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Debt, Net
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Debt, Net Debt, Net
The following table summarizes the components of Debt, net (in thousands):
Year Ended December 31,
20242023
Debt, net, current:
Sprott Credit Agreement$— $2,200 
Note payable54 130 
Total$54 $2,330 
Debt, net, non-current:
Sprott Credit Agreement, net of original issue discount of $1,913 and $10,500 as of December 31, 2024 and 2023, net of amortization, respectively
$13,087 $42,530 
Subordinated Notes112,190 101,639 
Note payable22 76 
Less, debt issuance costs(354)(1,628)
Total$124,945 $142,617 
The following table summarizes the Company’s contractual payments of Debt, net, including current maturities, for the five years subsequent to December 31, 2024 (in thousands):
2025$54 
202622 
2027127,190 
2028— 
2029— 
Total127,266 
Less, original issue discount, net of accumulated amortization ($18.4 million)
(1,913)
Less, debt issuance costs, net of accumulated amortization ($4.5 million)
(354)
Total debt, net$124,999 
Interest expense
The following table summarizes the components of recorded Interest expense (in thousands):
Year Ended December 31,
20242023
Subordinated Notes(1)
$10,551$9,565 
Amortization of original issue discount(2)
7,4732,227 
Sprott Credit Agreement(3)
1,7956,206 
Amortization of debt issuance costs(2)
148463 
Other interest expense26
Total$19,969 $18,467 
(1)    The Subordinated Notes bear interest at 10.0% per annum (non-cash), payable in-kind on a quarterly basis.
(2)    As of December 31, 2024 and 2023, the effective interest rate for the amortization of the discount and issuance costs was 2.4% and 1.6%, respectively.
(3)    The Sprott Credit Agreement bears interest monthly at a floating rate of SOFR plus 0.26161% adjustment plus 6.00% and the current effective interest rate is 18.1% including amortization.
Debt covenants
The Company’s debt agreements contain representations and warranties, events of default, restrictions and limitations, reporting requirements, and covenants that are customary for agreements of these types.
As of December 31, 2024 and 2023, the Company was in compliance with all financial covenants under its debt agreements.
Sprott Credit Agreement
On October 4, 2019, the Company, as borrower, certain subsidiaries of the Company, as guarantors, and the Lender, as arranger, executed a secured multi-advance term credit facility. Under this agreement, the Lender committed to providing term loans totaling up to $110.0 million, subject to specified conditions.
On May 29, 2020, the Company entered into the Sprott Credit Agreement to update the conditions precedent and effect certain other changes to conform to the details of the business combination. On the same date, at the consummation of the business combination transaction (the “Recapitalization Transaction”), the Company borrowed $70.0 million, representing the amount available under the first and second tranches. Additionally, the Company issued the Lender 49,663 shares of common stock, equal to 1.0% of the Company’s post-closing shares of common stock outstanding. The Company also paid an original issuance discount equal to 2.0% ($1.4 million) of the amount borrowed.
Advances under the Sprott Credit Agreement bear interest monthly at a floating rate equal to 7.0% plus the greater of (i) U.S. Dollar three-month LIBOR and (ii) 1.5%, per annum, compounded monthly.
For each three-month period from February 28, 2021, through the maturity date, the Company was required to pay the Lender additional interest on the last business day of the period. This interest was calculated based on a formula outlined in the Sprott Credit Agreement and was initially equal to $0.5 million per quarter, totaling $9.3 million over the life of the agreement.
The Company was required to make principal repayments beginning on August 31, 2021, and on the last business day every three months thereafter. The first four principal repayments were equal to 2.5% of the outstanding principal amount of the Sprott Credit Agreement on May 31, 2021 (including all capitalized interest thereon, if any, but excluding the principal repayment then due). Subsequent principal repayments increased to 7.5% of the outstanding principal amount of the Sprott Credit Agreement on May 31, 2021 (including all capitalized interest thereon, if any, but excluding the principal repayment then due).
The Company is required to make prepayments of its outstanding principal balance equal to 50% or 100% of the proceeds received as outlined in the Sprott Credit Agreement. The Company reviewed the features of the Sprott Credit Agreement for embedded derivatives and determined no such instruments exist.
