i-80 Gold (IAUX) - 2024 Q2 - Quarterly Report

Financial Statements Condensed Consolidated Interim Statements of Financial Position As of June 30, 2024, i-80 Gold Corp. reported total assets of $758.4 million, an increase from $723.7 million at year-end 2023, primarily driven by a significant rise in cash and cash equivalents to $47.8 million. Total liabilities decreased slightly to $292.1 million from $297.4 million. Total equity increased to $466.3 million from $426.3 million, largely due to an increase in share capital, despite a growing deficit Statement of Financial Position Highlights (in millions of USD) | Financial Metric | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $758.4 | $723.7 | +4.8% | | Cash and cash equivalents | $47.8 | $16.3 | +193.7% | | Property, plant and equipment | $647.3 | $638.6 | +1.4% | | Total Liabilities | $292.1 | $297.4 | -1.8% | | Current portion of long-term debt | $92.7 | $88.4 | +4.9% | | Long-term debt | $86.7 | $91.9 | -5.7% | | Total Equity | $466.3 | $426.3 | +9.4% | | Share capital | $582.4 | $489.3 | +19.0% | | Deficit | ($134.9) | ($82.3) | +63.8% | Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three and six months ended June 30, 2024, the company reported significant net losses. The second quarter net loss widened to $36.8 million from $16.0 million year-over-year, driven by a higher mine operating loss and increased finance expenses. For the first half of the year, the net loss increased to $52.5 million from $29.1 million in the prior year period. Basic and diluted loss per share for the six-month period was $0.16, compared to $0.11 in H1 2023 Income Statement Summary (in millions of USD, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $7.18 | $11.31 | $15.60 | $15.86 | | Mine operating loss | ($11.88) | ($3.60) | ($11.75) | ($7.02) | | Loss before income taxes | ($36.83) | ($20.20) | ($52.55) | ($37.02) | | Loss and comprehensive loss | ($36.83) | ($15.96) | ($52.55) | ($29.08) | | Basic and diluted loss per share | ($0.10) | ($0.06) | ($0.16) | ($0.11) | Condensed Consolidated Interim Statements of Cash Flows For the six months ended June 30, 2024, cash used in operating activities was $42.9 million, a slight increase from $39.4 million in the prior year period. Cash used in investing activities decreased significantly to $4.0 million from $28.4 million. Cash provided by financing activities surged to $78.0 million, primarily due to proceeds from share issuances, compared to $38.8 million in H1 2023. This resulted in a net increase in cash of $31.2 million, ending the period with $47.8 million in cash and cash equivalents Cash Flow Summary for the Six Months Ended June 30 (in millions of USD) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in operating activities | ($42.90) | ($39.36) | | Cash used in investing activities | ($3.96) | ($28.35) | | Cash provided by financing activities | $78.01 | $38.76 | | Change in cash and cash equivalents | $31.16 | ($28.95) | | Cash and cash equivalents, end of period | $47.81 | $19.36 | - Financing activities in H1 2024 were driven by $83.5 million from a brokered placement and $17.4 million from an equity financing, which significantly boosted the company's cash position[7] Condensed Consolidated Interim Statements of Changes in Equity Total equity increased from $426.3 million at December 31, 2023, to $466.3 million at June 30, 2024. The increase was primarily driven by the issuance of shares from a brokered placement ($74.6 million) and a private placement ($17.4 million). This was partially offset by a net loss for the period of $52.5 million and share issue costs of $4.5 million Equity Reconciliation for the Six Months Ended June 30, 2024 (in millions of USD) | Description | Amount | | :--- | :--- | | Balance as at December 31, 2023 | $426.26 | | Shares issued in brokered placement | $74.64 | | Shares issued in private placement | $17.44 | | Share issue costs | ($4.48) | | Loss for the period | ($52.55) | | Other (exercises, payments, etc.) | $4.97 | | Balance as at June 30, 2024 | $466.29 | Notes to the Condensed Consolidated Interim Financial Statements Note 1: Nature of Operations i-80 Gold Corp. is a Nevada-focused gold and silver producer involved in the exploration, development, and production of precious and poly-metallic deposits. The company's main assets, all wholly-owned, are the Ruby Hill Mine, Lone Tree Mine, Granite Creek Mine, and the McCoy-Cove Project. Its shares are listed on the TSX (IAU) and NYSE (IAUX) - The company is a growth-oriented gold and silver producer with a strategic focus on assets located entirely within Nevada[9] Note 2: Basis of Preparation The financial statements are prepared in accordance with IAS 34 for interim reporting. Management has identified material uncertainties