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What changed in HYCROFT MINING HOLDING CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HYCROFT MINING HOLDING CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+330 added−443 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-28)

Top changes in HYCROFT MINING HOLDING CORP's 2023 10-K

330 paragraphs added · 443 removed · 264 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

46 edited+8 added−10 removed25 unchanged
Biggest changeRisk Factors – Industry Related Risks : • 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; • Changes in environmental regulations could adversely affect our cost of operations or result in operations delays; • Environmental regulations could require us to make significant expenditures or expose us to potential liability; and • Our exploration and development operations are subject to extensive environmental regulations, which could result in the incurrence of additional costs and operational delays.
Biggest changeRisk Factors – Industry Related Risks : • The Company relies upon numerous governmental permits that are difficult to obtain, and the Company may not be able to obtain or renew all of the required permits, or such permits may not be timely obtained or renewed; • Environmental regulations could require the Company to make significant expenditures or expose the Company to potential liability; • Failure to comply with environmental regulations could result in penalties and costs; and • Compliance with current and future government regulations may cause the Company to incur significant costs.
The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate utilizing a milling and pressure oxidation (“POX”) process for sulfide mineralization and heap leaching process for oxide and transition mineralization.
The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate utilizing a milling and pressure oxidation (“POX”) process for sulfide and transition mineralization and a heap leaching process for oxide mineralization.
Government Regulation of Mining-Related Activities Government Regulation Mining operations and exploration activities are subject to various federal, state and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.
Government Regulation of Mining-Related Activities Government Regulation Mining operations and exploration activities are subject to various federal, state and local laws and regulations in the United States, which govern prospecting, exploration, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.
The federal laws and regulations, among other things: • impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites (the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”)); • govern the generation, treatment, storage and disposal of solid waste and hazardous waste (the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”)); • restrict the emission of air pollutants from many sources, including mining and processing activities (the Clean Air Act of 1970, as amended (the “Clean Air Act”)); 8 Table of Contents • require federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including the issuance of permits to mining facilities and assessing alternatives to these actions (the National Environmental Policy Act of 1970, as amended (“NEPA”)); • regulate the use of federal public lands to prevent undue and unnecessary degradation of the public lands (the Federal Land Policy and Management Act of 1976, as amended (the “FLPMA”)); • restrict and control the discharge of pollutants and dredged and fill materials into waters of the United States (the Clean Water Act of 1972, as amended (the “Clean Water Act”)); and • regulate the drilling of subsurface injection wells (the Safe Drinking Water Act of 1974, as amended (the “Safe Drinking Water Act”) and the Underground Injection Control Program promulgated thereunder).
The federal laws and regulations, among other things: • impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites (the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”)); • govern the generation, treatment, storage and disposal of solid waste and hazardous waste (the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”)); • restrict the emission of air pollutants from many sources, including mining and processing activities (the Clean Air Act of 1970, as amended (the “Clean Air Act”)); • require federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including the issuance of permits to mining facilities and assessing alternatives to these actions (the National Environmental Policy Act of 1970, as amended (“NEPA”)); 7 Table of Contents • regulate the use of federal public lands to prevent undue and unnecessary degradation of the public lands (the Federal Land Policy and Management Act of 1976, as amended (the “FLPMA”)); • restrict and control the discharge of pollutants and dredged and fill materials into waters of the United States (the Clean Water Act of 1972, as amended (the “Clean Water Act”)); and • regulate the drilling of subsurface injection wells (the Safe Drinking Water Act of 1974, as amended (the “Safe Drinking Water Act”) and the Underground Injection Control Program promulgated thereunder).
During the year ended December 31, 2022, the Company received a notice of non-compliance from the closure branch of the Nevada Division of Environmental Protection (“NDEP”) Bureau of Mining Regulation and Reclamation (“BMRR”) regarding a historical reclamation matter. As such, the Company has accelerated certain reclamation activities in order to regain compliance.
During the year ended December 31, 2022, the Company received a notice of non-compliance from the closure branch of the Nevada Division of Environmental Protection (“NDEP”) Bureau of Mining Regulation and Reclamation regarding a historical reclamation matter. As such, the Company has accelerated certain reclamation activities in order to regain compliance.
At the state level, mining operations in Nevada are regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection (the “Division”), which has the authority to implement and enforce many of the federal regulatory programs described above as well as state environmental laws and regulations.
At the state level, mining operations in Nevada are regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection, which has the authority to implement and enforce many of the federal regulatory programs described above as well as state environmental laws and regulations.
Environmental Regulation Our mining projects are subject to various federal and state laws and regulations governing protection of the environment. These laws and regulations are continually changing and, in general, are becoming more restrictive.
Environmental Regulation Our projects are subject to various federal and state laws and regulations governing protection of the environment. These laws and regulations are continually changing and, in general, are becoming more restrictive.
There is substantial competition for qualified employees in the mining industry, some of which is with companies having substantially greater financial resources than us and a more stable history. As a result, we may have difficulty hiring and retaining qualified employees. See Item 1A.
There is substantial competition for qualified employees in the mining industry, some of which is with larger companies having greater financial resources than us and a more stable history. As a result, we may have difficulty hiring and retaining qualified employees. See Item 1A.
As of December 31, 2022, our surface management surety bonds totaled $58.7 million, of which $58.3 million secures the financial assurance requirements for the Hycroft Mine, and $0.4 million secures the financial assurance requirements for the adjacent water supply well field and exploration within the project boundary.
As of December 31, 2023, our surface management surety bonds totaled $58.7 million, of which $58.3 million secures the financial assurance requirements for the Hycroft Mine, and $0.4 million secures the financial assurance requirements for the adjacent water supply well field and exploration within the project boundary.
We consider these programs to be essential at all levels within Hycroft to ensure that our employees, contractors, and visitors only operate in a safe and healthy workplace. Our operations and exploration properties are subject to regulation by MSHA under the Federal Mine Safety and Health Act of 1977, as amended (the “Mine Act”).
We consider these programs to be essential at all levels within Hycroft to ensure that our employees, contractors, and visitors only operate in a safe and healthy workplace. Our operations and exploration properties are subject to regulation by the Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977, as amended (the “Mine Act”).
Technical Report Summaries (“TRS”) and Qualified Persons The scientific and technical information concerning our mineral projects in this 2022 Form 10-K have been reviewed and approved by third-party “qualified persons” under the Modernization Rules, including Ausenco Engineering South USA, Inc. (“Ausenco”), Independent Mining Consultants, Inc, (“IMC”), and WestLand Engineering & Environmental Services, Inc. (“WestLand”).
Technical Report Summaries (“TRS”) and Qualified Persons The scientific and technical information concerning our mineral projects in the 2023 Form 10-K have been reviewed and approved by third-party “qualified persons” under the Modernization Rules, including Ausenco Engineering South USA, Inc. (“Ausenco”), Independent Mining Consultants, Inc, (“IMC”), and WestLand Engineering & Environmental Services, Inc. (“WestLand”).
Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and coins. Fabricated silver also has a variety of end uses, including jewelry, mirrors, cameras, electronics, energy, engines, novelty explosives and coins. Gold and silver investors buy gold and silver bullion, coins and jewelry.
Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative applications, medals, medallions and coins. Fabricated silver also has a variety of end uses, including jewelry, mirrors, cameras, electronics, energy production, engines, novelty explosives, and coins. Gold and silver investors buy gold and silver bullion, coins and jewelry.
We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our current mining, exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in Nevada and the United States.
We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our current mining, exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in Nevada and at the federal level in the United States.
The Dodd-Frank Act requires us to provide certain mine safety disclosure, which we have done in Part I – Item 4. Mine Safety Disclosure s of this 2022 Form 10-K. Property Interests and Mining Claims Our development activities are conducted in the State of Nevada.
The Dodd-Frank Act requires us to provide certain mine safety disclosure, which we have done in Part I – Item 4. Mine Safety Disclosure s of this 2023 Form 10-K. Property Interests and Mining Claims Our exploration and development activities are conducted in the State of Nevada.
Segment Information The Hycroft Mine is our only operating segment and includes the operations, development, and exploration activities and accounts for 100% of our Revenues and Production costs . Corporate and Other includes corporate General and administrative costs. See Note 19 – Segment Information to the Notes to the Consolidated Financial Statements for additional information on our segments.
Segment Information The Hycroft Mine is our only operating segment and includes operations, exploration, and development activities and accounts for 100% of our Production costs . Corporate and Other includes corporate General and administrative costs. See Note 20 – Segment Information to the Notes to the Consolidated Financial Statements for additional information on our segments.
(“Sprott Credit Agreement”) and the assumption of the newly issued 10% Senior Secured Notes (“ Subordinated Notes”). Our property, the Hycroft Mine, has historically operated as an open-pit oxide mining and heap leach processing operation and is located approximately 54 miles northwest of Winnemucca, Nevada.
(“Sprott Credit Agreement”) and the assumption of the newly issued 10% Senior Secured Notes (“Subordinated Notes”). Our property, the Hycroft Mine, historically operated as an open-pit oxide mining and heap leach processing operation and is located approximately 54 miles northwest of Winnemucca, Nevada.
Gold and Silver Prices The price of gold and silver is volatile and is affected by many factors beyond our control, such as the sale or purchase of gold by central banks and financial institutions, inflation or deflation and monetary policies, fluctuation in the value of the U.S. dollar and foreign currencies, global and regional demand, and the political and economic conditions of major gold and silver producing countries throughout the world.
Gold and Silver Prices The price of gold and silver is volatile and is affected by many factors beyond our control, including geopolitical events, such as conflicts or trade tensions, the sale or purchase of gold by central banks and financial institutions, inflation or deflation and monetary policies, fluctuation in the value of the U.S. dollar and foreign currencies, global and regional demand, and the political and economic conditions of major gold and silver producing countries throughout the world.
We are a U.S.-based gold and silver development company that owns the Hycroft Mine in the prolific mining region of Northern Nevada. The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements (“Financial Statements”) and Notes to the Financial Statements (“Notes”) included in Part II – Item 8. Financial Statements of this 2022 Form 10-K.
We are a U.S.-based gold and silver exploration and development company that owns the Hycroft Mine in the prolific mining region of Northern Nevada. The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements (“Financial Statements”) and Notes to the Financial Statements (“Notes”) included in Part II – Item 8.
When we perform reclamation work in the future, the work will be planned to conform to our mining operations and will be required to be 9 Table of Contents documented when completed under our governing permits with the government regulatory agencies.
When we perform reclamation work in the future, the work will be planned to conform to our mining operations and will be required to be documented when completed under our governing permits with the government regulatory agencies.
In conjunction with the Recapitalization Transaction, Seller’s indebtedness existing prior to the Recapitalization Transaction was either repaid, exchanged for indebtedness of the Company, exchanged for shares 5 Table of Contents of common stock or converted into shares of Seller common stock, and our post-Recapitalization Transaction indebtedness included amounts drawn under the Credit Agreement among MUDS, MUDS Holdco Inc., Allied VGH LLC, Hycroft Mining Holding Corporation, Hycroft Resources and Development, LLC Sprott Private Resource Lending II (Collector) Inc., and Sprott Resources Lending Corp.
In conjunction with the Recapitalization Transaction, Seller’s indebtedness existing prior to the Recapitalization Transaction was either repaid, exchanged for indebtedness of the Company, exchanged for shares of common stock or converted into shares of Seller common stock, and our post-Recapitalization Transaction indebtedness included amounts drawn under the Credit Agreement among Hycroft, AuxAg Mining Corporation (formerly known as MUDS Holdco Inc.), Allied VGH LLC, Hycroft Resources and Development, LLC Sprott Private Resource Lending II (Collector) Inc., and Sprott Resources Lending Corp.
As of December 31, 2022, the Hycroft Mine had measured and indicated mineral resources of 10.6 million ounces of gold and 360.7 million ounces of silver and inferred mineral resources of 3.4 million ounces of gold and 96.1 million ounces of silver, w hich are contained in oxide, transitional, and sulfide ores.
As of December 31, 2023, the Hycroft Mine had measured and indicated mineral resources of 10.6 million ounces of gold and 360.7 million ounces of silver and inferred mineral resources of 3.4 million ounces of gold and 96.1 million ounces of silver, which are contained in oxide, transitional, and sulfide ores.
As the Company ceased active mining operations in November 2021 and completed the processing of gold and silver ounces from the leach pads, we do not expect to have significant Revenues from gold and silver sales until restarting mining operations. 6 Table of Contents Gold and Silver Uses Gold and silver have two main categories of use: fabrication and investment.
Product Revenues and Customers As the Company ceased active mining operations in November 2021 and completed the processing of gold and silver ounces from the leach pads, we do not expect to have Revenues from gold and silver sales until restarting mining operations. Gold and Silver Uses Gold and silver have two main categories of use: fabrication and investment.
Our ongoing disclosures and many of management’s estimates and judgements as of and for the period ended December 31, 2022 are based on the 2023 Hycroft TRS.
Our ongoing disclosures and many of management’s estimates and judgments as of and for the periods ended December 31, 2023 and 2022, are based on the 2023 Hycroft TRS.
The metals markets are cyclical, and our ability to maintain our competitive position over the long-term is based on our ability to develop and cost effectively operate the Hycroft Mine in a safe and environmentally responsible manner. We compete with other mining companies in connection with hiring and retaining qualified employees.
The metals markets are cyclical, and our ability to compete in that market over the long-term will be based on our ability to develop and cost effectively operate the Hycroft Mine in a safe and environmentally responsible manner. We compete with other mining companies in connection with hiring and retaining qualified employees.
The Company will continue to build on the work to date and investigate opportunities identified through progressing the technical and data analyses leading up to the 2023 Hycroft TRS and will provide an updated technical report at an appropriate time.
The Company will continue to build on the work to date, incorporate exploration data as it becomes available, and investigate opportunities identified through progressing the technical and data analyses leading up to the 2023 Hycroft TRS and subsequent studies and analyses, and we will provide an updated technical report at an appropriate time.
Competition The top 10 producers of gold comprise approximately one third of total worldwide mined gold production. We are a gold and silver development company with a single property. The Hycroft Mine has large gold and silver mineral resources included in the 2023 Hycroft TRS.
Competition The top ten producers of gold comprise approximately one-quarter of total worldwide mined gold production. We are a gold and silver exploration and development company with a single property, the Hycroft Mine. The Hycroft Mine has a large gold and silver mineral resource as noted in the 2023 Hycroft TRS.
Based on publicly available information published by the World Gold Council, gold production from mines increased 1.2% in 2022 compared with 2021 totaling approximately 3,612 metric tons (or 116.1 million troy ounces) and represented approximately 75.9% of the 2022 global gold supply of 4,755 metric tons.
Based on publicly available information published by the World Gold Council, gold production from mines increased 0.9% in 2023 compared with 2022 totaling approximately 3,644 metric tons (or 117.2 million troy ounces) and represented approximately 74.4% of the 2023 global gold supply of 4,899 metric tons.
We did not incur material capital expenditures for environmental control facilities during 2022 and 2021 and we do not expect to incur any material expenditures in 2023 for such environmental control facilities.
During 2023 and 2022, there were no known material environmental incidents. We did not incur material capital expenditures for environmental control facilities during 2023 and 2022, and we do not expect to incur any material expenditures in 2024 for such environmental control facilities.
Principal Products, Revenues, and Market Overview The principal products produced during 2022 and 2021 at the Hycroft Mine were unrefined gold and silver bars (doré) and gold and silver laden carbons and slags, both of which were sent to third party refineries and sold at prevailing spot prices after adjustments for refining and other associated fees, to financial institutions or to precious metals traders.
Principal Products, Revenues, and Market Overview During the year ended December 31, 2023, the Company generated no Revenues due to the cessation of active mining operations. 5 Table of Contents The principal products produced during 2022 at the Hycroft Mine were unrefined gold and silver bars (doré) and gold and silver-laden carbons and slags, both of which were sent to third party refineries and sold at prevailing spot prices after adjustments for refining and other associated fees, to financial institutions or to precious metals traders.
According to the World Gold Council, gold demand in 2022 was approximately 4,741 metric tons (or 152.4 million troy ounces) and totaled approximately $274.4 billion in value. In 2022, gold demand by sector was comprised of jewelry (46%), investments including bar and coin and ETFs (23%), central bank purchases (24%), and technology (7%).
According to the World Gold Council, gold demand in 2023 was approximately 4,448 metric tons (or 143.0 million troy ounces) and totaled approximately $277.5 billion in value. In 2023, gold demand by sector was comprised of jewelry (49%), investments including bar and coin and ETFs (21%), central bank purchases (23%), and technology (7%).
Based on publicly available information, estimated silver production from mines increased approximately 2.5% in 2022 compared with 2021 totaling approximately 843 million troy ounces and represented approximately 82% of the 2022 global silver supply of 1,030 million troy ounces. Silver demand in 2022 was approximately 1,101 million troy ounces and totaled approximately $26.3 billion in value.
Based on publicly available information, estimated silver production from mines increased approximately 2% in 2023 compared with 2022 totaling approximately 842 million troy ounces and represented approximately 82% of the 2023 global silver supply of 1,025 million troy ounces. Silver demand in 2023 was approximately 1,167 million troy ounces and totaled approximately $24.9 billion in value.
ITEM 1. BUSINESS About the Company Hycroft Mining Holding Corporation (formerly known as Mudrick Capital Acquisition Corporation) was incorporated under the laws of the state of Delaware on August 28, 2017. In this 2022 Form 10-K, “we”, “us”, “our”, the “Company”, “Hycroft”, and "HYMC" refer to Hycroft Mining Holding Corporation and its subsidiaries.
ITEM 1. BUSINESS About the Company Hycroft Mining Holding Corporation (formerly known as Mudrick Capital Acquisition Corporation) was incorporated under the laws of the state of Delaware on August 28, 2017. In this 2023 Form 10-K, “we,” “us,” “our,” “Company,” “Hycroft,” and “HYMC” refer to Hycroft Mining Holding Corporation and its subsidiaries.