As of January 5, 2024, the Company voluntarily pre-paid $34.7 million of the first lien loan, along with $3.3 million for the additional interest (as defined in the Sprott Credit Agreement) balance, totaling $38.0 million.
Second Amendment to the Second Amended and Restated Credit Agreement (“Second A&R Agreement”)
The Company entered into the Second Amended and Restated Credit Agreement (“Second A&R Agreement”) on March 30, 2022, which: (i) extended the loan maturity date to May 31, 2027; (ii) required prepayments of $10.0 million and $13.9 million from equity proceeds; (iii) eliminated prepayment premiums on these and future principal prepayments; (iv) increased the required minimum unrestricted cash balance to $15.0 million; (v) allowed asset sale prepayment obligations to be offset by $23.9 million of prior equity proceeds; (vi) included a $3.3 million fee, which was capitalized to principal; and (v) a $0.5 million deferred interest payment. The Company accounted for the Second A&R Agreement as a debt modification, as the changes did not result in debt that was substantially different.
On July 1, 2023, the Company entered into the Second Amendment to the Second A&R Agreement, by and between the Company, Sprott Private Resource Lending II (Collector), LP (the “Lender”), Sprott Resource Lending Corp. (“Arranger” and together with the Lender, the “Sprott Parties”), and certain subsidiaries of the Company as guarantors. The Second Amendment to the Second A&R Agreement amends the Second A&R Agreement dated March 30, 2022, which in turn amended the Amended and Restated Credit Agreement, dated as of May 29, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Sprott Credit Agreement”).
The Second Amendment to the Second A&R Agreement: (i) corrects a cross-reference error; and (ii) implements a replacement of LIBOR with three-month Secured Overnight Financing Rate (“SOFR”) effective July 1, 2023.
Subordinated Notes
In connection with the business combination and pursuant to a 1.25 Lien Exchange Agreement, on May 29, 2020, the Company assumed $80.0 million in aggregate principal amount of HMC’s 1.25 Lien Notes that were exchanged as part of the Recapitalization Transaction. The Subordinated Notes are secured and subordinate in priority to the obligations under the Sprott Credit Agreement. The Subordinated Notes bear interest at a rate of 10.0% per annum, payable in-kind on a quarterly basis. The principal on the new Subordinated Notes is due December 1, 2025.
On November 28, 2022, the Company entered into a Note Purchase and Sale Agreement (the “Highbridge Agreement”) with Highbridge MSF International Ltd. (“Highbridge”) whereby the Company agreed to purchase and Highbridge agreed to sell, $11.1 million (including $0.2 million in accrued unpaid interest) of Subordinated Notes. 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. As a result of the Highbridge Agreement, the Company recorded a Gain on extinguishment of debt of $5.0 million which represented the difference between the carrying value of the Subordinated Notes of $11.1 million and the total consideration paid, including legal fees, of $6.1 million. The purchase of the Subordinated Notes represented a discount of approximately 42% to the face value of the debt.
Amendment to the 10% Senior Secured Notes and Note Exchange Agreement
On March 14, 2022, the Company amended its 10% Senior Secured Notes and Note Exchange Agreement (the “Note Amendment”), extending the maturity of Subordinated Notes to December 1, 2027, and eliminating the consent requirement for note transfers. The amendment became effective upon the receipt of $55.9 million in gross cash proceeds from a private placement (before fees and expenses). The Company accounted for the amendment as a debt modification. A $1.8 million fee was incurred in connection with the amendment. No new covenants were introduced.
2023 Waiver and Amendment
On March 9, 2023, the Company entered into a letter agreement (the “2023 Waiver and Amendment”), by and between the Company, the Lender, and Sprott Private Resource Lending II (Co) Inc. (“SPRL II” and together with the Lender, the “Sprott Parties”). Pursuant to the terms of the Sprott Credit Agreement, the Company agreed that while any indebtedness is outstanding under the Sprott Credit Agreement or while the credit facility under the Sprott Credit Agreement remains available to the Company, the Company and guarantors under the Sprott Credit Agreement would not undertake certain corporate actions without the Lender’s prior written consent.