope angles or provide additional road access to prevent such a failure, our stated mineral reserves could be negatively affected. Further, hydrological conditions relating to pit slopes, renewal of material displaced by slope failures and increased stripping requirements could also negatively affect our stated mineral reserves. We cannot provide any assurances that we will not have to take additional action to maintain slope stability in the future or that our actions taken to date will be sufficient. Unexpected failure or additional requirements to prevent slope failure may negatively affect our results of operations and financial condition, as well as have the effect of diminishing our stated ore reserves.

The Sprott Credit Agreement and Sprott Royalty Agreement impose significant operating and financial restrictions that may limit our ability to operate our business.

The Sprott Credit Agreement and the Sprott Royalty Agreement impose significant operating and financial restrictions on us and our restricted subsidiaries. These restrictions limit our ability and the ability of our restricted subsidiaries to, among other things, as applicable:

incur additional debt;
pay dividends or make other restricted payments, including certain investments;
create or permit certain liens;
sell assets;
engage in certain transactions with affiliates; and
consolidate or merge with or into other companies, or transfer all or substantially all of our assets or the assets of our restricted subsidiaries.

These restrictions could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities.

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In addition, the Sprott Credit Agreement and the Sprott Royalty Agreement require us to comply with a number of customary covenants, including:

covenants related to the delivery of monthly, quarterly and annual financial statements, budgets and annual projections;
maintaining required insurance;
compliance with laws (including environmental);
compliance with ERISA;
maintenance of ownership of 100% of the Hycroft Mine;
restrictions on consolidations, mergers or sales of assets;
limitations on liens;
limitations on issuance of certain equity interests;
limitations on issuance of additional indebtedness;
limitations on transactions with affiliates; and
other customary covenants.

We cannot assure you that we will satisfy these covenants or that our lenders will waive any future failure to do so. A breach of any of the covenants under the Sprott Credit Agreement and the Sprott Royalty Agreement could result in a default. If a default occurs under the Sprott Credit Agreement and the Sprott Royalty Agreement, the lenders could elect to declare the debt, together with accrued interest and other fees, to be immediately due and payable and proceed against the collateral securing that debt, which, in the case of the Sprott Credit Agreement and the Sprott Royalty Agreement, constitutes all or substantially all of our assets.

Our substantial indebtedness could adversely affect our financial condition.

We have a significant amount of outstanding indebtedness. As of June 30, 2020, the carrying value of the obligations under the Sprott Credit Agreement and the Subordinated Notes were $63.1 million and $80.7 million, respectively. Subject to the limits contained in the Sprott Credit Agreement and the Sprott Royalty Agreement, if we are able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes, then the risks related to our high level of debt could intensify. Our high level of debt and royalty payment obligations could:

make it more difficult for us to satisfy our obligations with respect to our outstanding debt;
require a substantial portion of our cash flows to be dedicated to debt service and/or royalty payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;
increase our vulnerability to commodity price volatility, including increases in prices of commodities that we purchase and decreases in prices of gold and silver that we sell, each as part of our operations, general adverse economic and industry conditions;
limit our flexibility in planning for and reacting to changes in the industry in which we compete;
place us at a disadvantage compared to other, less leveraged competitors; and
increase our cost of borrowing.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under our debt, and the price of our Common Stock. The Sprott Credit Agreement and the Sprott Royalty Agreement each contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of nearly all of our debt.

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If we default on our obligations to pay any of our indebtedness or otherwise default under the agreements governing our indebtedness, lenders could accelerate such debt and we may be subject to restrictions on the payment of our other debt obligations or cause a cross-acceleration.

Any default under the agreements governing our indebtedness that is not waived by the required lenders or holders of such indebtedness, and the remedies sought by the holders of such indebtedness, could prevent us from paying principal, premium, if any, and interest on other debt instruments. If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness and royalty payment obligations, or if we otherwise fail to comply with the various covenants in any agreement governing our indebtedness, we would be in default under the terms of the agreements governing such indebtedness and other indebtedness under the cross-default and cross-acceleration provisions of such agreements. In the event of such default:

the lenders or holders of such indebtedness could elect to terminate any commitments thereunder, declare all the funds borrowed thereunder to be due and payable and, if not promptly paid, in the case of our secured debt, institute foreclosure proceedings against our assets; and
even if these lenders or holders do not declare a default, they may be able to cause all of our available cash to be used to repay indebtedness owed to them.

As a result of such default and any actions the lenders may take in response thereto, we could be forced into bankruptcy or liquidation.

We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on our debt and royalty obligations or refinance our debt obligations (if necessary) depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control, including the market prices of gold and silver. We may be unable to maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness and our royalty obligations.

If our cash flows and capital resources are insufficient to fund our debt service obligations and our royalty obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Sprott Credit Agreement and the Sprott Royalty Agreement restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service and royalty payment obligations then due.

In addition, we conduct a substantial portion of our operations through our subsidiaries, certain of which in the future may not be guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

Our inability to generate sufficient cash flows to satisfy our debt and royalty obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations.

If we cannot make scheduled payments on our debt, we will be in default and the lenders under the Sprott Credit Agreement and the Sprott Royalty Agreement could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.

Seller’s history of operations included periods of operating and net losses, and we may incur operating and net losses in the future. Seller’s significant net losses and Seller’s significant amount of indebtedness led Seller to declare bankruptcy in 2015.

Prior to Seller’s emergence from bankruptcy proceedings on October 22, 2015, Seller generated operating losses of $368.9 million for the period from January 1, 2015 through October 22, 2015 and $480.1 million for the year ended December 31,

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2014. In the years ended December 31, 2018 and 2017, Seller generated operating losses of $8.2 million and $32.9 million, respectively, and net losses of $55.8 million and $74.1 million, respectively. In connection with the restart of operations beginning in 2019, in the year ended December 31, 2019, we generated operating losses of $33.9 million and net losses of $98.9 million. Additionally, Seller generated operating losses of $49.6 million and net losses of $84.4 million for the six months ended June 30, 2020. If we continue to suffer operating and net losses, our business, financial condition, results of operations and cash flows may be negatively impacted.

We have material indebtedness. We may not generate sufficient revenues in future periods to cover our payment obligations under the Sprott Credit Agreement, the Subordinated Notes, and the Sprott Royalty Agreement to pay for all of our operating or other expenses, which could have a material adverse effect on our business, results of operations and financial condition.

The chapter 11 proceedings may have disrupted our business relationships, which may materially and adversely affect our operations.

The chapter 11 reorganization that Seller went through in 2015 may have created a negative public perception of us in relation to our competitors and adversely impacted our relationships with our employees, suppliers, customers and other parties. Consequently, our relationships with our customers, suppliers, certain liquidity providers and employees may have been adversely impacted and our operations, currently and going forward, could be materially and adversely affected, such as if we are not extended customary business credit or payment terms.

If we lose key personnel or are unable to attract and retain additional personnel, we may be unable to develop our business.

Our development in the future will be highly dependent on the efforts of key management employees, and other key employees that we may hire in the future. We will need to recruit and retain other qualified managerial and technical employees to build and maintain our operations. If we are unable to successfully recruit and retain such persons, our development and growth could be significantly curtailed.

We are dependent upon information technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.

We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design. Cybersecurity incidents, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, extortion to prevent or the unauthorized release of confidential or otherwise protected information and the corruption of data. Given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to production downtimes, operational delays, extortion, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, financial condition or results of operations.

We could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly or not properly integrated into our operations. System modification failures could have a material adverse effect on our business, financial position and results of operations and could, if not successfully implemented, adversely impact the effectiveness of our internal controls over financial reporting.

We may be subject to legal proceedings.

Due to the nature of our business, we may be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of our business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. We can provide no assurances that these matters will not have a material adverse effect on our business.

We are not currently a party to any forward sale or other significant hedging arrangements to protect against gold and silver prices and commodity prices and, as a result, our operating results are exposed to the impact of any significant decrease in the price of gold or silver or any significant increase in commodity prices.

We are not currently a party to any forward sales or other hedging arrangements to reduce the risk of exposure to volatility in commodity prices. Accordingly, our future operations will be exposed to the impact of any significant decrease in gold or silver prices

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and any significant increase in commodity prices. If such prices adversely change significantly, we will realize reduced revenues and increased costs.

Further, we cannot provide any assurance that the use of hedging techniques will always be to our benefit. Hedging instruments that protect against gold and silver market price volatility may prevent us from realizing the full benefit from subsequent increases in market prices with respect to covered production, which would cause us to record a mark-to-market loss, decreasing our profits. Hedging contracts also are subject to the risk that the other party may be unable or unwilling to perform its obligations under these contracts. Any significant nonperformance could have a material adverse effect on our financial condition, results of operations and cash flows.

Joint ventures and other partnerships may expose us to risks.

In the future, we may enter into joint ventures or other partnership arrangements with other parties in relation to the exploration, development and production of certain properties. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of constituting documents, and the pledge of joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture or partnership. Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or their properties and therefore could have a material adverse effect on our results of operations, financial performance and cash flows.

Our four largest stockholders will be able to exert significant influence over matters submitted to stockholders for approval, which could delay or prevent a change in corporate control or result in the entrenchment of management of our Board, possibly conflicting with the interests of our other stockholders.

Mudrick Capital, Whitebox, Highbridge and Aristeia beneficially owned approximately 43.8%, 24.1%, 13.8% and 9.2% of the outstanding shares of our Common Stock as of August 28, 2020 (excluding shares acquirable upon exercise of outstanding warrants held by Mudrick Capital, Whitebox, Highbridge and Aristeia and based on information filed with the SEC or otherwise provided by them), respectively. Because of their significant stockholdings, each of Mudrick Capital, Whitebox, and Highbridge could exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise influence our business. This influence could have the effect of delaying or preventing a change in control or entrenching management of our Board, which could conflict with the interests of other stockholders and, consequently, could adversely affect the market price of the Common Stock.

Risks Related to Our Common Stock and this Offering

The price of our Common Stock may be volatile, and you could lose all or part of your investment.

The trading price of our Common Stock following this offering may fluctuate substantially. This may be especially true for companies, like ours, with a small public float. The trading price of our Common Stock following this offering will depend on several factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Common Stock since you might be unable to sell your shares at or above the price you paid for them, if any. Factors that could cause fluctuations in the trading price of our Common Stock include:

price and volume fluctuations in the overall stock market from time to time;
volatility in gold and silver commodity prices and in the market prices and trading volumes of gold mining stocks;
changes in operating performance, including challenges to our ability to economically and profitably recover gold and silver through heap leaching of sulfide ores, and stock market valuations of other mining companies generally, or those in our industry in particular;
sales of shares of our Common Stock by us or our stockholders;
the public’s reaction to our press releases, other public announcements and filings with the SEC;
rumors and market speculation involving us or other companies in our industry;
actual or anticipated changes in our operating results or fluctuations in our operating results; actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

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litigation involving us;
developments; or disputes concerning our mining rights;
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
changes in accounting standards, policies, guidelines, interpretations or principles;
any major change in our management; and
other events or factors, including those resulting from war, global pandemics, incidents of terrorism or responses to these events.