that cast significant doubt on the company's ability to continue as a going concern due to a working capital deficit and operating losses. The company adopted amendments to IAS 1, resulting in the reclassification of certain long-term liabilities to current. Additionally, the company will transition from IFRS to US GAAP starting January 1, 2025, as it no longer qualifies as a foreign private issuer - Material uncertainties exist regarding the company's ability to continue as a going concern, dependent on its success in obtaining additional financing[13] - The company adopted amendments to IAS 1 retrospectively, which resulted in a significant reclassification of long-term debt and other liabilities to current liabilities as of December 31, 2023[18] - Effective January 1, 2025, the company will be required to prepare its financial statements using US GAAP, as it no longer qualifies as a foreign private issuer under SEC rules[23] Note 4: Corporate Transactions During the first half of 2024, the company engaged in significant corporate activities, including a bought deal public offering in May that raised gross proceeds of approximately $83.5 million. It also amended its Gold Prepay and Silver Purchase agreements with Orion Mine Finance to extend delivery deadlines. Additionally, a non-brokered private placement of common shares was completed, raising $17.4 million Bought Deal Public Offering On May 1, 2024, the company completed a bought deal public offering, issuing 69.7 million units at C$1.65 per unit for gross proceeds of C$115 million (approx. $83.5 million). Each unit consisted of one common share and one-half of a common share purchase warrant, with each whole warrant exercisable at C$2.15 for 48 months - Completed a bought deal public offering on May 1, 2024, raising gross proceeds of C$115.0 million ($83.5 million) through the sale of 69.7 million units[25] - The offering included 34.8 million warrants, which are treated as derivative liabilities because their exercise price is in C$. Of the gross proceeds, $8.9 million was allocated to the warrant liability[26] Amendments to Orion Agreements On April 24, 2024, the company amended its Gold Prepay and Silver Purchase agreements with Orion. The amendments extended the deadlines for outstanding deliveries and provided options to defer 2024 delivery obligations to 2025, subject to certain conditions and multipliers on the deferred quantities. The company paid amendment fees of $0.5 million for the gold agreement and $0.25 million for the silver agreement - The Second A&R Gold Prepay Agreement extended the April 15, 2024 delivery deadline to May 10, 2024, and allows for the deferral of 2024 quarterly deliveries to September 30, 2025, with a 1.15x or 1.19x multiplier on the deferred quantity[28][29] - The Amended Silver Purchase Agreement also extended the April 15, 2024 delivery deadline to May 10, 2024, and allows for the deferral of the 2024 minimum delivery amount to September 30, 2025, with a 1.07x or 1.11x multiplier[32][33] Private Placement of Common Shares During the first quarter of 2024, the company completed a non-brokered private placement, issuing 13,064,204 common shares at C$1.80 per share for aggregate gross proceeds of C$23.5 million ($17.4 million) - Raised C$23.5 million ($17.4 million) in Q1 2024 through a non-brokered private placement of over 13.1 million common shares[36] Note 5: Inventory Total inventory increased to $13.6 million as of June 30, 2024, from $11.4 million at the end of 2023. During the first half of 2024, the company recognized an inventory write-down of $8.8 million related to Granite Creek mined material, which was included in the cost of sales Inventory Breakdown (in millions of USD) | Category | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Ore in stockpiles and on leach pads | $6.55 | $7.61 | | Work-in-process | $0.73 | $0.78 | | Finished goods | $3.04 | $0.90 | | Materials and supplies | $3.26 | $2.10 | | Total inventory | $13.58 | $11.39 | - The company recognized an inventory write-down of $8.8 million for the six months ended June 30, 2024, relating to Granite Creek mined material[42] Note 8: Property, Plant and Equipment The carrying amount of property, plant, and equipment (PP&E) increased to $647.3 million at June 30, 2024, from $638.6 million at year-end 2023. Additions during the first half of 2024 totaled $15.9 million, primarily in development properties. This was partially offset by a $5.2 million reduction due to changes in the estimate for environmental rehabilitation provisions. In Q1 2024, the company made a final contingent payment of $5.0 million related to the Granite Creek Project acquisition, which was recorded in PP&E PP&E Carrying Amounts (in millions of USD) | Category | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Development properties | $133.97 | $119.54 | | Exploration, evaluation and pre-development | $284.09 | $289.23 | | Buildings, plant and equipment | $229.25 | $229.86 | | Total Carrying Amount | $647.31 | $638.63 | - In Q1 and Q2 2024, the company satisfied the final $5.0 million contingent 'Price Payment' to Waterton for the Granite Creek Project acquisition, consisting of $3.6 million in shares and $1.4 million in cash. This payment was capitalized to property, plant and equipment[55] Note 9: Long-Term Debt As of June 30, 2024, total long-term debt was $179.4 million, a slight decrease from $180.3 million at year-end 2023. The debt portfolio includes convertible loans from Orion and Sprott, convertible debentures, a Gold Prepay Agreement, and a Silver Purchase Agreement. Due to the application of IAS 1 amendments, the Orion and Sprott convertible loans, totaling $61.8 million, are classified as current liabilities despite their 2025 maturity dates. The company made principal repayments of $17.4 million during the first half of 2024 Long-Term Debt Breakdown (in millions of USD) | Instrument | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Orion Convertible Loan | $52.66 | $47.97 | | Sprott Convertible Loan | $9.12 | $8.47 | | Convertible Debentures | $54.59 | $49.77 | | Gold Prepay Agreement | $40.14 | $43.83 | | Silver Purchase Agreement | $22.60 | $29.66 | | Other | $0.26 | $0.57 | | Total | $179.37 | $180.27 | | Less current portion | ($92.68) | ($88.38) | | Long-term portion | $86.70 | $91.90 | - The Orion and Sprott Convertible Loans have been reclassified to current liabilities due to amendments to IAS 1, as holders can demand settlement in shares at any time[60][65] - During Q2 2024, the company delivered 4,223 troy ounces of gold to Orion, satisfying the extended March 31 delivery and partially satisfying the June 30 delivery. It also delivered 394,605 ounces of silver, satisfying the 2023 shortfall[74][80] Note 10: Provision for Environmental Rehabilitation The provision for environmental rehabilitation decreased to $67.6 million at June 30, 2024, from $71.5 million at the end of 2023. The decrease was mainly due to a $5.2 million change in estimate that was capitalized to assets. The undiscounted, un-inflated cash flow estimate to settle the provision is $96.2 million, with the largest portion ($66.0 million) related to the Lone Tree property Reconciliation of Environmental Provision (in millions of USD) | Description | Amount | | :--- | :--- | | Balance as at January 1, 2024 | $71.52 | | Change in estimate capitalized | ($5.21) | | Accretion expense | $1.50 | | Reclamation expenditures | ($0.24) | | Balance as at June 30, 2024 | $67.57 | Note 11: Other Liabilities Total other liabilities increased to $23.1 million at June 30, 2024, from $18.5 million at year-end 2023. The increase was primarily driven by a higher warrant liability (from $4.5 million to $9.3 million) following the May 2024 public offering, and larger embedded derivative liabilities related to the Gold Prepay and Silver Purchase agreements. The conversion and change of control rights liabilities for the Orion and Sprott convertible loans decreased significantly Other Liabilities Breakdown (in millions of USD) | Liability | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Warrant liability | $9.33 | $4.47 | | Gold Prepay Agreement embedded derivative | $6.59 | $1.68 | | Silver Purchase Agreement embedded derivative | $3.40 | $0.00 | | Orion - Conversion/control rights | $1.16 | $9.03 | | Sprott - Conversion/control rights | $0.18 | $1.46 | | Share-based payment liability | $1.82 | $1.18 | | Total other liabilities | $23.12 | $18.45 | - The warrant liability increased due to the issuance of 34.8 million warrants in the May 2024 offering, which had an initial fair value of $8.9 million[90] Note 12: Share Capital As of June 30, 2024, the company had 384.9 million common shares issued and outstanding. During the first half of the year, the company issued 69.7 million shares in a bought deal offering, 13.1 million shares in a private placement, and 2.7 million shares as part of a contingent payment for the Granite Creek project. There were 10.9 million stock options and 48.2 million warrants outstanding at period end - Completed a bought deal public offering on May 1, 2024, issuing 69.7 million units (shares and half-warrants) for gross proceeds of C$115.0 million ($83.5 million)[99] - Completed a non-brokered private placement in Q1 2024, issuing 13.1 million shares for gross proceeds of C$23.5 million ($17.4 million)[100] Outstanding Options and RSUs/DSUs | Security | Outstanding at June 30, 2024 | | :--- | :--- | | Stock Options | 10,940,295 | | RSUs | 2,666,099 | | DSUs | 763,392 | Note 15: Exploration, Evaluation and