HYCROFT MINING HOLDING CORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

1. Company Overview

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

The Company restarted pre-commercial scale open pit mining operations at the Hycroft Mine during the second quarter of 2019 and began producing and selling gold and silver during the third quarter of 2019. The Company operated the Hycroft Mine until November 2021, when it discontinued active mining operations as a result of the then-current and expected ongoing cost pressures for many of the reagents and consumables used at the Hycroft Mine and to further determine the most effective processing method for the sulfide ore. In March 2023, the Company, along with its third-party consultants, completed and filed the Hycroft Property Initial Assessment Technical Report Summary Humboldt and Pershing Counties, Nevada (“2023 Hycroft TRS”) that included a mineral resource estimate utilizing a pressure oxidation (“POX”) process for sulfide mineralization and heap leaching process for oxide and transition mineralization. The Company is focusing on exploration drilling and data analyses, completing technical studies, conducting trade-off studies and alternative analyses for determining the optimal process flow sheet for processing sulfide ores and recovering gold and silver, and maintaining the Hycroft Mine.

Beginning in the fourth quarter of 2023, the Company again began accessing its at-the-market public offering program (“ATM Program”). During the three and six months ended June 30, 2024, the Company sold 2,474,859 and 2,992,547 shares of common stock, respectively, for aggregate gross proceeds, before commissions and offering expenses, of $9.2 million and $10.4 million, during the respective time periods. On May 31, 2024, the Company implemented a new $100.0 million at-the-market public offering program (the “New ATM Program”). See Note 14 – Stockholders’ Equity for additional information. As of June 30, 2024, there was $100.0 million gross sales price of common stock available for issuance under the New ATM Program. As of December 31, 2023, there was $360.3 million gross sales price of common stock available for issuance under the ATM Program. The net proceeds from the ATM Program have been, and are expected to be, used for general corporate purposes, which may include the repayment, refinancing, redemption, or repurchase of existing indebtedness, exploration, working capital, or capital expenditures and other investments.

2. Summary of Significant Accounting Policies

Basis of presentation

These Unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, these Financial Statements do not include all information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. These Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto as of and for the year ended December 31, 2023 (the “2023 Audited Financial Statements”), filed as a part of the Company’s annual report on Form 10-K filed with the SEC on March 14, 2024. The Company continues to follow the accounting policies set forth in the 2023 Audited Financial Statements, with updates discussed below. In the opinion of management, the accompanying Financial Statements include all adjustments that are necessary for a fair presentation of the Company’s interim financial position, operating results, and cash flows for the periods presented.

Use of estimates

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

New accounting pronouncements not yet adopted

In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. The amendments are considered to be codification improvements only and therefore are not expected to significantly affect current accounting practice. The guidance is to clarify guidance, simplify wording or structure of guidance, and other minor improvements. The new guidance is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adopting this update will have on its Financial Statements and related disclosures.

Impairment of long-lived assets

Long-lived assets consist of Note 5 – Property, Plant, and Equipment, Net. The Company routinely reviews and evaluates its long-lived assets for impairment to ensure there are no new events or changes in circumstances that would indicate that the related carrying amounts may not be recoverable. Events that may trigger a test for recoverability include, but are not limited to, significant adverse changes to projected Revenues, costs, or future expansion plans or changes to federal and state regulations (with which the Company must comply) that may adversely impact the Company’s current or future operations. An impairment is determined to exist if the total projected future cash flows on an undiscounted basis are less than the carrying amount of a long-lived asset group. An impairment loss is measured and recorded based on the excess carrying value of the impaired long-lived asset group over fair value.

In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows and estimates of fair value are based on numerous assumptions and are subject to significant risks and uncertainties. See Note 5 – Property, Plant, and Equipment, Net for additional information.

During the three months ended June 30, 2024, the Company completed its evaluation and determinedno impairment was necessary.

3. Prepaids and Deposits

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

4. Supplies Inventories, Net

As of June 30, 2024 and December 31, 2023, Supplies inventories, net was $1.8 million and $1.8 million, respectively. The Company maintains inventory reserves to account for potential losses due to inventory obsolescence, damage, or other factors that could affect the value of its inventory.