In addition, the stock market in general, and the market for mining companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our Common Stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Common Stock shortly following this offering.

In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.

If securities or industry analysts issue an adverse opinion regarding our stock or do not publish research or reports about our company, our stock price and trading volume could decline.

The trading market for our Common Stock will depend in part on the research and reports that equity research analysts publish about us and our business. Currently, we do not have any analyst coverage and we may not obtain analyst coverage in the future. If we obtain analyst coverage, we would have no control over such analysts or the content and opinions in their reports. Securities analysts may elect not to provide research coverage of our company, and such lack of research coverage may adversely affect the market price of our Common Stock. The price of our Common Stock could also decline if one or more equity research analysts downgrade our Common Stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If one or more equity research analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline.

Substantial future sales of shares of our Common Stock could cause the market price of our Common Stock to decline.

The market price of shares of our Common Stock could decline as a result of substantial sales of our Common Stock, particularly sales by our significant stockholders, and/or sales by selling stockholders under an effective shelf registration statement, large number of shares of our Common Stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. As of August 27, 2020, we had outstanding 50,160,143 shares of Common Stock and 34,289,898 warrants exercisable at a price of $11.50 per share for an equivalent number of shares of Common Stock (not including the Seller warrants which, with an exercise price of $44.82 per share, are significantly out of the money).

We may issue additional shares of Common Stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Common Stock.

We may issue additional shares of Common Stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or our equity incentive plan, without stockholder approval, in a number of circumstances.

Our issuance of additional shares of Common Stock or other equity securities of equal or senior rank would have the following effects:

our existing stockholders’ proportionate ownership interest in us will decrease;
the relative voting strength of each previously outstanding share of Common Stock may be diminished; and
the market price of our shares of our Common Stock may decline.

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We do not intend to pay cash dividends for the foreseeable future.

We have agreed to restrictions against paying cash dividends in the Sprott Credit Agreement. We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our Common Stock if the market price of our Common Stock increases. Our Board retains the discretion to change this policy at any time subject to the restrictions to which we have agreed.

Anti-takeover provisions in our organizational documents and under Delaware law could make a third party acquisition of the Company difficult.

Our Second Amended and Restated Charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make it more difficult to remove management by our Board and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These provisions include:

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
the right of our Board to appoint a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our Board;
a prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders may only be called by members of our Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
the ability of our Board to determine whether to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
limiting the liability of, and providing indemnification to, our directors and officers; and
advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Hycroft.

As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our shares of Common Stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to the following:

exemption from the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act of 2002;
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements;
exemption from the requirements of holding non-binding stockholder votes on executive compensation arrangements; and
exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless the SEC otherwise determines, any future audit rules that may be adopted by the Public Company Accounting Oversight Board.

We could be an emerging growth company until the last day of the fiscal year following the fifth anniversary after our initial public offering, or until the earlier of (i) the last day of the fiscal year in which we have annual gross revenue of $1.07 billion or more, (ii) the date on which we have, during the previous three year period, issued more than $1 billion in non-convertible debt or (iii) the date on which we are deemed to be a large accelerated filer under the federal securities laws. We will qualify as a large accelerated filing as of the first day of the first fiscal year after we have (i) more than $700 million market value in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

We cannot predict if investors will find our Common Stock less attractive if we rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

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Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we are an “emerging growth company.”

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we filed with the SEC after our IPO, and generally requires a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company.” We could be an “emerging growth company” for up to five fiscal years.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

USE OF PROCEEDS

We estimate that the net proceeds from this offering after deducting estimated underwriters’ fees and offering expenses will be approximately $[●] million, or approximately $[●] million if the underwriters exercise their over-allotment option, based on an assumed public offering price of $[●] per share, which represents the midpoint of the price range set forth on the cover of this prospectus. We anticipate using the net proceeds from this offering to fund capital as we seek to continue to ramp up operations at the Hycroft Mine and to construct a new leach pad and associated infrastructure. Our actual use of the net proceeds may vary depending on our operating and capital needs from time to time.

CAPITALIZATION

The following table sets forth our cash and capitalization as of June 30, 2020:

On an actual basis; and
On an as-adjusted basis to reflect our receipt of the net proceeds from our sale of [●] shares of Common Stock in this offering at an assumed public offering price of $[●] per share, which was the closing sale price of our Common Stock on the Nasdaq Capital Market on [●], 2020, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our and Seller’s financial statements and the related notes thereto appearing elsewhere in this prospectus.

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As of June 30, 2020

 

    

Actual

    

As Adjusted(1)

(in thousands, except for share
numbers)

Cash, cash equivalents and short-term investments

$

47,293 

$

Current debt, net

— 

Long-term debt, net

139,044 

Total liabilities

195,404 

Stockholders’ equity (deficit):

Class A Common stock, $0.001 par value per share; 400 million shares authorized, actual and as adjusted; 50,160,042 shares issued and outstanding, actual; [●] shares issued and outstanding, as adjusted

Additional paid-in capital

466,047 

Accumulated deficit

(468,775)

Total stockholders’ equity

(2,723)

Total capitalization

$

192,681 


(1)A $1.00 increase or decrease in the assumed public offering price of $[●] per share, the last reported sale of our Common Stock on the Nasdaq Capital Market on [●], 2020, after deducting the estimated underwriting discounts and commissions and estimated offering expenses, would increase or decrease, as applicable, our as adjusted amount of each of cash, cash equivalents and short-term investments, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $[●], assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses. We may also increase or decrease the number of shares we are offering. Each 100,000 share increase or decrease in the number of shares offered in this offering would increase or decrease, as applicable, the as adjusted amount of each of cash, cash equivalents and short-term investments, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $[●], assuming that the assumed public offering price of $[●] remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses.

The number of shares of our Common Stock issued and outstanding actual and adjusted in the table above is based on 50,160,042 shares of Common Stock outstanding as of June 30, 2020, and excludes:

2,508,002 additional shares of Common Stock reserved for future issuance under our Incentive Plan;
34,289,999 shares of Common Stock issuable upon exercise of warrants outstanding as of June 30, 2020, with an exercise price of $11.50 per share; and
3,210,213 shares of Common Stock issuable upon exercise of 12,721,623 Seller warrants outstanding as of June 30, 2020, with an exercise price of $44.82 per share.

DILUTION

If you invest in our Common Stock in this offering, your ownership interest will be diluted to the extent of the difference between the public offering price per share of our Common Stock and the as-adjusted net tangible book value per share of our Common Stock immediately after this offering. Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of Common Stock in this offering and the as-adjusted net tangible book value per share of Common Stock immediately after completion of this offering.

The difference between the per share offering price paid by purchasers of our Common Stock in this offering and the net tangible book value per share of our Common Stock after this offering constitutes the dilution to purchasers in this offering. Net tangible book value (or deficit) per share is determined by dividing our net tangible book value (or deficit), which is our total tangible assets less total liabilities, by the number of outstanding shares of our Common Stock.

Our net tangible book deficit as of June 30, 2020, was $2.7 million, or $0.05 per share of Common Stock.

After giving effect to our sale of [●] shares of Common Stock in this offering at an assumed public offering price of $[●] per share, which was the closing sale price of our Common Stock on the Nasdaq Capital Market on [●], 2020, and after deducting the underwriting discount and estimated offering expenses payable by us in connection with this offering, our net tangible book value as of June 30, 2020 would have been $[●], or $[●] per share. This represents an immediate increase in net tangible book value to existing

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stockholders of $[●] per share and an immediate dilution to new investors of $[●] per share. The following table illustrates this per share dilution:

Assumed public offering price per share

    

    

$

Historical net tangible book deficit per share as of June 30, 2020

$

(2,723)

Increase in net tangible book value per share attributable to new investors in this offering

$

As adjusted net tangible book value per share after this offering

$

Dilution per share to new investors in this offering

$

If the underwriters exercise their option to purchase an additional [●] shares in full, the as-adjusted net tangible book value per share of our Common Stock immediately after this offering would be $[●] per share, and the dilution in net tangible book value per share to new investors in this offering would be $[●] per share, assuming a public offering price of $[●] per share, which was the closing sale price of our Common Stock on the Nasdaq Capital Stock on [●], 2020, and after deducting the underwriting discount and estimated offering expenses payable by us in connection with this offering.

A $1.00 increase (decrease) in the assumed public offering price of $[●] per share of Common Stock, which is the closing sale price of our Common Stock on the Nasdaq Capital Market on [●], 2020, would increase (decrease) the net tangible book value by $[●] per share (assuming no exercise of the underwriters’ option to purchase additional shares) and would increase (decrease) the dilution to new investors by $[●] per share (assuming no exercise of the underwriters’ option to purchase additional shares), assuming the number of shares of Common Stock offered, as set forth on the cover page of this prospectus, remains the same and without deducting the estimated underwriting discounts and offering expenses payable by us in connection with this offering.

If the underwriters exercise their option to purchase additional shares of Common Stock in full, the number of shares of Common Stock held by new investors will increase to [●], or approximately [●] percent, of the total number of shares of our Common Stock outstanding after this offering.

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DESCRIPTION OF BUSINESS

Overview

We are a U.S.-based gold producer that has historically focused on mining, developing, and exploring properties in the state of Nevada in a safe, environmentally responsible, and cost-effective manner. Gold and silver sales have historically represented 100% of our operating revenues and are expected to represent 100% of our operating revenues in the future. Accordingly, the market prices of gold and silver significantly impact our financial position, operating results and cash flows.

On May 29, 2020, we consummated the Recapitalization Transaction pursuant to which Acquisition Sub, our indirect wholly owned subsidiary, acquired all of the issued and outstanding equity interests of the direct subsidiaries of Seller and substantially all of the other assets and assumed substantially all of the liabilities of Seller. In connection with the completion of the Recapitalization Transaction, we changed our name from Mudrick Capital Acquisition Corporation to Hycroft Mining Holding Corporation.

The Hycroft Mine, our sole operating property, ranks among one of the 20 largest gold deposits in the world, and second largest in the United States, based on resource sizes.

Graphic


Source: Hycroft Technical Report and the Policy Perception Index from the Fraser Institute Fraser Institute Annual Surveys of Mining Companies 2019 and 2018

Hycroft AuEq. calculated based on Hycroft Technical Report commodity pricing of $1,300/oz for gold and $17.33/oz for silver; includes stockpiled sulfide ore.
Presents other assets’ gold and gold equivalent silver ounces converted at long-term street consensus pricing of $1,500/oz for gold and $18.00/oz for silver.
Lower risk denotes a Fraser Institute Policy Perception Index score above 75; mid risk indicates a Policy Perception Index score between 50 and 75; higher risk indicates a Policy Perception Index score below 50.