Any defects in such title could cause us to lose our rights in mineral properties and jeopardize our business operations; • 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 Mineral Tax we pay to the State of Nevada.
Any defects in such title could cause the Company to lose its rights in mineral properties and jeopardize our business operations; and • Legislation has been proposed periodically that could, if enacted, significantly affect the cost of mine development on the Company’s unpatented mining claims.
Risk Factors — Industry Related Risks — The Company faces intense competition in the recruitment and retention of qualified employees , for additional discussion related to our current and potential competition. 7 Table of Contents Employees At December 31, 2022, we had approximately 74 employees, of which 64 were employed at the Hycroft Mine.
Risk Factors — Industry Related Risks — The Company faces intense competition in the recruitment and retention of qualified employees and contractors , for additional discussion related to our current and potential competition. Employees At December 31, 2023, we had 78 employees, of which 69 were employed at the Hycroft Mine. None of our employees are represented by unions.
For a description of the key assumptions, parameters and methods used to estimate mineral resources included in this 2022 Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the 2023 Hycroft TRS incorporated by reference herein. 10 Table of Contents Available Information Our corporate headquarters is located at 4300 Water Canyon Road, Unit 1 Winnemucca, Nevada 89445, and our telephone number is (775) 304-0260.
For a description of the key assumptions, parameters and methods used to estimate mineral resources included in the 2023 Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the 2023 Hycroft TRS incorporated by reference herein.
In 2022, silver demand by sector was comprised of photovoltaics (12%), other industrial (37%), jewelry (18%), silverware (5%), photography (3%), and investments (25%).
In 2023, silver demand by sector was comprised of photovoltaics (14%), other industrial (12%), jewelry (17%), silverware (5%), photography (2%), and investments (26%).
GOLD PRICES SILVER PRICES Year High Low Average High Low Average 2020 $ 2,067 $ 1,474 $ 1,770 $ 28.89 $ 12.01 $ 20.55 2021 $ 1,943 $ 1,684 $ 1,799 $ 29.59 $ 21.53 $ 25.04 2022 $ 2,039 $ 1,628 $ 1,800 $ 26.18 $ 17.77 $ 21.71 2023 (through Mar. 24th) $ 1,994 $ 1,811 $ 1,884 $ 24.44 $ 20.09 $ 22.48 On March 24, 2023, the afternoon fix price for gold and silver on the London Bullion Market was $1,994 per ounce and $23.17 per ounce, respectively.
GOLD PRICES SILVER PRICES Year High Low Average High Low Average 2021 $ 1,943 $ 1,684 $ 1,799 $ 29.59 $ 21.53 $ 25.04 2022 $ 2,039 $ 1,628 $ 1,800 $ 26.18 $ 17.77 $ 21.71 2023 $ 2,150 $ 1,907 $ 1,944 $ 24.43 $ 22.00 $ 23.33 2024 (through Mar. 12th) $ 2,180 $ 1,985 $ 2,046 $ 24.50 $ 22.09 $ 22.98 On March 12, 2024, the afternoon fix price for gold and silver on the London Bullion Market was $2,161 per ounce and $24.38 per ounce, respectively.
If we incur additional long-term environmental impacts from future mining activities, we will likely have additional reclamation obligations as well as additional financial assurance requirements.
No additional material reclamation expenditures are expected to be incurred until after mining and mineral processing are completed. If we incur additional long-term environmental impacts from future mining activities, we will likely have additional reclamation obligations, as well as additional financial assurance requirements.
On May 29, 2020, we, consummated a business combination transaction (the “Recapitalization Transaction”) that resulted in MUDS Acquisition Sub, Inc. (“Acquisition Sub”) acquiring all of the issued and outstanding equity interests of the direct subsidiaries of Hycroft Mining Corporation (“Seller”) and substantially all of the other assets of Seller and assuming substantially all of the liabilities of Seller.
(“Acquisition Sub”) acquiring all of the issued and outstanding equity interests of the direct subsidiaries of Hycroft Mining Corporation (“Seller”) and substantially all of the other assets of Seller and assuming substantially all of the liabilities of Seller.
The reclamation obligation would be adjusted accordingly as allowed under current regulations, and the financial assurance requirements would be adjusted to account for the completed reclamation work. If we are required to comply with material unanticipated financial assurance requirements in the future, our financial position could be adversely affected, or our posted financial assurance may be insufficient.
The reclamation obligation would be adjusted accordingly as allowed under current regulations, and the financial assurance requirements would be adjusted to account for the completed reclamation work.
None of our employees are represented by unions. We believe “the miner is the most important thing to come out of a mine” and we support that belief through our philosophy of “continuous improvement.” Our mandated mine safety and health programs include employee and contractor training, risk management, workplace inspection, emergency response, accident investigation, and program auditing.
We believe safety is a core value and support that belief through our philosophy of safe work performance. Our mandatory mine safety and health programs include employee engagement and ownership of safety performance, accountability, employee and contractor training, risk management, workplace inspection, emergency response, accident investigation, anti-harassment, and program auditing.
During the year ended December 31, 2022, we completed processing of gold and silver ore previously placed on leach pads prior to ceasing mining operations in November 2021 and we sold 17,728 ounces of gold and 44,084 ounces of silver.
We ceased mining activities in November 2021, and completed processing of gold and silver ore previously placed on leach pads as of December 31, 2022. We do not expect to generate revenues from gold and silver sales until after further developing the Hycroft Mine and recommencing mining and processing operations.
For financial information about our estimated future reclamation costs, see Note 13 – Asset Retirement Obligation to the Notes to the Consolidated Financial Statements.
If we are required to comply with material unanticipated financial assurance requirements in the future, our financial position could be adversely affected, or our posted financial assurance may 8 Table of Contents be insufficient. For financial information about our estimated future reclamation costs, see Note 8 – Asset Retirement Obligation to the Notes to the Consolidated Financial Statements.
In addition, our Code of Business Conduct & Ethics applicable to all of our officers, directors, employees, consultants and advisors; our Code of Conduct of Senior Financial Officers; and our Board committee charters are available, free of charge, on our website. In addition, paper copies of these documents will be furnished to any stockholder, upon request, free of charge.
In addition, paper copies of these documents will be furnished to any stockholder, upon request, free of charge. 9 Table of Contents
We have not fully developed our milling and POX operations and we have not established our long-term production and cost structure. Our costs are expected to be determined by the location, grade and nature of our ore body, processing technologies applied to our ore, and costs including energy, reagents, labor and equipment.
We have not completed our engineering studies and we have not fully developed our sulfide ore milling and processing studies and therefore, have not established our long-term 6 Table of Contents production and cost structure.
The Company began performing reclamation activities on its Crofoot leach pad beginning in 2022 and expects to complete the reclamation activities in 2028. No additional material reclamation expenditures are expected to be incurred until after mining and mineral processing are completed.
The Company began performing reclamation activities on its Crofoot leach pad beginning in 2023 and expects to continue the Crofoot reclamation activities in 2024. The Company also expects to treat and manage solutions in certain ponds beginning in 2024 and continuing through 2026.
Removed
Product Revenues and Customers In 2022, Revenues from gold and silver recovered from our pre-commercial scale heap leaching operations made up 97% and 3%, respectively, of our total revenue and, as such, we consider gold our principal product.
Added
Financial Statements of this 2023 Form 10-K. On May 29, 2020, we consummated a business combination transaction (the “Recapitalization Transaction”) that resulted in Autar Gold Corporation (formerly known as MUDS Acquisition Sub, Inc.
Removed
In 2022, all of our Revenues were derived from metal sales to three customers; however, we do not believe we have any dependencies on these customers due to the liquidity of the metal markets and the availability of other metal buyers and financial institutions.
Added
This integrated approach is essential to ensure that our employees, contractors, and visitors operate safely. We reported no lost time incidents during the year ended December 31, 2023, and achieved one million workhours without a lost time incident in the second quarter of 2023.
Removed
These programs are a focus for our leadership and top management and are essential at all levels to ensure that our employees, contractors, and visitors operate safely. One of the metrics we use to measure our safety performance is the industry standard Total Recordable Injury Frequency Rate (“TRIFR”).
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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.
Removed
The Hycroft Mine’s TRIFR per 200,000 man-hours worked (including contractors) was Nil (0.00) at the end of 2022, as compared to 0.64 at the end of 2021 and the mining industry average of approximately 2.02 for 2022.
Added
During the year ended 2023, we continued our critical focus on safety, including allocating personnel, resources, workforce time, and communications to operate safely. These actions contributed to maintaining our TRIFR of Nil (0.00) at December 31, 2023 and December 31, 2022.
Removed
In 2021, we recruited new leadership from strong safety cultures in the mining industry that helped us successfully rebuild the Hycroft Mine safety culture utilizing elements in advanced safety practices and management making them the cornerstone for our safety success.
Added
We remain committed to adapting our safety initiatives as necessary to ensure the well-being of our workforce, contractors, and visitors.
Removed
We emphasize safety as a cornerstone of our corporate culture and continue with the practices, and people to elevate our safety performance in all site activities. During 2022 we continued to focus our efforts on safety with enhanced and expanded activities to further develop and reinforce our safety culture.
Added
Available Information The Company is a remote first company and does not maintain a corporate headquarters. Our mailing address is PO Box 3030 Winnemucca, Nevada 89446. Our telephone number is (775) 304-0260. Our website is www.hycroftmining.com. We encourage investors to use our website to find information about us.
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COVID-19 We have implemented health and safety policies for employees, contractors, and visitors that follow guidelines from the Center for Disease Control (“CDC”) and the Federal Mine Safety and Health Administration (“MSHA”). During 2022 and 2021, our operations faced certain limitations due to COVID-19 related absences, however the impact, while negative, did not materially and adversely affect our operations.
Added
We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, as well as corporate governance information (including our Code of Business Conduct & Ethics and our Code of Conduct and Ethics for Senior Financial Officers).
Removed
See Item 1A. Risk Factors – Industry Related Risks – The on-going effects of the coronavirus pandemic may adversely impact our business and financial condition , as well as Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion related to COVID-19.
Added
The SEC maintains a website at www.sec.gov that contains annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and other information regarding Hycroft and other issuers that file electronically with the SEC.
Removed
During 2021, there was no known material non-compliance with any applicable environmental regulations on the properties now held by us. During 2022 and 2021, there were no known material environmental incidents.
Removed
We make available on this website (under “Investors” and then under “SEC Filings”), free of charge, our proxy statements used in conjunction with stockholder meetings, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and Section 16 beneficial ownership reports (as well as any amendments to those reports) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

93 edited+8 added−35 removed114 unchanged
Biggest changeIndustry-related risks, including: • Fluctuations in the prices of gold and silver; • The intense competition in the recruitment and retention of qualified employees and contractors within the mining industry; • The commercial success of, and risks relating to, the Company’s development activities; • Uncertainties and risks related to reliance on contractors and consultants; • Availability and cost of equipment, supplies, energy, or commodities; • The inherently hazardous nature of mining activities, including environmental risks; • Potential effects of U.S. federal and state governmental regulations, including environmental regulation and permitting requirements; • Uncertainties relating to obtaining or retaining approvals and permits from governmental regulatory authorities; • Cost of compliance with current and future government regulations, including environmental regulations; • Potential challenges to mineral properties titles; • Inadequate insurance to cover all business risks; • Risks associated with proposed legislation that could significantly increase the cost of mine development on the Company’s unpatented mining claims; • Risks associated with regulations and pending legislation involving climate change could result in increased costs, which could have a material adverse effect the Company’s business; • Changes to the climate and regulations regarding climate change; and • Continued uncertainties relating to the COVID-19 pandemic or other pandemics. 11 Table of Contents Business-related risks, including: • Risks related to the Company’s ability to raise capital on favorable terms or at all; • The loss of key personnel or the Company’s failure to attract and retain personnel; • Risks related to the Company’s substantial indebtedness, including operating and financial restrictions under existing indebtedness, cross-acceleration and the Company’s ability to generate sufficient cash to service the indebtedness; • Risks related to having sufficient liquidity to service current indebtedness without a material cash flow; • The costs related to land reclamation requirements; • Future litigation or similar legal proceedings could have a material adverse effect on the Company’s business and results of operations; • Risks related to technology systems and security breaches; and • Risks that principal stockholders will be able to exert significant influence over matters submitted to stockholders for approval.
Biggest changeIndustry-related risks, including: • Fluctuations in the prices of gold and silver; • Intense competition within the mining industry for mineral properties, employees, contractors and consultants; • The commercial success of, and risks relating to, the Company’s exploration and development activities; • Uncertainties and risks related to reliance on contractors and consultants; • Availability and cost of equipment, supplies, energy, or commodities; • The inherently hazardous nature of mining activities, including safety and environmental risks; • Potential effects of U.S. federal and state governmental regulations, including environmental regulation and permitting requirements; • Uncertainties relating to obtaining, retaining or renewing approvals and permits from governmental regulatory authorities; • Cost of compliance with current and future government regulations, including environmental regulations; • Potential challenges to title in our mineral properties; • Inadequate insurance to cover all risks associated with our business, or cover the replacement costs of our assets or may not be available for some risks; • Risks associated with potential legislation in Nevada that could significantly increase the cost of mine development on the Company’s unpatented mining claims; • Risks associated with regulations and pending legislation involving climate change could result in increased costs, which could have a material adverse effect the Company’s business; • Changes to the climate and regulations regarding climate change; and • Continued uncertainties relating to the COVID-19 pandemic or other pandemics.
As a result, the Company is subject to a number of risks, some of which are outside its 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 exploration or development 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 exploration or development 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.
As a result, the Company is subject to a number of risks, some of which are outside its 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 exploration or development operations that 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 exploration or development 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.
The Hycroft Mine consists 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 the Company has only possessory title.
The Hycroft Mine consists of private mineral rights, leases covering private lands, 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 the Company has only possessory title.
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.
However, the right to pursue a patent has been subject to a moratorium since October 1994 through federal legislation restricting the BLM from accepting any new mineral patent applications.
Increases in market interest rates may cause potential investors to seek higher returns and therefore reduce demand for the Company’s common stock, which could result in a decline in the Company’s stock price.
Increases in market interest rates may cause potential investors to seek higher returns and therefore, may reduce demand for the Company’s common stock, which could result in a decline in the Company’s stock price.
Overall, there are various factors, many of which are beyond the Company’s control, that could negatively affect the market price of the Company’s common stock or result in fluctuations in the price or trading volume of the Company’s common stock, including: • publication of research reports by analysts or others about the Company or the precious metals market, which may be unfavorable, inaccurate, inconsistent or not disseminated on a regular basis; • changes in market interest rates that may cause purchasers of shares of the Company’s common stock to demand a different yield; • changes in market valuations of similar companies; • market reaction to any additional equity, debt or other securities that the Company may issue in the future, and which may or may not dilute the holdings of existing stockholders; • actual or anticipated variations in the Company’s annual or quarterly results of operations; • additions or departures of key personnel or Board of Directors members; • actions by institutional or significant stockholders; • short interest in the Company’s stock and the market response to such short interest; • the dramatic increase in the number of individual holders of the Company’s stock and their participation in social media platforms targeted at speculative investing; 23 Table of Contents • speculation in the press or investment community about the Company or industry; • strategic actions by the Company or its competitors, such as acquisitions or other investments; • the ongoing impacts and developments relating to the COVID-19 pandemic; • legislative, administrative, regulatory or other actions affecting the Company or industry; • investigations, proceedings, or litigation that involve or affect the Company; and • general market, economic and political conditions, such reductions in precious metals prices, increases in fuel and other commodity prices used in business operations, currency fluctuations, and acts of war or terrorism.
Overall, there are various factors, many of which are beyond the Company’s control, that could negatively affect the market price of the Company’s common stock or result in fluctuations in the price or trading volume of the Company’s common stock, including: • publication of research reports by analysts or others about the Company or the precious metals market, which may be unfavorable, inaccurate, inconsistent or not disseminated on a regular basis; 21 Table of Contents • changes in market interest rates that may cause purchasers of shares of the Company’s common stock to demand a different yield; • changes in market valuations of similar companies; • market reaction to any additional equity, debt or other securities that the Company may issue in the future, and which may or may not dilute the holdings of existing stockholders; • actual or anticipated variations in the Company’s annual or quarterly results of operations; • additions or departures of key personnel or Board of Directors members; • actions by institutional or significant stockholders; • short interest in the Company’s stock and the market response to such short interest; • the dramatic increase in the number of individual holders of the Company’s stock and their participation in social media platforms targeted at speculative investing; • speculation in the press or investment community about the Company or industry; • strategic actions by the Company or its competitors, such as acquisitions or other investments; • the ongoing impacts and developments relating to the COVID-19 pandemic; • legislative, administrative, regulatory or other actions affecting the Company or industry; • investigations, proceedings, or litigation that involve or affect the Company; and • general market, economic and political conditions, such reductions in precious metals prices, increases in fuel and other commodity prices used in business operations, currency fluctuations, and acts of war or terrorism.
The worsening of the current COVID-19 pandemic could continue to, and future similar epidemics or pandemics could also, materially and negatively impact the Company’s business including without limitation, employee health, workforce productivity, insurance premiums, ability to travel, the availability of industry experts and personnel, restrictions or delays to current and future drill and work programs and/or the timing to process drilling and other metallurgical testing, and other factors that will depend on future developments beyond the Company’s control, which may have a material and adverse effect on its business, financial condition and results of operations.
The worsening of the COVID-19 pandemic could continue to, and possible future similar epidemics or other possible pandemics could also, materially and negatively impact the Company’s business, including without limitation, employee health, workforce productivity, insurance premiums, ability to travel, the availability of industry experts and personnel, restrictions or delays to current and future drill and work programs and/or the timing to process drilling and other metallurgical testing, and other factors that will depend on future developments beyond the Company’s control, which may have a material and adverse effect on its business, financial condition and results of operations.
