HYCROFT MINING HOLDING CORP
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
HYMC$18.77+10.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001718405-24-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001718405-24-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 88 current paragraphs.
46 unchanged; 31 reworded; 10 added; 12 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
During the three and nine months ended September 30, 2024, Projects, exploration, and development costs totaled $4.7 million and $14.6 million, respectively, compared to $7.2 million and $16.0 million, respectively, during the same periods of 2023. The decrease of $2.5 million and $1.4 million, respectively, during both the three and nine months ended September 30, 2024, is primarily attributed to expanded drilling activities in the prior year.
Current report
During the three and nine months ended September 30, 2024, General and administrative costs totaled $4.4 million and $11.2 million, respectively, compared to $2.8 million and $9.8 million, respectively, during the same periods of 2023. The increase of $1.6 million and $1.4 million, respectively, during both the three and nine months ended September 30, 2024, is primarily attributed to increased professional fees associated with strategic projects.
Current report
During the three and nine months ended September 30, 2024, Asset retirement obligation adjustment totaled 2.3 million and 6.3 million, respectively, compared to nil during both the same periods of 2023. The increase of $2.3 million and $6.3 million, respectively, during both the three and nine months ended September 30, 2024, is attributed to a change in estimate to account for changes in: (i) the Standardized Reclamation Cost Estimator Unit Cost Data, (ii) updated reclamation regulations, (iii) a revised engineering design for impervious cover placement requiring additional volumes of cover material on the Crofoot Heap Leach Pad, and (iv) an adjusted timeline for initiating and completing this phase of reclamation work at the facility. See Note 13 – Asset Retirement Obligation to the Notes to the Financial Statements for additional information.
Current report
During the three and nine months ended September 30, 2024, Mine site period costs totaled $1.7 million and $6.8 million, respectively, compared to $2.7 million and $9.3 million, respectively, for the same periods of 2023. The decrease of $1.0 million and $2.5 million, respectively, during the three and nine months ended September 30, 2024, is primarily attributed to reduced year-over-year activities at the mine site, along with reduced expenses related to the net proceeds from the sale of carbon containing gold and silver that was initially intended for disposal.
Current report
During the three and nine months ended September 30, 2024, Depreciation and amortization totaled $0.5 million and $1.7 million, respectively, compared to $0.7 million and $2.2 million, respectively, for the same periods of 2023. The decrease of $0.2 million and $0.5 million, respectively, during the three and nine months ended September 30, 2024, is primarily attributed to certain assets nearing full depreciation and fewer significant capital additions in recent periods.
Current report
During the three and nine months ended September 30, 2024, Accretion totaled $0.4 million and $0.9 million, respectively, compared to $0.2 million and $0.6 million, respectively, for the same periods of 2023. The increase of $0.2 million and $0.3 million, respectively, during the three and nine months ended September 30, 2024, is primarily attributed to the increased Asset retirement obligation. See Note 13 – Asset Retirement Obligation to the Notes to the Financial Statements for additional information.
Current report
During the three and nine months ended September 30, 2024, Interest income totaled $1.0 million and $3.4 million, respectively, compared to $2.1 million and $6.2 million, respectively, for the same periods in 2023. The decrease of $1.1 million during the three months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to a decrease in investment interest of $0.8 million, a decrease in interest earned on Assets held-for-sale of $0.2 million, and a decrease in interest earned on Restricted cash of $0.1 million. The decrease of $2.8 million during the nine months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to a decrease in investment interest of $1.9 million, a decrease in interest earned on Assets held-for-sale of $0.6 million, and a decrease in interest earned on Restricted cash of $0.2 million.
Current report
(1)On October 2, 2024, the Company received a $1.6 million payment from the Internal Revenue Service, of which $1.4 million was for prior period income tax refunds and $0.2 million was for interest. As a result of this payment, the Company’s Income tax receivable balance has been reduced to $0.1 million.
Current report
(2)In July 2024, the Company entered into an Equipment Purchase Agreement to sell one ball mill for $4.0 million, before commissions and expenses. The Company recorded a $2.8 million reduction to equipment not-in-use and recognized $0.7 million, net of commissions as Other income for the sale of the ball mill for the nine months ended September 30, 2024.
Current report
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Removed paragraphs (12)
Previous report
During the three and six months ended June 30, 2024, Projects, exploration, and development costs totaled $5.1 million and $10.0 million, respectively, compared to $5.3 million and $8.8 million, respectively, for the same periods of 2023. Projects, exploration, and development costs were related to: (i) completing technical studies; (ii) conducting geological studies; (iii) oversight and project management; and (iv) exploration drilling, engineering, and metallurgical activities. The increase of $1.2 million during the six months ended June 30, 2024 was the result of ongoing assay results and analysis from Phase 2 of the Company’s 2022-2023 Exploration Program and expanding the 2024 Drilling Program that was initiated in February 2024.
