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My apologies but I have tried to read everything and still don’t have a clear picture for our warrants or what’s in the S4 document
The MUD press release in January states the project NPV of just over $2b but I have not found and backup documents on line. It also states the the deal value of $537m I believe this is below the price needed for our warrants to have value.
As I have said if our warrants roll forward with this deal and they are successful we should see something positive once the market values the project
I know they are operating the mine and producing gold at some levels. There are a lot of local rumors about their success in the community, both positive and negative.
I would hope they put out a deal update soon so we can get a clear picture. For now I’m patiently waiting to see the deal on our warrants.
Mudrick Capital filed the S4 last Friday. A lot of pages so I have not read through it yet
I have been quietly watching this unfold. While I am not an expert on any of this I can see no path forward that would cash us out based on the evaluation listed. From what I can calculate our warrants wouldn’t be in the money until the value of the company exceeds $800m. “If” the stated is correct the deal value is much less than this amount making our warrants worth $0. While they state the NPV of the project is $2b this is not the market cap nor the company value. Simply my opinion but it appears our best bet is if they roll the warrants into the new company and the “market” values the company appropriately. Once the market cap exceeds the $800m our warrants will be exercisable.
Just my $.05 but at the evaluation listed no one is giving us stock or writing checks.
I'm just a dumb geologist and have read the bankruptcy agreement and now this new data too many times to count.
My thoughts are that the price of the shares of the new company doesn't matter. What matters is the market value of the company. My math says we need to have a market value of somewhere around $675-800M for our warrants to be in the money. The press release states the value of the deal is (approximately) $570M. If I'm correct our warrants are out of the money.
What I don't know is if this acquisition dissolves our warrants or they stay in place. If they stay in place and the company is successful the market should reward them for the reserves and production and when the value increases we should be rewarded.
Just my opinion.
Perhaps someone can help me out with the market value that people have been putting out on this site for the company once they go public. I see the NPV that Hycroft has put out on the project but I cant see where this converts to market value of the company when they go public.
I have done some investigation and calculations on market valuation of companies based on their NPV.
It looks to me like good cash flowing companies are trading around 1-1.2X NAV. A company that is struggling but cash flowing looks like it will get a market value of .6-.8X NAV
Junior miners and or new project seem to be trading at .2-.5X NAV
I know the market will ultimately decide but was trying to get a feel for what we could expect once they are public
The capex is low compared to other projects of this size but when you add back in the $500M of sunk capital it normalizes.
The margins are good on the sulfide as the grades and recoveries are are much higher than when they ran before. The additional silver recovery should pay the operating expenses.
Despite the grade if they can execute this would be one of the best projects that I know of due to the low Capex.
The technology is not new, it’s been fairly well studied in Autoclaves as well as accelerating oxidation in waste rock dumps to control ARD (Barrick and Newmont) there is also a lot of research data from China on carbonate accelerated oxidation. I don’t think they are using Baking soda (sodium bicarbonate) they would be using Sodium Carbonate (soda Ash). The success is 100% about executing the technology at a commercial scale.
If the technology works it could be a game changer in the industry. I can think of a dozen projects internationally that could benefit from this is it works
It’s pretty easy math , (even for an old geologist,) but don’t know why you would use 20% discount rate?
20% would put the NPV around $300 million
I do but have been using them for year end taxes
I still have a “lot” of them
Would like to see them in the money but obviously know the market and the “NEW” BOD will make that decision not me
New BOD??? I missed that information
This permit allows Hycroft to mine the main part of the sulfide reserves below the water table and build a mill tailings impoundment. The permits they needed in 2016
Without this permit only a small percentage of the ore was mineable
I wasn’t a long term investor of Allied Nevada. I came in late to the party with hopes of a buyout when the stock had dropped. My investment was material to me but when I made it I was prepared to loose it.
I was however involved in multiple Due Diligence reviews of the project dating back to 2011-2014 and have some positive opinions of the project and what it can be with either a lot of capital or with the new technology that is being rumored.
I have done quite a bit of research on the project trying to determine the missteps by the board and management. It appears the company started up with a good plan to take an old producing mine and get it back into production and use the proceeds to conduct exploration on a large land package in Nevada. It appears they got lost when they started drilling the deeper sulfides at Hycroft. Unfortunately, it appears management and the Board got lost or greedy and ran the value of the company up to over $3M in market cap with little to no production. I believe the thought was someone would step in and buy the company and give them a golden handshake. The plan that was not executable, they had no permits, and they had insufficient capital to build a $2B mill to process the ore.