Recapitalization Transaction

As indicated above, the Company completed the Recapitalization Transaction with Seller on May 29, 2020, in accordance with the terms of the Purchase Agreement.

In accordance with the Purchase Agreement, Allied VGH Inc., a Nevada corporation (“Allied VGH”), and Allied Nevada Delaware Holdings Inc., a Delaware corporation (“Allied Delaware”), were converted into Delaware limited liability companies prior to the consummation of the Recapitalization Transaction. Pursuant to the Recapitalization Transaction, Acquisition Sub (a) acquired from Seller (i) all of the issued and outstanding equity interests of Allied Nevada Gold Holdings, LLC, a Nevada limited liability company, Allied VGH (as converted), and Allied Delaware (as converted), the direct subsidiaries of Seller and (ii) substantially all of the remaining assets of Seller subject to specified retained assets and (b) assumed substantially all of the liabilities of Seller, including, without limitation, the liabilities and obligations of Seller under the Seller Warrant Agreement.

The value of the aggregate consideration was estimated at approximately $615.0 million, which amount was inclusive of the value of the 15,140,584 shares of the Common Stock issued as consideration to Seller in the Recapitalization Transaction (and promptly distributed pro rata to Seller’s stockholders), the value of Seller’s debt assumed by the Company at the closing of the Recapitalization

27


Transaction, and the value of Seller’s debt paid off or exchanged for shares of Common Stock and cancelled by Seller at the closing of the Recapitalization Transaction.

On May 29, 2020, immediately prior to the consummation of the Recapitalization Transaction, the Company issued pursuant to the private investment an aggregate of 7,596,309 shares of Common Stock and 3,249,999 million PIPE warrants for an aggregate purchase price of approximately $76.0 million to the Initial Subscribers, pursuant to the terms of separate Subscription/Backstop Agreements. In addition, on May 29, 2020, immediately prior to the consummation of the Recapitalization Transaction, sponsor surrendered to the Company 3,511,820 founder shares (included in the 15,140,584 shares distributed pro rata to Seller’s stockholders) in accordance with the terms of the Purchase Agreement and the Parent Sponsor Letter Agreement.

At the consummation of the Recapitalization Transaction, the Company, sponsor, Cantor, Excess Noteholders and 1.5 Lien Noteholders that received shares of Common Stock upon exchange of Excess Notes and 1.5 Lien Notes, certain stockholders of Seller that received shares of Common Stock in the Recapitalization Transaction and, some of which are affiliates of the Company after consummation of the Recapitalization Transaction, the Initial Subscribers and Lender, and such persons or entities, collectively, referred to as “restricted stockholders,” entered into the Amended and Restated Registration Rights Agreement, pursuant to which the restricted stockholders are entitled to, among other things, customary registration rights, including demand, piggy-back and shelf registration rights, subject to cut-back provisions. Pursuant to the Amended and Restated Registration Rights Agreement, a registration statement on Form S-1 was filed with the SEC and declared effective on July 22, 2020, which registers for resale the Common Stock and certain warrants of the Company owned by the restricted stockholders. The restricted stockholders have agreed in the Amended and Restated Registration Rights Agreement not to sell, transfer, pledge or otherwise dispose of shares of Common Stock they hold or receive for certain time periods, ranging from between 30 days after the consummation of the Recapitalization Transaction for warrants purchased in the private investment to six months for shares received in the Note exchange, to one year after the consummation of the Recapitalization Transaction for converted founder shares, subject to certain exceptions.

Concurrently with the consummation of the Recapitalization Transaction, sponsor also purchased 3,125,000 shares of Common Stock and 2,500,000 forward purchase warrants to purchase one share of Common Stock per warrant for $11.50 per share, in accordance with the terms of the Forward Purchase Contract.

On October 4, 2019, Seller, as borrower, certain subsidiaries of Seller, as guarantors, Lender, and Sprott Resource Lending Corp., as arranger, executed a secured multi-advance term credit facility pursuant to which Lender committed to make, subject to certain conditions set forth therein, term loans in an aggregate principal amount up to $110.0 million (the “Initial Sprott Credit Agreement”). On May 29, 2020, the Company and certain of its subsidiaries, as guarantors, entered into the Amended and Restated Credit Agreement (the “Sprott Credit Agreement”) to update the conditions precedent and effect certain other changes to conform the terms of the Initial Sprott Credit Agreement to the details of the Recapitalization Transaction. At the consummation of the Recapitalization Transaction, the Company assumed the Initial Sprott Credit Agreement pursuant to the terms of the Purchase Agreement, entered into the Sprott Credit Agreement, borrowed $70.0 million under such facility and issued to Lender 496,634 shares of Common Stock equal to approximately 1% of the Company’s post-closing shares of Common Stock outstanding. In addition, concurrently with the consummation of the Recapitalization Transaction, the Company and HRD entered into the Sprott Royalty Agreement with Lender, pursuant to which, among other things, HRD received $30.0 million in cash consideration in exchange for a 1.5% net smelter perpetual royalty payment relating to the Hycroft Mine, the principal asset of HRD acquired in the Recapitalization Transaction.

On May 28, 2020, in connection with the closing of the Recapitalization Transaction, Seller, Acquisition Sub, the 1.25 Lien Noteholders and the 1.5 Lien Noteholders entered into an Omnibus Amendment to the Note Purchase Agreements and Exchange Agreement (the “Omnibus Amendment”), which effected certain technical changes, and added certain representations and warranties to, the Exchange Agreement.

On May 29, 2020, in connection with the consummation of the Recapitalization Transaction, the Company amended and restated its existing amended and restated certificate of incorporation (the “Second Amended and Restated Charter”) to:

(a)change the name of the Company to Hycroft Mining Holding Corporation;
(b)increase the total number of authorized shares of all classes of capital stock from 111,000,000 shares to 410,000,000 shares, consisting of (i) 400,000,000 shares of Common Stock and (ii) 10,000,000 shares of preferred stock;
(c)remove or amend those provisions of our prior certificate of incorporation which terminated or otherwise ceased to be applicable following the completion of the Recapitalization Transaction, including removal of certain provisions relating to the Company’s prior status as a blank check company and the Company’s Class B Common Stock that no longer applied;
(d)clarify the exclusive forum provision to provide the Court of Chancery of the State of Delaware as the exclusive forum for certain stockholder litigation shall not apply to any action to enforce any liability or duty under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, for which there is exclusive federal or concurrent federal and state jurisdiction;
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(e)permit stockholder action by written consent;
(f)provide that the Company will not be governed by Section 203 of the DGCL, and included a provision that is substantially similar to Section 203 of the DGCL, but excluded the investment funds affiliated with sponsor and their respective successors and affiliates and the investment funds affiliated with or managed by the Initial Subscribers from the definition of “interested stockholder,” and
(g)reclassify the board of directors.

Upon consummation of the Recapitalization Transaction, the Company assumed Seller’s liabilities and obligations under the Seller Warrant Agreement. Each Seller warrant outstanding and unexercised immediately prior to the effective time of the Recapitalization Transaction is exercisable to purchase shares of our Common Stock at an exercise price, as of July 1, 2020, of $44.82 per share, and each Seller warrant is exercisable into approximately 0.2523 shares of our Common Stock for a total of 3,210,213 shares of our Common Stock.

The foregoing descriptions of the Sprott Credit Agreements, the Sprott Royalty Agreement, the Seller Warrant Agreement, the Subscription/Backstop Agreements, the amendments thereto, the Amended and Restated Registration Rights Agreement, the Omnibus Amendment, and the Second Amended and Restated Charter do not purport to be complete and are subject to and qualified in their entirety by reference to such documents, copies of which are included as Exhibits 10.1, 10.2, 4.1, 10.3, 10.4, 10.5, 10.13 and 3.1, respectively, of the registration statement of which this prospectus forms a part.

Hycroft Business

General

Historically, gold and silver sales from the Hycroft Mine have represented 100% of Seller’s operating revenues and are expected to represent 100% of our operating revenues in the future. Due to declines in the price per gold and silver ounce in 2014 and 2015, Seller’s predecessor filed voluntary petitions for relief under the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware and on July 8, 2015, Seller’s predecessor announced that it had suspended mining operations. On October 22, 2015, Seller’s predecessor completed its financial restructuring process and emerged from the chapter 11 process.

Since suspending mining operations in July 2015, the Hycroft Mine’s operating cash flows have been limited and have related primarily to gold and silver produced from the previously mined ore that had been placed on leach pads. At the end of the first quarter of 2017, with the revenue from the gold and silver produced from the leach pads no longer covering the cost of the reagents necessary for production, the Hycroft Mine was placed into care and maintenance mode to minimize expenditures and conserve cash. Gold and silver production in care and maintenance is a byproduct of maintenance activities and not considered as sales revenues. The Hycroft Mine restarted mining operations during the first half of 2019. The first pour of gold and silver occurred in August 2019. As part of its restart of mining operations, Seller obtained a feasibility study as of July 31, 2019 for the heap leaching process for transition and sulfide ores.

Our sole operating mine, the Hycroft Mine, is an open-pit heap leach operation located approximately 54 miles west of Winnemucca, Nevada. Historically, gold and silver sales have represented 100% of our operating revenues and the market prices of gold and silver significantly impact our financial position, operating results and cash flows.

As reflected in the Hycroft Technical Report completed by M3 Engineering and Technology (“M3 Engineering”), SRK Consulting US (“SRK”) and Seller, compliant with the recently adopted Modernization of Property Disclosures for Mining Registrants (the “New Mining Rules”), which we have voluntarily adopted early, as of June 30, 2019, the Hycroft Technical Report reflected proven and probable mineral reserves of 11.996 million ounces of gold and 481.4 million ounces of silver, which were contained in oxide, transition and sulfide ores. The Hycroft Technical Report also reported, as of June 30, 2019, the following measured, indicated and inferred mineral resources of gold and silver contained in oxide, transition and sulfide ores (in 000’s):

Mineral Resources(1)

    

Gold (Oz)

    

Silver (Oz)

 

Measured(2)

649 

15,554 

Indicated(2)

3,050 

93,438 

Inferred

5,769 

129,754 


(1)Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination. The term “economically,” as used in the SEC’s New Mining Rules, means that profitable extraction or production has been established or analytically demonstrated in a feasibility study to be viable and justifiable under reasonable investment and market assumptions. The term “legally,” as used in the New Mining Rules definition of reserves, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, we must

29


have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with our current mine plans. In accordance with the New Mining Rules, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” used in this prospectus are defined in the New Mining Rules.
(2)The measured and indicated mineral resources are exclusive of those mineral resources modified to produce the reported mineral reserves.