Pre-development Exploration, evaluation, and pre-development expenses for the six months ended June 30, 2024, were $7.8 million, a significant decrease from $20.1 million in the same period of 2023. The reduction was primarily due to lower spending at the Ruby Hill and McCoy-Cove properties. Drilling expenses fell sharply from $13.0 million in H1 2023 to $3.1 million in H1 2024 Exploration Expenses by Property (Six Months Ended June 30, in millions of USD) | Property | 2024 | 2023 | | :--- | :--- | :--- | | McCoy-Cove, Nevada | $4.53 | $7.06 | | Granite Creek, Nevada | $2.42 | $0.41 | | Ruby Hill, Nevada | $0.63 | $11.54 | | Other | $0.27 | $1.07 | | Total | $7.85 | $20.07 | Note 17 & 18: Other Income (Expense) & Finance Expense For the six months ended June 30, 2024, the company recorded other income of $3.2 million, a sharp decrease from $21.7 million in H1 2023, mainly due to lower gains on warrants and convertible loan derivatives, and significant losses on gold and silver prepay derivatives. Finance expense increased to $19.2 million from $14.6 million year-over-year, driven by higher interest accretion on convertible instruments and prepay agreements Other Income (Expense) & Finance Expense (Six Months Ended June 30, in millions of USD) | Category | 2024 | 2023 | | :--- | :--- | :--- | | Other Income (Expense) | | | | Gain on warrants | $4.28 | $10.18 | | Gain on Convertible Loans derivative | $9.15 | $10.46 | | Loss on Gold Prepay derivative | ($4.92) | ($2.25) | | Loss on Silver Purchase derivative | ($5.30) | $0.45 | | Total other income (expense) | $3.23 | $21.66 | | Finance Expense | | | | Interest accretion (all instruments) | $16.60 | $12.71 | | Environmental rehabilitation accretion | $1.50 | $1.44 | | Total finance expense | $19.19 | $14.57 | Note 19: Segmented Information For the six months ended June 30, 2024, the Nevada Production segment (Ruby Hill, Lone Tree, Granite Creek) generated $15.6 million in revenue but recorded a loss of $20.4 million. The Exploration and Development segment (McCoy-Cove, FAD) had a loss of $5.1 million. The Corporate and other segment recorded a loss of $27.0 million, resulting in a total consolidated loss of $52.5 million for the period Segment Results for Six Months Ended June 30, 2024 (in millions of USD) | Segment | Revenue | Loss for the period | | :--- | :--- | :--- | | Nevada Production | $15.60 | ($20.43) | | Exploration and Development | $0.00 | ($5.08) | | Corporate and other | $0.00 | ($27.03) | | Total | $15.60 | ($52.55) | Note 20: Commitments As of June 30, 2024, i-80 Gold had outstanding surety bonds totaling $132.8 million. These bonds are in favor of U.S. and Nevada state agencies to provide financial support for environmental reclamation and exploration permitting. The largest bonds are for the Lone Tree project ($87.0 million) and the Ruby Hill property ($27.0 million), secured by a $39.5 million deposit - The company has $132.8 million in outstanding surety bonds for environmental reclamation, secured by a $39.5 million deposit[130] Note 21: Financial Instruments The company manages financial risks including credit, liquidity, and market risk. Liquidity risk is significant, with undiscounted contractual cash outflows of $62.9 million due within one year. The company uses various valuation techniques for its financial instruments, with many derivative liabilities, such as those related to convertible loans and prepay agreements, classified as Level 3 in the fair value hierarchy, requiring significant management judgment for valuation Contractual Maturities of Financial Liabilities (Undiscounted, in millions of USD) | Timing | Amount | | :--- | :--- | | Within 1 year | $62.93 | | 1-2 years | $97.19 | | 2-3 years | $95.15 | | Thereafter | $93.90 | | Total | $349.16 | - The company's derivative instruments, including conversion rights on loans and embedded derivatives in prepay agreements, are classified as Level 3 fair value items, indicating their valuation is based on unobservable inputs and significant management estimates[142][143][144] Note 23: Subsequent Events Subsequent to the reporting period, on August 12, 2024, the company established an at-the-market (ATM) equity program. This program allows the company to offer and sell common shares up to an aggregate offering price of $50 million from time to time through the TSX and NYSE American. The proceeds are intended for advancing exploration and development, debt repayment, and general corporate purposes - On August 12, 2024, the company implemented an at-the-market (ATM) equity program to sell up to $50 million of common shares[152] - Proceeds from the ATM program are designated for advancing the company's projects (McCoy Cove, Granite Creek, Lone Tree, Ruby Hill), debt repayment, and working capital[154]