Company Overview

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Hycroft Mining Holding Corporation (formerly known as Mudrick Capital Acquisition Corporation ("MUDS")) and its subsidiaries (collectively, “Hycroft”, the “Company”, “we”, “us”, “our”, "it", "HYMC") is a U.S.-based gold and silver company that is focused on operating and developing its wholly owned Hycroft Mine in a safe, environmentally responsible, and cost-effective manner. The Hycroft Mine is located in the State of Nevada and the corporate office is located in Denver, Colorado.

The Company restarted pre-commercial scale open pit mining operations at the Hycroft Mine during the second quarter of 2019 and began producing and selling gold and silver during the third quarter of 2019. The Company's operating plan to date has been primarily focused on developing the proprietary two-stage heap oxidation and leach process detailed in the Hycroft Technical Report Heap Leaching Feasibility Study, prepared in accordance with the requirements of the Modernization of Property Disclosures for Mining Registrants, with an effective date of July 31, 2019 (the “2019 Technical Report”) and advancing evaluations and developing technical studies for milling sulfide ore so that the Company can evaluate alternative processing technologies. Based upon the Company's findings to date, including an analysis completed by an independent third-party research laboratory and independent reviews by two metallurgical consultants, the Company does not believe the Novel Process, as currently designed in the 2019 Technical Report, is economic at current metal prices or those metal prices used in the 2019 Technical Report. Additionally, as announced on November 10, 2021, as a result of current and expected ongoing cost pressures for many of the reagents and consumables used at the Hycroft Mine, and the timeline for completing the updated technical studies in early 2022, effective immediately the Company is discontinuing pre-commercial scale mining at its run-of-mine ("ROM") operation. The Company will continue producing gold and silver from ore on the leach pads as long as it is economic and will right-size the workforce to meet ongoing operational requirements. As a result, the Company is focusing its study efforts and resources on the necessary technical studies for milling sulfide ore and plans to file a new technical report prior to or concurrent with the filing of its Annual Report on Form 10-K for the year ended December 31, 2021, that will include associated mineral reserves and mineral resources.

On May 29, 2020, the Company consummated the Recapitalization Transaction (as defined below) as contemplated by a purchase agreement dated January 13, 2020, as amended on February 26, 2020 (the “Purchase Agreement”), by and among the Company, MUDS Acquisition Sub, Inc. (“Acquisition Sub”) and Hycroft Mining Corporation ("Seller"). Pursuant to the Purchase Agreement, Acquisition Sub acquired all of the issued and outstanding equity interests of the direct subsidiaries of Seller and substantially all of the other assets of Seller and assumed substantially all of the liabilities of Seller in a business combination and reverse recapitalization transaction (the "Recapitalization Transaction"). See Note 3 - Recapitalization Transaction for further details.

Restatement of Previously Issued Financial Statements

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled "Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Statement”). Specifically, the SEC Statement clarified guidance for all SPAC-related companies regarding the accounting and reporting for their warrants and focused in part on provisions in warrant agreements that provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder, and because the holder of such warrants would not be an input into the pricing of a fixed-for-fixed option on equity shares, such provision would preclude such warrants from being classified in equity and thus such warrants should be classified as a liability.

As previously disclosed in the Company's Annual Report on Form 10-K/A, as filed on May 14, 2021 (“2020 Form 10-K/A”), the Company restated its previously issued consolidated financial statements and accompanying notes as of and for the year ended December 31, 2020, to make the necessary accounting corrections related to warrant accounting and to recognize certain warrants as a liability instead of as equity, in accordance with Accounting Standards Codification (“ASC”) 815-40, Contracts in Entity’s Own Equity. As a smaller reporting company that was not required to include quarterly financial information in the 2020 Form 10-K/A, the Company did not amend its previously issued Quarterly Reports on Form 10-Q for any period prior to December 31, 2020. The Company restated the condensed consolidated financial statements for the three and nine months ended September 30, 2020, as reflected below.

The following presents the restated condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020. The condensed consolidated statement of stockholders' equity reflects the restatement adjustments presented in the consolidated Balance Sheets presented below.


HYCROFT MINING HOLDING CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (dollars in thousands)
	September 30, 2020
	As Previously Reported		Restatement Adjustment		As Restated
Total assets	$	173,186	$	—	$	173,186
Liabilities:
Current liabilities	$	28,649	$	—	$	28,649
Other liabilities	1,893		(190)		1,703
Debt, net	140,959		—		140,959
Deferred gain on sale of royalty	29,812		—		29,812
Asset retirement obligation	4,654		—		4,654
Warrant liabilities	—		16,461		16,461
Total liabilities	$	205,967	$	16,271	$	222,238
Stockholders' deficit:
Common stock	$	5	$	—	$	5
Additional paid-in capital	465,103		(12,185)		452,918
Accumulated deficit	(497,889)		(4,086)		(501,975)
Total stockholders' deficit	$	(32,781)	$	(16,271)	$	(49,052)
Total liabilities and stockholders' deficit	$	173,186	$	—	$	173,186


HYCROFT MINING HOLDING CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (dollars in thousands)
	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	As Previously Reported		Restatement Adjustment		As Restated		As Previously Reported		Restatement Adjustment		As Restated
Revenue	$	12,291	$	—	$	12,291	$	31,051	$	—	$	31,051
Total cost of sales	(25,770)		—		(25,770)		(81,501)		—		(81,501)
Operating expenses	(11,135)		—		(11,135)		(23,760)		—		(23,760)
Loss from operations	(24,614)		—		(24,614)		(74,210)		—		(74,210)
Other (expense) income:
Interest expense, net of capitalized interest	(4,319)		—		(4,319)		(39,278)		—		(39,278)
Fair value adjustment to warrants	(190)		(3,164)		(3,354)		(190)		(4,086)		(4,276)
Interest income	9		—		9		156		—		156
Net loss	$	(29,114)	$	(3,164)	$	(32,278)	$	(113,522)	$	(4,086)	$	(117,608)


HYCROFT MINING HOLDING CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in thousands)
	Nine Months Ended September 30, 2020
	As Previously Reported		Restatement Adjustment		As Restated
Net loss	$	(113,522)	$	(4,086)	$	(117,608)
Adjustments to reconcile net loss for the period to net cash used in operating activities:
Non-cash portion of interest expense	34,696		—		34,696
Write-down of production inventories	17,924		—		17,924
Depreciation and amortization	4,250		—		4,250
Stock-based compensation	1,991		—		1,991
Fair value adjustment to warrants	190		4,086		4,276
Accretion	280		—		280
Impairment on equipment not in use - Note 5	5,331		—		5,331
Phantom share compensation	225		—		225
Changes in operating assets and liabilities	(36,577)		—		(36,577)
Net cash used in operating activities	(85,212)		—		(85,212)
Net cash used in investing activities	(19,237)		—		(19,237)
Cash flows from financing activities:	106,641		—		106,641
Net increase in cash and restricted cash	2,192		—		2,192
Cash and restricted cash, beginning of period	48,967		—		48,967
Cash and restricted cash, end of period	$	51,159	$	—	$	51,159
Total cash and restricted cash	$	51,159	$	—	$	51,159