The Hycroft Technical Report does not include any assumptions for the conversion of mineral resources to mineral reserves.

You are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC. You are also cautioned that mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence as to whether they can be economically or legally mined. Under the New Mining Rules, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. A significant amount of exploration must be completed in order to determine whether an inferred mineral resource may be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded to mineral reserves.

Prior to the suspension of mining operations on July 8, 2015, Seller’s predecessor recovered metals contained in oxide and transition ores through heap leach operations. As discussed below, the Hycroft Mine’s current mining plan and operations involve oxidizing and leaching transition and sulfide material in a heap leach application. As of July 31, 2019, based upon the findings in the Hycroft Technical Report, about 94% of the Hycroft Mine’s ore contains enough refractory gold to economically justify pretreatment by pre-oxidation prior to cyanide leaching.

Historical Test Work

Beginning in 2007, Seller’s predecessor examined milling options to expand production, including direct cyanidation of high-grade oxide ore, and production of a flotation concentrate from sulfide ore, followed by an oxidative treatment of the concentrate. The original focus was on oxidation methods primarily employed in the Nevada gold industry, including pressure oxidation and roasting. Test work on these processes showed that each of these options could work well.

In 2013, Seller’s predecessor began testing a suite of alternative oxidation methods, including chlorination, ambient pressure alkaline oxidation, fine-grinding with intense cyanidation, and a procedure similar to the patented Albion Process. The goal was to develop an economically viable process that would be less expensive to build and operate than autoclaves and that would eliminate the need for offsite concentrate sales.

Batch test results were positive and indicated that the Hycroft Mine’s concentrates were amenable to oxidation under atmospheric conditions, using trona as the acid neutralizing agent. Continuous pilot plant testing on three main domains was completed at Hazen Research to confirm these results.

In 2016, the viability of the atmospheric oxidation process using trona was demonstrated in a 10 ton-per-day integrated pilot plant at the mine site. This plant included primary grinding of 3/8” material, followed by flotation, atmospheric oxidation, cyanide leaching, counter-current decantation and Merrill-Crowe precipitation.

Previous testing and analysis of the Hycroft Mine indicated that transition and sulfide ore can be oxidized in a heap leach operation prior to irrigation with cyanide solution and previous studies have all contributed to the development of the proposed process for the two-stage, heap oxidation and subsequent leaching of sulfide and transition ores. Aside from offering an extensive characterization of the ore, our past test work has served to demonstrate the relationship between oxidation and recovery, to quantify the carbonate consumption requirements for oxidation and to establish reaction rates under varying operating conditions. Knowledge of the oxidation mechanism that was established in past work has favorably assisted the advancement of the pre-oxidation process that we are using at the Hycroft Mine.

The Hycroft Technical Report prepared by M3 Engineering, in association with SRK and Seller was issued effective July 31, 2019 and followed the requirements of the New Mining Rules. The Hycroft Technical Report provides the results of the heap leach feasibility study that evaluated the possibility of oxidizing and leaching transitional and sulfidic material in a heap leach application. The Hycroft Technical Report presents a mineral reserve and resource estimate, a supporting life-of-mine plan and the results of metallurgical testing to determine the applicability of oxidizing and leaching transition and sulfide ore in a heap leach process. The metallurgical testing includes three phases of the ongoing test program using extensive column and bottle roll test work. The objective

30


of the Hycroft Technical Report was to determine if soda ash, a refined form of trona, can be used to oxidize sulfides in a heap leach operation prior to irrigation with cyanide solution. This process, which is the subject of a pending patent application, is intended to accomplish two goals, namely, the liberation of gold and silver in the sulfides by oxidation, thereby increasing its recovery, and the reduction of the heap’s potential to turn acidic during cyanide leaching.

Over a decade of research into various carbonate oxidation systems has laid the foundation for the pre-oxidation and cyanidation process. A history of processes that have contributed to the development of this technology is included in the Hycroft Technical Report to show the progression of the mechanism used for oxidation as well as the logic that led to current operating procedures.

The metallurgical test programs conducted on the Hycroft Mine deposit consisted of a series of comminution, flotation, concentrate oxidation, and cyanide leaching tests on whole ore, flotation tailing, and oxidized sulfide concentrate. The samples were mostly derived from drill cores.

Ore is classified as “oxide,” “transitional,” or “sulfide,” depending on the solubility of its gold content in cyanide solution (refractoriness). Ores having cyanide soluble gold contents of 70% or higher are classified as oxide ore. Those with cyanide-soluble gold contents below 30% are considered sulfide. The remainder, with cyanide-soluble contents between 30 to 70% are considered transition ores. The classification has been shown to have no strong correlation with sulfide sulfur content.

Heap Leach Test Work

In October 2015, Seller began testing the possibility of oxidizing (using trona to manage the pH) and leaching the transition and sulfide ores in a heap leach scenario in order to reduce the capital intensity of recovering the gold and silver ounces contained in such ores. Heap leach oxidation and cyanide leach tests began with traditional column lab work. Core samples for metallurgical testing were selected to represent the most significant domains within the orebody. Central, Brimstone and Vortex, will be the main sources of ore going forward. Tests were conducted in plexiglass cylindrical columns that were 1-ft diameter and 4-ft high. Ore samples were crushed to 1/2”, blended and loaded into the columns.

Between the oxidation and leach stages, the columns were rinsed with water followed by lime-saturated water. The objective of the water rinse was to remove as much of the sulfate produced and excess carbonate alkalinity as practicable from the ore column. Sulfate that remains will react with calcium in the leach solution to precipitate CaSO4, which could form a passivation layer over the solids that are being leached. Bicarbonate has been shown to react with cyanide resulting in high cyanide consumptions. The objective of the lime-water rinse was to neutralize residual bicarbonate after the water rinse. Depending on the efficiency of the water rinse, the lime-saturated rinse may not be required but this will have to be tested to determine the trade-off between the cost of lime-water rinse and the cyanide loss.

Oxidation was performed for different periods ranging from 60 days to 180 days, by adding soda ash to the ore column and applying just enough solution to the column to keep the ore wet. This status was maintained to ensure that the interstices in the ore column are filled with oxygen-supplying air and not flooded with solution. A small amount of solution was allowed to drain at the bottom of the column, enough to collect at least 50 ml of sample each day for pH analysis, and to create a weekly composite for sulfate analysis. Oxidation was tracked by the amount of sulfate produced.

The results of the column oxidation followed by leach tests in general supported the hypothesis that higher oxidation levels of transition and sulfide ores produce better gold and silver recoveries in the subsequent cyanide leach process. From the overall trend observed in the test results, it appears that gold recoveries of 70% are possible for all the domains if the conditions are right. It is recommended that testing be continued using optimal conditions to provide experimental support for this recovery target. These optimal conditions include soda ash dosage, crush size, oxidation time, maintaining moist conditions during oxidation and ensuring access to air. During operations, testing of ore is likewise recommended to fine tune the conditions to be used in the heap. The duration of the oxidation cycle is variable and dependent on parameters found in the head assay.

While trona was initially used in testing to manage the pH and alkalinity during oxidation, for commercial production Seller determined to use soda ash, a trona product, as they believed that soda ash can deliver higher carbonate concentrations than trona and requires less mass to be moved and stored in order to provide the same total alkalinity.

31


As reported in the Hycroft Technical Report, operating parameters and expected recoveries for heap leaching were as follows:

Domain

    

Nominal* Target
Oxidation, %

    

CN —Leach Time,
days

    

Au Recovery, %

    

Ag Recovery, %

Northwest (Bay)

31 

60 

55 

55 

West (Central)

40 

60 

70 

70 

Southwest (Camel) Above Water Table

40 

60 

70 

70 

Southwest (Camel) Below Water Table

40 

60 

65 

70 

Brimstone

40 

60 

65 

70 

Vortex

40 

60 

65 

70 

The Hycroft Technical Report indicated that maximum recoveries can be attained if the correct operating conditions are observed, including the following:

1.It is essential that pH be maintained above 9.5 during the oxidation process but not higher than 11. This ensures that the catalytic action of the ferrous-ferric carbonate redox pair is prevailing.
2.The total carbonate alkalinity must be maintained at a minimum of 20,000 parts per million, preferably up to 60,000 ppm to stabilize enough iron in solution.
3.During oxidation, the ore must be maintained wet.
4.However, the heap must not be saturated with solution to allow oxygen to migrate to the oxidation sites.
5.When the desired oxidation level is attained, excess carbonate and bicarbonate must be rinsed out of the heap. This may be followed by a lime water rinse to neutralize any residual carbonate.

Maintaining permeability in the heap is important during both oxidation and leach stages.

Hycroft Business Strategy

Based on the test work outlined above, we have developed a mine plan to profitably produce gold and silver at the Hycroft Mine (in a stable jurisdiction) that focuses on two-stage, heap leach oxidation of transition and sulfide ores using soda ash to manage the pH

32


and alkalinity during oxidation and subsequent cyanidation of the oxidized ores. The following simplified schematic outlines the process that we intend to use, which is further described in the Hycroft Technical Report.

Graphic

Restart of Mining and Leach Pad Expansion Project

Under the mine plan that was developed by Seller, we currently intend to mine using typical truck and shovel open pit mining methods.

The Hycroft Technical Report contemplates that the Hycroft Mine will ramp up production over five years to the design crushed ore tonnage of 36 million tons per year, starting with 4.5 million tons in 2019, 12.6 million tons in 2020, 23.3 million tons in 2021, and reaching the target 36 million tons per year in 2024. The Company currently believes that the Hycroft Mine's production is approximately one year behind the production levels described in the Hycroft Technical Report.

The yearly tonnage will be supplemented by a small percentage of ore that will be placed and leached as run-of-mine ore.

Mining at the Hycroft Mine is currently in the initial stage of our restart plan. In connection with the restart of mining operations, we made repairs to the crushing system. Our primary crusher was reconditioned and brought into operation in late March 2019. Our secondary and tertiary crushers were also recommissioned and brought into operation in March. During the second quarter of 2020, we commenced in-pit contractor drilling and blasting activities to provide fresh ore feed for the crusher, fresh run-of-mine ore and waste removal in support of the full year plan. We currently operate the Brimstone Merrill-Crowe facility and refinery and have begun planning to restart the North Merrill-Crowe plant in 2021 to meet our expectations of increasing solution flows from the new leach pad. With 24-hour mining operations, we are currently operating with our own fleet of six 200-ton haul trucks, two shovels, and support equipment, supplemented with a contractor’s fleet of one shovel, seven 240-ton haul trucks and one loader. Gold and silver ounces produced, and related ounces sold, were lower than levels set forth in the Hycroft Technical Report due to our inability to properly execute our processing plans and delays in getting the pads under leach. However, we continue to believe that the production level referenced in the Hycroft Technical Report are ultimately achievable once infrastructure is ramped up and we can execute the mine and processing plans successfully.The gold and silver grades of ore mined in the first half of 2020 were as planned and decreased from the comparable period of 2019 in which existing higher grade stockpile ore was mined prior to commencement of drilling and blasting activities.

