Hycroft Mining (HYMC) - 2025 Q1 - Quarterly Report

Part I - Financial Information Financial Statements The company's financial statements for the quarter ended March 31, 2025, reflect a net loss of $11.8 million, an improvement from the $20.7 million loss in the prior-year period, with total assets decreasing to $129.3 million and stockholders' deficit widening to $44.5 million Condensed Consolidated Balance Sheets As of March 31, 2025, the company's total assets were $129.3 million, a decrease from $140.1 million at year-end 2024, primarily due to a reduction in cash and cash equivalents, resulting in an increased total stockholders' deficit of $44.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $39,688 | $49,560 | | Total current assets | $44,009 | $54,600 | | Total assets | $129,327 | $140,135 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $2,722 | $5,794 | | Total liabilities | $173,833 | $173,550 | | Total stockholders' deficit | $(44,506) | $(33,415) | | Total liabilities and stockholders' deficit | $129,327 | $140,135 | Unaudited Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, the company reported a net loss of $11.8 million, or $(0.47) per share, a significant improvement compared to a net loss of $20.7 million, or $(1.00) per share, for the same period in 2024, driven by lower exploration costs and reduced interest expense Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Loss from operations | $(9,222) | $(11,928) | | Interest expense | $(3,387) | $(10,119) | | Net loss | $(11,759) | $(20,749) | | Loss per share (basic and diluted) | $(0.47) | $(1.00) | Unaudited Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash used in operating activities was $9.7 million, with minor investing outflows and $0.2 million from financing activities, resulting in a net decrease of $9.6 million in total cash, cash equivalents, and restricted cash, bringing the end-of-period balance to $67.4 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,695) | $(11,733) | | Net cash (used in) provided by investing activities | $(114) | $245 | | Net cash provided by (used in) financing activities | $182 | $(36,863) | | Net decrease in cash, cash equivalents, and restricted cash | $(9,627) | $(48,351) | Notes to Unaudited Condensed Consolidated Financial Statements The notes disclose critical information, including the company's operational status, financial condition, and accounting policies, highlighting the cessation of mining operations, a going concern warning, debt covenant compliance, and ongoing exploration for its Nevada-based Hycroft Mine - The company discontinued mining operations in November 2021 and is currently focused on exploration, data analysis, and advancing technical studies to determine the optimal processing method for sulfide ores[24] - The financial statements were prepared on a going concern basis, but management has identified substantial doubt about the Company's ability to continue as a going concern due to significant operating losses and dependence on raising additional capital[27][29] - The company is subject to debt covenants under the Sprott Credit Agreement that require it to maintain Unrestricted Cash of at least $15.0 million and Working Capital of at least $10.0 million[28] - Through its at-the-market (ATM) program, the company sold 108,072 shares for net proceeds of $0.2 million in Q1 2025, with $97.5 million remaining available for issuance under the program[25] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on exploration and development following the 2021 cessation of mining, highlighting a reduced net loss in Q1 2025 driven by lower exploration and interest expenses, with liquidity remaining a key concern dependent on existing cash and capital raising efforts to fund operations and meet debt covenants Executive Summary and Recent Developments In Q1 2025, the company focused on analyzing data from its 2024 drill program and advancing metallurgical test work for its sulfide ore, identifying significant improvements in gold and silver flotation recoveries and new high-potential exploration targets, while continuing to strengthen its balance sheet through strategic initiatives - The company is analyzing results from the 2024 exploration drill program and conducting metallurgical and variability test work to follow up on the 2023 Technical Report Summary (TRS)[95] - Analysis of the 2024 drill program has led to the understanding that high-grade trends are influenced by structure, identifying new high-potential targets named Manganese and Bay[97] - Ongoing metallurgical test work has identified significant improvements in gold and silver flotation recoveries compared to the current technical report, potentially increasing economic benefits[98] 2025 Outlook Subject to securing sufficient funding, the company's 2025 plans include assessing a high-grade underground mining scenario, executing a follow-up exploration program budgeted at approximately $4.0 million, and finalizing engineering and trade-off studies aimed at optimizing the process flow sheet, with an updated technical report anticipated in the second half of 2025 - Key 2025 plans, subject to funding, include assessing a high-grade underground mining scenario and executing a follow-up exploration program[99] - The next exploration program is designed to test high-grade silver trends and new targets, with a budget of approximately $4.0 million[100] - An updated technical report is anticipated in the second half of 2025, following the completion of trade-off studies and alternative analyses[101] Results of Operations The company's loss from