Summary of Risk Factors: The following list provides a summary of risk factors discussed in further detail below: Risks related to changes in the Company’s operations at the Hycroft Mine, including: • Risks associated with cessation of mining operations at the Hycroft Mine; • Uncertainties concerning estimates of mineral resources; • Risks relating to a lack of a completed pre-feasibility or feasibility study; and • Risks related to the Company’s ability to establish commercially feasible mining operations.
Summary of Risk Factors: The following list provides a summary of risk factors discussed in further detail below: Risks related to changes in the Company’s operations at the Hycroft Mine, including: • Risks associated with cessation of mining operations at the Hycroft Mine; • Uncertainties concerning estimates of mineral resources; • Risks relating to a lack of a completed pre-feasibility or feasibility study; and • Risks related to the Company’s ability to finance and establish commercially feasible mining operations.
As discussed above, historically, the market for the Company’s common stock has been characterized by significant price volatility when compared to seasoned issuers, and the Company expects that its share price will continue to be more volatile than a seasoned issuer for the indefinite future.
As discussed above, historically, the market for the Company’s common stock has been characterized by significant price volatility when compared to seasoned issuers, and the Company expects that its share price will continue to be more volatile than that of a seasoned issuer for the indefinite future.
The Company does not anticipate paying common stock dividends in the foreseeable future. The Company currently plans to invest all available funds and future cash flows, if any, in the development and growth of its business. The Company has never paid dividends on its common stock and currently has no plans to do so.
The Company does not anticipate paying common stock dividends in the foreseeable future. The Company currently plans to invest all available funds and future cash flows, if any, in the exploration and development and growth of its business. The Company has never paid dividends on its common stock and currently has no plans to do so.
This high level of debt and royalty payment obligations could: • make it more difficult for the Company to satisfy obligations with respect to its outstanding debt; • require a substantial portion of the Company’s 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 the Company’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • increase vulnerability to commodity price volatility, including increases in prices of commodities the Company purchases and decreases in prices of gold and silver that the Company sells, each as part of operations, general adverse economic and industry conditions; • limit flexibility in planning for and reacting to changes in the industry in which the Company competes; • place the Company at a disadvantage compared to other, less leveraged competitors; and • increase the Company’s cost of borrowing.
This high level of debt and royalty payment obligations could: • make it more difficult for the Company to satisfy obligations with respect to its outstanding debt; • require a substantial portion of the Company’s 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 the Company’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; 18 Table of Contents • increase vulnerability to commodity price volatility, including increases in prices of commodities the Company purchases and decreases in prices of gold and silver that the Company sells, each as part of operations, general adverse economic and industry conditions; • limit flexibility in planning for and reacting to changes in the industry in which the Company competes; • place the Company at a disadvantage compared to other, less leveraged competitors; and • increase the Company’s cost of borrowing.
The Company will need to recruit and retain other qualified managerial and technical employees to build and maintain its operations. If the Company is unable to successfully recruit and retain such persons, the Company’s development and growth plans could be significantly curtailed.
The Company will need to recruit and retain other qualified managerial and technical employees to build and maintain its operations. If the Company is unable to successfully recruit and retain such persons, the Company’s exploration, development and growth plans could be significantly curtailed.
Risks related to the Company’s Common Stock and Warrants The market prices and trading volume of shares of the Company’s common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of the Company’s common stock to incur substantial losses.
Risks related to the Company’s Common Stock and Warrants The market prices and trading volume of shares of the Company’s common stock have experienced, and may continue to experience, extreme volatility, which could cause purchasers of the Company’s common stock to incur substantial losses.
The Company’s primary future cash requirements for 2023 will be to fund working capital needs, capital and project expenditures, satisfying debt service required under the Sprott Credit Agreement, and other corporate expenses so the Company can continue to develop the Hycroft Mine by conducting targeted exploration drilling and completing the necessary technical studies to determine the likely timeline to bring the sulfide mineral resources into commercial scale operation.
The Company’s primary future cash requirements for 2024 will be to fund working capital needs, capital and project expenditures, satisfying debt service required under the Sprott Credit Agreement, and other corporate expenses so the Company can continue to develop the Hycroft Mine by conducting targeted exploration drilling and completing the necessary technical studies to determine the likely timeline to bring the sulfide mineral resources into commercial-scale operation.
The market prices and trading volume of shares of the Company’s common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers to incur substantial losses.
The market prices and trading volume of shares of the Company’s common stock have experienced, and may continue to experience, extreme volatility, which could cause purchasers to incur substantial losses.
The market volatility and trading patterns the Company has experienced creates several risks for stockholders, including the following: ◦ the market price of the Company’s common stock has experienced and may experience in the future rapid and substantial increases or decreases unrelated to the Company’s financial performance or prospects, or macro or industry fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties the Company continues to face; ◦ factors in the public trading market for the Company’s common stock include the sentiment of retail investors (including as may be expressed on financial trading and other social media sites and online forums), the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in the Company’s securities, access to margin debt, trading in options and other derivatives on the Company’s common stock and any related hedging and other trading factors; ◦ the Company’s market capitalization, as implied by various trading prices, currently reflects valuations that diverge significantly from those seen prior to recent volatility, and to the extent these valuations reflect trading dynamics unrelated to the Company’s financial performance or prospects, purchasers of its common stock could incur substantial losses if there are declines in market prices driven by a return to earlier valuations; and ◦ to the extent volatility in the Company’s common stock is caused, as has widely been reported, by a “short squeeze” in which coordinated trading activity causes a spike in the market price of its common stock as traders with a short position make market purchases to avoid or to mitigate potential losses,stockholders purchase at inflated prices unrelated to the Company’s financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated.
The market volatility and trading patterns the Company has experienced create several risks for stockholders, including the following: ◦ the market price of the Company’s common stock has experienced and may experience in the future rapid and substantial increases or decreases unrelated to the Company’s financial performance or prospects or macro or industry fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties the Company continues to face; ◦ factors in the public trading market for the Company’s common stock include the sentiment of retail investors (including as may be expressed on financial trading and other social media sites and online forums), the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in the Company’s securities, access to margin debt, trading in options and other derivatives on the Company’s common stock and any related hedging and other trading factors; ◦ the Company’s market capitalization, as implied by various trading prices, has at times reflected valuations that diverge significantly from those seen prior to recent volatility, and to the extent these valuations reflect trading dynamics unrelated to the Company’s financial performance or prospects, purchasers of its common stock could incur substantial losses if there are declines in market prices driven by a return to earlier valuations; and ◦ to the extent volatility in the Company’s common stock is caused, as has widely been reported, by a “short squeeze” in which coordinated trading activity causes a spike in the market price of the Company’s common stock as traders with a short position make market purchases to avoid or to mitigate potential losses, stockholders purchase at inflated prices unrelated to the Company’s financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated.
Substantial expenditures are required to construct and operate the Hycroft Mine including additional equipment and infrastructure that is typically seen in milling and POX operations to allow for extraction of gold and silver from the sulfide mineral resource, to further develop the Hycroft Mine to establish mineral reserves and identify new mineral resources through exploration drilling and analysis.
Substantial expenditures are required to construct and operate the Hycroft Mine, including additional equipment and infrastructure that is typically seen in milling and processing operations to allow for extraction of gold and silver from the sulfide mineral resource, to further develop the Hycroft Mine to establish mineral reserves and identify new mineral resources through exploration drilling and analysis.
If unable to fully remedy an environmental violation or release of hazardous substances, the Company 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.
If unable to fully remedy an environmental violation or release of hazardous substances, the Company 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 remediation costs.
Under the circumstances investing in the Company’s common stock may cause stockholders to incur the risk of losing all or a substantial portion of their investment. • Extreme fluctuations in the market price of the Company’s common stock has been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums.
Under the circumstances, investing in the Company’s common stock may cause stockholders to incur the risk of losing all or a substantial portion of their investment. • Extreme fluctuations in the market price of the Company’s common stock have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums.
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; • pandemics adversely affecting the availability of workforces and supplies; • mechanical equipment failure and facility performance problems; and • availability of skilled labor, critical materials, equipment, reagents, and consumable items.
Mining, exploration, 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; • supply and transportation interruptions; • pandemics adversely affecting the availability of workforces and supplies; • mechanical equipment failure and facility performance problems; and • availability of skilled labor, critical materials, equipment, reagents, and consumable items.
Prior to 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.
Before 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.
In addition, sustained lower gold or silver prices may materially adversely affect the Company’s business, including: • halting, delaying, modifying, or canceling plans for the mining of oxide, transitional, and sulfide ores or the development of new and existing projects; • reducing existing mineral resources by removing ore from mineral resources that can no longer be economically processed at prevailing prices; and • causing the Company to recognize an impairment to the carrying values of its long-lived assets.
In addition, sustained lower gold or silver prices may materially adversely affect the Company’s business, including: • halting, delaying, modifying, or canceling plans for the mining of oxide, transitional, and sulfide ores or the development of new and existing projects; 12 Table of Contents • reducing existing mineral resources by removing ore from mineral resources that can no longer be economically processed at prevailing prices; and • causing the Company to recognize an impairment to the carrying values of its long-lived assets.
Their prices fluctuate and are affected by many factors beyond the Company’s 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.
Commodity prices fluctuate and are affected by many factors beyond the Company’s 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.
See Note 10 – Debt, Net to the Notes to the Financial Statements for further information. If a default occurs under the Sprott Credit Agreement and/or the Royalty Agreement among the Company, Hycroft Resources and Development, LLC, a wholly owned subsidiary of the Company, and Sprott Private Resource Lending II (CO) Inc.
See Note 9 – Debt, Net to the Notes to the Financial Statements for further information. If a default occurs under the Sprott Credit Agreement and/or the Royalty Agreement among the Company, Hycroft Resources and Development, LLC, a wholly owned subsidiary of the Company, and Sprott Private Resource Lending II (Co) Inc.
The Company’s ability to establish mining operations or profitably produce precious metals from the Hycroft Mine will be affected by: • timing and cost, which can be considerable, of the construction of additional mining and processing facilities; • availability and costs of skilled labor and mining equipment; • availability and cost of appropriate refining arrangements; • necessity to obtain additional environmental and other governmental approvals and permits, and the timing of those approvals and permits; • availability of funds to finance equipment purchases, construction, and advancement activities; • management of an increased workforce and coordination of contractors; • potential opposition from non-governmental organizations, environmental groups, or local groups, which may delay or prevent advancement activities; and 13 Table of Contents • potential increases in construction and operating costs due to changes in the cost of fuel, power, labor, materials and supplies and foreign exchange rates.
The Company’s ability to establish mining operations or profitably produce precious metals from the Hycroft Mine will be affected by: • timing and cost, which can be considerable, of the construction of additional mining and processing facilities; • availability and costs of skilled labor and mining equipment; • availability and cost of appropriate refining arrangements; • necessity to obtain additional environmental and other governmental approvals and permits, and the timing of those approvals and permits; • availability of funds to finance equipment purchases, construction, and advancement activities; • management of an increased workforce and coordination of contractors; • potential opposition from non-governmental organizations, environmental groups, or local groups, which may delay or prevent advancement activities; and • potential increases in construction and operating costs due to changes in the cost of fuel, power, labor, supplies and foreign exchange rates.
There can be no assurance that recovery of minerals in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale. Until mineral resources are mined and processed, the quantity of ore and grades must be considered as an estimate only.
There can be no assurance that recovery of minerals in small-scale tests will be duplicated in larger-scale tests under on-site conditions or in production scale. Until mineral resources are mined and processed, the quantity of ore and grades must be considered as an estimate only.
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.
Congress have periodically introduced bills that 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.
The risks discussed below also include forward-looking statements, and actual results may differ substantially from those discussed in these forward-looking statements. See also Cautionary Statement Regarding Forward-Looking Statements in this 2022 Form 10-K. The following discussion should be read in conjunction with the Financial Statements and Notes.
The risks discussed below also include forward-looking statements, and actual results may differ substantially from those discussed in these forward-looking statements. See also Cautionary Statement Regarding Forward-Looking Statements in this 2023 Form 10-K. The following discussion should be read in conjunction with the Financial Statements and Notes.
Actual remedial costs may exceed the financial accruals that have been made for such remediation. Additionally, the timing of the remedial costs may be materially different from the current remediation plan. The potential exposure may be significant and could have a material adverse effect on the Company’s financial condition and results of operations.
Actual remediation costs may exceed the financial accruals made for such remediation. Additionally, the timing of the remedial costs may be materially different from the current remediation plan. The potential exposure may be significant and could have a material adverse effect on the Company’s financial condition and results of operations.
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 development.
Fish and Wildlife Service may designate critical habitat and suitable habitat areas it believes are necessary for the survival of a threatened or endangered species. A critical habitat or suitable habitat designation could result in further material land-use restrictions and may materially delay or prohibit land access for development.
In the event of such default: 20 Table of Contents • the lenders or holders of such indebtedness could elect to terminate any commitments thereunder, declare all the funds borrowed thereunder due and payable and, if not promptly paid, in the case of the Company’s secured debt, institute foreclosure proceedings against company assets; and • even if the lenders or holders do not declare a default, they may be able to cause all of the Company’s available cash to be used to repay indebtedness owed to them.
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 due and payable and, if not promptly paid, in the case of the Company’s secured debt, institute foreclosure proceedings against company assets; and • even if the lenders or holders do not declare a default, they may be able to cause all of the Company’s available cash to be used to repay indebtedness owed to them.
While the Company has ceased mining operations at the Hycroft Mine, continued compliance with these regulations and other legislation relating to regulation obligations with respect to the Hycroft Mine and its future exploration and development could require significant financial outlays to comply with these laws.
While the Company has ceased mining operations at the Hycroft Mine, continued compliance with these regulations and other legislation relating to regulation obligations concerning the Hycroft Mine and its future exploration and development could require significant financial outlays to comply with these laws.
Because the Company has not completed a feasibility study or recommenced commercial production at the Hycroft Mine, mineral resource estimates may require adjustments or downward revisions based upon further exploration or advancement 12 Table of Contents work or actual production experience. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by drilling results.
Because the Company has not completed a feasibility study or recommenced commercial production at the Hycroft Mine, mineral resource estimates may require adjustments or downward revisions based upon further exploration or advancement work or actual production experience. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by drilling results.
Mining development and processing operations pose inherent risks and costs that may negatively impact the Company’s business.
Mining, exploration, development and processing operations pose inherent risks and costs that may negatively impact the Company’s business.
The Company is also a “smaller reporting company”, and will remain a smaller reporting company until the fiscal year following the determination that the Company’s voting and non-voting common stock held by non-affiliates is $250 million or more measured on the last business day of the second fiscal quarter, or the Company’s annual revenues are $100 million or more during the most recently completed fiscal year and the voting and non-voting common stock held by non-affiliates is $700 million or more measured on the last business day of the second fiscal quarter.
The Company is a “smaller reporting company,” and will remain a smaller reporting company until the fiscal year following the determination that the Company’s voting and non-voting common stock held by non-affiliates is $250 million or more measured on the last business day of the second fiscal quarter, or the Company’s annual revenues are $100 million or more during the most recently completed fiscal year and the voting and non-voting common stock held by non-affiliates is $700 million or more measured on the last business day of the second fiscal quarter.
For example, the Company’s expectations are based on assumptions regarding commodity prices, anticipated costs and other factors that are subject to a number of risks, many of which are beyond the Company’s control.
For example, the Company’s expectations are based on assumptions regarding commodity prices, anticipated costs and other factors that are subject to risks, many of which are beyond the Company’s control.
The Company’s substantial indebtedness could adversely affect its financial condition. As of December 31, 2022, the Company had substantial outstanding indebtedness under the Sprott Credit Agreement and the Subordinated Notes.
The Company’s substantial indebtedness could adversely affect its financial condition. As of December 31, 2023, the Company had substantial outstanding indebtedness under the Sprott Credit Agreement and the Subordinated Notes.
The Company can provide no assurance that the development and advancement of the Hycroft Mine sulfide processing operations will result in economically viable mining operations. 14 Table of Contents The Company’s reliance on third-party contractors and consultants to conduct exploration and development projects exposes the Company to risks.
The Company can provide no assurance that the exploration, development and advancement of the Hycroft Mine sulfide processing operations will result in economically viable mining operations. The Company’s reliance on third-party contractors and consultants to conduct exploration and development projects exposes the Company to risks.
The duration and success of efforts to obtain and renew permits are contingent upon many variables not within the Company’s control, including the interpretation of applicable requirements implemented by the permitting authority and intervention by third parties in any required environmental review.
The duration and success of efforts to obtain and renew 14 Table of Contents permits are contingent upon many variables not within the Company’s control, including the interpretation of applicable requirements implemented by the permitting authority and intervention by third parties in any required environmental review.
A shortage of equipment and supplies and/or the time it takes such items to arrive at the Hycroft Mine could adversely affect the Company’s ability to operate. The Company is dependent on various supplies and equipment to engage in exploration and development activities.
A shortage of equipment and supplies and/or the time it takes such items to arrive at the Hycroft Mine could adversely affect the Company’s ability to operate. 13 Table of Contents The Company is dependent on various supplies and equipment to engage in exploration and development activities.
Violations of these laws, regulations and other regulatory requirements could lead to substantial fines, penalties or other sanctions, including possible shutdown of future operations, as applicable. There are uncertainties as to title matters in the mining industry. Any defects in such title could cause the Company to lose its rights in mineral properties and jeopardize the business.
Violations of these laws, regulations, and other regulatory requirements could lead to substantial fines, penalties or other sanctions, including possible shutdown of future operations. 15 Table of Contents There are uncertainties as to title matters in the mining industry. Any defects in such title could cause the Company to lose its rights in mineral properties and jeopardize the business.