Previous report
During the three and six months ended June 30, 2024, General and administrative expenses totaled $3.9 million and $6.8 million, respectively, compared to $3.7 million and $7.0 million, respectively, during the same periods of 2023.
Previous report
During the three and six months ended June 30, 2024, Mine site period costs totaled $2.5 million and $5.1 million, respectively, compared to $2.8 million and $6.6 million, respectively, for the same periods of 2023. The decrease in spending was primarily due to reduced activities year over year associated with the mine site. Mine site period costs include costs related to maintaining the Hycroft Mine, including environmental, maintenance and administration costs. Effective January 1, 2023, the Company began reporting amounts for Mine site period costsas Operating expensesas this presentation aligns with how the business will be viewed and managed until such time that the Company further develops the Hycroft Mine and recommences mining operations.
Previous report
During the three and six months ended June 30, 2024, the Company recognized a change in estimate to reflect updated reclamation regulations and a revised engineering design change for impervious cover placement on the Crofoot Heap Leach Pad, and a change in timing to begin and complete this stage of reclamation work at this facility. In accordance with the change in estimate, Asset retirement obligation increased $2.0 million and $4.0 million during the three and six months ended June 30, 2024, respectively, as the Company does not have mineral reserves, and accordingly, all costs are expensed until such time that it declares mineral reserves.
Previous report
During the three and six months ended June 30, 2024 and June 30, 2023, the Company did not incur additional reclamation obligations associated with additional disturbances, other regulatory requirements, or changes in estimates.
Previous report
Depreciation and amortization was $0.6 million and $1.2 million, respectively, for the three and six months ended June 30, 2024, compared to $0.7 million and $1.4 million, respectively, during the same periods of 2023.
Previous report
The Company recorded $0.3 million and $0.5 million of Accretion for the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.4 million for the same periods of 2023, respectively. These expenses are related to the Company’s Asset retirement obligation and future reclamation costs. See Note 12 – Asset Retirement Obligation (“ARO”) to the Notes to the Financial Statements for further detail.
Previous report
As detailed in Note 9 – Debt, Net in the Notes to the Financial Statements, Interest expense totaled $3.2 million and $13.3 million for the three and six months ended June 30, 2024, respectively, compared to $4.6 million and $9.0 million, for the same periods in 2023. Included in Interest expense for the first half of 2024 was $6.9 million of accelerated amortization of original issue discount and issuance costs. On January 5, 2024, the Company voluntarily prepaid $38.0 million of its first lien debt. The original issue discount and issuance costs were expensed on a prorated basis in line with the prepaid amount of the debt.
Previous report
Interest income totaled $1.1 million and $2.4 million for the three and six months ended June 30, 2024, respectively, compared to $2.1 million and $4.1 million, respectively, for the same periods in 2023. In July 2022, the Company began investing the majority of its cash balances in AAAm rated U.S. Government Money Market Funds that are readily convertible to cash. These investments earned the Company $0.8 million and $1.8 million in interest during the three and six months ended June 30, 2024, respectively, and $1.7 million and $3.4 million, respectively, for the same periods in 2023. In addition, the Company earned $0.3 million and $0.6 million on its Restricted cash during the three and six months ended June 30, 2024, respectively, as compared with $0.4 million and $0.7 million, respectively, for the same periods in 2023.
Previous report
(1)In May 2024, the Company entered into an Equipment Purchase Agreement to sell two substation transformers for consideration of $2.0 million. As of June 30, 2024, the Company has received $0.3 million in non-refundable deposit payments.
Previous report
(2)In August 2022, the Company entered into an Equipment Purchase Agreement to sell one ball mill and one SAG mill for consideration of $12.0 million. The agreement was amended in December 2022 to include two substation transformers for an additional amount of $1.6 million for a total amended equipment purchase price of $13.6 million, of which the Company had received payments totaling $1.6 million. As of December 31, 2023, the total deposit payments received was $1.6 million. Effective March 1, 2024, the buyer terminated a portion of the Equipment Purchase Agreement and effective April 5, 2024, the entire Equipment Purchase Agreement was terminated. Because the sale did not materialize, $1.5 million of the nonrefundable deposit payments was recognized as Other income in the first quarter of 2024, and $0.1 million of the nonrefundable deposit payments recognized as Other income in the second quarter of 2024.
Previous report
Six months ended June 30, 2024 compared to six months ended June 30, 2023
Reworded paragraphs (31)
Previous wording
The following discussion, which has been prepared based on information available to us as of August 6, 2024, provides information we believe is relevant to an assessment and understanding of our consolidated operating results and financial condition. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 (the “Financial Statements”) and the notes thereto (the “Notes”) included in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024, as well as our other reports filed with the Securities and Exchange Commission (“SEC”) from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2023. Terms not defined herein have the same meaning defined in the Financial Statements and the Notes.