33


Thus far, our demonstrated process on initial leach pads one and two is achieving higher than feasibility level gold recoveries for Brimstone ore (82% versus 65% in the Hycroft Technical Report) and Central ore (91% versus 70% in the Hycroft Technical Report) as set forth in more detail below:

Brimstone, Vortex, lower Camel Testing

Represents:

81% of total reserve ore tons
81% of total reserve gold ounces
85% of total reserve silver ounces

Recoveries:

82% and 91% vs Hycroft Technical Report of 65%
Rate of Oxidation 21% faster than the Hycroft Technical Report
76 operating days per annum increase

Gold Produced:

Using 80% recovery: +1.3M oz gold sold with no additional operating costs

Graphic

Central Testing

Represents:

19% of total reserve ore tons
18% of total reserve Gold ounces
14% of total reserve Silver ounces

Recoveries:

95% and 91% vs Hycroft Technical Report of 70%
Rate of Oxidation 21% faster than the Hycroft Technical Report
76 operating days per annum increase

34


Gold Produced:

Using 80% recovery: +0.4M oz gold sold with no additional operating costs

Graphic

You are cautioned that these rates of recovery are initial results from only two of our leach test pads and do not represent our current overall recovery rate on the majority of our leach pads.

In July 2019, we received approval of an amendment to our permits for construction of a new leach pad. During the second quarter of 2020, we commenced a leach pad expansion project on the north side of the Hycroft Mine, having an ultimate pad capacity of 550 million tons. This expansion project will provide us with the leach pad space required for future operations. The initial stage of the leach pad expansion project is being constructed in two phases. The first phase will consist of approximately 4.0 million square feet of pad space and infrastructure for ponds, pipes and electricity, and the second phase will consist of approximately 4.6 million square feet (which we expect to construct in 2021). Thus far, all groundwork and the underliner have been completed, as well as the pond lining. We began placing the leach pad liner in mid-July of 2020. With respect to this first phase of leach pad expansion, we expect the earthworks and leach pad construction to be completed in the fourth quarter of 2020 and the related infrastructure completed and initially commissioned shortly thereafter.

The Hycroft Mine is a senior-scale asset with an expected average annual production of approximately 366,000 ounces of gold equivalents, based on a 34 year mine life for mining and processing mineral reserves. As set forth in the Hycroft Technical Report, the production schedule is based upon the following projections of average annual gold and silver production over the life-of-mine:

Production Schedule

Graphic


Source: Hycroft Technical Report

35


Note: Gold equivalent production calculated assuming $1,300/oz gold and $17.33/oz silver; See “Cautionary Note Regarding Forward-Looking Statements.”

The chart below presents life-of-mine (“LOM”) free cash flow projected by us to be generated by the Hycroft Mine over the 34 year LOM as presented in the Hycroft Technical Report, also using sale prices per ounce of $1,300 for gold and $17.33 for silver. See “Cautionary Note Regarding Forward-Looking Statements” section and Table 19-6 of the Hycroft Technical Report, filed herewith as Exhibit 96.1 for more detail on the line item components of the unlevered free cash flow estimates presented.

Graphic


1.Unlevered free cash flow is defined as after-tax cash flow provided by operating activities, plus changes in operating restricted funds, less capital expenditures.
2.Unlevered free cash flow is a non-GAAP financial measure. The Company’s projections of unlevered free cash flow are not based on GAAP net income/loss or cash flow provided by operating activities, respectively, and are anticipated to be adjusted to exclude the effects of events or circumstances over the periods presented that are not representative or indicative of the Company’s results of operations and that are not currently determinable. Due to the recent restart of operations, continuing ramp up of operations and the uncertainty of the likelihood, amount and timing of any such adjusting items, the Company does not have information available, without undertaking unreasonable efforts, to provide a quantitative reconciliation of any projected non-GAAP financial measures at this time.
3.Unlevered free cash flow is derived from an asset-level analysis of the Hycroft Mine, as provided in the Hycroft Technical Report.

The chart below provides additional cumulative financial projections of all-in-sustaining costs (“AISC”) and free cash flow contained in the Hycroft Technical Report. AISC and Unlevered Free Cash Flow are non-GAAP financial measures.

    

Years 1 – 5

    

Years 1 – 10

    

LOM

 

Production AuEq (k oz)

908 

2,812 

12,432 

AISC(1)(3) ($/ oz)

$

775 

$

766 

$

548 

Unlevered Free Cash Flow(2)(3)(4) ($mm)

$

123 

$

786 

$

5,062 

Capital ($mm)

$

225 

$

491 

$

758 


Source: Hycroft Technical Report

(1)AISC includes total production cash costs to be incurred at the Company’s mining operation, plus sustaining capital expenditures (once the initial capital is spent) and reclamation costs, less revenue generated from silver sales. Additionally, the measure seeks to reflect the full cost of gold production from the Company’s operations, therefore initial expansionary capital is excluded. Certain other cash expenditures, including income tax payments and financing costs are also excluded.

The Company believes that this measure represents the total costs of producing gold from current operations and provides the Company and other stakeholders with additional information of the Company’s operational performance and ability to generate cash flows. AISC, as a key performance measure, allows the Company to assess its ability to support capital expenditures and to sustain future production from the generation of operating cash flows. This information provides management with the ability to more actively manage capital programs and to make more prudent capital investment decisions.

36


The Company calculates AISC on a gold ounces sold basis, where silver revenue is treated as a reduction in operating costs. This performance measure was adopted as a result of an initiative undertaken within the gold mining industry; however, this performance measure has no standardized meaning and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company follows the guidance note released by the World Gold Council, which became effective January 1, 2014, in calculating AISC. The World Gold Council is a non-regulatory market development organization for the gold industry whose members comprise global senior gold mining companies.

(2)Unlevered free cash flow is defined as after-tax cash flow provided by operating activities, plus changes in operating restricted funds, less capital expenditures. The non-GAAP financial measure of Free Cash Flow is presented as an indicator of liquidity to determine amounts that can be reinvested in the Company’s core business.
(3)Unlevered free cash flow and AISC are non-GAAP financial measures. The Company’s projections of AISC and free cash flow are not based on GAAP net income/loss or cash flow provided by operating activities, respectively, and are anticipated to be adjusted to exclude the effects of events or circumstances over the periods presented that are not representative or indicative of the Company’s results of operations and that are not currently determinable. Due to the recent restart of operations, continuing ramp up of operations and the uncertainty of the likelihood, amount and timing of any such adjusting items, the Company does not have information available, without undertaking unreasonable efforts, to provide a quantitative reconciliation of any projected non-GAAP financial measures at this time.
(4)Unlevered free cash flow is derived from an asset-level analysis of the Hycroft Mine, as provided in the Hycroft Technical Report. The unaudited projected financial information of the Company includes certain adjustments to the unlevered free cash flow analysis to account for corporate costs and the Sprott Royalty Agreement at the corporate level.

The base case economic analysis provided in the Hycroft Technical Report indicates that the Hycroft Mine project has an after-tax Internal Rate of Return (“IRR”) of 148.6%, with a payback period of 2.5 years and with an after-tax Net Present Value (“NPV”) of $2.1 billion at a 5% discount rate. The economics incorporate updated metallurgical test work and operating costs and are based on long-term prices of $1,300 per ounce of gold and $17.33 per ounce of silver. The project economics are sensitive to metal price fluctuations, as demonstrated below:

Case

    

Metal Prices ($/oz.)

NPV 
Cumulative 
Unlevered FCF

NPV@ 5%

NPV @ 10%

After Tax IRR

    

Au

    

Ag

    

$ Billions

    

$ Billions

    

$ Billions

    

1

$

1,200 

$

16.50 

$

4.2 

$

1.7 

$

0.8 

80 

%

2

$

1,300 

$

17.33 

$

5.1 

$

2.1 

$

1.1 

148 

%

3

$

1,400 

$

18.67 

$

6.1 

$

2.6 

$

1.3 

304 

%

4

$

1,500 

$

20.00 

$

7.1 

$

3.0 

$

1.6 

N/A 

1.Downside Price (Reserve Price)
2.Financial Base Case
3.Moderate Price
4.Upside Price

*

Unlevered free cash flow and NPV are derived from an asset-level analysis of the Hycroft Mine, as provided in the Hycroft Technical Report. The unaudited projected financial information of the Company included certain adjustments to the unlevered free cash flow and NPV analyses to account for corporate costs and the Sprott Royalty Agreement at the corporate level.

In addition to metal prices, the business is sensitive to capital and operating costs as shown below.

Operating and capital cost sensitivity of the LOM heap leach operations (after tax), NPV@5% using long-term prices of $1,300 per ounce of gold and $17.33 per ounce of silver:

    

20%
Decrease

10%
Decrease

Base 
Case

10% 
Increase

20% 
Increase

 

Mining Cost

$

2.41 billion

$

2.25 billion

$

1.91 billion

$

1.75 billion

Processing Cost

$

2.43 billion

$

2.26 billion

$

2.1 billion

$

1.90 billion

$

1.72 billion

CapEx

$

2.18 billion

$

2.13 billion

$

2.03 billion

$

1.98 billion


1.Mine plan economics are resilient to small changes in mining and processing costs, due to the lower operating leverage.
2.Low sensitivity to capital expenditure, due to the Company’s capital-light restart, which leverages existing infrastructure.
3.Unlevered free cash flow and NPV are derived from an asset level analysis of the Hycroft Mine, as provided in the Hycroft Technical Report.

We have prepared the following comparison of price to net asset value (“P/NAV”) multiples of the Company and other junior gold and silver producers. As reflected in the base economic case set forth in the Hycroft Technical Report, our NPV@5% is projected at $2.1 billion using long-term prices of $1,300 per ounce of gold and $17.33 per ounce of silver. When adjusted for the Subordinated Notes of $80 million, $70 million of debt drawn under the Sprott Credit Agreement, the impact on the NPV of the sale of the 1.5% net smelter royalty ($84 million), the NPV of corporate, general and administrative expenses ($121 million) which is not part of the Hycroft Technical Report, and cash on hand at the closing of the Recapitalization Transaction ($66 million), the Net Asset Value

37


(“NAV”) is estimated to be approximately $1.8 billion. With approximately 50 million shares outstanding, and an assumed Common Stock price of $10.00 per share, we calculate an implied P/NAV multiple of approximately 0.3x.

