Executive Summary / Key Takeaways

• Hycroft Mining is strategically focused on unlocking the value of its world-class Hycroft Mine in Nevada, one of the largest precious metals deposits globally, by advancing technical studies for sulfide ore processing and aggressively exploring high-grade zones.
• Following the cessation of mining in late 2021 due to challenges with a prior novel process, the Company is evaluating proven technologies like Pressure Oxidation (POX), roasting, and milling, with an updated technical report anticipated in the second half of 2025 to define the optimal path forward.
• Recent exploration success has revealed significant high-grade silver and gold potential, fundamentally changing the perception of the deposit and prompting consideration of a smaller, high-grade start-up operation to potentially reduce initial capital and enhance early cash flows.
• Financially, Hycroft is in a development phase, incurring operating losses ($9.2 million loss from operations in Q1 2025) and dependent on external financing, while actively managing liquidity ($39.7 million unrestricted cash as of March 31, 2025) and exploring strategic alternatives to address its substantial debt burden.
• The investment thesis hinges on the successful outcome of technical studies, exploration results confirming high-grade potential, securing necessary funding, and effectively addressing the balance sheet challenges to transition from a development company to a producing mine.

The Hycroft Mine: A World-Class Asset in Transition

Hycroft Mining Holding Corporation (NASDAQ: HYMC) stands at a pivotal juncture in its history, centered around the Hycroft Mine in Northern Nevada. This asset is not merely a mine; it is a geological anomaly, boasting one of the world's largest precious metals deposits, including the largest silver resource in the United States, exceeding 700 million ounces, and the second largest U.S. gold resource at 21 million ounces. Situated within a Tier-1 mining jurisdiction, the property spans over 64,000 acres, yet less than 10% has been explored to date, hinting at significant untapped potential.

The Company's journey has seen shifts, from historical oxide heap leaching to a restart of pre-commercial open pit mining in 2019 aimed at accessing sulfide ore. However, this phase was short-lived, ceasing in November 2021. The decision was a strategic necessity, driven by the realization that the previously contemplated novel two-stage sulfide oxidation and leach process faced significant technical and economic hurdles. Findings from extensive review indicated materially higher capital and operating costs, limited applicability to certain ore types, and insufficient prior test work to de-risk commercial scale-up. This pivot allowed the Company to conserve cash and dedicate resources to determining the most effective and economically viable processing method for the complex sulfide mineralization.

Unlocking Value Through Technical Rigor and Exploration Success

The core of Hycroft's current strategy lies in rigorous technical evaluation and aggressive exploration. Recognizing the limitations of the prior approach, the Company is now focused on proven metallurgical processes, primarily Pressure Oxidation (POX), but also evaluating roasting and conventional milling. The March 2023 Hycroft Property Initial Assessment Technical Report Summary (Hycroft TRS) incorporated a mineral resource estimate based on both POX and heap leaching, providing a technical foundation for future development.

Ongoing metallurgical and variability test work is critical to this process. The Company is testing composite samples from across the ore body to understand the characteristics of the sulfide ore. Early results from crushing, grinding, and flotation work have shown promising improvements in gold and silver flotation recoveries compared to the current technical report. Further test work is advancing on roasting, pressure oxidation, leaching, sulfuric acid generation, and power co-generation. These efforts are designed to refine process plant flow sheets, equipment selection, and overall plant layout. A key trade-off study will compare the economics of roasting versus POX technology, aiming to optimize recoveries and potentially identify additional by-product revenue streams. The culmination of this technical work is expected in an updated technical report anticipated in the second half of 2025, which will outline the optimal process flow sheet and development plan.