Current wording
The following discussion, which has been prepared based on information available to us as of November 5, 2024, provides information we believe is relevant to an assessment and understanding of our consolidated operating results and financial condition. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 (the “Financial Statements”) and the notes thereto (the “Notes”) included in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024, as well as our other reports filed with the Securities and Exchange Commission (“SEC”) from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2023. Terms not defined herein have the same meaning defined in the Financial Statements and the Notes.
Previous wording
We are a U.S.-based gold and silver exploration and development company that owns the Hycroft Mine in Nevada, USA. We are focused on exploring the Hycroft Mine’s claims comprising approximately 64,000 acres, and developing the Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. We ceased mining activities in November 2021, and as of December 31, 2022, we completed processing of gold and silver ore previously placed on leach pads. We do not expect to generate significant revenues from gold and silver sales until after completing the technical work and recommencing mining operations.
Current wording
We are a U.S.-based gold and silver exploration and development company that owns the Hycroft Mine in Nevada. Our focus is on exploring the mine’s approximately 64,000 acres of claims and developing the project in a safe, environmentally responsible, and cost-effective way. Pre-commercial scale mining activities were started in the fourth quarter of 2019, subsequently halted in November 2021, and we completed processing the gold and silver ore previously placed on leach pads by December 2022. We do not anticipate significant revenue from gold and silver sales until we complete the necessary technical work and resume mining operations.
Previous wording
We reported no lost time incidents during the first half of 2024 and continue to operate in excess of one million workhours without a lost time incident. The Hycroft Mine’s total recordable injury frequency rate (“TRIFR”) for the trailing 12 months, which includes other reportable incidents, is one of the metrics we use to assess safety performance, and it is well below industry averages and significantly below pre-2021 historical levels experienced at the Hycroft Mine. During the first six months of 2024, we continued our critical focus on safety, including allocating personnel, resources, workforce time, and communications to operate safely. These actions contributed to maintaining our TRIFR of 0.00 at June 30, 2024 and December 31, 2023. We will continue to evolve our safety efforts as needed to keep our workforce, contractors, and visitors safe.
Current wording
We reported no lost time incidents during the nine months ended September 30, 2024 and continue to operate in excess of one million workhours without a lost time incident. The Hycroft Mine’s total recordable injury frequency rate (“TRIFR”) for the trailing 12 months, which includes other reportable incidents, is one of the metrics we use to assess safety performance, and it is well below industry averages and significantly below pre-2021 historical levels experienced at the Hycroft Mine. During the first nine months of 2024, we continued our critical focus on safety, including allocating personnel, resources, workforce time, and communications to operate safely. These actions contributed to maintaining our TRIFR of 0.00 at both September 30, 2024 and December 31, 2023. We will continue to evolve our safety efforts as needed to keep our workforce, contractors, and visitors safe.
Previous wording
During the first six months of 2024, the Company continued its exploration drill program, completed portions of the metallurgical and variability test work, and continued to analyze new drill assay data and information received in the period. The ongoing metallurgical and variability test work continues to follow up on the March 2023 Hycroft Property Initial Assessment Technical Report Summary Humboldt and Pershing Counties, Nevada (“2023 Hycroft TRS”) that was completed utilizing a conventional crushing, grinding, and flotation circuit that generates a concentrate to be fed to a pressure oxidation (“POX”) autoclave facility commonly used for refractory gold ores. The Company is also focused on strengthening its balance sheet primarily by reducing debt and raising cash through its at-the-market (“ATM Program”). Additionally, on May 31, 2024, the Company implemented a new $100.0 million at-the-market public offering program (the “New ATM Program”). The Company voluntarily pre-paid $38.0 million of the senior secured debt with Sprott Resource Lending on January 5, 2024, and through the ATM Program and the New ATM Program has raised $10.4 million aggregate gross proceeds, before commissions and offering expense, during the first six months of 2024.
Current wording
During the third quarter of 2024, the Company continued its exploration drill program, completed portions of the metallurgical and variability test work, and continued to analyze new drill assay data and information received in the period. The ongoing metallurgical and variability test work continues to follow up on the March 2023 Hycroft Property Initial Assessment Technical Report Summary Humboldt and Pershing Counties, Nevada (“2023 Hycroft TRS”) that was completed utilizing a conventional crushing, grinding, and flotation circuit that generates a concentrate to be fed to a pressure oxidation autoclave facility commonly used for refractory gold ores. The Company is also focused on strengthening its balance sheet primarily by reducing debt and raising cash through sales of non-core assets and equity. Beginning in the fourth quarter of 2023, the Company again began accessing its at-the-market public offering program (“ATM Program”) and on May 31, 2024, the Company replaced the ATM Program with a new $100.0 million at-the-market public offering program (the “New ATM Program”). Through these programs, the Company generated gross proceeds of $0.2 million and $10.6 million, before commissions and offering expenses, during the three and nine months ended September 30, 2024, respectively. 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 on its senior secured debt with Sprott Resource Lending.
