Precious metals development company Hycroft Mining Holding Corp. (HYMC:NASDAQ), which owns and operates the Hycroft Mine located approximately 54 miles west of Winnemucca, Nev., today announced "a $56 million equity private placement with precious metals investor Eric Sprott and AMC Entertainment Holdings Inc. (AMC:NYSE)."
Hycroft Mining Holding's President, CEO and Acting Chairman Diane Garrett remarked, "We couldn't be more pleased to announce this transformational investment in the future of Hycroft, anchored by Eric Sprott, one of the world's leading precious metals investors, and AMC Entertainment Holdings, which has proven its expertise and ability to address liquidity challenges and to raise capital to optimize the value of significant underlying assets. Collectively, their investment dramatically improves Hycroft's liquidity position and provides years of financial runway."
"Additionally, their confidence underscores the world-class nature of Hycroft's gold and silver deposit and our potential to unlock value at a pivotal moment in its development. We look forward to working alongside our new investors to advance Hycroft up the value chain," Garrett added.
The company advised that the private placement is expected to close on or around March 15, 2022. Under the terms of the investment agreement, Mr. Sprott and AMC will both make a cash investment of $27.9 million in the company and in return will each receive 23,408,240 units, whereby each unit includes one Hycroft common share and one common share purchase warrant. The firm listed that the units are priced at $1.193 and the purchase warrants will be valid for five years at an exercise price of $1.068 per share.
The firm indicated that when the transaction is finalized Mr. Sprott and AMC will each own about 21.8% of Hycroft's outstanding common shares which will make them the second largest stockholders in the company. The company stated that under the terms of the investment AMC will be given the right to a appoint a representative to serve on Hycroft Mining's Board of Directors.
The company said that it plans to use the new capital raised for general corporate purposes for items such as working capital, debt restructuring, investments, capex, additional exploration and perhaps to advance the Initial Assessment in the Hycroft Mine's 2022 Technical Report Summary to a pre-feasibility and/or feasibility study.
In addition to the private placement the firm stated that it has taken steps to recapitalize its balance sheet which will provide it with greater flexibility going forward. The company reported that "it reached an agreement in principle with its primary lending partner, Sprott Private Resource Lending II (Collector), LP (Sprott), acting as Facility Agent, to extend all principal debt repayments to one bullet payment in May 2027, from current maturity date of May 2025, subject to $50 million of new equity, and upon payment of a $3.3 million lender interest adjustment which will be capitalized and added to the principal due upon maturity." The company pointed out the that the arrangement to extend the maturity date will include certain loan coverage conditions and covenants.
Hycroft advised that "it also reached an agreement with its other second lien holders whereby, subject to $50 million of new equity, they will extend the life of the loan by two years to December 2027 with continuing 10% annual payment-in-kind interest payments."
Hycroft Mining Holding Corp. is a U.S. gold and silver development firm that owns, explores, develops and operates the Hycroft Mine in Northern Nevada. The property encompasses approximately 72,000 acres and is located about 50 miles west of Winnemucca, Nev. on the western flank of the Kamma Mountains. The Hycroft Mine hosts a Measured & Indicated Resource of 446.0 Moz Ag and 9.65 Moz Au and an Inferred Resource of 150.4 Moz Ag and 5.0 Moz Au.
Hycroft Mining started the day with a market cap of around $84.0 million with approximately 60.41 million shares outstanding. HYMC shares opened nearly 95% higher today at $2.71 (+$1.32, +94.96%) over yesterday's $1.39 closing price. The stock has traded today between $1.53 and $2.72 per share and is currently trading at $1.58 (+$0.19, +13.67%).
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