*Mudrick Capital Acquisition Corp. Acquires Hycroft Mining Corp. to Create Publicly Traded World-Class Mining Company
NEW YORK and DENVER, June 1, 2020 – Mudrick Capital Acquisition Corporation (NASDAQ: MUDS, MUDSU and MUDSW) ("MUDS"), a publicly traded blank check company, and Hycroft Mining Corporation ("Hycroft"), a US-based, gold and silver producer in Nevada, are pleased to announce the consummation of the purchase of Hycroft by MUDS. The shareholders of each of MUDS and Hycroft approved the transaction, which closed on May 29, 2020, creating a new world-class mining company named Hycroft Mining Holding Corporation (“HYMC” or the “Company”) that will trade publicly on the NASDAQ Capital Market under the ticker symbol HYMC. Hycroft has sold all of the equity interests of Hycroft's subsidiaries and substantially all of its other assets to MUDS, and MUDS has discharged and paid or assumed all or substantially all of Hycroft's liabilities. HYMC has 50.2 million common shares outstanding, as of the consummation of the transaction.
“This is a critical transaction that paves the way for the development of Hycroft into one of the world’s premier gold and silver producers with a long life and in a desirable mining jurisdiction,” noted Randy Buffington, President & CEO. “We now have the pieces we need to build a profitable future for the mine, its employees and the surrounding areas.”
HYMC has in excess of $50.0 million of unrestricted cash on hand post transaction. Cash sources for the transaction included (a) a $110.0 million multi-tranche senior secured credit facility (“Senior Credit Facility”) by Sprott Private Resource Lending II (Collector), LP, of which $70.0 million was drawn at closing, (b) a $30.0 million 1.5% net smelter royalty agreement arranged by Sprott Private Resource Lending II (CO) Inc., (c) a $25.0 million forward purchase of HYMC’s units and shares by Mudrick Capital Acquisition Holdings LLC, (d) a $75.96 million purchase of HYMC shares by certain stockholders of Hycroft and (e) the net cash of $12.4 million remaining in HYMC’s trust account following stockholder redemptions. HYMC’s post-transaction indebtedness will include amounts drawn from the Senior Credit Facility plus newly issued subordinated notes totaling $80.0 million. All other indebtedness of Hycroft was retired, exchanged for MUDS shares or converted into Hycroft shares. The Hycroft stockholders were distributed shares of HYMC upon the dissolution of Hycroft.
HYMC operates its wholly owned Hycroft Mine, a world-class gold and silver producing operation located 55 miles west of Winnemucca in the prolific Northern Nevada mining jurisdiction. In July 2019, Hycroft completed the Hycroft Technical Report, a third-party feasibility study1 supporting its multi-year developed proprietary2 sulfide oxidation and leach process along with M3 Engineering and incorporating resources modeled by SRK Consulting (Reno, NV). Results of the feasibility study were robust indicating a projected life-of-mine (“LOM”) net present value (“NPV”) of $2.1 billion (at a 5% discount rate), a LOM after-tax internal rate of return (“IRR”) of 147.5%, and a payback period of 2.6 years. The Hycroft Mine was restarted in 2019 to demonstrate this proprietary process on a commercial scale and, to date, has proven successful. Based on the success of initial operations and the robust feasibility study, Hycroft began implementing the long-term mine plan with the start of construction in April 2020 of the first phase of a large leach pad capable of processing the resource base with more than 30 years of mine life. The funds received from this transaction allow HYMC to construct the new leach pad, expand its existing mining fleet (via rental contracts) and increase production rates.
1 A Summary Technical Report showing the results of the Feasibility Study can be found at www.hycroftmining.com.
2 The proprietary sulfide oxidation and heap leach process is the subject of a patent application.
Neal, Gerber & Eisenberg LLP is acting as legal advisor to Hycroft and will act as legal counsel to HYMC. Weil, Gotshal & Manges LLP is acting as legal advisor to MUDS.
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