Financial Performance Overview

The company reported a net loss of $20.7 million in the first quarter of 2024, compared to a net loss of $13.9 million in the first quarter of 2023. The increased net loss was primarily driven by higher interest expense related to the company’s debt.

The company is currently not generating revenue as mining operations were ceased in 2022 after recovering all accessible gold and silver from the leach pad. The company is now focused on further exploration and technical studies to optimize the development plan for processing sulfide ores at the Hycroft mine. Potential by-product revenue opportunities are also being evaluated, including sulfuric acid production and green electricity co-generation.

Key Expenses

Projects, exploration, and development costs increased by $1.4 million year-over-year to $4.9 million. This reflects ongoing analysis from the 2022-2023 exploration program and the start of the 2024 exploration drilling program.

Expense	Q1 2024	Q1 2023
Projects, Exploration & Development	$4.9 million	$3.5 million
General & Administrative	$2.9 million	$3.3 million
Mine Site Period Costs	$2.6 million	$3.8 million
Asset Retirement Obligation Adjustment	$2.0 million	$0

General and administrative costs decreased due to reduced legal/accounting and contractor expenses. Mine site period costs declined with lower site maintenance and administration activities compared to 2023. A $2.0 million asset retirement obligation adjustment was also recorded in 2024.

Interest Expense and Debt

Interest expense increased significantly to $10.1 million, from $4.4 million in Q1 2023. This was driven by $6.9 million in accelerated amortization of debt issuance costs due to the prepayment of $38 million of first lien debt in January 2024.

The company had total debt principal repayments of $95.2 million due over the next 5+ years as of March 31, 2024. This includes the remaining $15 million outstanding on the first lien loan.

Cash Flows and Liquidity

The company used $11.7 million in operating activities during Q1 2024. Cash and cash equivalents declined from $106.2 million at December 31, 2023 to $57.6 million at March 31, 2024.

Additional sources of potential liquidity include $7 million in assets held for sale, a $1.5 million income tax receivable, and $26.6 million of restricted cash collateralizing reclamation bonds.

The company will require additional capital from either debt or equity issuances to fund the future development of the Hycroft mine. Controlling costs, capital spending, and discretionary expenses continues to be a priority.

Outlook

Key areas of focus in 2024 include:

• Continuing exploration drilling and analysis
• Completing technical studies on processing sulfide ores
  
• Assessing potential by-product revenue opportunities
• Maintaining safe ongoing operations

Updates will be provided as more information becomes available on the anticipated timing and costs for developing a sulfide ore processing operation.

The company believes improving gold and silver recoveries through alternative processing methods could significantly improve the economic viability of the Hycroft mine. By-product revenue from sulfuric acid production and other opportunities are also being evaluated.

Careful liquidity management will enable advancement of these crucial development initiatives while retaining the flexibility to respond to changes in the commodity price environment.

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