Simultaneously, Hycroft has intensified its exploration efforts, particularly targeting high-grade mineralization. The 2024 drill program, and ongoing analysis in Q1 2025, focused on defining and expanding newly discovered high-grade silver and gold trends, notably at Vortex and Brimstone. These discoveries, first announced in 2023, have fundamentally altered the understanding of the Hycroft deposit, demonstrating significant high-grade potential beyond the historical perception of a large, low-grade system. High-priority targets like Manganese and Bay have been identified for follow-up drilling. This exploration success has strategic implications, leading the Company to contemplate developing a smaller, high-grade mining operation as an initial phase. Such an approach could potentially reduce upfront capital requirements, accelerate cash flow generation early in the mine life, and enhance overall project economics. The planned next exploration program, subject to funding, involves approximately 490 meters of core drilling across nine to ten holes, budgeted at around $4.0 million, specifically designed to test the extensions of these high-grade zones.

Competitive Positioning in the Gold Sector

Hycroft operates within the highly competitive gold and silver mining industry, competing with established major producers like Barrick Gold (GOLD), Newmont Corporation (NEM), Kinross Gold (KGC), and Agnico Eagle Mines (AEM), as well as numerous smaller exploration and development companies. Nevada's status as a Tier-1 jurisdiction attracts significant competition for resources, talent, and investment.

Compared to major players like Barrick and Newmont, Hycroft is significantly smaller in scale and currently lacks operational production. While majors benefit from economies of scale, diversified global portfolios, and established low-cost production profiles (e.g., Barrick's robust margins and cash flow, Newmont's advanced techniques), Hycroft is in a development phase, focused on proving the economic viability of its large sulfide resource. HYMC's TTM financial ratios reflect this stage, showing 0% gross, operating, and net profit margins, negative operating and free cash flow, and a negative P/E and P/S ratio, starkly contrasting with the positive margins and cash flow generation of established producers like NEM (35% Gross Margin, 18% Net Margin, positive cash flow) and KGC (36% Gross Margin, 18% Net Margin, positive cash flow).

However, Hycroft possesses distinct potential advantages. Its sheer resource size is world-class, offering substantial long-term production potential once successfully developed. The existing infrastructure and full permitting for both heap leach and milling operations provide a significant head start compared to greenfield projects. The recent high-grade discoveries offer the potential for higher-margin production, a strategic focus that could differentiate it from operations solely reliant on large-scale, lower-grade material. The ongoing technical studies, particularly the evaluation of POX and milling, aim to leverage proven technologies to achieve higher recoveries from the complex sulfide ore, a critical factor in maximizing value from the deposit. While majors employ various processing methods, Hycroft's specific challenge and opportunity lie in tailoring the optimal proven technology to its unique ore body characteristics.

Indirect competition comes from alternative investments and potential technological disruptions in metal extraction. However, the fundamental demand for physical gold and silver, particularly in a high commodity price environment, remains a key driver for the sector.

Financial Health and Liquidity Challenges

As a company in the development phase without commercial production, Hycroft has incurred significant operating losses. For the three months ended March 31, 2025, the Company reported a net loss of $11.8 million, resulting in a loss from operations of $9.2 million. This compares to a net loss of $20.7 million and loss from operations of $11.9 million for the same period in 2024. The reduced loss from operations in Q1 2025 was primarily driven by lower exploration and development costs (down $1.9 million) due to cash conservation measures and a significant decrease in asset retirement obligation adjustments (down $1.9 million) as no change in estimate was recorded in the current period. General and administrative costs remained relatively flat.

Liquidity remains a critical focus. As of March 31, 2025, Hycroft held $39.7 million in unrestricted cash and cash equivalents, a decrease from $49.6 million at December 31, 2024. Cash used in operating activities was $9.7 million in Q1 2025, compared to $11.7 million in Q1 2024. The Company does not anticipate generating positive cash flow from operations in the near term and is dependent on its unrestricted cash and external financing to meet obligations and fund its development activities.