The issue seems to be that they made a decision to take on $500M in Senior debt when they could have raised more than this in equity. It appears that management and the Board made a mistake taking the debt and not fully understanding the capital needed to construct a 120M ton per year mill. When Gold started to fall they were stuck with a ton of debt and a mine that was out of ore that could be processed without a mill.
It appears that the Board of directors, Bob Buchan and CEO Scott Caldwell made some serious missteps in managing this company. I am assuming it was because they held a large portion of the company? Or was there other reasons for this? I remember looking at the project in 2012 and questioning the plan to pay for the mill with oxide ore that didn’t appear to be there. (20+ years of mining had depleted this reserve)
Now we have all of the permits, the mill capital has been removed and I am assuming as a straight heap leach the restart capital is much less. Albeit completely dependent upon new technology that has been developed.
All of this sounds good but my question is what is the catalyst to make them go public?? Just back calculating from my old notes from 2012 it appears the project could have a discounted NPV of around $2-3B. What would be the catalyst for them to take the company public? Also, is the current management capable of taking on this task? Seems like a big task to put this monster into production. There are still a couple of the management that were involved in the dept raising and market mismanagement.
Hycroft does not own 25% of West Kirkland
Check the records, they sold it and all of their Nevada Exploration properties to Waterton just prior to filing bankruptcy.
My guess is it’s the hedge funds loaning it to themself. If it was a traditional lending fund we would be able to find it somewhere.
They have to be putting a lot of money into the mine. Just care and maintenance pumping costs, claim fees, taxes, manpower, permitting costs and metallurgical testing has to be $20-30m annually
Copper uses heap leach oxidation but in acidic conditions. The reason Hycroft needs to oxidize in alkaline conditions is it keeps from fixing the silver as Jarosite (non recoverable) if it goes acidic
There are a couple of mines using alkaline heap oxidation but no one using Trona
My guess is after testing Trona for 4 years these guys are making it work. Taking a new process commercial will have its setbacks but a heap will seriously reduce capex
That would be good but the Hycroft mine is a difficult project because of its low grade nature. It’s very large but lacks the grade to make it attractive. Because it’s refractory they need to make the heap leach work or I don’t believe it gets built. From what I know it would be the lowest grade sulfide mill in the world.
I do know they have tried to sell it at least two times since 2014 because I was asked to work on Due Diligence for companies. Let’s hope the new technology works because I don’t believe there is a company out there that could buy the project then spend $1.2b to build it—-there are a lot of lower risk projects out there
I live in the local community and can tell you they definitely do not have 400 employees and are not yet producing gold. This is directly from one of the county commissioners who has visited the site and know the manager
They have 50-75 employees and are building test pads to try to prove the new process works commercially while they wait for permits
If this new process works the project has a high value and I would expect them to go public or be purchased by a major. If it doesn’t work then we are back to square 1 as don’t believe anyone would finance them for a $1.2B mill build.
They are not permitted to mine below the water table and are not permitted to dewater for mining. The majority of the ore is underwater according to their permit application
I have spoken to a few locals, some of them employees at the mine. They are not or have not produced any gold yet. They are testing the new process to determine if its economical.
I did check the BLM website and they still do not have the full permits to mine. The feds have not granted the EIS. This is a problem as I don't believe they can produce commercially without the permits.
The ore at Hycroft needs to be treated/oxidized or its is not economic. So they cant just start producing. They either need a mill---(cost somewhere around $1.5B) and three years to build or they need this new heap process to work.
Local rumors say that they need 6-8 months of testing, permits in hand then a capital spend of around $150-250M
I'm off to Brazil for a couple of months, hopefully the testing goes well and they can get hycroft producing sooner than this
Rich, I have to agree unless something changes the price of gold and Hycroft’s value does not correlate to value on our warrants
When I am back I do try to catch up on the happenings at Hycroft. They are operating but from what I can glean they are focused on demonstrating the new technology works on a commercial scale
The milling option is not financeable in this market. Investors are still hesitant to put money into mining. I am finding this is true will all of the projects I am working on. None of the majors will touch this asset until they prove the technology works
Our issue is we don’t know how long this will take and if they will ever take the company public
agree that the 2018 release sounds encouraging. My comment was just stating that the new permits that they are acquiring are for a mill and mill tailings as well as mining below the water table.
I don't see anything in the new EIS that shows a sulfide heap option
they are doing something at site. People and trucks running so it appears they are mining again.