ITEM 1A. RISK FACTORS You should carefully review and consider the following risk factors and the other information contained in this 2022 Form 10-K.
ITEM 1A. RISK FACTORS You should carefully review and consider the following risk factors and the other information contained in this 2023 Form 10-K.
In connection with the exploration and development of the Hycroft Mine, the Company contracts and engages third party contractors and consultants to assist with aspects of the projects.
In connection with the exploration and development of the Hycroft Mine, the Company contracts and engages third-party contractors and consultants to assist with aspects of the project.
To the extent aggregate short exposure exceeds the number of shares of common stock available for purchase on the open market, stockholders with short exposure may have to pay a premium to repurchase shares of the Company’s common stock for delivery to lenders of the Company’s common stock.
To the extent aggregate short exposure exceeds the number of shares of common stock available for purchase on the open market, stockholders with short exposure may have to pay a premium to repurchase shares of the Company’s common 22 Table of Contents stock for delivery to lenders of the Company’s common stock.
Risks related to the Company’s common stock and warrants, including: • Volatility in the price of the Company’s common stock and warrants; • Risks relating to a potential dilution as a result of future equity offerings; • Risks relating to a short “squeeze” resulting in sudden increases in demand for the Company’s common stock; • Risks relating to the Company’s proposed reverse stock split; • Risks relating to decreased liquidity of the Company’s common stock as a result of the proposed reverse stock split; • Risks relating to information published by third parties about the Company that may not be reliable or accurate; • Risks associated with interest rate changes; • Volatility in the price of the Company’s common stock could subject it to securities litigation; • Risks associated with the Company’s current plan not to pay dividends; • Risks associated with future offerings of senior debt or equity securities; • Risks related to delisting by Nasdaq; • Risks warrants may expire worthless; • Risks that certain warrants are being accounted for as a liability; • Anti–takeover provisions could make a third-party acquisition of the Company difficult; and • Risks related to limited access to the Company’s financial information due to the fact the Company elected to take advantage of the disclosure requirement exemptions granted to emerging growth companies and smaller reporting companies.
Risks related to the Company’s common stock and warrants, including: • Volatility in the price of the Company’s common stock and warrants; • Risks relating to a potential dilution as a result of future equity offerings; • Risks relating to a short “squeeze” resulting in sudden increases in demand for the Company’s common stock; • Risks relating to decreased liquidity of the Company’s common stock as a result of the reverse stock split; • Risks relating to information published by third parties about the Company that may not be reliable or accurate; • Risks associated with interest rate changes; • Volatility in the price of the Company’s common stock could subject it to securities litigation; • Risks associated with the Company’s current plan not to pay dividends; • Risks associated with future offerings of senior debt or equity securities; • Risks related to a failure to comply with the Nasdaq Stock Market LLC (“Nasdaq”) listing requirements and a potential delisting by Nasdaq; • Risks warrants may expire worthless; • Risks that certain warrants are being accounted for as a liability; • Anti–takeover provisions could make a third-party acquisition of the Company difficult; and • Risks related to limited access to the Company’s financial information due to the fact the Company elected to take advantage of the disclosure requirement exemptions granted to smaller reporting companies.
The Company’s business, financial condition, and results of operations could be adversely affected if a judgment, penalty or fine is not fully covered by insurance. The Company is dependent upon information technology systems that are subject to disruption, damage, failure, and risks associated with implementation and integration. The Company is dependent upon information technology systems to conduct its operations.
The Company’s business, financial condition, and results of operations could be adversely affected if a judgment, penalty or fine is not fully covered by insurance. The Company is dependent upon information and operational technology systems and new technologies that are subject to disruption, damage, failure, and risks associated with implementation and integration.
The Company completed and issued the 2023 Hycroft TRS which replaced the 2022 Hycroft TRS. The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate and is not a feasibility study for the Hycroft Mine. Typically, a company will not make a production decision until it has completed a feasibility study.
The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate and is not a feasibility study for the Hycroft Mine. Typically, a company will not make a production decision until it has completed a feasibility study.
A material decline in the current price of gold or silver or material changes in processing methods or cost assumptions could require a reduction in mineral resource estimates.
A material decline in the current price of gold or silver or material changes in processing methods or cost assumptions could require a reduction in mineral 11 Table of Contents resource estimates.
Specifically, the Company has 34,289,898 warrants outstanding that expire on May 29, 2025 that entitle holders to purchase one share of the Company’s common stock at an exercise price of $11.50, 9,583,334 warrants outstanding that expire on October 6, 2025 that entitle holders to purchase one share of the Company’s common stock at an exercise price of $10.50 per share and 46,816,480 warrants outstanding that expire on March 15, 2027 that entitle holders to purchase one share of the Company’s common stock at an exercise price of $1 .068 per share.
Specifically, the Company has 33,937,583 warrants outstanding that expire on May 29, 2025 that entitle holders to purchase one-tenth share of the Company’s common stock at an exercise price of $11.50, 9,583,334 warrants outstanding that expire on October 6, 2025 that entitle holders to purchase one-tenth share of the Company’s common stock at an exercise price of $10.50 per share and 46,816,480 warrants outstanding that expire on March 15, 2027 that entitle holders to purchase one-tenth share of the Company’s common stock at an exercise price of $1 .068 per share.
The Company’s stockholders may find its common stock less attractive as a result of the status as an “emerging growth company” and “smaller reporting company” and the Company’s reliance on the reduced disclosure requirements afforded to these companies.
The Company’s stockholders may find the Company’s common stock less attractive as a result of the Company’s status as a “smaller reporting company” and the Company’s reliance on the reduced disclosure requirements afforded to these companies.
The enactment of new legislation or more stringent enforcement of current legislation may also increase these costs, which could have a material negative effect on the Company’s financial position, results of operations, and liquidity. The Company can provide no assurances that it will be able to adapt to these regulatory developments on a timely or cost-effective basis.
The enactment of new legislation or more stringent enforcement of current legislation may also increase these costs, which could materially and negatively affect the Company’s financial position, results of operations, and liquidity. The Company can provide no assurances that it will be able to adapt to these regulatory developments on a timely or cost-effective basis.
The Company cannot be certain that future development activities will be commercially successful.
The Company cannot be certain that future exploration and development activities will be commercially successful.
If the Company does not obtain fee title to its unpatented mining claims, the Company can provide no assurance that it 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 the Company holds a material interest.
If the Company does not obtain fee title to its unpatented mining claims, the Company cannot assure that it 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 the Company holds a material interest.
Any adopted future climate change regulations could also negatively impact the Company’s ability to compete with companies situated in areas not subject to such regulations.
Any adopted future climate change regulations could also negatively impact the Company’s ability to compete with companies situated in areas not subject to such 16 Table of Contents regulations.
The Sprott Credit Agreement imposes significant operating and financial restrictions that may limit the Company’s ability to operate its business. The Sprott Credit Agreement imposes significant operating and financial restrictions on the Company and its restricted subsidiaries.
The Sprott Credit Agreement imposes significant operating and financial restrictions that may limit the Company’s ability to operate its business. 17 Table of Contents The Sprott Credit Agreement imposes significant operating and financial restrictions on the Company and its restricted subsidiaries.
As of December 31, 2022, the Company had unrestricted cash of $142.0 million. Stockholders are cautioned that expectations regarding the Company’s liquidity and capital resources are based on a number of assumptions that are believed to be reasonable but could prove to be incorrect.
As of December 31, 2023, the Company had unrestricted cash of $106.2 million. Stockholders are cautioned that expectations regarding the Company’s liquidity and capital resources are based on a number of assumptions that are believed to be reasonable but could prove to be incorrect.
If the Company loses key personnel or is unable to attract and retain additional personnel, the Company may be unable to develop the business.
If the Company loses key personnel or cannot attract and retain additional personnel, the Company may be unable to explore and develop the business.
An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of the Company’s common stock to expect a return, which the Company may be unable or choose not to provide. Further, higher interest rates would likely increase the Company’s borrowing costs and potentially decrease the cash available.
An increase in market interest rates may lead prospective purchasers of the Company’s common stock to expect a return, which the Company may be unable or choose not to provide. Further, higher interest rates would likely increase the Company’s borrowing costs and potentially decrease the cash available.
The Company is an “emerging growth company” and a “smaller reporting company,” and the applicable reduced disclosure requirements may make the Company’s common stock less attractive to stockholders.
The Company is a “smaller reporting company,” and the applicable reduced disclosure requirements may make the Company’s common stock less attractive to stockholders.
Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations, including, among other things, being required to provide only two years of audited consolidated financial statements.
Smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations, including, among other 24 Table of Contents things, being required to provide only two years of audited consolidated financial statements.
The on-going effects of the coronavirus pandemic may adversely impact our business and financial condition. The effects of the COVID-19 pandemic have largely abated. However, the remaining on-going effects are uncertain. In the future, the pandemic could begin worsening again in the U.S. and elsewhere, creating renewed uncertainty.
The ongoing effects of the coronavirus pandemic or other pandemics may adversely impact our business and financial condition. The effects of the COVID-19 pandemic have largely abated. However, the remaining ongoing effects are uncertain. The pandemic could begin worsening again in the U.S. and elsewhere, creating renewed uncertainty.
These occurrences could result in damage to, or destruction of, the Company’s properties or production facilities, personal injury or death, environmental damage, delays in future mining or processing, increased future production costs, long-lived asset impairments, monetary losses and legal liability, any of which could have a material adverse effect on future development plans, the Company’s ability to raise additional capital, and/or the Company’s financial condition, results of operations and liquidity. 15 Table of Contents Environmental regulations could require the Company to make significant expenditures or expose the Company to potential liability.
These occurrences could result in damage to, or destruction of, the Company’s properties or production facilities, personal injury or death, environmental damage, delays in future mining or processing, increased future production costs, long-lived asset impairments, monetary losses and legal liability, any of which could have a material adverse effect on future exploration and development plans, the Company’s ability to raise additional capital, and/or the Company’s financial condition, results of operations and liquidity.
The Company remains 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.
The Company remains at risk of the mining claims being forfeited either to the United States or to rival private claimants due to failure to comply with statutory requirements.
As of March 27, 2023, 2176423 Ontario Limited, an entity affiliated with Eric Sprott (“Eric Sprott”) and American Multi-Cinema, Inc. (“AMC”) owned approximately 9% and 12%, respectively, of the Company’s outstanding voting securities, respectively, and each have the right to acquire 23,408,240 additional shares, respectively, of common stock upon the exercise of warrants held by them.
As of March 13, 2024, 2176423 Ontario Limited, an entity affiliated with Eric Sprott, and American Multi-Cinema, Inc. (“AMC”) owned approximately 9% and 11%, respectively, of the Company’s outstanding voting securities and each has the right to acquire 23,408,240 additional shares, respectively, of common stock upon the exercise of warrants held by them.
Thus, higher market interest rates could cause the market price of the Company’s common stock to decline. 25 Table of Contents Volatility in the price of the Company’s common stock may subject it to securities litigation.
Thus, higher market interest rates could cause the market price of the Company’s common stock to decline. Volatility in the price of the Company’s common stock may subject the Company to securities litigation.
Since the Company’s decision to issue securities in any future offering will depend on market conditions and other factors beyond its control, the Company cannot predict or estimate the amount, timing, or nature of future offerings. Thus, stockholders bear the risk of future offerings reducing the market price of the Company’s common stock.
Since the Company’s decision to issue securities in any future offering will depend on market conditions and other factors beyond its control, the Company cannot predict or estimate the amount, timing, or nature of future offerings.
Additional regulatory authorities may also have or have had jurisdiction over some of the Company’s operations and mining projects including the Environmental Protection Agency, NDEP, the U.S.
Additional regulatory authorities may also have or have had jurisdiction over some of the Company’s operations and mining projects including the Environmental Protection Agency, NDEP, the U.S. Fish and Wildlife Service, BLM, and the Nevada Department of Wildlife (“NDOW”).
The prices of gold and silver, as quoted by The London Bullion Market Association on December 31, 2022 and December 31, 2021, were $1,813.75 and $1,805.85 per ounce for gold, respectively, and $23.945 and $23.085 per ounce for silver, respectively. The prices of gold and silver may decline in the future.
The prices of gold and silver, as quoted by The London Bullion Market Association on December 31, 2023 and December 31, 2022, were $2,062.40 and $1,813.75 per ounce for gold, respectively, and $23.79 and $23.945 per ounce for silver, respectively. The prices of gold and silver may decline in the future.
Fish and Wildlife Service, BLM, and the Nevada Department of Wildlife (“NDOW”). 16 Table of Contents These environmental regulations require the Company to obtain various permits, approvals and licenses and also impose standards and controls relating to development and production activities. For instance, the Company is required to hold a Nevada Reclamation Permit with respect to the Hycroft Mine.
These environmental regulations require the Company to obtain various permits, approvals and licenses and also impose standards and controls relating to development and production activities. For instance, the Company is required to hold a Nevada Reclamation Permit with respect to the Hycroft Mine.
The Company’s outstanding warrants have a strike price that is higher than the last recorded sales price of the Company’s common stock on Nasdaq on March 27, 2023.
The Company’s outstanding warrants have a strike price that is higher than the last recorded sale price of the Company’s common stock on Nasdaq on March 13, 2024.
The Company is also required by U.S. federal and state laws and regulations to provide financial assurance sufficient to allow a third party to implement approved reclamation plans for the Hycroft Mine if the Company is unable to do so.
If required to carry out unanticipated reclamation work, the Company’s financial position could be adversely affected. The Company is also required by U.S. federal and state laws and regulations to provide financial assurance sufficient to allow a third party to implement approved reclamation plans for the Hycroft Mine if the Company is unable to do so.
Accordingly, the Reverse Stock Split may not result in increasing the marketability of the Company’s common stock. Information available in public media that is published by third parties, including blogs, articles, online forums, message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate.
Information available in public media that is published by third parties, including blogs, articles, online forums, message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate.
In addition, the Sprott Credit Agreement requires the Company to comply with a number of customary covenants, including: • covenants related to the delivery of monthly, quarterly and annual consolidated financial statements, budgets and annual projections; • maintaining required insurance; • compliance with laws (including environmental); • compliance with Employee Retirement Income Security Act of 1974, as amended (“ERISA”); • maintenance of ownership of 100% of the Hycroft Mine; 19 Table of Contents • 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.
The customary covenants include: • delivery of monthly, quarterly and annual consolidated financial statements, and semi-annual budgets or projections; • maintaining required insurance; • compliance with laws (including environmental); • compliance with Employee Retirement Income Security Act of 1974, as amended (“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.
In addition, the Company cannot provide assurances 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.
In addition, the Company cannot provide assurances 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. The Company has not completed a feasibility study for the Hycroft Mine.
The 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.
The Company is dependent upon information technology systems to conduct its operations. The information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyberattacks, natural disasters and defects in design.
While the Company is not conducting active mining operations at the Hycroft Mine, the facilities and prior operations have been and are, and the Company’s future development plans may continue to be, subject to extensive federal and state environmental regulation, including those enacted under the following laws: • Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended; • Resource Conservation and Recovery Act of 1976, as amended; • Clean Air Act of 1963, as amended; • National Environmental Policy Act of 1970, as amended; • Clean Water Act of 1972, as amended; • Safe Drinking Water Act of 1974, as amended; • Federal Land Policy and Land Management Act of 1976, as amended; and • Bald and Golden Eagle Protection Act of 1940, as amended.
While the Company is not conducting active mining operations at the Hycroft Mine, the facilities and prior operations have been and are, and the Company’s future development plans may continue to be, subject to extensive federal and state environmental regulation, including those enacted under the following laws: • CERCLA; • RCRA; • Clean Air Act; • NEPA; • Clean Water Act; • Safe Drinking Water Act; • FLPMA; and • Bald and Golden Eagle Protection Act of 1940, as amended.
The exploration and development of the Hycroft Mine for mining and processing mineral resources will require significant investment. Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, development, or production at the Hycroft Mine.
Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, development, or production at the Hycroft Mine.
The Company may also issue securities convertible into, or exchangeable for, or that represent the right to receive, shares of common stock. The Company may also acquire interests in other companies or other assets by using a combination of cash and shares of common stock or using only shares of common stock.
The Company may also acquire interests in other companies or other assets by using a combination of cash and shares of common stock or using only shares of common stock.
Third party financial assurances may not be available to the Company or the Company may elect not to obtain it because of the high costs, associated collateral requirements may be too expensive, or it may be commercially impractical, which could materially adversely affect the Company’s financial position. 21 Table of Contents Future litigation or similar legal proceedings could have a material adverse effect on the Company’s business and results of operations.
Third party financial assurances may not be available to the Company or the Company may elect not to obtain it because of the high costs, associated collateral requirements may be too expensive, or it may be commercially impractical, which could materially adversely affect the Company’s financial position.
In addition, AMC has the right to receive an additional 61,189 shares of common stock upon vesting of restricted stock units granted to AMC for their Board of Directors representative. Because of their significant stockholdings, each of Eric Sprott and AMC could exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise influence the business.
In addition, AMC has the right to receive an additional 61,189 shares of common stock upon vesting of restricted stock units granted to AMC for its Board of Directors representative. Because of their significant stockholdings, each of Mr.

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Item 2. Properties

Properties — owned and leased real estate

41 edited+6 added−21 removed50 unchanged
Biggest changeThe 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.
Biggest changeThe 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.
Overview and Highlights The 2023 Hycroft TRS summarizes the results of an initial assessment and supports the disclosure of mineral resources at the Hycroft Mine utilizing a milling and POX process for sulfide mineralization and heap leaching process for oxide and transition mineralization.
Overview and Highlights The 2023 Hycroft TRS summarizes the results of an initial assessment and supports the disclosure of mineral resources at the Hycroft Mine utilizing a milling and POX process for sulfide and transition mineralization and heap leaching process for oxide mineralization.