The balance sheet carries a substantial debt burden. As of March 31, 2025, total debt (net) stood at $128.0 million, primarily comprising the Sprott Credit Agreement ($13.2 million net) and Subordinated Notes ($115.0 million). While the Company successfully pre-paid $38.0 million of its first lien debt in January 2024 and has reduced its overall debt burden by $101 million (principal and cash interest) since late 2020, the remaining debt, particularly the paid-in-kind interest on the subordinated notes, is viewed as an overhang on the Company's valuation. Hycroft was in compliance with its debt covenants (requiring minimum $15.0 million Unrestricted Cash and $10.0 million Working Capital) as of March 31, 2025. However, the need for future capital is evident, and the Company is actively exploring strategic and financial alternatives, including debt restructuring, additional equity financing (utilizing its $97.5 million remaining under the ATM program as of March 31, 2025), joint ventures, or M&A transactions. A subsequent event in April 2025 required an increase in cash collateral for a surety bond by $2.0 million, with a potential need for up to an additional $4.0 million, further highlighting the demands on liquidity. The Company's ability to continue as a going concern is explicitly noted as dependent on its ability to control costs, defer expenditures, or secure additional capital.

Outlook and Factors to Watch

The outlook for Hycroft in 2025 is defined by the pursuit of critical milestones aimed at de-risking the project and charting a path towards future production. Key plans include:

• Exploration: Executing a follow-up exploration program targeting high-grade silver mineralization and reviewing district exploration targets, with a planned $4.0 million budget for approximately 490 meters of core drilling in high-priority areas like Brimstone, Vortex, Manganese, and Bay.
• Technical Studies: Finalizing engineering and trade-off studies evaluating different processing technologies (POX, roasting, milling) and flow sheets to optimize recoveries and identify potential by-product streams.
• Updated Technical Report: Anticipating the completion and filing of an updated technical report in the second half of 2025, which will provide a detailed plan for the next phase of operations.
• Strategic Assessment: Assessing the potential for a high-grade underground mining scenario and, notably, re-evaluating the opportunity for a start-up heap leach operation utilizing newly identified oxide targets, potentially as an initial phase ahead of a larger milling operation, driven by the current high commodity price environment.
• Balance Sheet Strengthening: Continuing efforts to manage liquidity, control costs, and explore strategic alternatives to address the debt burden and secure funding for future development.

2025 is positioned as a defining year. The successful outcome of the technical studies and exploration programs are paramount. These results will dictate the viability and specifics of the next phase of operations. Securing the necessary funding, whether through equity, debt restructuring, or strategic partnerships, is equally critical to transition from a development-focused entity to a potential producer.

Risks to the Investment Thesis

Investing in Hycroft carries significant risks, commensurate with its stage of development and financial position. The substantial doubt about the Company's ability to continue as a going concern, absent successful capital raising or cost control, is a primary concern. The dependence on external financing in a potentially volatile market for junior mining companies poses a material risk. The large debt burden, particularly the paid-in-kind interest, creates financial pressure and is an overhang on valuation.

Technical and metallurgical risks remain, although the Company is actively working to mitigate these through extensive test work and trade-off studies. There is no guarantee that the chosen processing method will achieve target recoveries or operate within projected costs at a commercial scale. Operational execution risk is also present in transitioning to a new processing method and potentially a different mining approach (e.g., underground). Commodity price volatility for gold and silver can significantly impact the project's economics and the Company's ability to raise capital. Finally, the need for additional cash collateral for surety bonds and ongoing legal proceedings add further layers of financial and operational uncertainty.

Conclusion

Hycroft Mining presents a compelling, albeit high-risk, investment proposition centered on a world-class gold and silver asset with significant untapped potential. The Company has made a necessary strategic pivot, moving away from an unproven process to rigorously evaluate established technologies and aggressively explore for higher-grade mineralization. The recent exploration success has fundamentally enhanced the asset's profile, opening new avenues for potential development, including a possible smaller, high-grade start-up.

However, the path forward is challenging. Hycroft must successfully complete its technical studies to define a viable and economic processing solution, secure substantial funding to finance the next phase of development, and effectively address its considerable debt. The outcome of the updated technical report in the latter half of 2025, coupled with progress on balance sheet initiatives, will be critical determinants of the Company's future. For investors with a high-risk tolerance and a long-term perspective, Hycroft represents a leveraged play on the potential of a massive precious metals resource, contingent on the successful execution of its strategic plan and favorable market conditions. The coming months will be crucial in revealing whether Hycroft can translate its geological endowment and technical efforts into shareholder value.