5. Property, Plant, and Equipment, Net

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

Depreciation expense related to Property, plant, and equipment, netwas $0.6 million and $1.2 million for the three and six months ended June 30, 2024, respectively, and $0.7 million and $1.4 million for the three and six months ended June 30, 2023, respectively.

6. Restricted Cash

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

As of June 30, 2024 and December 31, 2023, the Company had $26.9 million and $26.3 million, respectively, in surface management surety bonds totaling $58.7 million, of which $58.3 million secured the financial assurance requirements for the Hycroft Mine. The remaining portion is related to the financial assurance requirements for the adjacent water supply well field and exploration. Events or circumstances that would necessitate the guarantor’s performance include a deteriorating financial condition or a breach of contract. Periodically, the Company may need to provide collateral to support these instruments. When the specified requirements are met, the party holding the related instrument cancels and/or returns it to the issuing entity. The Company is confident that it currently complies with all relevant bonding obligations.

During the three and six months ended June 30, 2024, the Company earned $0.3 million and $0.6 million, respectively, of Interest income on a portion of its cash collateral. During the three and six months ended June 30, 2023, the Company earned $0.4 million and $0.7 million, respectively, of Interest income on a portion of its cash collateral. Interest received on cash collateral balances is restricted as to its use and is included as an increase to Restricted cash with a corresponding recognition of Interest income when earned.

7. Securities Available-For-Sale

On June 4, 2024, the Company sold patents, patent applications and certain other technology rights and assets in exchange for CAD $5.0 million (US $3.6 million), consisting of CAD $2.0 million (US $1.5 million) cash and common shares in a publicly traded gold mining company valued at CAD $3.0 million (US $2.1 million).

The following table provides the components of Securities available-for-sale, determined using the mark-to-market price based on the closing price on the last day of the period as quoted on the TSX Venture Exchange (in thousands):

(1)Securities available-for-sale, non-current are classified as such because they are restricted from sale within the next 12 months.

8. Assets Held-For-Sale

As of June 30, 2024 and December 31, 2023, Assets held-for-sale was comprised of equipment not-in-use of $7.1 million.

In May 2024, the Company entered into an Equipment Purchase Agreement to sell $2.0 million of unused equipment classified as equipment not-in-use. In connection with entry into this agreement, the Company received a $0.3 million nonrefundable deposit payment. The deposit has been included in Contract liabilities. See Note 10 – Contract Liabilities for additional details.

In August 2022 and with subsequent amendments, the Company entered into an Equipment Purchase Agreement to sell a total of $13.6 million of equipment. In connection with entry into the Equipment Purchase Agreement, the Company received $1.6 million in nonrefundable deposit payments. Effective March 1, 2024, the buyer terminated a portion of the Equipment Purchase Agreement related toone ball mill andone semi-autogenous (“SAG”) mill and effective April 5, 2024, the buyer terminated the balance of the Equipment Purchase Agreement. In accordance with Topic 606, Revenue from Contracts with Customers, because the sale did not materialize, $1.5 million was recognized as Other income in the first quarter of 2024 and the Company recognized the remaining $0.1 million in nonrefundable deposit payments as Other income in the second quarter of 2024.

9. Debt, Net

Second Amendment to the Second Amended and Restated Credit Agreement (“Second A&R Agreement”)

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

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

Voluntary partial prepayment

On January 5, 2024, the Company voluntarily pre-paid $34.7 million of the first lien loan, along with $3.3 million for the additional interest balance, totaling $38.0 million with a remaining outstanding balance of $15.0 million. As a result of this payment, the applicable margin was reduced by 100 basis points through the final payment.

Debt covenants

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

As of June 30, 2024, the Company was in compliance with all financial covenants under its debt agreements.

Debt balances

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

The following table summarizes the Company’s contractual payments of Debt, net, including current maturities, for the five years subsequent to June 30, 2024 (in thousands):

Interest expense

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

(1)The Sprott Credit Agreement bears interest monthly at a floating rate of SOFR plus 6.0% and the current effective interest rate is 18.1% including amortization.