In 2022 a hyperspectral imaging flyover of the Hycroft property was conducted by SpecTIR Advanced Hyperspectral Solutions. Both Longwave Infrared (“LWIR”) and Shortwave Infrared (“SWIR”) imaging was collected with the intent of helping identify key minerals on the surface to focus reconnaissance mapping and soils programs. Field mapping was historically carried out in all active mine areas.
In 2022, a hyperspectral imaging flyover of the Hycroft property was conducted by SpecTIR Advanced Hyperspectral Solutions. Both Longwave Infrared (“LWIR”) and Shortwave Infrared (“SWIR”) imaging were collected with the intent of helping identify key minerals on the surface to focus reconnaissance mapping and soils programs. Field mapping was historically carried out in all active mine areas.
The mineral resource is based upon information provided by the Company which has been checked and validated wherever possible by IMC. The calculations and interpretations presented here are the work of IMC, who takes responsibility for the published mineral resource. Hycroft Mine For a detailed discussion of the Hycroft Mine’s operating and production data, see Part II – Item 7.
The mineral resource is based upon information provided by the Company, which has been checked and validated wherever possible by IMC. The calculations and interpretations presented here are the work of IMC, which takes responsibility for the published mineral resource. Hycroft Mine For a detailed discussion of the Hycroft Mine’s operating and production data, see Part II – Item 7.
The mine property straddles 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. 29 Table of Contents The following shows the location of our properties. 30 Table of Contents Additionally, the following map shows the current property and facilities layout.
The mine property straddles 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. 28 Table of Contents The following shows the location of our property. 29 Table of Contents Additionally, the following map shows the current property and facilities layout.
Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the 2023 Hycroft TRS, incorporated herein by reference as Exhibit 96.1 to this 2022 Form 10-K and made a part hereof.
Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the 2023 Hycroft TRS, incorporated herein by reference as Exhibit 96.1 to this 2023 Form 10-K and made a part hereof.
Process costs include the environmental practices for placing waste and tailing material in properly designed facilities that can be remediated in the future. • Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding. • Mineral resources are contained within a computer-generated optimized pit.
Process costs include the environmental practices for placing waste and tailing material in properly designed facilities that can be remediated in the future. 33 Table of Contents • Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding. • Mineral resources are contained within a computer-generated optimized pit.
The terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are defined and used in accordance with the Modernization Rules. You are specifically cautioned not to assume that any part or all of the mineral deposits (including mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC.
The terms “Mineral Resource,” “Measured Mineral Resource,” “Indicated Mineral Resource,” and “Inferred Mineral Resource” are defined and used in accordance with the Modernization Rules. You are specifically cautioned not to assume that any part or all of the mineral deposits (including mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC.
There is no expiration date on the net profit royalty. The Hycroft Mine is also subject to the Sprott Royalty Agreement and that requires us to pay a perpetual royalty equal to 1.5% of the Net Smelter Returns, as such term is defined in such agreement, from the Hycroft Mine.
There is no expiration date on the net profit royalty. The Hycroft Mine is also subject to the Sprott Royalty Agreement and which requires us to pay a perpetual royalty equal to 1.5% of the Net Smelter Returns, as such term is defined in such agreement, from the Hycroft Mine.
See Table 11-14 in Section 11 of the 2023 Hycroft TRS for a more detailed presentation of the economic parameters for mineral resource estimation. 37 Table of Contents Mineral resources are not mineral reserves and detailed economic considerations have not been applied. Modifying factors for mine and process design have not been applied.
See Table 11-14 in Section 11 of the 2023 Hycroft TRS for a more detailed presentation of the economic parameters for mineral resource estimation. Mineral resources are not mineral reserves and detailed economic considerations have not been applied. Modifying factors for mine and process design have not been applied.
The drill hole collar locations are shown in the 2023 Hycroft TRS and later in this text. At this time, there are 5,323 drill holes in the resource model area of which 188 have been drilled to define stockpiles or the Crofoot leach pad.
The drill hole collar locations are shown in the 2023 Hycroft TRS and later in this text. In the 2023 Hycroft TRS, there are 5,323 drill holes in the resource model area of which 188 have been drilled to define stockpiles or the Crofoot leach pad.
Technical Report Summaries and Qualified Persons The scientific and technical information concerning the Hycroft Mine in this 2022 Form 10-K has been reviewed and approved by third-party “Qualified Persons” under the Modernization Rules, including Ausenco, IMC, and WestLand.
Technical Report Summaries and Qualified Persons The scientific and technical information concerning the Hycroft Mine in this 2023 Form 10-K has been reviewed and approved by third-party “Qualified Persons” under the Modernization Rules, including Ausenco, IMC, and WestLand.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Hycroft Mine . The Hycroft Mine and related facilities are located approximately 54 miles northwest of Winnemucca, Nevada. Winnemucca, a city with a population of approximately 8,431 (2020 Census data), is a commercial community on Interstate 80, 164 miles northeast of Reno.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Hycroft Mine . The Hycroft Mine and related facilities are located approximately 54 miles northwest of Winnemucca, Nevada. Winnemucca, a city with a population of approximately 8,431 (2020 Census data), is a commercial community on Interstate 80, 27 Table of Contents 164 miles northeast of Reno.
For a description of the key assumptions, parameters and methods used to estimate mineral resources included in this 2022 Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the 2023 Hycroft TRS. 39 Table of Contents
For a description of the key assumptions, parameters and methods used to estimate mineral resources included in this 2023 Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant factors, please review the 2023 Hycroft TRS.
The block model was verified by several methods before being used to determine mineral resource, including: • detailed Visual Checks of Drilling versus Block Estimates; • swath Plots; and • IMC Smear Check. 38 Table of Contents IMC completed visual checks on plan and section for all of the estimated variables in the model.
The block model was verified by several methods before being used to determine mineral resource, including: • detailed Visual Checks of Drilling versus Block Estimates; • swath Plots; and • IMC Smear Check. IMC completed visual checks on plan and section for all of the estimated variables in the model.
The term “legally” as used in the SEC’s Industry Guide 7 definition of mineral reserves, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved.
The term “legally” as used in the SEC’s Industry Guide 7 definition of mineral reserves, does not imply 35 Table of Contents that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved.
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 $3.3 million has been satisfied and $4.3 million remained outstanding as of December 31, 2022.
A portion of the Hycroft Mine is subject to a mining lease requiring us to pay a 4% net profit royalty to the owner of certain patented and unpatented mining claims, subject to a maximum of $7.6 million, of which $3.3 million has been satisfied, and $4.3 million remained outstanding at both December 31, 2023 and 2022.
The following description of the Hycroft Mine’s measured, indicated and inferred mineral resources does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the 2023 Hycroft TRS, incorporated by reference as Exhibit 96.1 to this 2022 Form 10-K and made a part hereof.
The following description of the Hycroft Mine’s measured, indicated and inferred mineral resources does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the 2023 Hycroft TRS, incorporated by reference as Exhibit 96.1 to this 2023 Form 10-K.
The current ground-based gravity survey covers approximately 130 square miles, centered on the mine site. Gravity indicates several structural features and density changes. Gravity has also defined the basin edge to the west, approximately 4 miles west of the Brimstone Pit.
The current ground-based gravity survey covers approximately 130 square miles, centered on the mine site. Gravity indicates 34 Table of Contents several structural features and density changes. Gravity has also defined the basin edge to the west, approximately four miles west of the Brimstone Pit.
Such filing fees amounted to $0.6 million in 2022. As long as we file the annual notice and pay the claim filing fees, there is no expiration date for our unpatented claims.
Such filing fees amounted to $0.6 million for the years ended December 31, 2023 and 2022. As long as we file the annual notice and pay the claim filing fees, there is no expiration date for our unpatented claims.
The Hycroft Mine consists of 30 private parcels with patented claims that comprise approximately 1,787 acres, and 3,247 unpatented mining claims that encompass approximately 62,298 acres. The combined patented and unpatented claims comprise approximately 64,085 acres.
The Hycroft Mine consists of 30 private parcels with patented claims that comprise approximately 1,787 acres, and 3,247 unpatented lode and placer mining claims that encompass approximately 62,298 acres. The combined patented and unpatented 30 Table of Contents claims comprise approximately 64,000 acres.
The combined patented and unpatented claims comprise approximately 64,000 acres. The Hycroft Mine’s patented claims occupy private lands and its 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.
The Hycroft Mine’s patented claims occupy private lands, and its 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.
Initial gold and silver production occurred in August 2019 and continued until active mining operations were ceased at the Hycroft Mine in November 2021. On site facilities include an administration building, mobile maintenance shop, light vehicle maintenance shop, warehouse, five leach pads, crushing system, two Merrill-Crowe process plants and a refinery.
Initial gold and silver production occurred in August 2019 and continued until active mining operations ceased at the Hycroft Mine in November 2021. Existing facilities on site include two administration buildings, a mobile maintenance shop, a light vehicle maintenance shop, a warehouse, leach pads, primary, secondary, and tertiary crushing systems, two Merrill-Crowe process plants, and a refinery.
Total material in that pit is 3.631 billion tons. • All units are imperial. Ktons refers to 1,000 short tons of 2,000 lbs.
Total material in that pit is 3.631 billion tons. • All units are imperial. Ktons refers to 1,000 short tons of 2,000 lbs. Gold and silver grades are in troy ounces/short ton.
Any expansion of the Hycroft Mine necessary to exploit any additional mineral resources that may be established through our exploration drilling program beyond the mineral resources in the 2023 Hycroft TRS, will require us to obtain all permits, approvals and consents of regulatory agencies responsible for the use and development of mines in Nevada. 34 Table of Contents Measured, Indicated and Inferred Mineral Resources Our mineral resource estimates are calculated in accordance with the Modernization Rules.
Any expansion of the Hycroft Mine necessary to exploit any additional mineral resources that may be established through our exploration drilling program beyond the mineral resources in the 2023 Hycroft TRS, will require us to obtain all permits, approvals and consents of regulatory agencies responsible for the use and development of mines in Nevada.
Existing facilities on-site include two administration buildings, a mobile maintenance shop, a light vehicle maintenance shop, a warehouse, three Heap Leach Pads – Crofoot, North, and Brimstone – primary, secondary and tertiary crushing systems, two Merrill-Crowe process plants and a refinery.
Existing facilities on-site include two administration buildings, a mobile maintenance shop, a light vehicle maintenance shop, a warehouse, three Heap Leach Pads (Crofoot, North, and Brimstone), primary, secondary, and tertiary crushing systems, two Merrill-Crowe process plants, and a refinery. Slopes on the historic Crofoot Heap Leach Pad are being re-graded in accordance with the reclamation plan approved by the BLM.
Drilling The Hycroft Mine mineral resource model includes data from 1981 t o 2022 and includes 5,601 holes, representing 2,588,826 feet of drilling, of which 171 holes were added during 2021 and 2022.
Drilling The Hycroft Mine mineral resource model includes data from 1981 to 2022 and includes 5,601 holes, representing 2,588,826 feet of drilling, of which 171 holes were added during 2021 and 2022. In the 2023 Hycroft TRS, there are 5,532 drill holes in the resource model area which includes holes drilled to define stockpiles.
Estimates of inferred mineral resources have significant geological uncertainty and it should not be assumed that all or any part of an inferred mineral resource will be converted to the measured or indicated categories.
The estimates of mineral resources may be materially affected if mining, metallurgical, or infrastructure factors change from those currently anticipated at the Hycroft Mine. Estimates of inferred mineral resources have significant geological uncertainty and it should not be assumed that all or any part of an inferred mineral resource will be converted to the measured or indicated categories.
Mineralization at the Hycroft Mine 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 crosscut by later, steeply dipping quartz alunite veins. Late-stage silver bearing veins are found in the Vortex zone and at depth in the Central 32 Table of Contents area.
These zones include Brimstone, Vortex, Central, Bay, Boneyard, and Camel. Breaks between the zones are major faults. Mineralization at the Hycroft Mine 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 crosscut by later, steeply dipping quartz alunite veins.
Consistent with HMC’s suspension of mining operations and conducting only care and maintenance activities on the Hycroft Mine, during 2017 and through December 2018, only drilling to obtain ore for metallurgical testing purposes was conducted. In December 2018, HMC began confirmation drilling of certain sulfide ore stockpiles that we planned to mine.
Drill hole collar locations are shown in the figure below. 32 Table of Contents Consistent with HMC’s suspension of mining operations and conducting only care and maintenance activities on the Hycroft Mine, during 2017 and through December 2018, only drilling to obtain ore for metallurgical testing purposes was conducted.
A major east–west railway runs immediately adjacent to the property. The Hycroft Mine straddles Townships 34, 35, 35½ 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 mine is situated on the western flank of the Kamma Mountains on the eastern edge of the Black Rock Desert.
A major east–west railway runs immediately adjacent to the property. The Hycroft Mine straddles Townships 34, 35, 35½, and 36 North and Ranges 28, 29, and 30 East, Mount Diablo Base and Meridian (“MDB&M”), with an approximate latitude 40°52’ north and longitude 118°41’ west.
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.
The known gold mineralization extends for a distance of three miles in a north-south direction by 1.5 miles in an east-west 31 Table of Contents 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.
The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate utilizing a milling and POX process for sulfide mineralization and heap leaching process for oxide and transition mineralization.
Hycroft Technical Report Summary On March 28, 2023, the Company, along with its third-party consultants, completed and filed the 2023 Hycroft TRS prepared in accordance with the Modernization Rules. The 2023 Hycroft TRS provides an initial assessment of the mineral resource estimate utilizing a milling and POX process for sulfide and transition mineralization and heap leaching process for oxide mineralization.
Measured, indicated and inferred mineral resources may not be comparable to similar information regarding mineral resources disclosed in accordance with the guidance of other countries. The estimates of mineral resources may be materially affected if mining, metallurgical, or infrastructure factors change from those currently anticipated at the Hycroft Mine.
Measured, Indicated and Inferred Mineral Resources Our mineral resource estimates are calculated in accordance with the Modernization Rules. Measured, indicated and inferred mineral resources may not be comparable to similar information regarding mineral resources disclosed in accordance with the guidance of other countries.
The gross carrying value of plant and equipment associated with the Hycroft Mine as of December 31, 2022, was $86.6 million. Geology and Mineralization 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.
Geology and Mineralization 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.
Average temperatures during the summer range from 50°F to 90°F and average winter temperatures range from 20°F to 40°F. 31 Table of Contents The Hycroft Mine consists of 30 private parcels with patented claims that comprise approximately 1,787 acres, and 3,247 unpatented lode and placer mining claims that encompass approximately 62,298 acres.
The mine is situated on the western flank of the Kamma Mountains on the eastern edge of the Black Rock Desert. 26 Table of Contents The Hycroft Mine consists of 30 private parcels with patented claims that comprise approximately 1,787 acres, and 3,247 unpatented mining claims that encompass approximately 62,298 acres.
The climate of the region is arid, with precipitation averaging 7.7 inches per year.
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.
Late to present supergene oxidation along faults has liberated precious metals from sulfide mineralization 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.
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 sulfide mineralization and further enriched gold and silver mineralization, along water table levels.
During 2022, the Company, together with its consultants, continued to advance work on the mill and POX process to treat the Hycroft sulfide mineral resource. The mill and POX process remains the focus of ongoing work, as it generates higher gold and silver recoveries in sulfide bearing ores.
During 2022 and 2023, the Company, together with its consultants, continued to advance the metallurgical processes to treat the Hycroft sulfide mineral resource.
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 will be rehabilitated and brought online when required.
Components for a second refinery are present on-site and will be assembled during the mining activities expansion. In the event of any missing components for the refinery’s construction, they will be acquired and delivered to the site as part of the overall mining expansion. The crushing system was refurbished as part of the restart activities.
The Company is currently contemplating a milling and POX process that is commonly used worldwide to treat refractory sulfide ores. 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.
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. The Company is contemplating sulfide processes commonly used worldwide to treat refractory sulfide ores. The deposit is typically broken into six major zones based on geology, mineralization, and alteration.
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Slopes on the historic Crofoot Heap Leach Pad are being re-graded in accordance with the reclamation plan approved by the BLM. It is considered that the other existing components of the mine property may be utilized for future development.
Added
The combined patented and unpatented claims comprise approximately 64,000 acres. On May 15, 2023, the Company expanded its holdings by acquiring a 50% undivided interest in three additional mining claims, totaling approximately 60 acres.
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The Hycroft Mine operates under permit authorizations from the BLM, NDEP, NDOW, Nevada Department of Water Resources (“NDWR”), and County agencies. 28 Table of Contents Hycroft Technical Report Summary On March 28 2023, the Company, along with its third-party consultants, completed and filed the 2023 Hycroft TRS prepared in accordance with the Modernization Rules.
Added
It is considered that the other existing components of the mine property may be utilized for future development. The Hycroft Mine operates under permit authorizations from the BLM, NDEP, NDOW, Nevada Department of Water Resources (“NDWR”), and County agencies.
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Recoveries become a critical factor in developing and optimizing the mineral economics of the deposit. POX recoveries will be further verified with ore-specific variability testing. As that work progressed in 2022, the Company continued to identify additional opportunities that may yield significant economic benefits to the project.
Added
The focus of ongoing work has included further development of the comminution circuit with crushing and grinding studies, flotation variability studies, benchtop pressure oxidation studies, carbon-in-leach studies, thickener dewatering studies, preparation for a benchtop roaster study, and tailings compaction study.
Removed
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.
Added
The purpose of these studies is to generate higher gold and silver recoveries in sulfide-bearing ores and identify potential alternative products for additional revenue streams that will optimize the mineral economics of the deposit.
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At this time, there are 5,532 drill holes in the resource model area which includes holes drilled to define stockpiles. 33 Table of Contents Drill hole collar locations are shown in the figure below.