Previous wording
In February 2024, the Company launched its 2024 exploration drill program (the “2024 Drill Program”), to follow up on the high-grade underground silver discovery announced in November 2023. The 2023 drilling reflected significant high-grade silver mineralization that has continuity with historical drilling along trends not previously identified. The objective of the 2024 Drill Program is to define the structural framework of these new trends and identify target areas that have not been drilled to establish continuity of the two high-grade silver trends. The 2024 Drill Program has been expanded to approximately 6,200 meters of core drilling, of which approximately 4,000 meters of drilling have been completed. The current program is targeted to define the structural framework of the two new high-grade silver trends and target those areas that have not been drilled to establish continuity of the two high-grade silver trends. Additionally, the Company completed Induced Polarity (“IP”) geophysical surveys with results expected in the third quarter of 2024. The 2024 Drill Program and geophysical surveys will help with the Company’s understanding of the structural controls observed in the two high-grade silver trends and potentially expand the Hycroft mineralization to the east in a previously unexplored area mostly within the current plan of operation.
Current wording
Program is to define the structural framework of these new trends and identify target areas that have not been drilled to establish continuity of the two high-grade silver trends. The 2024 Drill Program has again been expanded to approximately 8,500 meters of core drilling, of which approximately 6,600 meters of drilling were completed as of September 30, 2024. The current program continues to define the structural framework of the two new high-grade silver trends, targeting down-dip extensions, and further establishing continuity of the two trends. Additionally, the Company has extended the drilling program east of the current resource based on the Induced Polarity geophysical surveys completed in the second quarter of 2024 coupled with a robust mapping and sampling program to extend Hycroft mineralization to the east in a previously unexplored area within the current plan of operation. The currently pending assay results are expected in the fourth quarter of 2024, and assay results from drilling in the fourth quarter of 2024 are expected to extend into the first quarter of 2025.
Previous wording
During the six months ended June 30, 2024, the Company advanced with metallurgical test and design work necessary for designing a sulfide milling operation. The Company has been actively testing composite samples from around the ore body that represents the various material characteristics in the sulfide ore. Crushing, grinding, and flotation work has identified significant improvements in gold and silver recoveries compared to the current technical report that increase the economic benefits to the project. Roasting, leaching, sulfuric acid generation, and power co-generation work progressed during the quarter ended June 30, 2024. Process plant flow sheets, equipment selection, plant layout, tailing storage facility designs, and other designs continued to be developed. With the roasting option, there is a significant quantity of sulfuric acid generated and the Company engaged a third-party specialist to complete a focused market study and to assist in identifying local and regional markets with specific current and emerging consumers. The Company is still conducting trade-off studies to determine if utilizing roasting technology instead of pressure oxidation technology could further deliver superior economics for the Hycroft Mine.
Current wording
During the nine months ended September 30, 2024, the Company advanced with metallurgical test and engineering work necessary for designing a sulfide milling operation. The Company has been testing composite samples from around the ore body that represents the various material characteristics in the sulfide ore. Crushing, grinding, and flotation work has identified significant improvements in gold and silver flotation recoveries compared to the current technical report that increase the economic benefits to the project. The Company’s test work for identifying the optimal inputs and operating parameters for roasting, pressure oxidation, leaching, sulfuric acid generation, and power co-generation work progressed during the quarter ended September 30, 2024, and this test work will continue into 2025. Process plant flow sheets, equipment selection, plant layout, and other designs continued to be developed. Due to the potential commercial applications for the significant quantity of sulfuric acid expected to be generated from roasting the sulfide concentrate, the Company engaged a third-party specialist to complete a focused sulfuric acid market study and to assist in identifying local and regional sulfuric acid markets with current and emerging consumers. The Company continues to conduct trade-off studies to assess whether roasting technology could offer superior economics compared to POX technology for the Hycroft Mine. Hycroft completed the future Tailing Storage Facility designs that will extend material storage capacity and will meet new and emerging safety and environmental regulations for these types of facilities.
Previous wording
The Company’s current plan is to operate safely as it continues exploration drilling and data analyses, completing technical studies, conducting trade-off studies and alternatives analyses for determining the optimal process flow sheet for processing sulfide ores and recovering gold and silver, maintaining the Hycroft Mine and strengthening its balance sheet.
Current wording
The Company’s current plan is to operate safely and environmentally responsibly as it continues advancing exploration drilling, targeting high-grade opportunities, completing technical studies and data analyses, conducting trade-off studies and alternatives analyses to determine the optimal process flow sheet for processing sulfide ores and recovering gold and silver, maintaining the Hycroft Mine, and strengthening its balance sheet.