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

(3)The effective interest rate for the amortization of the discount and issuance costs, as of June 30, 2024, was 1.6%.

(4)On January 5, 2024, the Company voluntarily prepaid $38.0 million of its first lien debt, and the Company charged Interest expense $6.9 million for accelerated amortization of original issue discount and issuance costs associated with the prepayment.

10. Contract Liabilities

As of June 30, 2024 and December 31, 2023, Contract liabilities were $0.3 million and $1.6 million, respectively. As of June 30, 2024, the Company held $0.3 million as a non-refundable deposit in accordance with the Equipment Purchase Agreement fortwo substation transformers. The sale is anticipated to be completed within the third quarter of 2024.

As of December 31, 2023, the Company had received non-refundable deposit payments totaling $1.6 million in accordance with the Equipment Purchase Agreement forone SAG mill, one ball mill, andtwo substation transformers. Partial cancellation of the agreement was received on March 1, 2024, with $1.5 million of the deposit recognized as Other income during the first quarter of 2024 and cancellation of the remainder of the agreement was received on April 5, 2024 with the remaining balance of $0.1 million recognized as Other income during the second quarter of 2024. See Note 8 – Assets held-for-sale for additional details.

11. Other Liabilities

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

12. Asset Retirement Obligation

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

During the six months ended June 30, 2024, the Company recognized a change in cost estimate to reflect both a revised engineering design change required by the Nevada Department of Environmental Protection for impervious cover placement on the Crofoot Heap Leach Pad, and a change in timing to begin the work in 2025 and complete it by the end of 2027. In June, the Company received third-party quotes to complete the cover placement that required additional equipment, longer haul distances and other costs in excess of prior estimates, and the project was accelerated to begin in the second half of 2024. In accordance with these changes, the Company recorded an additional expense of $2.0 million in the quarter ended June 30, 2024, bringing the year-to-date ARO adjustment expense to $4.0 million. The Company does not have mineral reserves, and accordingly, these types of reclamation costs must be expensed until such time that it declares mineral reserves.

13. Warrant Liabilities

5-Year Private Warrants

The Company’s outstanding warrant liabilities include 5-Year Private Warrants. The 5-Year Private Warrants cannot be redeemed and can be exercised on a cashless basis if the 5-Year Private Warrants are held by the initial purchasers or their permitted transferees. If the 5-Year Private Warrants are transferred to someone other than the initial purchasers or their permitted transferees, such warrants become redeemable by the Company under substantially the same terms as the 5-Year Public Warrants. Since the original issue of private warrants,9,569,400 5-Year Private Warrants have been transferred to someone other than the initial purchasers or their permitted transferees and they are now treated as 5-Year Public Warrants. For the three and six months ended June 30, 2024 and 2023, transfers from 5-Year Private Warrants to 5-Year Public Warrants totaled 194,822 and 194,822, respectively.

The following tables summarize the Company’s 5-Year Private Warrants(1) (in thousands, except warrant amounts):

(1)On November 14, 2023, the Company effectuated a 1-for-10 reverse stock split, after which 10 warrants were required to purchase one share of common stock.

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

The following table summarizes additional information on the Company’s 5-Year Private Warrants as of June 30, 2024:

14. Stockholders’ Equity

At-the-market offering

•On June 2, 2023, the Company filed a prospectus supplement reactivating the ATM Program and as of December 31, 2023, there was common stock available for issuance under the ATM Program with an aggregate offering sales price of up to $360.3 million. On March 19, 2024, the Company filed a prospectus supplement subject to Instruction I.B.6. to Form S-3, which is referred to as the baby shelf rule. For so long as the Company’s public float is less than $75.0 million, it may not sell more than the equivalent of one-third of its public float during any 12 consecutive months pursuant to the baby shelf rules. The prospectus supplement updated the remaining number of shares that the Company may sell through the ATM Program to an aggregate offering price of up to $15.3 million. On April 11, 2024, the Company’s public float exceeded the $75.0 million baby shelf threshold and on May 15, 2024, the Company filed a prospectus supplement subject to Instruction I.B.6 to Form S-3 updating the remaining number of shares that the Company may sell through the ATM Program to an aggregate offering price of up to $100.0 million.