Graphic

The potential NPV@5% values set forth in the Hycroft Technical Report are highly sensitive to variations in the price of gold and sliver. As reflected and calculated in the Hycroft Technical Report, a $100 per ounce change in the price of gold results in an increase or decrease of the NPV@5% of approximately $300 million and every $1.00 per ounce change in the price of silver results in an increase or decrease of the NPV@5% of approximately $125 million. Extrapolating the NPV@5% set forth in the Hycroft Technical Report for recent changes in the spot price for gold and silver would produce NPV@5% values along the line set forth in the following chart below:

Graphic

38



Source: Hycroft Technical Report.

Note: Assumes a 75:1 silver to gold ratio.
As of August 28, 2020, the London Bullion Market Association afternoon p.m. fix price for gold was $1,957 per ounce and the London Bullion Market Association fixing price for silver was $27.35 per ounce.

The assumptions made in preparing the Hycroft Technical Report and the projections of value and unaudited projected financial information may not reflect actual future conditions. The estimates and assumptions underlying the projections of value and unaudited financial information involve judgments with respect to, among other things, future gold and silver prices, ore reserves, recovery rates for both gold and silver, future environmental expenditures, input commodity prices and labor costs and availability of labor, power, transportation, equipment and infrastructure, including, among others, risks and uncertainties described under “Risk Factors — Risks Related to Our Industry”, “— Risks Related to Our Business” and “Cautionary Note Regarding Forward-Looking Statements”, all of which are difficult to predict and many of which are beyond our control. The underlying assumptions and projected results may not be realized and actual results differ. Additionally, although presented with numerical specificity, the projections of value and financial information with respect to the Company and the Hycroft Mine have not been audited and reflects numerous assumptions and estimates as to future events made by the Company’s management and the qualified persons in preparing the Hycroft Technical Report that our management believes were reasonably prepared.

You are cautioned not to place undue reliance on the projections of value and unaudited financial information set forth above. No representation is made by the Company or any other person to any stockholders regarding the ultimate performance of the Company compared to the information included in the above projections of value and unaudited projected financial information. The inclusion of projections of value and unaudited financial information in this prospectus should not be regarded as an indication that this information will be necessarily predictive of actual future events, and this information should not be relied on as such. The projections of value and unaudited financial information does not take into account any circumstances or events occurring after the date they were prepared, and, except as may be required in order to comply with applicable securities laws, none of the Company or any of its representatives intend to update, or otherwise revise, the unaudited projected financial information, or the specific projections presented, to reflect circumstances existing after the date when they were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

Processing

A significant portion of gold in the Hycroft Mine ore is refractory due to its association with pyrite, marcasite and other sulfides. About 94% of the ore contains enough refractory gold to economically justify pretreatment by pre-oxidation prior to cyanide leaching.

The heap leach operation is designed to treat three categories of ore, classified as described below, using the following methods:

Ore Category 1 (ROM ore) — lower grade ore with high cyanide soluble gold is routed directly to the leach pad and cyanide leached to extract gold and silver. This accounts for 4% of the ore over the life of mine. The gold contents are highly soluble and the remaining refractory gold contents are not projected to justify the time and expense of a pre-oxidation step, therefore it will be stacked as run of mine, or ‘ROM’. The ore in this category is typically defined as ‘ROM oxide’ or ‘ROM transition’.
Ore Category 2 (3/4” Crushed ore) — higher grade ore with high cyanide soluble gold is crushed to a P80 of 3/4” and cyanide leached to extract gold and silver. This accounts for 2% of the ore over the life of mine. The gold contents are highly soluble, but additional size reduction is expected to increase gold and silver recovery enough to justify the additional expense. The remaining refractory gold contents are not projected to justify the time and expense of a full pre-oxidation cycle. The ore in this category is typically defined as ‘3/4” crushed oxide’ or ‘3/4” crushed transition’.
Ore Category 3 (1/2” Crushed ore) — low cyanide soluble ratio ores are crushed to a P80 of 1/2”. The crushed ore is mixed with soda ash to induce an alkaline ‘pre-oxidation’ process. After the oxidation process has been completed to the desired extent, the ore will be rinsed sequentially with water and saturated lime solution, and then leached with cyanide to extract gold and silver. This accounts for 94% of the ore over the life of mine. The ore in this category is typically defined as ‘1/2” crushed sulfide’ or ‘1/2” crushed transition’. This process is the subject of a pending patent application.

Crushing Plant

The crushing system is designed to run a nominal capacity of 65,750 tons per day ramping up to 98,630 tons per day with the addition of two more tertiary crushers. The existing crushing system includes one primary crusher, two secondary crushers, and two tertiary crushers. The existing facility will be sufficient during the ramp-up period, but will require the addition of two more tertiary crushers to attain the design capacity.

39


Category 2 and Category 3 ores will be transported to the primary crusher dump pocket via haul truck. Prior to the primary crusher, the ore that is being routed as Category 3 will pass under a soda ash silo where a pre-determined amount of soda ash will be added to the ore to begin the pre-oxidation process. The ore will proceed through three stages of crushing and exit the tertiary crushers routed as either 3/4” crushed or 1/2” crushed. It will then be hauled to and stacked on the leach pads.

Pre-Oxidation

Pre-oxidation of the Category 3 ore will begin at the crusher using in-situ moisture and solid soda ash. The amount of soda ash required for the ore is relative to the percent sulfide-sulfur content of the ore. We will regularly sample the mined ore for reagent addition control.

After placing Category 3 ore on the heap, additional soda ash solution will be applied to bring the ore to field capacity (8 – 10% moisture). The solution in the heap will be replenished on a regular basis using soda ash solution in order to offset evaporation and carbonate consumption.

The dissolved oxygen required for the reaction will be replenished through solution to air contact; the oxygen will be monitored inside the heap using embedded recoverable sensors. If required, air inflow can be aided by installing large perforated piping at the bottom of each panel, with ends protruding out of the heap.

Pre-oxidation duration will be determined by the characteristics of the ore and the measured extent of oxidation based upon sulfate production. The extent of oxidation will be determined by the target recoveries for each domain and the initial cyanide soluble gold, which is translated to degrees of oxidation already achieved. The number of days required to attain target oxidation is dependent upon the sulfide-sulfur content of the ore with, higher sulfide-sulfur corresponding to longer oxidation cycles. The majority of the ore is expected to take between 30 and 120 days to finish pre-oxidation. This is measured between the day that soda ash is introduced to the ore at the crusher and the day that the ‘rinse’ cycle begins for the panel.

Rinse Cycle

When the pre-oxidation cycle has been completed, the Category 3 ore will be rinsed first with water, then with a saturated lime solution prior to the commencement of cyanidation leach. This is necessary to remove bicarbonate from the heap and prevent cyanide loss during leaching. The alkalinity of the solution in the heap is monitored to ensure rinse completion prior to the start of cyanidation.

Heap Leach Cyanidation

The cyanidation conditions for all placed ore will be the same regardless of crush size or the use of pre-oxidation. The pH will be controlled using lime. Category 1 and Category 2 ores, those ores not going through pre-oxidation or rinse are expected to undergo a 200-day primary leach cycle. Category 3 ore, having already been oxidized and rinsed, is expected to undergo a nominal 60-day primary leach cycle.

Merrill-Crowe and Refinery

Due to the high silver content of the pregnant solution, gold and silver is recovered by zinc cementation. We have two existing Merrill-Crowe plants, which are used to process pregnant solution from the heap leach operation. The older plant has a capacity of 4,500 gallons per minute. The newer plant is considerably larger, with a present capacity of 21,500 gallons per minute.

The wet filter cakes from the Merrill-Crowe circuits are transferred to retort pans, which are then put into a retort furnace to remove water and mercury. Water and then mercury are sequentially volatilized from the precipitate by heating the precipitate under a partial vacuum. The dried filter cake is mixed with flux, a clarifying agent used to remove certain impurities and reduce the melting point of elements in the precipitate, and then transferred to an electric arc furnace where it is smelted to produce doré.

Project Infrastructure

The future infrastructure for the Hycroft Mine heap leach project includes the existing infrastructure and the requirements of the project. Currently on site are administrative buildings, mobile equipment maintenance shops, two Merrill-Crowe processing plants, a three-stage crushing system, a refinery and heap leach pads. The site also has a modern communications system provided by microwave facilities, including cellular communications. Major infrastructure categories to be constructed for the project include:

Additional leach pad space and associated ponds, piping and other facilities;
Conveying and stacking;
Crushing system refurbishments; and

40


Rail siding.

Fresh water will be obtained from existing active and inactive production wells in a field west of the mine, and from mine dewatering. Plant water requirements are projected to fall below the current permitted water rights.

A rail siding will be constructed that will access the nearby main east-west rail line, which is operated by Union Pacific. The rail siding will be used to receive large quantities of bulk commodities such as soda ash and lime at a reduced cost of transportation versus trucking, while reducing the potential environmental and safety hazards associated with truck transportation. M3 Engineering has provided the design for the rail unloading and materials handling facilities at the rail siding.

Currently the final crushed ore product is loaded to trucks and transported to the heap. A conveyor stacking system is planned in the future which will directly convey the ore to the heap and eliminate the need for the truck haul.

Principal Products and Market Overview

The principal products that the Hycroft Mine produces are unrefined gold bars (doré) and in-process inventories (metal-laden carbon), both of which are sent to third party refineries before being sold, generally at prevailing spot prices, to financial institutions or precious metals traders. Doré bars and metal-laden carbon are sent to refineries to produce bullion that meets the required market standards of 99.95% pure gold and 99.90% pure silver. Under the terms of our refining agreements, doré bars and metal-laden carbon are refined for a fee, and our share of the refined gold and the separately-recovered silver are credited to our account or delivered to our buyers. As noted above, due to the expected higher silver content, we anticipate producing doré and not relying on the carbon-in-columns to produce the metal-laden carbon except in limited circumstances.

Product Revenues and Customers

For the year ended December 31, 2018 and the portion of 2019 prior to Seller resuming mining operations, Seller did not record revenues, with any sales of gold and silver recovered from care and maintenance of the leach pads and not reflecting material production amounts. Accordingly, they were deemed to be a byproduct (and a net expense) of the care and maintenance activities. We expect gold and silver sales to be our only source of future revenues. Even at full production levels, however, we do not believe we have any dependencies on any customers of our gold and silver due to the liquidity of the metal markets and the availability of metal traders and financial institutions. For the year ended December 31, 2019, gold and silver sales of 8,593 ounces and 52,036 ounces, respectively, were reported as revenue as the Hycroft Mine was operating. All gold and silver sales during the year ended December 31, 2019 were to the same customer. However, Hycroft is not obligated to sell all of its gold and silver to one customer.