Previous wording
The 2024 Drill Program is designed to test the lateral and at depth extensions of the newly discovered high-grade silver trends at Brimstone and Vortex. This new system remains open in all directions and at depth having the potential to expand and be developed as an underground mine. Additionally, geophysical surveys and structural geology reviews in the first half of 2024 have identified anomalous opportunities in and around the primary resource area indicative of high-grade mineralization. The anomalies have created a target area two kilometers north to south and extending one kilometer east of the current resource pit, which is mostly within the current plan of operation. The Company is in the process of refining drill targets for these areas.
Current wording
The 2024 Drill Program is designed to test the lateral and at depth extensions of the newly discovered high-grade silver dominant trends at Brimstone and Vortex. These new systems remain open in all directions and at depth, having the potential to expand and be developed as an underground mine. Additionally, geophysical surveys and structural geology reviews in the first half of 2024 have identified anomalous opportunities in and around the primary resource area indicative of high-grade mineralization. The anomalies have created a target area two kilometers north to south and extending one kilometer east of the current resource pit, which is mostly within the current plan of operation. The Company is in the process of refining drill targets for these areas.
Previous wording
The Company continues to evaluate various process alternatives to economically improve gold and silver recoveries while developing potential additional, meaningful by-product revenue streams. The trade-off studies and alternatives analyses include different grinding methods, various flotation cell configurations, sulfide conversion through pressure oxidation and roasting, and process flow sheet development. This additional work is expected to be completed over the coming months and as a result, the Company will provide updates on the anticipated timing of the process flow sheet and the associated technical report as information becomes available.
Current wording
The Company continues to evaluate various process alternatives to economically improve gold and silver recoveries while also developing potential additional, meaningful by-product revenue streams. The trade-off studies and alternative analyses include different grinding methods, various flotation cell configurations, sulfide conversion through pressure oxidation or roasting, and equipment selection for the respective process flow sheets. This additional work is expected to be completed in 2025 and as a result, the Company expects to provide updates on the anticipated timing of the process flow sheet and the associated technical report as new information becomes available.
Previous wording
The decrease of $1.4 million for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to the January 2024 voluntary prepayments the Company made on the first lien debt. The increase of $4.3 million for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to the $6.9 million of accelerated amortization of original issue discount and issuance costs related to the voluntary prepayments.
Current wording
During the three and nine months ended September 30, 2024, Interest expense totaled $3.3 million and $16.6 million, respectively, compared to $4.7 million and $13.7 million, respectively, for the same periods in 2023. The decrease of $1.4 million during the three months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to the January 2024 voluntary prepayments the Company made on the first lien debt. The increase of $2.9 million for the nine months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to the $6.9 million of accelerated amortization of original issue discount and issuance costs related to the voluntary prepayments, partially offset by the January 2024 voluntary prepayments the Company made on the first lien debt. See Note 11 – Debt, Net to the Notes to the Financial Statements for additional information.
Previous wording
For the three and six months ended June 30, 2024, the Company recognized Other income of $3.3 million and $4.6 million, respectively, compared to $0.1 million and $0.3 million, respectively, for the same periods in 2023. The increase of $4.3 million for the six months ended June 30, 2024 included a $3.6 million gain on the sale of patents and a $1.6 million gain on a non-refundable deposit, partially offset by an unrealized loss on securities of $0.5 million and a loss of $0.1 million on the sale of equipment.
Current wording
During the three and nine months ended September 30, 2024, Other income, nettotaled $2.4 million and $7.0 million, respectively, compared to $0.5 million and $0.7 million, respectively, for the same periods in 2023. The increase of $1.9 million during the three months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to $2.2 million gain on sale of equipment, partially offset by $0.3 million unrealized loss on securities. The increase of $6.3 million during the nine months ended September 30, 2024, compared to the same period in 2023, is primarily attributed to $3.6 million gain on sale of patents and intellectual property, $2.0 million gain on sale of equipment, and $1.6 million gain on forfeiture of non-refundable deposit, partially offset by $0.8 million unrealized loss on securities. See Note 18 – Other Income (Expense) to the Notes to the Financial Statements for additional information.
Previous wording
The Company incurred Nil net income tax expense or benefit for both the six months ended June 30, 2024 and June 30, 2023. See Note 16 – Income Taxes.
Current wording
The Company incurred nil net income tax expense or benefit for both the three and nine months ended September 30, 2024 and September 30, 2023. See Note 19 – Income Taxesto the Notes to the Financial Statements for additional information.