I believe if you research Hycroft research and development the incorporation documents state 1985, purchased by Allied Nevada.
(Printed in the ownership section of the EIS) don’t know if it’s true? But I googled in on Bloomberg and got the same dates and info
I have read the EIS document. This permit will let Hycroft mine below the water table and allow them to build a tailings impoundment for Mill tailings
Both of these were suppose to be permitted in 2012 when Allied raised $500m in debt. So 7 years later they get the permits!!!
I am guessing that this permit is tied to the last Feasibility that was published. If so Hycroft would still need to raise over $1b and then build the mill. Construction in the feasibility is 3 years if I remember correctly.
Based on recent experience with projects I have been working on I would suggest this type of Capital is not available in public markets right now.
Haul trucks are running at the mine site so that is good news. In a recent presentation to the county fathers the site stated they were in production but focused on demonstrating the new process worked at a larger scale
While I hope it works and our warrants are in the money someday I am pessimistic after spending hours reading the bankruptcy documents. It appears to me there are 1000 ways to avoid the warrants being in the money (I could be wrong as I’m just a dumb Engineer)
Highbridge Capital, Mudrick Capital, White Box Capital, one new board member works for Sprott Capital so they may be involved but are not mentioned in the court documents. There are some others in the documents if you read through them but no Bank of Nova Scotia.
I don’t think so, it’s the destressed funds who stole it from us who are funding it. These are pretty big funds I don’t think they would go outside for financing. I believe (if I understand correctly) they are funding all of the mine activities and just booking it as a loan. (But I could be incorrect)
I would hope for our sakes they stay private until the technology is fully proven and they have their federal permits in place.
I am not sure what the market would value the company at today but it could be lower than we need to get paid. With a proven low capital processing technology and permits to fully exploit the recourse—-it could be plus a $billion. One scenario we may not get paid—the other we get paid.
I would hope for our sakes they stay private until the technology is fully proven and they have their federal permits in place.
I am not sure what the market would value the company at today but it could be lower than we need to get paid. With a proven low capital processing technology and permits to fully exploit the recourse—-it could be plus a $billion. One scenario we may not get paid—the other we get paid.
Their federal permits have not been published. I would guess this will keep them from ramping up to a full production level until they can mine below the water table
Their new technology is getting a lot of attention in the gold industry. A lot of operators are waiting to see if it’s real. If so it could be a game changer.
I’m headed back home today
But, they are operating the mine. Trucks are running, the crusher is running, new leach pads are built. I am friends withone of the technical folks there. First gold sales are scheduled for Q3
I will see what I can find out on their plans to go public. I still read in the bankruptcy document regarding our warrants that it’s not as simple as the warrants getting value when they go public. I believe that the public value needs to exceed 450 million before our warrants are in the money. I could be wrong but this is the way I read the document.
I’m traveling the next three weeks but hopefully I can get a better feel for the restart plans once I return.
We will see. If they plan on producing gold they will need to process the ore at the mine. The ore at Hycroft is much too low grade to sell. The Oxide ore ran out years ago. The ore that is left is refractory and needs to be oxidized prior to leaching. So there are two options for restarting the mine, the new rumored technology works or they have found more oxide ore.
As far as I know the BOD is made up of the banks that put in the money during bankruptcy. I believe this is the same group that’s funding the restart. It’s hard to get any good information on the financials or plans for the company. The local General manager is well known as a good operator
It appears the mine is running. There are a Lot of people being hired locally and construction crews are building leach pads. No official statements locally but a lot of rumors about their new processing technology
I drove out past the mine on my last field break and there appears to be a lot of work going on. It appears Hycroft mine is back in operation!
I am not an expert on the warrants but I have spent a bit of time trying to understand how or if we get or make money on them
My take is if there is a takeover/purchase of the company that is at or less than the bankruptcy valuation the warrants are valued at $0 and go away. I seems to remember something like $300-400m
Our best bet of getting value out of the warrants would be the restart of the mine and the company going public. Once the public valuation exceeds the bankruptcy value then our warrants are in the money.
I could be completely off base but this is my read on the documents I have read.
There isn’t much more to tell. He said the company was focused on a small demonstration type restart to prove the commercial aspects of the new technology while they wait for the federal permits to be granted.
Hey, mucca miner here—I keep getting Nuked so this post probably won’t stay up. I listened to the new mine manager speak at a commissioners meeting. He says they are ready to start up with some new proprietary technology they developed that oxidizes the refractory ore in a leach pad. He says their main issue is they still do not have the federal permits needed to mine the ore deposit.