•On May 15, 2024, the Company filed a new $350.0 million prospectus subject to Instruction I.B.6 to Form S-3, referred to as a universal shelf registration statement, that included the New ATM Program. The universal shelf registration statement became effective on May 31, 2024, at 4:00 p.m. Eastern Daylight Time, which replaced the prior universal shelf registration statement that was originally filed June 30, 2021.

•For the six months ended June 30, 2024, the Company sold 2,992,547 shares of common stock for aggregate gross proceeds, before commissions and offering expenses of $10.4 million. The Company sold 2,474,859 shares of common stock for aggregate gross proceeds, before commissions and offering expenses, of $9.2 million during the second quarter of 2024 and the Company sold 517,688 shares of common stock for aggregate gross proceeds, before commissions and offering expenses, of $1.2 million in the first quarter of 2024.

•There were no sales of common stock under the New ATM Program during June 2024; accordingly, up to $100.0 million of common stock was available for issuance under the New ATM Program at June 30, 2024.

Equity Classified Warrants

The following tables summarize the Company’s outstanding equity classified warrants(1) included in Additional paid-in capital:

(1)On November 14, 2023, the Company effectuated a 1-for-10 reverse stock split, after which 10 warrants were required to purchase one share of common stock.

The following table summarizes additional information on the Company’s outstanding warrants as of June 30, 2024:

15. Stock-Based Compensation

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

On May 23, 2024, the Company’s stockholders approved an amendment and restatement to the PIPP that increased the number of authorized shares of common stock available for issuance by 900,000 shares of common stock, bringing the total authorized shares under the PIPP to 2,350,800, after adjusting for the 1-for-10 reverse stock split in November 2023. As of June 30, 2024, all awards granted under the PIPP were in the form of restricted stock units to employees, directors, or consultants of the Company. As of June 30, 2024, there were 966,926 shares available for issuance under the PIPP.

The following table summarizes the Company’s unvested share awards outstanding under the PIPP after adjusting for the 1-for-10 reverse stock split:

16. Income Taxes

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

The Company incurred Nil net income tax expense or benefit for the six months ended June 30, 2024 and 2023. The effective tax rate for the both the six months ended June 30, 2024 and 2023 was Nil. The effective tax rate differed from the statutory rate during each period primarily due to changes in the valuation allowance established to offset net deferred tax assets.

17. Loss Per Share

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

(1)Shares and per common share amounts for June 30, 2023 have been adjusted to reflect the 1-for-10 reverse stock split effectuated on November 14, 2023.

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

Due to the Company’s net loss during thesix months ended June 30, 2024 and 2023, there was no dilutive effect of common stock equivalents because the effects of such would have been anti-dilutive. The following table summarizes the shares excluded from the weighted average number of shares of common stock outstanding, as the impact would be anti-dilutive (in thousands):

(1)2023 shares and restricted stock units have been adjusted to reflect the 1-for-10 reverse stock split effectuated on November 14, 2023. After the reverse stock split, 10 warrants are required to purchase one share of common stock.

18. Segment Information

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

19. Other Income (Expense)

The table below summarizes the components reported in Other income (expense)(in thousands):

20. Fair Value Measurements

Recurring fair value measurements

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

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

During the second quarter of 2024, the Company sold patents, patent applications, and certain other technology rights and assets in exchange for a combination of cash and common shares of a publicly traded gold mining company. The value of the shares were determined using the closing price on the last day of the period as quoted on the TSX Venture Exchange

Items disclosed at fair value

The Sprott Credit Agreement and the Subordinated Notes are privately held and, as such, there is no public market or trading information available for such debt instruments. As of June 30, 2024 and December 31, 2023, the fair value of the Company’s debt instruments was $113.3 million and $149.2 million, respectively, compared to the carrying value of $119.6 million and $144.9 million as of June 30, 2024 and December 31, 2023, respectively. The fair value of the principal of the Company’s debt instruments, including capitalized interest, was estimated using a market approach in which pricing information for publicly traded, non-convertible debt instruments with speculative ratings was analyzed to derive a mean trading multiple to apply to the June 30, 2024 balances.