Previous wording
The Company’s Cash and cash equivalents at June 30, 2024, were $58.5 million, as compared with $106.2 million at December 31, 2023. As discussed in Note 14 – Stockholders’ Equity in the Notes to the Financial Statements, the Company raised cash through its ATM Program as follows:
Current wording
The Company’s unrestricted cash position at September 30, 2024, was $55.8 million, as compared with $106.2 million at December 31, 2023. In addition to cash from sales of equipment, patents, and intellectual property totaling $7.1 million for the nine months ended September 30, 2024, the Company raised cash through its ATM Program as follows, and as discussed in Note 15 – Stockholders’ Equity in the Notes to the Financial Statements:
Previous wording
•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.
Current wording
•On June 2, 2023, the Company filed a prospectus supplement reactivating the ATM Program. As of December 31, 2023, $360.3 million of common stock was available for issuance under the ATM Program. On March 19, 2024, the Company filed a prospectus supplement under the baby shelf rule (Instruction I.B.6. of Form S-3), limiting sales to one-third of its public float over any 12-month period while the public float remained below $75.0 million. This supplement revised the maximum shares available for sale through the ATM Program to $15.3 million. However, on April 11, 2024, the Company’s public float exceeded $75.0 million, and a new prospectus supplement filed on May 15, 2024, increased the available shares for sale under the ATM Program to an aggregate offering price of $100.0 million.
Previous wording
•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.
Current wording
•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 $100.0 million New ATM Program. The universal shelf registration statement became effective on May 31, 2024, at 4:00 p.m. Eastern Daylight Time, replacing the prior universal shelf registration statement filed on June 30, 2021.
Previous wording
•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.
Current wording
•During the three and nine months ended September 30, 2024, the Company sold 89,118 and 3,081,665 shares of common stock, respectively, for aggregate gross proceeds, before commissions and offering expenses of $0.2 million and $10.6 million, respectively.
Previous wording
•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.
Current wording
•As of September 30, 2024, $99.8 million gross sales price of common stock was available for issuance under the New ATM Program.
Previous wording
As the Company completed recovering gold and silver ounces previously placed on the leach pad in 2022, the Company does not expect to generate net positive cash for the foreseeable future. Accordingly, the Company will be dependent on its unrestricted cash and other sources of cash to fund the business. Historically, the Company has been dependent on various forms of debt and equity financing to fund its business. While the Company has been successful in the past raising funds through equity and debt financings, no assurance can be given that additional financing will be available to it in amounts sufficient to meet the Company’s needs or on terms acceptable to the Company. If funds are unavailable, the Company may be required to materially change its business plan.
Current wording
As the Company ceased mining activities in 2021 and completed recovering gold and silver ounces previously placed on the leach pad in 2022, the Company does not expect to generate net positive cash for the foreseeable future. Accordingly, the Company will be dependent on its unrestricted cash and other sources of cash to repay debt and fund the business. Historically, the Company has been dependent on various forms of debt and equity financing to fund its business. While the Company has been successful in the past raising funds through equity and debt financings, no assurance can be given that additional financing will be available to it in amounts sufficient to meet the Company’s needs or on terms acceptable to the Company. If funds are unavailable, the Company may be required to materially change its business plan.
Previous wording
The Company has placed substantially all its unrestricted cash in operating and investing accounts with well-capitalized financial institutions, thereby ensuring balances remain readily available. The Company uses AAAm rated U.S. Government Money Market Funds for its unrestricted cash investments. Due to the nature of its operations and the composition of current assets, Cash and cash equivalents, Income tax receivable, and Assets held-for-sale represent substantially all the liquid assets on hand.
Current wording
The Company has placed substantially all its unrestricted cash in operating and investing accounts with well-capitalized financial institutions, thereby ensuring balances remain readily available. The Company uses AAAm rated U.S. Government Money Market Funds for its unrestricted cash investments. Due to the nature of its operations and the composition of current assets, Cash and cash equivalents, Income tax receivable, Assets held-for-sale, Interest receivable, and Other receivables represent substantially all the liquid assets on hand.
Previous wording
During the six months ended June 30, 2024, the Company used $20.3 million of cash in operating activities primarily attributable to a net loss of $33.9 million, the cash impact of which was $18.9 million. There was a $1.4 million deficit to working capital, including cash used for Other liabilitiesof $1.8 million. The largest non-cash items included in Net loss for the six months ended June 30, 2024, were Non-cash interest expense of $12.4 million and non-cash Asset retirement obligation adjustments of $4.0 million.
Current wording
During the nine months ended September 30, 2024, the Company used $27.8 million of cash in operating activities primarily attributable to a net loss of $48.2 million, the cash impact of which was $28.5 million. There was a $0.7 million deficit to working capital, including cash used for Other liabilitiesof $0.8 million. The largest non-cash items included in Net loss for the nine months ended September 30, 2024, were Non-cash interest expense of $15.2 million and non-cash Asset retirement obligation adjustments of $6.3 million.