Gold Uses

Gold has two main categories of use: fabrication and investment. Fabricated gold has a variety of end uses, including jewelry, electronics, computers, dentistry, industrial and decorative uses, medals, medallions and coins. Gold investors that want to own physical gold generally buy gold bullion, coins and jewelry.

Gold Supply

The supply of gold consists of a combination of current production from mining and metal recycling and the draw-down of existing stocks of gold held by governments, financial institutions, industrial organizations and private individuals. Based on publicly available information, gold production from mines was flat for 2019 compared to 2018 totaling approximately 3.46 metric tons (or 111 million troy ounces) and represented approximately 73% of the 2019 global gold supply.

Gold and Silver Prices

The prices of gold and silver are volatile and are affected by many factors beyond our control, such as the sale or purchase of gold and silver by central banks and financial institutions, inflation or deflation and monetary policies, fluctuation in the value of the US dollar and foreign currencies, global and regional demand, and the political and economic conditions of major gold producing

41


countries throughout the world. The following table presents the London Bullion Market Association annual high, low, and average afternoon fixing prices for gold and silver over the past ten years (in US dollars per ounce).

GOLD PRICES

SILVER PRICES

Year

    

High

    

Low

    

Average

    

High

    

Low

    

Average

 

2009

1,213 

810 

972 

19.18 

10.51 

14.67 

2010

1,421 

1,058 

1,225 

30.70 

15.14 

 

20.19 

2011

1,895 

1,319 

1,572 

48.70 

26.16 

35.12 

2012

1,792 

1,540 

1,669 

37.23 

26.67 

31.15 

2013

1,694 

1,192 

1,411 

32.23 

18.61 

23.79 

2014

1,385 

1,142 

1,266 

22.05 

 

15.28 

19.08 

2015

1,296 

1,049 

1,160 

18.23 

13.71 

15.68 

2016

1,366 

1,077 

1,251 

20.71 

13.58 

17.14 

2017

1,346 

1,151 

1,257 

18.56 

15.22 

17.04 

2018

1,355 

1,178 

1,268 

17.17 

13.97 

15.71 

2019

1,540 

1,270 

1,393 

19.30 

14.37 

16.21 

2020 (through August 28, 2020)

2,067 

1,474 

1,711 

28.33 

12.01 

18.38 

On August 28, 2020, the London Bullion Market Association afternoon p.m. fix price for gold was $1,957 per ounce. On August 28, 2020, the London Bullion Market Association fixing price for silver London Bullion Market Association was $27.35 per ounce.

Employees

We have 238 employees, of whom 228 are currently employed at the Hycroft Mine. None of our employees are represented by unions.

Competition

We compete with other mining companies in connection with hiring and retaining qualified employees. There is substantial competition for qualified employees in the mining industry, some of which is with companies having substantially greater financial resources and a more stable history. As a result, we may have difficulty hiring and retaining qualified employees.

Our management believes that no single company has sufficient market power to affect the price or supply of gold or silver in the world market.

Please see “Risk Factors — Risks Related to Our Industry — We face intense competition in the mining industry”, for additional discussion related to our current and potential competition.

DESCRIPTION OF PROPERTY

Our sole property is the Hycroft Mine. The Hycroft Mine is an open-pit (surface) gold and silver mine with a long history of operations as discussed below. Beginning in July 2015, mining operations at the Hycroft Mine were suspended and the Hycroft Mine was operated solely in a care and maintenance mode through December 31, 2018. Commencing in January 2019, efforts to ramp up and restart mining operations began. During the first quarter of 2019, Seller worked to bring our six haul trucks, two hydraulic shovels and one wheel loader back into operation. In addition, Seller began the rehabilitation of our crushing system and the construction of leach pad space to enable mining operations to begin in the second quarter of 2019. Initial gold and silver production occurred in August 2019. During the first half of 2020, Seller commissioned additional mobile fleet rentals, increased headcount, and commenced the construction of a new leach pad expansion and related infrastructure.

Historically, Seller’s predecessors held as many as 75 mineral exploration properties, all of which were sold in 2015 as part of Seller’s bankruptcy process.

Operating Properties

Hycroft Technical Report

The information that follows relating to the Hycroft Mine is derived, for the most part, from, and in some instances is an extract from, the Hycroft Technical Report prepared in compliance with the SEC’s New Mining Rules. Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full

42


text of the Hycroft Technical Report, filed with the SEC as Exhibit 96.1 to the registration statement of which this prospectus forms a part. The Hycroft Technical Report is incorporated herein by reference and made a part hereof.

The Hycroft Technical Report sets forth a revised process for mining that significantly reduces capital expenditures when compared to the prior plans to build a mill to process sulfide ores. A summary of the estimated capital expenditures for the first five years of operations at the Hycroft Mine based upon the Hycroft Technical Report is set forth below:

($000's)

    

Years 1-5

    

Year 1

    

Year 2

    

Year 3

    

Year 4

    

Year 5

Leach Pad & Pond Construction

$

50,831

$

31,951

$

18,425

$

$

455

$

Mobile Equipment

$

312

$

$

312

$

$

$

M3 Capital:

General

$

4,397

$

$

$

4,397

$

$

Primary Crushing

$

383

$

$

$

383

$

$

Secondary & Tertiary Crushing

$

40,419

$

$

$

9,911

$

9,459

$

21,050

Conveying & Stacking

$

65,924

$

$

$

12,991

$

12,991

$

39,941

Reagents

$

18,146

$

$

$

$

$

18,146

Rail Unloading & Storage

$

32,340

$

$

$

$

10,792

$

21,548

De-watering

$

10,401

$

$

3,850

$

376

$

2,385

$

3,791

Owner's Team

$

5,148

$

4,548

$

600

$

$

$

Other Annual Sustaining

$

2,500

$

500

$

500

$

500

$

500

$

500

Total Capital Expenditures

 

$

230,802

$

36,999

$

23,687

$

28,558

$

36,582

$

104,976

43


Hycroft Open Pit Mine

The following shows where the Hycroft Mine is located.

Graphic

44


Additionally, the below map shows the current property and facilities layout.

Graphic

The Hycroft Mine and related facilities are located 54 miles west of Winnemucca, Nevada. Winnemucca, a city with a population of approximately 7,000, is a commercial community on Interstate 80, 164 miles northeast of Reno. The mine property straddles

45


Townships 34, 35, 351∕2 and 36 North and Ranges 28, 29 and 30 East (MDB&M) with an approximate latitude 40°52’ north and longitude 118°41’ west.

The town is served by a transcontinental railroad and has a municipal airport. Access to the mine from Winnemucca is by Jungo Road, formerly designated as State Route 49, a good-quality, unpaved road, and a short access road to the main entrance of the mine. Well-maintained mine and exploration roads provide access throughout the property. Access is also possible from Imlay, Gerlach and Lovelock by unpaved roads intersecting Interstate 80 and Nevada State Route 447. The majority of our employees live in the Winnemucca area. The site receives electrical power provided by NV Energy from the northwestern Nevada power grid. Initial surveys indicate that the town of Winnemucca has the required infrastructure (shopping, emergency services, schools, etc.) to support the maximum workforce and dependents. The Hycroft Mine currently has water rights which are adequate to support our planned future heap leach operations. The mine is situated on the eastern edge of the Black Rock Desert and on the western flank of the Kamma Mountains between Winnemucca and Gerlach, Nevada. There are no streams, rivers or major lakes in the general area. Elevations in the mine area range between 4,500 and 5,500 feet above sea level.

The climate of the region is arid, with precipitation averaging 7.7 inches per year. Average temperatures during the summer range from 50°F to 90°F and average winter temperatures range from 20°F to 40°F.

We hold 30 private patented claims and 3,247 unpatented mining claims that constitute our Hycroft Mine operating property. The total acreage covered by unpatented claims is approximately 68,759 acres and an additional 1,912 acres is covered by patented claims. Combining the patented and unpatented claims, total claims cover approximately 70,671 acres. Our Hycroft Mine patented claims occupy private lands and our unpatented claims occupy public lands, administered by the BLM. These claims are governed by the laws and regulations of the U.S. federal government and the state of Nevada. To maintain the patented claims in good standing, we must pay the annual property tax payments to the county in which the claims are held. To maintain the unpatented claims in good standing, we must file a notice of intent to maintain the claims within the county and pay the annual mineral claim filing fees to the BLM. Such filing fees amounted to $0.6 million in 2020. As long as we file the annual notice and pay the claim filing fees, there is no expiration date for our unpatented claims.

A portion of the Hycroft Mine is subject to a mining lease requiring us to pay 4% net profit royalty to the owner of certain patented and unpatented mining claims, subject to a maximum of $7.6 million, of which $5.0 million remained payable as of June 30, 2020. There is no expiration date on the net profit royalty.

The Hycroft Mine was formerly known as the Crofoot-Lewis open pit mine, which was a small heap leaching operation that commenced in 1983. Vista Gold Corp., a corporation incorporated under the laws of the Yukon Territory (“Vista”), acquired the Crofoot-Lewis claims and mine in 1987 and 1988. During this first operating period the mine produced over 1.0 million ounces of gold and 2.5 million ounces of silver. The mine production continued until it was placed on a care and maintenance program in December 1998 due to low gold prices. Seller acquired the Hycroft Mine in 2007 pursuant to an arrangement agreement where Vista transferred its Nevada mining properties to Seller’s predecessor. Seller restarted the Hycroft Mine in 2008 and suspended mining operations on July 8, 2015. During 2016, Seller was actively processing and producing gold from the ore within the heap leach pads. On January 1, 2017, Seller went into a care and maintenance mode when it stopped adding lime to the leach pads and continued to operate in a care and maintenance mode throughout 2017 and 2018. Prior to restarting operations, production of gold and silver was a byproduct of Seller’s maintenance activities on the Hycroft Mine. In January 2019 Seller began the restart of mining operations. During the first quarter of 2019 Seller began operations again with six haul trucks, two hydraulic shovels and one wheel loader. In addition, Seller began the rehabilitation of its crushing system and the construction of new leach pad space to enable mining operations to begin in the second quarter of 2019. Initial gold and silver production occurred in August 2019.

On site facilities include an administration buildings, mobile maintenance shop, light vehicle maintenance shop, warehouse, leach pads, crushing system, two Merrill-Crowe process plants and a refinery. The components for a second refinery are on-site and will be constructed as part of the expansion of mining activities. The crushing system was refurbished as part of the restart activities and all other facilities are operational with the exception of the North Merrill-Crowe plant which is not required until 2021. The gross book value of property, plant and equipment associated with the Hycroft Mine as of December 31, 2019, was $68.4 million.

