Nevada-based precious metals development company Hycroft Mining has announced a $56m equity investment from precious metals investor Eric Sprott and AMC Entertainment Holdings.
Sprott and AMC will each invest $27.9m in cash in the mining firm in return for 23.4 million units, with each unit comprising one common share of Hycroft and one common share purchase warrant. These units are each priced at $1.193.
Commenting on the investment, Hycroft acting chairman, CEO and president Daine Garrett said: “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.”
With this capital injection, AMC has received the right to appoint a representative to Hycroft’s board of directors.
Sprott and AMC will become Hycroft’s second-largest stockholders. Each of them will hold 21.8% of the outstanding common shares of the mining firm.
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Hycroft plans to use the net proceeds from the placement for general corporate purposes, working capital or capital expenditures, and advance the initial assessment in the 2022 Technical Report Summary to a pre-feasibility and/or feasibility study, as well as undertake further exploration at the Hycroft mine in northern Nevada.
Meanwhile, Hycroft has agreed in principle with key lending partner Sprott Private Resource Lending II to extend all principal debt repayments from the present maturity date of May 2025 to one bullet payment in May 2027. This is subject to $50m of new equity, and following the payment of a $3.3m lender interest adjustment, which will be added to the principal on maturity.
The extension of the maturity date is subject to some loan coverage conditions.
Hycroft has also agreed with its second lien holders under which, subject to $50m of new equity, the life of the loan will be extended by two years to December 2027 with continuing 10% payment-in-kind interest annually.
The firm stated that it will continue to discuss its ability to reduce its debt obligations with its present lenders.