Previous wording
During the six months ended June 30, 2023, the Company used $22.4 million of cash in operating activities primarily attributable to a net loss of $27.8 million, the cash impact of which was $19.9 million. There was a $2.6 million deficit to working capital with the largest non-cash item included in Net loss for the six months ended June 30, 2023 being Non-cash interest expense of $6.0 million.
Current wording
During the nine months ended September 30, 2023, the Company used $31.9 million of cash in operating activities primarily attributable to a net loss of $43.5 million, the cash impact of which was $31.4 million. There was a $0.6 million deficit to working capital and other, including cash used for Accounts payable and accrued liabilities of $1.4 million and Other liabilities of $0.6 million, and an increase in Prepaids of $1.4 million, partially offset by $2.8 million cash received on the collection of Accounts receivable as the Company collected its remaining receivables related to gold and silver sales during 2022. The largest non-cash item included in net loss during the nine months ended September 30, 2023, was Non-cash interest expense of $9.1 million.
Previous wording
For the six months ended June 30, 2024, investing activities generated cash of $1.3 million, comprised of Proceeds from the sale of patents of $1.4 million and Proceeds from the sale of equipment of $0.3 million, partially offset by Additions to property, plant, and equipmentof $0.4 million.
Current wording
For the nine months ended September 30, 2024, investing activities generated cash of $6.1 million, comprised of Proceeds from patent saleof $1.4 million and Proceeds from the sale of equipment of $5.7 million, partially offset by Additions to property, plant, and equipmentof $1.0 million.
Previous wording
For the six months ended June 30, 2023, investing activities used cash of $0.6 million primarily attributable to Additions to property, plant, and equipmentof $0.7 million, partially offset by Proceeds from the sale of equipment of $0.1 million.
Current wording
For the nine months ended September 30, 2023, investing activities used cash of $0.3 million primarily attributable to Additions to property, plant, and equipmentof $0.9 million, partially offset by Proceeds from the sale of equipment of $0.6 million.
Previous wording
For the six months ended June 30, 2024, financing activities used cash of $28.0 million that was primarily related to principal payments on debt and notes payable including the $38.0 million voluntary prepayment of the first lien debt and$10.1 million from the Issuance of common stock.
Current wording
For the nine months ended September 30, 2024, financing activities used net cash of $27.8 million that was primarily related to Principal payments on debt including the $38.0 million voluntary first lien debt prepayment, partially offset by $10.3 million from the Proceeds from issuance of common stock, net of issuance costs.
Previous wording
For the six months ended June 30, 2023, financing activities used cash of $1.2 million that was primarily related to Principal payments on debtof $1.1 million and Principal payments on notes payable of $0.1 million.
Current wording
For the nine months ended September 30, 2023, financing activities used cash of $1.7 million that was attributable to Principal payments on debtof $1.7 million and Principal payments on notes payable of $0.1 million.
Previous wording
(2)Mining operations are subject to extensive environmental regulations in the jurisdictions in which they are conducted, and we are required, upon cessation of operations, to reclaim and remediate the lands that our operations have disturbed. The estimated undiscounted inflated cash outflows of these remediation and reclamation obligations are reflected here. In the above presentation, no offset has been applied for the $58.3 million of our reclamation bonds or for the $26.9 million of cash collateral for those bonds included in Restricted Cash.
Current wording
(2)Mining operations are subject to extensive environmental regulations in the jurisdictions in which they are conducted, and we are required, upon cessation of operations, to reclaim and remediate the lands that our operations have disturbed. The estimated undiscounted inflated cash outflows of these remediation and reclamation obligations are reflected here. In the above presentation, no offset has been applied for the $58.7 million of our reclamation bonds or for the $27.2 million of cash collateral for those bonds included in Restricted Cash.
Previous wording
(4)The Company is required to pay a 4% net profit royalty (Crofoot Royalty), including advance royalty payments of $0.1 million in any year where mining occurs on the Crofoot claims and an additional $0.1 million if tons mined from the Crofoot claim blocks exceed 5.0 million tons. See Note 22 – Commitments and Contingencies in the Notes to the Financial Statements for additional information. Amounts shown represent the current estimates of cash payment timing using consensus pricing for gold and silver.
Current wording
(4)The Company is required to pay a 4% net profit royalty (Crofoot Royalty), including advance royalty payments of $0.1 million in any year where mining occurs on the Crofoot claims and an additional $0.1 million if tons mined from the Crofoot claim blocks exceed 5.0 million tons. Amounts shown represent the current estimates of cash payment timing using consensus pricing for gold and silver. See Note 23 – Commitments and Contingencies in the Notes to the Financial Statements for additional information.