operations for Q1 2025 decreased to $9.2 million from $11.9 million in Q1 2024, primarily due to a $1.9 million reduction in exploration costs from cash conservation measures and a $1.9 million decrease in asset retirement obligation expense, with interest expense also falling significantly by $6.7 million due to accelerated amortization related to a debt prepayment in the prior-year period Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Exploration and development costs | $2,999 | $4,903 | | General and administrative costs | $2,933 | $2,913 | | Mine site costs | $2,469 | $2,584 | | Asset retirement obligation adjustments and accretion expense | $333 | $2,223 | | Total Operating Expenses (Loss from operations) | $(9,222) | $(11,928) | - Exploration and development costs decreased by $1.9 million due to reduced exploration drilling driven by cash conservation measures[104] - Interest expense decreased by $6.7 million, primarily because the prior year included $6.9 million of accelerated amortization of original issue discount and issuance costs related to voluntary debt prepayments[112] Liquidity and Capital Resources The company's liquidity position weakened, with unrestricted cash falling to $39.7 million at March 31, 2025, and as it does not expect positive cash flow from operations, it remains dependent on its cash reserves and ability to raise capital, actively managing liquidity through cost controls and evaluating financing alternatives while adhering to debt covenants requiring minimum unrestricted cash of $15.0 million and working capital of $10.0 million - The company's unrestricted cash position was $39.7 million at March 31, 2025, down from $49.6 million at December 31, 2024[113] - The company does not expect to generate net positive cash from operations for the foreseeable future and is dependent on its unrestricted cash and other sources to fund the business[113] - The Sprott Credit Agreement requires the company to maintain, at all times, both Working Capital and Unrestricted Cash of at least $15.0 million[130] Contractual Cash Obligations as of March 31, 2025 (in thousands) | Obligation | Total | Less than 1 Year | 1 - 3 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | | Sprott Royalty Agreement | $241,199 | $— | $— | $241,199 | | Remediation and reclamation | $110,963 | $179 | $9,944 | $100,840 | | Interest payments | $3,822 | $1,764 | $2,058 | $— | | Repayments of debt principal | $164,781 | $28 | $164,753 | $— | | Total | $525,109 | $1,971 | $176,755 | $346,383 | Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Hycroft is not required to provide quantitative and qualitative disclosures about market risk, and this information has been omitted from the report - The Company qualifies as a smaller reporting company, and therefore, quantitative and qualitative disclosures about market risk are not required[139] Controls and Procedures Based on an evaluation as of March 31, 2025, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective, with no significant changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[142] - There were no significant changes in internal control over financial reporting during the quarter ended March 31, 2025[144] Part II - Other Information Legal Proceedings The company is a defendant in several pro se lawsuits related to warrant agreements, with one individual action discontinued, and has determined that a loss is not probable nor reasonably estimable, resulting in no recorded liability - The Company is a defendant in four pro se individual and/or putative class/derivative actions related to warrant agreements, with one lawsuit discontinued[78] - The company has assessed the legal proceedings and determined that a loss was not probable nor reasonably estimable, resulting in no litigation accruals being recorded[79] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the quarter - None reported for the period[147] Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the quarter - None reported for the period[148] Mine Safety Disclosures The company maintains a strong focus on mine safety, with a goal of zero workplace injuries, reporting no lost time incidents during Q1 2025 and operating for over 1.2 million man-hours without such an incident, resulting in a trailing 12-month Total Recordable Injury Frequency Rate (TRIFR) of 0.00 as of March 31, 2025 - The company reported no lost time incidents during the three months ended March 31, 2025, and has operated in excess of 1.2 million man-hours without a lost time incident[94] - The Hycroft Mine's total recordable injury frequency rate (TRIFR) for the trailing 12 months was 0.00 at March 31, 2025[94] - Detailed information concerning mine safety violations or other regulatory matters is included in Exhibit 95.1 of the report[150] Other Information The company reported no other material information for the quarter, with no material changes to director nominee recommendation procedures and no directors or officers adopting or terminating a Rule 10b5-1 trading plan - During the quarter, no director or officer of the Company adopted or terminated a Rule 10b5-1(c) trading plan or a non-Rule 10b5-1 trading arrangement[151] Exhibits This section provides a list of all exhibits filed with the Quarterly Report on Form 10-Q, including amendments to employment agreements, CEO and CFO certifications, mine safety disclosures, and interactive data files (XBRL) - The report includes exhibits such as amendments to employment agreements, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), Mine Safety Disclosures (Exhibit 95.1), and Inline XBRL documents[152]