Added
All other facilities are operational except for the North Merrill-Crowe plant, which will be rehabilitated and brought online when required. The gross carrying value of Property, plant, and equipment, net associated with the Hycroft Mine as of December 31, 2023 and 2022, was $87.1 million and $86.6 million, respectively.
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Gold and silver grades are in troy ounces/short ton. 35 Table of Contents For comparison, as of December 31, 2021, the Hycroft Mine’s estimate of gold and silver mineral resources as reported in the 2022 Hycroft TRS, are provided in the below table.
Added
In December 2018, HMC began confirmation drilling of certain sulfide ore stockpiles that we planned to mine.
Removed
Hycroft Mine – Summary of Gold and Silver Mineral Resources as of February 18, 2022 Classification Cutoff Grade $ Net of Process Approximate Cutoff, AuEq oz/ton Ktons Au oz/ton Ag oz/ton Sulfide Sulfur% Au Contained Ounces (000) Ag Contained Ounces (000) Heap Leach Resource Measured $0.01 0.003 97,086 0.008 0.30 2.75 777 29,417 Indicated $0.01 0.003 36,046 0.007 0.29 2.10 252 10,417 Meas + Ind $0.01 0.003 133,132 0.008 0.30 2.57 1,029 39,834 Inferred $0.01 0.003 101,314 0.008 0.09 1.77 811 9,118 Flotation Mill + Concentrate by POX and Cyanide Leach Process Measured $0.01 0.011 372,226 0.013 0.65 1.86 4,839 240,830 Indicated $0.01 0.011 314,866 0.012 0.53 1.65 3,778 165,305 Meas + Ind $0.01 0.011 687,092 0.013 0.59 1.76 8,617 406,135 Inferred $0.01 0.011 349,659 0.012 0.40 1.19 4,196 141,262 Combined Mineral Resources Leach Plus Process Plant Measured $0.01 0.003 - 0.011 469,312 0.012 0.58 2.04 5,616 270,247 Indicated $0.01 0.003 - 0.011 350,912 0.011 0.50 1.70 4,030 175,722 Meas + Ind $0.01 0.003 - 0.011 820,224 0.012 0.54 1.90 9,646 445,969 Inferred $0.01 0.003 - 0.011 450,973 0.011 0.33 1.32 5,007 150,380 Total material in the Pit (tons) = 3.516 billion Notes: • Cutoffs grades were determined by income – process cost = NPR = NSR – Process Opex.
Removed
Cutoff grade is the minimum grade required for a mineral to be economically mined and processed to retrieve the metal for commercial sale.
Removed
The cutoff grade for Hycroft is determined by assessing each mine block for gold and silver content and then applying a cost for extraction of these metals from that block by employing commercial mining practices and using the crushing, grinding, flotation, pressure oxidation and cyanide leaching circuit for oxidized flotation concentrate process to create a gold/silver doré bar.
Removed
Process costs include the environmental practices for placing waste and tailing material in properly designed facilities that can be remediated in the future. • Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding. • Mineral resources are contained within a computer-generated optimized pit.
Removed
Total material in that pit is 3.516 billion tons. • All units are imperial. Ktons refers to 1,000 short tons of 2,000 lbs. Gold and silver grades are in troy ounces/short ton. During 2022, the Company and IMC spent significant effort toward the verification of the drill hole database.
Removed
That work included: • Detailed comparison of certificates of assay versus the assay data base which resulted in substantial update and correction to the data base. 36 Table of Contents • Analysis of the QAQC data used by the Company and previous owners from 2005 to 2022.
Removed
This work was completed in two stages representing different time periods. • Analysis of Diamond Drilling (“DDH”) versus Reverse Circulation (“RC”) with the post 2005 drilling to confirm that the two methods can be comingled and utilized for the estimation of mineral resources. • Comparison of the pre-2005 drilling versus post-2005 drilling to verify the application of the older data.
Removed
The pre-2005 data has no QAQC information that can be used to verify its reliability. Based on this work, changes were made to the drill hole database that were included in the estimate of mineral resources reported in the 2023 Hycroft TRS.
Removed
As a result of the changes discussed below, the Hycroft Mine’s measured and indicated gold mineral resources increased by 0.9 million ounces and its measured and indicated silver mineral resources decreased by 85.3 million ounces. In addition, the Hycroft Mine’s inferred gold mineral resources decreased by 1.7 million ounces and its silver inferred mineral resources decreased by 54.3 million ounces.
Removed
The reasons for the change in mineral resources are as follows: • Additional drilling assay results from 2021 and the assay results received through December 9, 2022 have been added to the database.
Removed
This data came from 171 holes containing 23,804 gold fire assays and 23,780 silver fire assays. • The February 2022 resource statement reflected downward adjustments for reported bias in grade estimation from pre-2000 gold fire assay values.
Removed
Detailed review of historical assay certificates confirmed that the database used to develop the mineral resource corresponds to the original assay certificates, therefore the downward adjustment was removed. • Approximately 165,000 silver fire assay samples previously included in the database as “no assay” results were found to have trace level assay values.
Removed
As a result, the “no assay” sample values were replaced with the lower “trace sample” values. “Trace assay” sample values are less than the grade of economic mineralization. (“No assay” sample values allow the model to estimate the mineralization in the area between two drill holes with known mineralization values.
Removed
“Trace assay” values are approximately one-half the detection limit of the calibrated laboratory instrument used in assessing assay samples.) • Detailed analysis of the earliest drilling at Hycroft from 1982 to 1987 indicated that the assays were high biased.
Removed
As a result, the historical assays from this period have been adjusted downward and taking a conservative approach, the resource from this time period has been classified as inferred material only. • Economic changes include a reduction of process costs by 3% due to more detailed analysis and an increase of metal prices from $1800/oz gold and $23.00/oz silver to $1,900/oz gold and $24.50/oz silver. • Minor changes to block model estimation methods are also incorporated.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless 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. Warrant Holder Litigation On January 10, 2023, Plaintiff Travus Pope (“Plaintiff”) filed a complaint (the “Complaint”) in the Delaware Chancery Court (the “Court”) against the Company.
Biggest changeRegardless 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.
Removed
The Complaint included two claims: (i) breach of contract; and (ii) declaratory relief. Plaintiff challenges the method by which the Company calculated mechanical adjustments to his 16 expired warrants. The Company believes Plaintiff’s Complaint is without merit. On January 30, 2023, the Company filed its Motion to Dismiss the Complaint.
Added
Warrant Holder Litigation The Company has been named as a defendant in four pro se actions that assert claims for breach of contract and declaratory judgment arising from or directly relating to Warrants purportedly held by the Pro Se Plaintiffs in the Delaware Chancery Court.
Removed
On February 14, 2023, Plaintiff filed an Amended Complaint, wherein Plaintiff listed additional alleged facts, but did not add additional claims for relief, maintaining the breach of contract and declaratory claims for relief. The Company believes Plaintiff’s amended Complaint is without merit. On February 28, 2023, the Company filed its Motion to Dismiss the Amended Complaint.
Added
In various forms, they allege that the Company or its predecessor entities breached the Warrant Agreement, dated October 22, 2015, and/or related Amendment Agreement, dated February 26, 2020.
Removed
Currently, the Company is awaiting the Court’s briefing schedule to be issued in order that the Company’s Motion to Dismiss can be fully briefed.
Added
In sum, in all four actions, Plaintiffs allege, by or on behalf of “Warrant holders,” that the Company or its predecessor(s) breached these agreements by failing to make proper “Mechanical Adjustments” to the Warrants in accordance with terms of the Warrant Agreement upon the occurrence of certain business transactions and events, including the May 29, 2020, Business Combination.
Added
On January 10, 2024, in response to the Company’s motion to consolidate the four pro se actions, the Delaware Chancery Court ordered the parties to submit a proposed briefing schedule for the defendant’s preliminary motions to dismiss.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeThe Company emphasizes safety as a cornerstone of its corporate culture and continues with the practices, and people to elevate its safety performance in all site activities. The operation of the Hycroft Mine is subject to regulation by MSHA under the Mine Act.
Biggest changeThe Company remains committed to adapting safety initiatives as necessary to ensure the well-being of our workforce, contractors, and visitors. The operation of the Hycroft Mine is subject to regulation by MSHA under the Mine Act.
The dollar penalties assessed for citations issued has also increased in recent years. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this 2022 Form 10-K. 40 Table of Contents PART II
The dollar penalties assessed for citations issued have also increased in recent years. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this 2023 Form 10-K. 37 Table of Contents PART II
Removed
One of the metrics the Company uses to measure its safety performance is the industry standard TRIFR. The Hycroft Mine’s TRIFR per 200,000 man-hours worked (including contractors) was 0.00 at the end of 2022, as compared to 0.64 at the end of 2021 and the mining industry average of approximately 2.02 for 2022.
Added
During the year ended December 31, 2023, the Hycroft Mine reported no lost time accidents and achieved one million work hours without a lost time incident in the second quarter of 2023.
Removed
In 2022, the Company recruited new leadership from strong safety cultures in the mining industry that helped it successfully rebuild the Hycroft Mine safety culture utilizing elements in advanced safety practices and management making them the cornerstone for its safety success.
Added
The Hycroft Mine’s 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 observed at the Hycroft Mine.
Added
During the year ended December 31, 2023, the Company continued its critical focus on safety, including allocating additional personnel, resources, workforce time, and communications to mine safety. These actions contributed to maintaining a TRIFR of Nil (0.00) at 36 Table of Contents December 31, 2023 and December 31, 2022.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities During the year ended December 31, 2022, the Company did not purchase any of its equity securities that are registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Sprott Credit Agreement contains provisions that restrict the Company’s ability to repurchase or redeem capital stock.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations – Debt covenants and Note 9 – Debt, Net to the Notes to the Financial Statements. Issuer Purchases of Equity Securities During the year ended December 31, 2023, the Company did not purchase any of its equity securities that are registered under Section 12(b) of the Exchange Act.
The purchase of the Subordinated Notes was completed in two transactions: (i) cash consideration of $5.6 million; and (ii) the issuance of 500,000 shares of common stock with a grant date fair value of $0.4 million. In addition, the Company paid $0.1 million in legal fees related to the Highbridge Agreement.
The purchase of the Subordinated Notes was completed in two transactions: (i) cash consideration of $5.6 million; and (ii) the issuance of 50,000 shares of common stock with a grant date fair value of $0.4 million. In addition, the Company paid $0.1 million in legal fees related to the Highbridge Agreement.
Dividend Policy The Company has never paid dividends on its common stock and currently has no plans to do so. The Sprott Credit Agreement contains provisions that restrict the Company’s ability to pay dividends. For additional information on these restrictions, see Part II – Item 7.
Dividend Policy The Company has never paid dividends on its common stock and currently has no plans to do so. The Sprott Credit Agreement contains provisions that restrict the Company’s ability to pay dividends. For additional information on these restrictions, see Item 7.
The purchase of the Subordinated Notes represented a discount of approximately 42% to the face value of the debt. See Note 10 – Debt, Net to the Notes to the Financial Statements for further details.
The purchase of the Subordinated Notes represented a discount of approximately 42% to the face value of the debt. See Note 9 – Debt, Net to the Notes to the Financial Statements for further details.
The number of shares of common stock issued was determined using the volume weighted average price on the Nasdaq Capital Market for the 10 trading days preceding the effective date of the agreement. See Note 14 – Stockholders’ Equity to the Notes to the Financial Statements for further details.
The number of shares of common stock issued was determined using the volume weighted average price on the Nasdaq for the 10 trading days preceding the effective date of the agreement. See Note 15 – Stockholders’ Equity to the Notes to the Financial Statements for further details.
Unregistered Sales of Equity Securities and Use of Proceeds On July 28, 2022, the Company issued 1,714,678 shares of common stock to a financial advisor as consideration for entering into a settlement agreement.
The Sprott Credit Agreement contains provisions that restrict the Company’s ability to repurchase or redeem capital stock. Unregistered Sales of Equity Securities and Use of Proceeds On July 28, 2022, the Company issued 171,467 shares of common stock (on a post 1-for-10 reverse stock split basis) to a financial advisor as consideration for entering into a settlement agreement.
On March 27, 2023, the last reported sale price of the Company’s common stock on the Nasdaq Capital Market was $0.3852. As of March 27, 2023, there were 200,270,599 s hares of the Company’s common stock issued and outstanding, and it had 233 registered stockholders of record.
On March 13, 2024, the last reported sale price of the Company’s common stock on the Nasdaq was $2.3200. As of March 13, 2024, there were 21,005,192 s hares of the Company’s common stock issued and outstanding, and there were 244 registered stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock began publicly trading on the Nasdaq Capital Market under the symbol “HYMC” on June 1, 2020. Prior to that time, shares of Class A common stock traded on the Nasdaq Capital Market under the symbol “MUDS”.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock is publicly traded on the Nasdaq under the symbol “HYMC.” On November 14, 2023, the Company effectuated a reverse stock split with a ratio of 1-for-10.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Debt covenants and Note 10 – Debt, Net to the Notes to the Financial Statements.
Added
The reverse stock split was intended to increase the price per share of the Company’s common stock to allow the Company to demonstrate compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes to the Financial Statements for further details.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below summarizes total cost of sales for the following periods (dollars in thousands): Year Ended December 31, 2022 2021 Production costs $ 30,756 $ 102,750 Depreciation and amortization 3,361 8,544 Mine site period costs 13,720 38,166 Asset retirement obligation adjustments 4,701 — Write-down of materials and supplies inventories 1,051 7,990 Write-down of ore on leach pads — 5,888 Total cost of sales $ 53,589 $ 163,338 Production costs For the year ended December 31, 2022, the Company recognized $30.8 million in Production costs , or $1,735 per ounce of gold sold, compared to $102.8 million, respectively, or $1,833 per ounce of gold, sold during the same period of 2021.
Biggest change(The following notes are in reference to the Notes to the Financial Statements) Year Ended December 31, 2023 2022 Cost of sales: Production costs $ — $ 30,756 Mine site period costs – Note 2 — 13,720 Asset retirement obligation adjustments – Notes 2 and 8 — 4,701 Depreciation and amortization – Note 2 — 3,361 Write-down of supplies inventories – Notes 2 and 4 — 1,051 Total cost of sales — 53,589 Operating expenses: Projects, exploration, and development 20,637 18,355 General and administrative 12,673 14,367 Mine site period costs – Note 2 11,886 — Depreciation and amortization – Note 2 2,814 — Accretion – Note 8 1,087 408 Write-down of supplies inventories – Notes 2 and 4 495 — Gain on settlement of accrued liability – Note 10 (1,151) — Asset retirement obligation adjustments – Notes 2 and 8 (2,887) — Total cost of sales and operating expenses $ (45,554) $ 86,719 Production costs For the year ended December 31, 2023, the Company recognized Nil in Production costs , compared to $30.8 million, respectively, or $1,735 per ounce of gold, sold during the same period of 2022.
The Company has undertaken and continues to undertake additional efforts including: (i) monetizing non-core fixed assets and excess materials and supplies inventories; (ii) returning excess rental and leased equipment; (iii) selling uninstalled mills that are not expected to be needed for a future milling operation; and (iv) working with existing debt holders to adjust debt service requirements.
The Company has undertaken and continues to undertake additional efforts including: (i) monetizing non-core fixed assets and excess supplies inventories; (ii) returning excess rental and leased equipment; (iii) selling uninstalled mills that are not expected to be needed for a future milling operation; and (iv) working with existing debt holders to adjust debt service requirements.
Section 382 of the Internal Revenue Code (“IRC”) imposes limitations on the use of U.S. federal net operating losses (“NOLs”) upon a more than 50% change in ownership in the Company (as defined in the IRC) within a three-year period. In connection with its at-the-market equity offering, the Company underwent a Section 382 ownership change on March 25, 2022.
Section 382 of the Internal Revenue Code (“IRC”) imposes limitations on the use of U.S. federal net operating losses (“NOLs”) upon a more than 50% change in ownership in the Company (as defined in the IRC) within a three-year period. In connection with its at-the-market equity offering, the Company underwent an IRC § 382 ownership change on March 25, 2022.
Subsequent to ceasing mining operations in November 2021, the Company implemented an asset recovery program in order to monetize non-core assets and excess materials and supplies inventories. In addition, the Company sold an uninstalled regrind mill and ball mill that are not expected to be needed for a future milling operation.
Subsequent to ceasing mining operations in November 2021, the Company implemented an asset recovery program in order to monetize non-core assets and excess supplies inventories. In addition, the Company sold an uninstalled regrind mill and ball mill that are not expected to be needed for a future milling operation.
The change in estimate was the result of updated cost assumptions related to regulatory changes, updated assumptions for regulatory changes requiring additional sloping and expected timing of reclamation activities associated with the Crofoot leach pad prior to recommencing operations.
The change in estimate was the result of updated cost assumptions related to regulatory changes requiring additional sloping and expected timing of reclamation activities associated with the Crofoot leach pad prior to recommencing operations.
For information on all of our significant accounting policies, see Note 2 – Summary of Significant Accounting Policies to the Notes to the Financial Statements. Impairment of long-lived assets Estimate Required: Our long-lived assets consist of Plant and equipment, net .
For information on all of our significant accounting policies, see Note 2 – Summary of Significant Accounting Policies to the Notes to the Financial Statements. Impairment of long-lived assets Estimate Required: Our long-lived assets consist of Property, plant, and equipment, net .
In addition, the Company will continue to evaluate alternatives to raise additional capital necessary to fund the future development of the Hycroft Mine and will continue to explore other strategic initiatives to enhance stockholder value.
In addition, the Company will continue to evaluate alternatives to raise additional capital necessary to fund the future exploration and development of the Hycroft Mine and will continue to explore other strategic initiatives to enhance stockholder value.
Cash provided by (used in) financing activities During the year ended December 31, 2022, cash provided by financing activities of $155.8 million was primarily related to the equity offerings completed during the period: (i) the Private Placement offering completed on March 15, 2022 for net cash proceeds of $55.4 million, and (ii) the ATM Program completed on March 25, 2022 for net cash proceeds of $133.5 million.