Previous wording
(5)Repayments of principal on debt consists of amounts due under the Sprott Credit Agreement (as amended by the Second A&R Agreement), the amendment to the 10% Senior Secured Notes and Note Exchange Agreement (“Subordinated Notes”), and notes payable for equipment purchases. Included in the repayment of the Sprott Credit Agreement is the $3.3 million fee that was capitalized as payable in-kind in connection with the Second A&R Agreement. Included in the repayment of the Subordinated Notes principal is interest that is payable in-kind and capitalized on a quarterly basis. See Note 9 – Debt, Net in the Notes to the Financial Statements for additional information.
Current wording
(5)Repayments of principal on debt consists of amounts due under the Sprott Credit Agreement (as amended by the Second A&R Agreement), the amendment to the 10% Senior Secured Notes and Note Exchange Agreement (“Subordinated Notes”), and notes payable for equipment purchases. The repayment of the Subordinated Notes principal includes interest that is paid in-kind, which adds to the outstanding debt principal. See Note 11 – Debt, Net in the Notes to the Financial Statements for additional information.
Previous wording
On March 9, 2023, the Company entered into a letter agreement (the “Waiver and Amendment”), by and between the Company, the (“Lender”), and Sprott Private Resource Lending II (Co) Inc. (“SPRL II” and together with the Lender, the “Sprott Parties”). Pursuant to the terms of the Sprott Credit Agreement, the Company agreed that while any indebtedness is outstanding under the Sprott Credit Agreement or while the credit facility under the Sprott Credit Agreement remains available to the Company, the Company and guarantors under the Sprott Credit Agreement would not undertake certain corporate actions without the Lender’s prior written consent.
Current wording
On March 9, 2023, the Company entered into a letter agreement (the “Waiver and Amendment”), by and between the Company, Sprott Private Resource Lending II (Collector), LP (the “Lender”), and Sprott Private Resource Lending II (Co) Inc. (“SPRL II” and together with the Lender, the “Sprott Parties”). Pursuant to the terms of the Sprott Credit Agreement, the Company agreed that while any indebtedness is outstanding under the Sprott Credit Agreement or while the credit facility under the Sprott Credit Agreement remains available to the Company, the Company and guarantors under the Sprott Credit Agreement would not undertake certain corporate actions without the Lender’s prior written consent.
Previous wording
On May 24, 2023, the Company’s stockholders approved a proposed amendment of the Company’s second amended and restated certificate of incorporation (the “Certificate of Incorporation”) to effectuate a reverse stock split of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, at a ratio of no less than 1-for-10 and no more than 1-for-25, with such ratio to be determined at the sole discretion of the Board (the “Reverse Stock Split”). Pursuant to the terms of the Waiver and Amendment, Lender agreed to waive certain provisions of the Sprott Credit Agreement so that the Company may effectuate the proposed Reverse Stock Split of the Company’s common stock, including amendment of the Certificate of Incorporation necessary to effectuate the Reverse Stock Split. The Company notified the Nasdaq Stock Market LLC on October 26, 2023, that the Board of Directors approved filing the amendment to the Certificate of Incorporation in order that the Reverse Stock Split will be effective on November 14, 2023, at a ratio of 1-for-10. Except as set forth in the Waiver and Amendment, the Sprott Credit Agreement remains in full force and effect.
Current wording
On May 24, 2023, the Company’s stockholders approved a proposed amendment of the Company’s second amended and restated certificate of incorporation (the “Certificate of Incorporation”) to effectuate a reverse stock split of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, at a ratio of no less than 1-for-10 and no more than 1-for-25, with such ratio to be determined at the sole discretion of the Board (the “Reverse Stock Split”). Pursuant to the terms of the Waiver and Amendment, Lender agreed to waive certain provisions of the Sprott Credit Agreement so that the Company may effectuate the proposed Reverse Stock Split of the Company’s common stock, including amendment of the Certificate of Incorporation necessary to effectuate the Reverse Stock Split. The Company notified the Nasdaq Stock Market LLC on October 26, 2023, that the Board of Directors approved filing the amendment to the Certificate of Incorporation in order that the Reverse Stock Split would be effective on November 14, 2023, at a ratio of 1-for-10. Except as set forth in the Waiver and Amendment, the Sprott Credit Agreement remains in full force and effect.
Previous wording
As of June 30, 2024, the Company’s off-balance sheet arrangements consisted of a net profit royalty arrangement and a net smelter royalty arrangement (see Note 22 – Commitments and Contingencies in the Notes to the Financial Statements).
Current wording
As of September 30, 2024, the Company’s off-balance sheet arrangements consisted of a net profit royalty arrangement and a net smelter royalty arrangement. See Note 23 – Commitments and Contingencies in the Notes to the Financial Statements for additional information.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In February 2024, the Company launched its 2024 exploration drill program (the “2024 Drill Program”), to build on the high-grade silver dominant trends announced in November 2023. The 2023 drilling revealed substantial high-grade silver mineralization that has continuity with historical drilling along trends not previously identified. The objective of the 2024 Drill