Hycroft Mining Holding Corporation Q4 FY2020 earnings call

• Introduced a new technical and operational team with extensive experience in complex refractory ore bodies.
• Achieved improvements in safety performance, operating performance, and reduced downtime by eliminating wasteful spending and reducing reliance on contractors.
• Highlighted metallurgical updates, including the need for variability test work across geologic domains to understand sulfide oxidation and gold recovery.
• Kicked off a $10 million drill program for variability testing and heap leach design work.
• Considered a hybrid operation approach for different ore types, including potential use of a small mill for higher-grade sulfide ores.
• Focused on refurbishing the North Merrill Crowe plant and constructing a new refinery, with existing equipment available.

In 2020, gold sales were 24,892 ounces contributing $47 million of total revenue, compared to $14 million in 2019 (partial year). For 2021, the production is projected at 45,000 to 55,000 ounces of gold and 400,000 to 450,000 ounces of silver. The revenue contribution of gold sales in 2020 was significant, with the sulfide material stockpiled and future plans to test and utilize it for better financial performance.

• 2021 gold production guidance: 45,000 to 55,000 ounces; silver production: 400,000 to 450,000 ounces.
• Capital and project spend forecast: $14 million to $18 million, including $10 million for the variability program.
• Goal to improve cash flow by controlling spend, rightsizing workforce, and renegotiating contracts, with aim to reach breakeven cash flow or better.

• Delay in earnings release due to completing work under new SEC disclosure guidelines.
• Challenge in accessing commercial scale sulfide material until late 2021 or early 2022 due to need to mine through oxide and transition material.
• Gaps in previous metallurgical test work regarding variability across geologic domains.
• Operational constraints including aging fleet, difficulty in finding parts, and need for plant/refinery refurbishment.

Q: Could you detail the update to the pre-oxidation process and its relation to recovery rates?

A: There were gaps in previous test work regarding factors affecting recovery. The team is stepping back to understand oxidation kinetics, chemistry, and ore type impacts, and doing variable testing to ensure understanding of ore performance and pad operation.

Q: What about rare earth minerals at the mine?

A: Hycroft is a gold company, with only trace amounts of rare earth minerals.

Q: Describe the forced air injection process in heap leach pre-oxidation.

A: Forced air injection involves a network of piping with low-pressure blowers forcing air up through the heap. It's critical for oxidation, but agglomeration and permeability are important to avoid channeling issues. It's relatively low capital but adds operating expense.

Q: What cost savings have been instituted?

A: Getting rid of high-cost contractors, rightsizing workforce, renegotiating contracts, bringing in cost-effective equipment like the 994 loader, and improving maintenance planning to reduce downtime.