Geology

The Hycroft Mine is located on the western flank of the Kamma Mountains. The deposit is hosted in a volcanic eruptive breccia and conglomerates associated with the Tertiary Kamma Mountain volcanics. The volcanics are mainly acidic to intermediate tuffs, flows and coarse volcanoclastic rocks. Fragments of these units dominate the clasts in the eruptive breccia. The Central Fault and East Fault control the distribution of mineralization. A post-mineral range-front fault separates the ore-body from the adjacent Pleistocene Lahontan Lake sediments in the Black Rock Desert. The geological events have created a physical setting ideally suited to the open-pit, heap-leach mining operation at the Hycroft Mine. The heap leach method is widely used in the southwestern United States and allows the economical treatment of oxidized low-grade ore deposits in large volumes.

46


The deposit is typically broken into six major zones based on geology, mineralization, and alteration. These zones include Brimstone, Vortex, Central, Bay, Boneyard, and Camel. Breaks between the zones are major faults.

Mineralization at Hycroft has been deposited through multiple phases. An early silica sulfide flooding event deposited relatively low-grade gold and silver mineralization, generally along bedding. This mineralization is cross cut by later, steeply dipping quartz alunite veins. Late stage silver bearing veins are found in the Vortex zone and at depth in the Central area. Late to present supergene oxidation along faults has liberated precious metals from sulfides and further enriched gold and silver mineralization, along water table levels.

The known gold mineralization extends for a distance of three miles in a north-south direction by 1.5 miles in an east-west direction. Mineralization extends to a depth of less than 330 feet in the outcropping to near-outcropping portion of the deposit on the northwest side to over 2,500 feet in the Vortex deposit in the east.

Proven and Probable Mineral Reserves

Our mineral reserve estimates are calculated in accordance with subpart 1300 of Regulation S-K under the New Mining Rules of the Exchange Act. Proven and probable reserves may not be comparable to similar information regarding mineral reserves disclosed in accordance with the guidance of other countries. We conduct ongoing studies of our ore bodies to optimize economic values and to manage risk. We revise our mine plans and estimates of proven and probable mineral reserves as required and in accordance with the latest available studies. Our estimates of proven and probable reserves are prepared by and are the responsibility of our employees.

Our estimated proven and probable reserves are as of June 30, 2019, using prices of $1,200 per ounce for gold and $16.50 per ounce for silver. The gold and silver prices used in estimating reserves are lower than the trailing 3-year average price of $1,272.66 per ounce for gold and $16.53 per ounce for silver. The average London Bullion Market spot metal prices for each of the years ended December 31, 2019, 2018 and 2017 was $1,393, $1,268 and $1,257 per ounce for gold, respectively, and $16.21, $15.71 and, $17.04 per ounce for silver, respectively. Below is a summary of our estimated proven and probable ore reserves as of June 30, 2019.

Tons

Grades, oz/t

Contained Oz (000s)

 

    

(000s)

    

Au

    

Ag

    

Au

    

Ag

Proven (Heap Leach)

Oxide ROM

22,476 

0.009 

0.230 

205 

5,211 

Transition ROM

4,095 

0.008 

0.190 

32 

759 

Oxide 3∕4” Crushed

15,252 

0.012 

0.720 

184 

10,926 

Transition 3∕4” Crushed

4,399 

0.005 

0.310 

24 

1,367 

Transition 1∕2” Crushed

90,206 

0.011 

0.450 

948 

40,365 

Sulfide 1∕2” Crushed

250,906 

0.012 

0.470 

2,940 

116,818 

Total Proven Heap Leach

387,334 

0.011 

0.450 

4,333 

175,446 

Probable (Heap Leach)

Oxide ROM

13,145 

0.005 

0.230 

71 

3,005 

Transition ROM

3,660 

0.005 

0.140 

20 

505 

Oxide 3∕4” Crushed

3,001 

0.010 

0.690 

29 

2,063 

Transition 3∕4” Crushed

1,304 

0.004 

0.490 

644 

Transition 1∕2” Crushed

52,467 

0.010 

0.460 

504 

24,043 

Sulfide 1∕2” Crushed

663,071 

0.010 

0.410 

6,936 

272,271 

Total Probable Heap Leach

736,648 

0.010 

0.410 

7,565 

302,531 

Total Probable Sulfide Stockpile 1∕2” Crushed

9,079 

0.011 

0.380 

98 

3,422 

TOTAL PROVEN & PROBABLE MINERAL RESERVES

1,133,061 

0.011 

0.425 

11,996 

481,399 

Waste

1,321,853 

Total Tons

2,454,914 

Strip Ratio

1.17 


Mineral Reserves estimated according to the New Mining Rules definitions.
Mineral Reserves estimated at $1,200/oz Au and $16.50/oz Ag.
Cut-off grades used a Net Smelter Return (NSR) calculation.

47


Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding.

We did not use metal or equivalent metal cut-off grades in estimating proven and probable mineral reserves set forth in the table above and the complexity of the ore body resulted in the use of multiple metallurgical recovery factors by domain and process method, as reflected in the NSR calculations contained in Section 12 of the Hycroft Technical Report. NSR calculations were used as the basis of proven and probable mineral reserve estimations and for decisions influencing operating strategy, mine planning and design, because of differing mining and processing costs, recoveries, and the influence of both gold and silver. Factors including the variable ore types and mineralogy, different process streams and metallurgical recoveries, and related haulage distance can all cause variability in mining and processing costs and block value. Consequently, calculation of the breakeven NSR contained no profit assumptions and breakeven NSR cut-off as used in the mine plan has been determined to be US$0/t. Metallurgical recovery factors used to estimate proven and probable mineral reserves set forth in the table above are variable based upon the domain and processing method applied. Detailed domain specific metallurgical recoveries used to estimate proven and probable mineral reserves are set forth in Table 12-3 in Section 12 of the Hycroft Technical Report, including Au and Ag recoveries by domain for ROM Heap Leach Recovery, ¾” Crushed Heap Leach Recovery, and 1∕2” Crushed Heap Leach Recovery.

The reference point for mineral reserves is ore delivered to the leach pad and does not include reductions attributed to anticipated leach recoveries. In the case of the Hycroft Mine’s open pit, all costs are accounted for during the optimization phase of pit limit planning. Once the optimum pit extents have been determined, the decision to mine the material has been made and the cost incurred; the only task remaining then is to determine the optimal routing of the material. General and administrative expenses, as applied at Hycroft, are a fixed cost and do not vary by the tons mined or processed. As such, general and administrative costs are applied as an annual cost in the mine planning and not applied as a dollar to ton of ore processed. All material routing is based on optimal destination determination accounting for all applicable costs, recoveries, and limits (i.e., crushing capacity).

Typical break-even individual single metal cut-off grade listed for informational reference in the Hycroft Technical Report (Table 12-7) is as follows:

Process Method

    

Au (opt)

    

Ag (opt)

 

ROM Oxide Leach Recovery

0.006 

0.938 

ROM Transitional Leach Recovery

0.008 

1.115 

3/4” Crushed Oxide Leach Recovery

0.005 

0.793 

3/4” Crushed Transitional Leach Recovery

0.007 

0.835 

1/2” Crushed Transitional Leach Recovery

0.006 

0.420 

1/2” Crushed Sulfide Leach Recovery

0.007 

0.519 

The NSR calculation incorporates more than the typical single metal cutoff grades shown above, and the cutoff grades above, while typical, are not utilized in the estimation or reporting of mineral reserves. The NSR calculation covers all fixed and variable costs including mining, processing, sustaining capital deemed to be directly proportional to ore tonnage, general and administration, gross royalties, transport and shipping costs, smelting and refining costs, limits to payable metals, and refining penalties for deleterious metals. The following is an example of the method used to calculate the NSR expressed in US dollars per ton (US$/t):

NSR (US$/t) is calculated from the following equation:

NSR = (((Au Price - Au Selling) * Au Grade * Recovery Au * Au Refine) + ((Ag Price - Ag Selling) * Ag Grade * Recovery Ag * Ag Refine)) * (1 - Royalty) - Mine Cost - Process Cost - Soda Ash Cost - Sustaining Cost - G&A Cost

48


Where:

NSR

=

Net Smelter Return

Au Price

=

Au selling price in $ per troy ounce

Au Selling

=

bullion treatment and refining cost in $ per troy ounce

Au Grade

=

Au fire grade in troy ounces per ton

Recovery Au

=

% metallurgical recovery of Au by process route& domain

Au Refine

=

% payable for Au refining losses and deductions

Ag Price

=

Ag selling price in $ per troy ounce

Ag Selling

=

bullion treatment and refining cost in $ per troy ounce

Ag Grade

=

Ag fire grade in troy ounces per ton

Recovery Ag

=

% metallurgical recovery of Ag by process route& domain

Ag Refine

=

% payable for Ag refining losses and deductions

Royalty

=

% royalty (Note due to very limited royalty remaining, no royalty has been included)

Mine Cost

=

mining cost per ton by material type

Process Cost

=

process cost per ton by process type& domain

Soda Ash Cost

=

soda ash cost per ton

Sustaining Cost

=

sustaining cost per ton

G&A Costs

=

general and administrative cost per ton

In addition to the factors listed above, methods, material assumptions and criteria used for estimating mineral reserves, as set forth in Section 12 of the Hycroft Technical Report, are as follows:

Costs were generated by Hycroft personnel, metallurgical recoveries were developed by M3 Engineering, and slope inputs supplied by Call and Nicholas and Golder Associates.
An NSR was generated for each 40 ft x 40 ft x 40 ft block for each of the processing methods available at Hycroft, which are the following:
Run-of-Mine (ROM) Heap Leaching of oxide and transitional material;
3∕4” Crushed Heap Leaching of oxide and transitional material;
1∕2” Crushed Heap Leaching of transitional and sulfide material; and
Assumed gold and silver prices of $1,200 and $16.50 per ounce, respectively.
Economic pit limits were determined with Geovia Whittle® Strategic Planning software.
Open pit designs were completed utilizing Maptek Vulcan 3D mine design software.
Mine planning was completed using Minemax strategic and operational mine planning software and the processing method that returned the highest net value was selected. If all processing methods returned a negative value, the block was classified as waste.

49


Soda ash assumptions set forth in Table 12-4 in Section 12 of the Hycroft Technical Report were as follows:

Soda Ash Cost

=

Cost of Soda Ash x Soda Ash Required

Cost of Soda Ash

=

$0.11 per pound

Soda Ash Required

=

% Oxidation x 2000 x%Sulfide Sulfur x 1.57

% Oxidation

=

(Target Oxidation — ratio_au) / Liberation Rate

Target Oxidation

:

Bay = 55%; All Others = 70%

ratio_au

=

aucn block grade / aufa block grade

Liberation Rate

if (ratio_au le 0.05) then = 1.77

if (ratio_au le 0.10) then = 1.89

if (ratio_au le 0.15) then = 1.99

if (ratio_au le 0.20) then = 2.09

if (ratio_au le 0.25) then = 2.18

if (ratio_au le 0.30) then = 2.27