21. Supplemental Cash Flow Information

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

22. Commitments and Contingencies

Legal proceedings

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

The Company expenses legal fees and other costs associated with legal proceedings as incurred. The Company assessed, in conjunction with its legal counsel, the need to record a liability related to the Complaints and determined that a loss was not probable nor reasonably estimable. Litigation accruals are recorded when, and if, it is determined that a loss related matter is both probable and reasonably estimable. Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure. No losses have been recorded during the six months ended June 30, 2024 and 2023 with respect to litigation or loss contingencies.

Insurance

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

Financial commitments and contingencies not recorded in the Financial Statements

As of June 30, 2024 and December 31, 2023, the Company’s off-balance sheet arrangements consisted of a net smelter royalty arrangement and a net profit royalty arrangement.

Crofoot Royalty

A portion of the Hycroft Mine is subject to a payment of 4% net profit royalty to the previous owner of certain patented and unpatented mining claims (“Crofoot Royalty”). The mining lease also requires an annual advance payment of $0.1 million every year mining occurs on the leased claims. All advance annual payments are credited against the future payments due under the 4% net profit royalty. An additional payment of $0.1 million is required for each year the total tons mined on the leased claims exceeds 5.0 million tons. As the Company ceased mining operations in November 2021, the Company was not required to pay the annual advance payment of $0.1 million in 2024, 2023 or 2022. The total payments due under the mining lease are capped at $7.6 million, of which the Company has paid $3.3 million, including $0.6 million of advanced annual payments in Prepaids in the Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023.

Sprott Royalty

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

At both June 30, 2024 and December 31, 2023, the estimated net present value of the Sprott Royalty Agreement was $146.7 million. The net present value of the Sprott Royalty Agreement was modeled using the following level 3 inputs: (i) market consensus inputs for future gold and silver prices; (ii) a precious metals industry consensus discount rate of 5.0%; and (iii) estimates of the Hycroft Mine’s life-of-mine gold and silver production volumes and timing.

23. Related Party Transactions

As of June 30, 2024, Ausenco Engineering South USA, Inc. (“Ausenco”) and American Multi-Cinema, Inc. (“AMC”) were considered related parties. The Company’s President and Chief Executive Officer is currently a non-executive director for Ausenco’s parent company Board of Directors. Additionally, an AMC representative serves on the Company’s Board of Directors. During the six months ended June 30, 2024, the Company paid an aggregate of $0.4 million to Ausenco to prepare the 2023 Hycroft TRS and director fees paid for AMC’s director representative. During the six months ended June 30, 2023, the Company paid an aggregate of $0.1 million to Ausenco to prepare the 2023 Hycroft TRS and director fees paid for AMC’s director representative. As of June 30, 2024 and 2023, AMC through its director representative was entitled to receive 12,393 and 180,069 shares of common stock upon the future vesting of restricted stock units, respectively.

24. Employee Benefit Plans

The Hycroft Mining Corporation 401(k) Plan (the “401(k) Plan”) is a defined contribution plan available to all employees of the Company upon their date of hire. The 401(k) Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and Section 401(k) of the Internal Revenue Code of 1986, as amended. Administration fees of the 401(k) Plan are paid by the Company. The assets of the 401(k) Plan are held and the related investments are executed by the 401(k) Plan’s trustee.

Participants in the 401(k) Plan exercise control and direct the investment of their contributions and account balances among various investment alternatives. The Company matches a percentage of employee deferrals to the 401(k) Plan up to certain limits. For the six months ended June 30, 2024 and June 30, 2023, the Company’s matching contributions totaled $0.4 million and $0.4 million, respectively.

25. Subsequent Events

In July 2024, the Company entered into an Equipment Purchase Agreement to sellone ball mill for consideration of $4.0 million, before commissions and expenses. Under the terms of the agreement, $3.9 million is due in the third quarter of 2024 and the final payment is due no later than December 31, 2024.