During the year ended December 31, 2022, cash provided by financing activities of $155.8 million was primarily related to the equity offerings completed during the period: (i) the Private Placement Offering completed on March 15, 2022, for net cash proceeds of $55.4 million, and (ii) the ATM Program completed on March 25, 2022, for net cash proceeds of $133.5 million.
The Subordinated Notes include customary events of default, including those relating to a failure to pay principal or interest, a breach of a covenant, representation or warranty, a cross-default to other indebtedness, and non-compliance with security documents. As of December 31, 2022, the Company was in compliance with all covenants under its debt agreements.
The Subordinated Notes include customary events of default, including those relating to a failure to pay principal or interest, a breach of a covenant, representation or warranty, a cross-default to other indebtedness, and non-compliance with security documents. As of December 31, 2023, the Company was in compliance with all covenants under its debt agreements.
As a result, utilization of the Company’s NOLs and certain unrealized losses are limited on an annual basis. If the Section 382 annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that tax year is added to the Section 382 annual limitation in subsequent years.
As a result, utilization of the Company’s NOLs and certain unrealized losses are limited on an annual basis. If the IRC § 382 annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that tax year is added to the IRC § 382 annual limitation in subsequent years.
The Sprott Credit Agreement (as amended by the Second A&R Agreement) requires the Company to ensure that, at all times, both its Working Capital and Unrestricted Cash is at least $15.0 million and its Working Capital is at least $10.0 million, as such terms are defined in the Sprott Credit Agreement (as amended by the Second A&R Agreement), and that at least every six months the Company demonstrates its ability to repay and meet all present and future obligations as they become due with a financial model that uses consensus gold prices discounted by 5.0%.
The 46 Table of Contents Sprott Credit Agreement (as amended by the Second A&R Agreement) requires the Company to ensure that, at all times, both its Working Capital and Unrestricted Cash is at least $15.0 million and its Working Capital is at least $10.0 million, as such terms are defined in the Sprott Credit Agreement (as amended by the Second A&R Agreement), and that at least every six months the Company demonstrates its ability to repay and meet all present and future obligations as they become due with a financial model that uses consensus gold prices discounted by 5.0%.
See Note 23 – Commitments and Contingencies to 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.
See Note 24 – Commitments and Contingencies to 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.
Projects, exploration, and development During the years ended December 31, 2022 and 2021, Projects, exploration, and development costs totaled $18.4 million and $13.6 million, respectively. Projects, exploration, and development were related to: (i) completing technical studies; (ii) conducting geological studies; (iii) oversight and project management; and (iv) exploration drilling, engineering, and metallurgical activities.
Projects, exploration, and development During the years ended December 31, 2023 and 2022, Projects, exploration, and development costs totaled $20.6 million and $18.4 million, respectively. Projects, exploration, and development were related to: (i) completing technical studies; (ii) conducting geological studies; (iii) oversight and project management; and (iv) exploration drilling, engineering, and metallurgical activities.
Our estimates of future cash flows from the potential sale of our assets are based on numerous assumptions that are consistent or reasonable in relation to transactions occurring in the market 56 Table of Contents and actual future cash flows may be significantly different than the estimates as each are each subject to significant risks and uncertainties.
Our estimates of future cash flows from the potential sale of our assets are based on numerous assumptions that are consistent or reasonable in relation to transaction occurring in the market and actual future cash flows may be significantly different than the estimates as each are subject to significant risks and uncertainties.
This decrease was offset by an increase in the balance outstanding on the Subordinated Notes at December 31, 2022 as compared to the same periods in 2021. The higher outstanding balance for the Subordinated Notes was due to quarterly interest payments that are paid in-kind as additional indebtedness.
This decrease was offset by an increase in the balance outstanding on the 42 Table of Contents Subordinated Notes at December 31, 2023 as compared to the same periods in 2022. The higher outstanding balance for the Subordinated Notes was due to quarterly interest payments that are paid in-kind as additional indebtedness.
Terms not defined herein have the same meaning defined elsewhere in this 2022 Form 10-K. 41 Table of Contents Introduction to the Company We are a gold and silver development company that owns the Hycroft Mine in the prolific mining region of Northern Nevada.
Terms not defined herein have the same meaning defined elsewhere in this 2023 Form 10-K. Introduction to the Company We are a gold and silver exploration and development company that owns the Hycroft Mine in the prolific mining region of Northern Nevada.
The Hycroft Mine’s TRIFR for the trailing twelve 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 historical levels experienced at the Hycroft Mine.
The Hycroft Mine’s 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 observed at the Hycroft Mine.
The Company has earned $0.4 million on its Restricted cash since June 2022. 49 Table of Contents Gain on extinguishment of debt During the year ended December 31, 2022, the Company recognized a Gain on extinguishment of debt of $5.0 million related to the purchase of $11.1 million of the Subordinated Notes (such amount included accrued interest of $0.2 million) in two transactions: (i) the Company paid cash consideration of $5.6 million; and (ii) the Company issued 500,000 shares of common stock with a grant date fair value of $0.4 million.
Gain on extinguishment of debt During the year ended December 31, 2022, the Company recognized a Gain on extinguishment of debt of $5.0 million related to the purchase of $11.1 million of the Subordinated Notes (such amount included accrued interest of $0.2 million) in two transactions: (i) the Company paid cash consideration of $5.6 million; and (ii) the Company issued 50,000 shares of common stock with a grant date fair value of $0.4 million.
The decrease of $2.1 million during the year ended December 31, 2022 was the result of a decrease in the outstanding obligation for the Sprott Credit Agreement as the Company repaid portions of the balance in March 2022 and November 2022.
The net change during the year ended December 31, 2023, was the result of a decrease in the outstanding obligation for the Sprott Credit Agreement as the Company repaid portions of the balance in March 2022 and November 2022.
During the year ended December 31, 2021, the Company recorded $38.2 million of Cost of sales for costs that were in excess of the net realizable value per ounce of gold inventories.
During the year ended December 31, 2022, the Company recorded $13.7 million of Cost of sales for costs that were in excess of the net realizable value per ounce of gold inventories.
Recent Developments Project Update 2022-2023 Exploration Drill Program In July 2022, the Company launched its 2022-2023 exploration drill program which is the largest exploration program at the Hycroft Mine in nearly a decade and comprises approximately 30,000 meters of RC drilling and 7,500 meters of core drilling.
Recent Developments Project Update 2022-2023 Exploration Drill Program In July 2022, the Company launched its 2022-2023 exploration drill program, which is the largest exploration program at the Hycroft Mine in nearly a decade. The 2022-2023 exploration drill program is comprised of RC and core drilling.
During the year ended 2022, we continued our critical focus on safety, including allocating additional personnel, resources, workforce time, and communications to mine safety. These actions contributed to a reduction in our TRIFR to Nil (0.00) at December 31, 2022, compared with approximately 0.64 at December 31, 2021, a reduction of 100%.
During the year ended December 31, 2023, we continued our critical focus on safety, including allocating additional personnel, resources, workforce time, and communications to mine safety. These actions contributed to maintaining a TRIFR of Nil (0.00) at December 31, 2023 and December 31, 2022.
Asset retirement obligation adjustments During the year ended December 31, 2022, the Company recorded a change in estimate to its Asset Retirement Obligation of $4.7 million.
Asset retirement obligation adjustments During the year ended December 31, 2023, the Company recorded a change in estimate to its Asset retirement obligation of $2.9 million.
See Note 5 – Prepaids and Other, Net to the Notes to the Financial Statements for further detail. Accretion We recorded $0.4 million of Accretion during both of the years ended December 31, 2022 and 2021, which related to our Asset retirement obligation and future reclamation costs.
Accretion We recorded $1.1 million and $0.4 million of Accretion during the years ended December 31, 2023 and 2022, respectively, which related to our Asset retirement obligation and future reclamation costs. See Note 8 – Asset Retirement Obligation to the Notes to the Financial Statements for further detail.
The Company’s annual limitation under Section 382 is estimated to be approximately $1.3 million. For additional details, see Note 17 – Income Taxes to the Notes to the Financial Statements. 50 Table of Contents Liquidity and Capital Resources General The Company’s unrestricted cash position at December 31, 2022 was $142.0 million as compared with $12.3 million at December 31, 2021.
The Company’s annual limitation under IRC § 382 is estimated to be approximately $1.3 million. For additional details, see Note 18 – Income Taxes to the Notes to the Financial Statements. Liquidity and Capital Resources General The Company’s unrestricted cash position at December 31, 2023, was $106.2 million as compared with $142.0 million at December 31, 2022.
Fair value adjustments to warrants During the year ended December 31, 2022, the Fair value adjustments to warrants resulted in a non-cash gain of $0.2 million, as the market trading values of the publicly listed warrants decreased during the period.
Fair value adjustments to warrants During the years ended December 31, 2023 and 2022, the Fair value adjustments to warrants resulted in a non-cash loss of $0.2 million and non-cash gain of $0.2 million, respectively, as the market trading values of the publicly listed warrants decreased and increased during the periods, respectively.
The POX process included in the 2023 Hycroft TRS is a conventional crushing, grinding, and flotation circuit that generates a concentrate to be fed to an autoclave facility commonly used for refractory gold ores in this region.
In March 2023, the Company completed the 2023 Hycroft TRS utilizing a conventional crushing, grinding, and flotation circuit that generates a concentrate to be fed to a POX autoclave facility commonly used for refractory gold ores.
Historically, the Company has been dependent on various forms of debt and equity financing to fund its business.
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.
The largest non-cash items included in net loss during the year ended December 31, 2022 included a $5.0 million Gain on extinguishment of debt, Non-cash portion of interest expense of $13.1 million and Asset retirement obligation adjustments of $4.7 million.
The largest non-cash items included in net loss during the year ended December 31, 2022, included Non-cash portion of interest expense of $13.1 million, Asset retirement obligation adjustments of $4.7 million, Depreciation and amortization of $3.4 million and non-cash Stock-based compensation of $2.5 million, all partly offset by $5.0 million Gain on extinguishment of debt , and $3.9 million Gain on sale of assets, net of commissions.
In addition, the Company may enter into service agreements from time-to-time with drilling contractors or other consultants to perform work on or related to the Hycroft Mine.
See Note 9 – Debt, Net to the Notes to the Financial Statements for additional information. In addition, the Company may enter into service agreements from time-to-time with drilling contractors or other consultants to perform work on or related to the Hycroft Mine.
The overall focus of the 2022-2023 exploration drill program is to improve the understanding of the higher-grade intercepts identified during the 2021 drill program, better understand the mineralization controls, test exploration targets outside 42 Table of Contents the currently known deposits, and develop opportunities to mine higher-grade ore early in the mine plan enhancing the project’s economics.
The overall focus of the 2022-2023 exploration drill program is to improve the understanding of the higher-grade intercepts, determine the sequencing of mine planning, develop opportunities to mine higher-grade ore early in the mine plan in order to enhance the project’s economics, and test exploration targets outside the currently known deposits.
Interest expense, net of capitalized interest As discussed and detailed in Note 10 – Debt, Net , Interest expense, net of capitalized interest to the Notes to the Financial Statements totaled $18.5 million and $20.6 million, respectively, during the years ended December 31, 2022 and 2021.
Interest expense As discussed and detailed in Note 9 – Debt, Net , Interest expense to the Notes to the Financial Statements totaled $18.5 million for both years ended December 31, 2023 and 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion provides information that we believe is relevant to an assessment and understanding of our consolidated operating results and financial condition.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion 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 other reports filed with the SEC, as well as our Financial Statements and the Notes.
In the above presentation, no offset has been applied for the $58.3 million of our reclamation bonds or for the $34.0 million of cash collateral for those bonds included in Restricted Cash .
The estimated undiscounted and 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 $26.3 million of cash collateral for those bonds included in Restricted Cash .
In addition, the Company paid $0.1 million in legal fees. Total consideration, including legal fees, of $6.1 million was paid which represented a discount of approximately 42% to the face value of the debt.
In addition, the Company paid $0.1 million in legal fees. Total consideration, including legal fees, of $6.1 million was paid which represented a discount of approximately 42% to the face value of the debt. Income taxes The Company incurred Nil Income tax expense (benefit) for both years ended December 31, 2023 and 2022.
Asset retirement obligation Estimate Required: We will be required to perform reclamation activity at the Hycroft Mine in the future. As a result of this requirement, an Asset retirement obligation has been recorded on our Consolidated Balance Sheets that is based on our expectation of the costs that will be incurred years in the future.
As a result of this requirement, an Asset retirement obligation has been recorded on our Consolidated Balance Sheets that is based on our expectation of the costs that will be incurred years in the future. Any underestimate or unanticipated reclamation costs or any changes in governmental reclamation requirements could require us to record or incur additional reclamation costs.
In July 2022, the Company invested a portion of its cash balances in AAAm rated U.S. Government Money Market Funds that are readily convertible to cash. These investments earned the Company $1.9 million in interest during the year ended December 31, 2022. In addition, the Company began earning interest on a portion of its Restricted cash balances in June 2022.
Interest income Interest income totaled $8.3 million and $2.3 million, respectively, during the years ended December 31, 2023 and 2022. In July 2022, the Company invested a portion of its cash balances in AAAm rated U.S. Government Money Market Funds that are readily convertible to cash.
The Company believes that the following provides the most meaningful presentation of near-term obligations expected to be satisfied using current and available sources of liquidity (dollars in thousands): Payments Due by Period Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Operating activities: Net smelter royalty (1) $ 240,506 $ 6 $ — $ — $ 240,500 Remediation and reclamation expenditures (2) 76,795 — 4,717 4,890 67,188 Interest payments (3) 18,925 4,288 12,865 1,772 — Crofoot Royalty (4) 4,495 151 — — 4,344 Financing activities: Repayments of debt principal (3) 153,479 127 205 153,147 — Additional interest payments (5) 5,499 2,200 3,299 — — Total $ 499,699 $ 6,772 $ 21,086 $ 159,809 $ 312,032 (1) Under the Sprott Royalty Agreement, the Company is required to pay a perpetual royalty equal to 1.5% of the Net Smelter Returns from the Hycroft Mine, payable monthly that also includes an additional amount for withholding taxes payable by the royalty holder.
The Company believes that the following provides the most meaningful presentation of near-term obligations expected to be satisfied using current and available sources of liquidity (in thousands): Payments Due by Period Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Operating activities: Net smelter royalty (1) $ 241,199 $ — $ — $ — $ 241,199 Remediation and reclamation expenditures (2) 86,915 3,172 1,453 — 82,290 Interest payments (3) 14,637 4,298 8,567 1,772 — Crofoot Royalty (4) 4,344 — — — 4,344 Financing activities: Repayments of debt principal (5) 199,635 130 76 199,429 — Additional interest payments (6) 3,300 2,200 1,100 — — Total $ 550,030 $ 9,800 $ 11,196 $ 201,201 $ 327,833 (1) Under the Sprott Royalty Agreement, the Company is required to pay a perpetual royalty equal to 1.5% of the Net Smelter Returns from the Hycroft Mine, payable monthly that also includes an additional amount for withholding taxes payable by the royalty holder.
See Note 13 – Asset Retirement Obligation to the Notes to the Financial Statements for further detail.
See Note 14 – Warrant Liabilities to the Notes to the Financial Statements for further detail.
(3) Repayments of principal on debt consists of amounts due under the Sprott Credit Agreement (as amended by the Second A&R Agreement), the Subordinated Notes and notes payable for equipment purchases.
(5) Repayments of debt principal consists of amounts due under the Sprott Credit Agreement (as amended by the Second A&R Agreement), the Subordinated Notes and notes payable for equipment purchases. Included in the repayment of the Subordinated Notes principal is payable in-kind interest that has been capitalized and payable in-kind interest expected to be capitalized through maturity.
In accordance with the change in estimate, the Company recorded an expense of $4.7 million as the Company does not have mineral reserves and accordingly all costs are expensed as incurred.
In accordance with the change in estimate, the Company recorded a reduction in operating expense of $2.9 million as the Company does not have mineral reserves and accordingly all costs are expensed or credited as incurred. During the year ended December 31, 2022, the Company recorded a change in estimate to its Asset retirement obligation of $4.7 million.
We recorded a Write-down of materials and supplies inventories of $8.0 million for the year ended December 31, 2021 related to the following: • A write-down of Inventories of $5.9 million for obsolete and slow-moving materials and supplies inventories.
Write-down of supplies inventories For the year ended December 31, 2023, the Company recorded a Write-down of supplies inventories of $0.5 million for obsolete and slow-moving supplies inventories as compared with $1.1 million for the year ended December 31, 2022.
Write-down of materials and supplies inventories We recorded a Write-down of materials and supplies inventories of $1.1 million for the year ended December 31, 2022 for obsolete and slow-moving materials and supplies inventories. The Company evaluates its materials and supplies inventories and records write-downs for items not expected to be used in the next 12 months.
The Company evaluates its supplies inventories and records write-downs for items not expected to be used in the next 12 months.
Health and Safety We believe that safety is a core value and we support that belief through our philosophy of safe work performance. Our mandatory mine safety and health programs include employee engagement and ownership of safety performance, accountability, employee and contractor training, risk management, workplace inspection, emergency response, accident investigation, and program auditing.
Our mandatory mine safety and health programs include employee engagement and ownership of safety performance, accountability, employee and contractor training, risk management, workplace inspection, emergency response, accident investigation, and program auditing. This integrated approach is essential to ensure that our employees, contractors, and visitors operate safely.
The 2023 Hycroft TRS included a mineral resource estimate for the Hycroft Mine.
The 2023 Hycroft TRS included a mineral resource estimate for the Hycroft Mine as determined in accordance with the requirements of the Modernization Rules.
Year ended December 31, 2022 compared to year ended December 31, 2021 The following table summarizes sources and uses of cash for the following periods (dollars in thousands): Year Ended December 31, 2022 2021 Net loss $ (60,828) $ (88,564) Net non-cash adjustments 16,304 30,829 Net change in operating assets and liabilities 9,669 20,697 Net cash used in operating activities (34,855) (37,038) Net cash provided by (used in) investing activities 8,337 (6,873) Net cash provided by (used in) financing activities 155,849 (5,494) Net increase (decrease) in cash 129,331 (49,405) Cash, cash equivalents and restricted cash, beginning of period 46,635 96,040 Cash, cash equivalents and restricted cash, end of period $ 175,966 $ 46,635 Cash used in operating activities During the year ended December 31, 2022, the Company used $34.9 million of cash in operating activities primarily attributable to a net loss of $60.8 million, the cash impact of which was equal to $39.5 million, and $9.7 million was provided by working capital, which included a $15.8 million decrease for production-related inventories as the Company processed the remaining gold and silver ore on its leach pads and in its drain down solutions, which was partly offset by cash used to reduce Accounts payable of $3.8 million.
Year ended December 31, 2023, compared to year ended December 31, 2022 The following table summarizes sources and uses of cash for the following periods (in thousands): Year Ended December 31, 2023 2022 Net loss $ (55,024) $ (60,828) Net non-cash adjustments 14,286 16,304 Net change in operating assets and liabilities (709) 9,669 Net cash used in operating activities (41,447) (34,855) Net cash provided by (used in) investing activities (507) 8,337 Net cash provided by (used in) financing activities (1,461) 155,849 Net increase (decrease) in cash (43,415) 129,331 Cash, cash equivalents and restricted cash, beginning of period 175,966 46,635 Cash, cash equivalents and restricted cash, end of period $ 132,550 $ 175,966 Cash used in operating activities During the year ended December 31, 2023, the Company used $41.4 million of cash in operating activities primarily attributable to a Net loss of $55.0 million, the cash impact of which was equal to $40.7 million, and $0.7 million was provided by working capital and other operating activities, driven primarily by cash used to reduce Accounts payable and accrued expenses of $2.3 million and Prepaids and deposits of $2.0 million, partly offset by cash from Accounts receivable of $2.8 million.
(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 and inflated cash outflows of these remediation and reclamation obligations are reflected here.
Amounts presented above incorporate mineral resource estimates as reported in the 2023 Hycroft TRS. (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.
Future capital and cash requirements The following table provides the Company’s gross contractual cash obligations as of December 31, 2022, which are grouped in the same manner as they are classified in the Consolidated Statement of Cash Flows in order to provide a better understanding of the nature of the obligations and to provide a basis for comparison to historical information.
These amounts were partially offset by prepayments under the Sprott Credit Agreement of $25.0 million, additional interest (which is classified as debt) payments under the Sprott Credit Agreement of $2.2 million, the purchase of $11.1 million Subordinated Notes for $5.6 million and payments on equipment notes payables of $0.1 million. 45 Table of Contents Future capital and cash requirements The following table provides the Company’s gross contractual cash obligations as of December 31, 2023, which are grouped in the same manner as they are classified in the Consolidated Statement of Cash Flows in order to provide a better understanding of the nature of the obligations and to provide a basis for comparison to historical information.
If the reclamation activities expected to be performed upon closure of the Hycroft Mine were to begin ten years earlier or later than currently assumed our reclamation liability would increase or decrease by approximately $3.7 million and $1.7 million, respectively. Adjustments may occur due to a change in estimate due to timing, costs assumptions, or regulatory requirements.
In addition, the Company expects to perform reclamation activities for earthworks and solutions management from 2024 through 2026. If the reclamation activities expected to be performed upon the estimated closure of the mine were to begin ten years earlier or later than currently assumed our reclamation liability would increase or decrease by approximately $5.2 million and $2.7 million, respectively.
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.
Hycroft is evaluating alternatives to strengthen its balance sheet and reduce debt. The Company may make additional debt prepayments or take other actions to reduce its outstanding debt. 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.
These results, and results from the 2022-2023 exploration drill program, will be used for designing the mine plan, the type and size of the mill circuit configuration, and the ore haul truck size specifications, among other engineering requirements.
Combined with data from the 2022-2023 exploration drill program, these results will guide mine plan design, mill circuit configuration, and ore haul truck specifications, to enhance the value of the Hycroft Mine.
Mine site period costs During the year ended December 31, 2022, the Company recorded $13.7 million of Cost of sales for costs related to maintaining and operating the Hycroft Mine that do not qualify for capitalization to production-related inventories.
Mine site period costs During the year ended December 31, 2023, the Company recorded $11.9 million of Mine site period costs for costs related to maintaining and operating the Hycroft Mine, including environmental, maintenance, and administration costs.
Impact of Change in Estimate: Based on the proposed 34-year mine plan which was the basis of our operations when we ceased mining activities in November 2021, and which we believe remains the best estimate for the life of mine, the Company expects to perform substantially all of its reclamation activities beginning in 2047 upon the estimated closure of the Hycroft Mine.
Whenever a previously unrecognized Asset retirement obligation becomes known, or a previously estimated reclamation cost is increased or decreased, the amount of that liability and any additional cost will be recorded at that time and could materially reduce our consolidated net income attributable to stockholders. 47 Table of Contents Impact of Change in Estimate: Based on the proposed 34-year mine plan which was the basis of our operations when we ceased mining activities in November 2021, and which we believe remains the best estimate for the life of mine, the Company expects to perform a substantial portion of its reclamation beginning in 2047 upon the estimated closure of the Hycroft Mine.
(2) In August 2022, the Company entered into an Equipment Purchase Agreement, as amended to sell one ball mill and one semi-autogenous (“SAG”) mill, and amended that agreement in December 2022 to also sell a sub-station transformer for a total of $13.6 million of which the Company has received payments totaling $1.1 million.
The following table summarizes projected sources of future liquidity, as recorded within the Financial Statements (in thousands): December 31, 2023 December 31, 2022 Cash and cash equivalents $ 106,210 $ 141,984 Accounts receivable — 2,771 Income tax receivable 1,530 1,530 Interest receivable 667 459 Assets held for sale, net of payments received of $1.6 million (1) 5,598 6,098 Total projected sources of future liquidity $ 113,338 $ 152,383 (1) In August 2022, the Company entered into an Equipment Purchase Agreement, as amended to sell one ball mill and one semi-autogenous (“SAG”) mill, and amended that agreement in December 2022 to also sell one sub-station transformer for a total of $13.6 million of which the Company has received payments totaling $1.1 million.
This work will establish: (i) a comprehensive and current understanding of how each geologic domain will perform during operations; and (ii) the processing components and reagents required to optimize gold and silver recoveries. The Company is working with consultants to complete this work and expects to receive all test results in April 2023.
Metallurgical and Variability Test Work During the year ended 2023, the Company completed a substantial portion of the metallurgical and flotation variability test work necessary for designing a sulfide milling operation, establishing (i) a comprehensive understanding of how each geologic domain will perform during operations, and (ii) the processing components and reagents required to optimize gold and silver recoveries.
Any underestimate or unanticipated reclamation costs or any changes in governmental reclamation requirements could require us to record or incur additional reclamation costs. We accrue an Asset retirement obligation when they become known, are probable and can be reasonably estimated.
We accrue an Asset retirement obligation when they become known, are probable, and can be reasonably estimated.
See Note 12 – Warrant Liabilities to the Notes to the Financial Statements for further detail. Gain (loss) on sale of equipment and materials and supplies inventories, net of commissions The Company recognized a Gain on sale of equipment and supplies, net of commissions of $3.9 million for the year ended December 31, 2022.
Gain on sale of assets, net of commissions The Company recognized a Gain on sale of assets, net of commissions of $0.5 million for the year ended December 31, 2023, compared to $3.9 million for the year ended December 31, 2022.
We ceased mining activities in November 2021, and as of December 31, 2022 we completed processing of gold and silver ore previously placed on leach pads. We do not expect to generate revenues from gold and silver sales until after developing the Hycroft Mine and recommencing mining operations.
We are focused on exploring the Hycroft Mine’s claims comprising approximately 64,085 acres and developing the Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. We ceased mining activities in November 2021, and as of December 31, 2022, we completed processing of gold and silver ore previously placed on leach pads.
The 2022-2023 exploration program involving reverse circulation (“RC”) and core drilling began in the third quarter of 2022 and the Company completed Phase 1 in December 2022.
Executive Summary During the year ended December 31, 2023, we continued Phase 2 of the 2022-2023 exploration drill program, completed portions of the metallurgical and variability test work, and continued to analyze drill assay data and information received during Phase 1 and Phase 2 of the 2022-2023 exploration drill program involving reverse circulation (“RC”) and core drilling that began in the third quarter of 2022.
Hycroft Mine Operations The following table provides a summary of operating results for the Hycroft Mine: Year Ended December 31, 2022 2021 Ounces recovered – gold (oz) 14,032 57,668 Ounces recovered – silver (oz) 37,281 355,967 Ounces sold – gold (oz) 17,728 56,045 Ounces sold – silver (oz) 44,084 397,546 Average realized sales price – gold ($/oz) $ 1,819 $ 1,794 Average realized sales price – silver ($/oz) $ 22.23 $ 25.66 As shown above, ounces recovered and ounces sold decreased during the year ended December 31, 2022, compared with the prior year.
Results of Operations Revenues The following table provides a summary of gold and silver revenues for the Hycroft Mine (in thousands, except ounces and per ounce amounts): Year Ended December 31, 2023 2022 Gold revenue $ — $ 32,249 Gold ounces recovered — 14,032 Gold ounces sold — 17,728 Average realized price (per ounce) $ — $ 1,819 Silver revenue $ — $ 980 Silver ounces recovered — 37,281 Silver ounces sold — 44,084 Average realized price (per ounce) $ — $ 22.23 During the year ended December 31, 2022, the Company completed processing of gold and silver ore previously placed on leach pads prior to ceasing mining operations in November 2021.
For the year ended December 31, 2021, the Company used $37.0 million of cash in operating activities primarily attributable to a net loss of $88.6 million, the cash impact of which was equal to $57.7 million, and $20.7 million provided by working capital, which included $29.0 million used to increase production-related inventories.
During the year ended December 31, 2022, the Company used $34.9 million of cash in operating activities primarily attributable to a net loss of $60.8 million, the cash impact of which was equal to $44.5 million, and $9.7 million was provided by working capital and other adjustment, which included a $17.3 million decrease for inventories including $15.8 million reduction in Production-related inventories as the Company processed the remaining gold and silver ore on its leach pads and in its drain down solutions.
Approximately 25,000 meters of RC drilling and 4,000 meters of core drilling was completed during Phase 1 of the 2022-2023 exploration drill program. Finalized Initial Assessment Technical Report The Company, along with its third-party consultants, completed and filed the 2023 Hycroft TRS with an effective date of March 27, 2023.
Additional exploration work completed in advance of drilling outside of the resource area includes geophysics and soil sample programs in high priority target areas highlighted from the hyperspectral work completed in 2022. Finalized Initial Assessment Technical Report The Company, along with its third-party consultants, completed and filed the 2023 Hycroft TRS with an effective date of March 27, 2023.
Impact of Change in Estimate: The estimates and assumptions used to determine the fair value of our long-lived assets as of December 31, 2022 were based on sales transactions of comparable assets.
Impact of Change in Estimate: The market-based approach utilizing sales transactions of comparable assets and enterprise value resulted in an estimated fair value range for long-lived assets of $73.5 million to $981.6 million as of December 31, 2023.
Total cost of sales Total cost of sales consists of Production costs , Depreciation and amortization, Mine site period costs and Write-down of inventories .
Prior to January 1, 2023, Mine site period costs, Asset retirement obligation adjustments, Depreciation and amortization, and Write-down of supplies inventories were presented as Cost of sales.
Depreciation and amortization Depreciation and amortization was $3.4 million, or $190 per ounce of gold sold for the year ended December 31, 2022, compared to $8.5 million, or $152 per ounce of gold sold, during the same period of 2021.
As discussed in the preceding paragraph, the Company recorded an expense of $4.7 million for the change in estimate as the Company did not have mineral reserves in 2022. Depreciation and amortization Depreciation and amortization expense was $2.8 million for the year ended December 31, 2023, compared to $3.4 million during the same period of 2022.
The largest non-cash items included in net income during the year ended December 31, 2021 included Impairment charges and write-downs of $17.3 million related to the Write-down of inventories, Write-down of non-current ore on leach pads, Write-down of deposits and Impairment on equipment not in use , a $14.4 million gain from Fair value adjustments to warrants and Non-cash portion of interest expense of $16.8 million. 52 Table of Contents Cash provided by (used in) investing activities During the year ended December 31, 2022, investing activities provided cash of $8.3 million primarily from the sale of assets previously held for sale , for net proceeds of $6.6 million and other mobile mine equipment and materials and supplies for net proceeds of $2.7 million.
During the year ended December 31, 2022, investing activities provided cash of $8.3 million primarily from the sale of assets previously held for sale , for net proceeds of $6.6 million and other mobile mine equipment and supplies for net proceeds of $2.7 million. In addition, the Company purchased equipment of $1.0 million.
The increase of $4.8 million during the year ended December 31, 2022 was primarily the result of Phase 1 of the 2022-2023 exploration program discussed above compared to drilling costs during the year ended December 31, 2022 related to exploration drilling completed during the 2021 drilling program.
The increase of $2.2 million during the year ended December 31, 2023, was primarily the result of Phase 2 of the 2022-2023 exploration program that was initiated in April 2023. General and administrative General and administrative totaled $12.7 million and $14.4 million, respectively, during the years ended December 31, 2023 and 2022.
The decrease of $0.3 million during the year ended December 31, 2022 was primarily due to decreases in salary and compensation costs, including fees paid to our Directors of $1.1 million due to a decrease in headcount after ceasing operations in November 2021, that was partially offset by an increase in legal and consulting fees of $0.8 million as the Company recorded settlement expense of $1.5 million related to a financial advisor that was partially offset by reduced legal fees of $0.6 million.
The decrease of $1.7 million during the year ended December 31, 2023, was primarily due to decreases in contractor services, investor relations expense, and legal expense, that was partially offset by an increase in compensation expense associated with additional staffing in 2023.
(5) Additional interest payments consist of repayments of additional interest under the Sprott Credit Agreement (as amended by the Second A&R Agreement), commencing February 28, 2021 (with the first cash payment due three months after such date) and ending on the maturity date. See Note 10 – Debt, Net to the Notes to the Financial Statements for additional information.
Additionally, the repayments of debt principal include the outstanding principal for the Sprott Credit Agreement (as amended by the Second A&R Agreement). As of January 5, 2024, the Company voluntarily pre-paid $34.7 million of the first lien loan. See Note 9 – Debt, Net to the Notes to the Financial Statements for additional information.
Off-balance sheet arrangements As of December 31, 2022, 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 to the Notes to the Financial Statements). 55 Table of Contents Accounting Developments The following accounting pronouncements were adopted by the Company during the year ended December 31, 2022: In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).
Off-balance sheet arrangements As of December 31, 2023, the Company’s off-balance sheet arrangements consisted of a net profit royalty arrangement and a net smelter royalty arrangement (see Note 24 – Commitments and Contingencies to the Notes to the Financial Statements). Critical Accounting Estimates MD&A is based on our Financial Statements, that have been prepared in accordance with GAAP.
On March 25, 2022, the Company terminated the ATM Program having sold 89,553,584 shares of common stock and generated aggregate gross proceeds before commissions and offering expenses of approximately $138.6 million.
Beginning on November 17, 2023, the Company again began accessing the ATM Program, and as of December 31, 2023, sold an additional 523,328 shares of common stock for aggregate gross proceeds of $1.1 million, less commissions and offering expenses of $0.3 million.
These amounts were offset by prepayments under the Sprott Credit Agreement of $25.0 million, Additional Interest (which is classified as debt) payments under the Sprott Credit Agreement of $2.2 million, the purchase of $11.1 million Subordinated Notes for $5.6 million and payments on equipment notes payables of $0.1 million.
Cash (used in) provided by financing activities During the year ended December 31, 2023, cash used in financing activities of $1.5 million was primarily related to the payment of additional interest (which is classified as debt) payments under the Sprott Credit Agreement of $2.2 million.
Removed
The following discussion should be read in conjunction with our other reports filed with the SEC, as well as our Financial Statements and the Notes.
Added
We do not expect to generate Revenues from gold and silver sales until after developing the Hycroft Mine and recommencing mining operations. 38 Table of Contents Health and Safety We believe that safety is a core value and we support that belief through our philosophy of safe work performance.
Removed
We are focused on exploring the Hycroft Mine’s claims comprising approximately 64,085 acres and developing the Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. Gold and silver sales represent 100% of our Revenues and the market prices of gold and silver significantly impact our financial position, operating results, and cash flows.
Added
During the year ended December 31, 2023, we reported no lost time accidents and achieved one million work hours without a lost time incident in the second quarter of 2023.
Removed
This integrated approach is essential to ensure that our employees, contractors, and visitors operate safely. During the year ended 2022, we reported no lost time accidents.
Added
We remain committed to adapting our safety initiatives as necessary to ensure the well-being of our workforce, contractors, and visitors.
Removed
We plan to advance our safety performance through continuous improvement programs and efforts to keep our workforce, contractors, and visitors safe. For health and safety actions specific to COVID-19, see the Recent Developments section below.
Added
To date, results are generally higher grade than reflected in the current resource model.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As the Company qualifies as smaller reporting company under Item 10(f) of Regulation S-K, quantitative and qualitative disclosures about market risk are not required, and such are omitted from this filing.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As the Company qualifies as a smaller reporting company under Item 10(f) of Regulation S-K, quantitative and qualitative disclosures about market risk are not required, and such are omitted from this filing. 48 Table of Contents