From Cal Implosion Yahoo board conversation on HYMC
@russ Yes, if they went BK today company would owe approximately $125M to creditor Sprott (debt minus cash on hand). What is the asset worth? A lot more than that in the right hands. The way a liquidation works is the bankruptcy court will allow "stalking horse" bidders. Sprott is only entitled to the debt he is owed. If a stalking horse bids say, $250M, the difference $250M - $125M (extra $125M) goes to the shareholders.
Corvus gold in a different part of Nevada has a similar ore grade, refractory, and they were even interested in this "new oxidation process". The problem is the elements needed skyrocketed in like other commodities making it "infeasible". Traditional ACID pox mining is better at these prices anyway, and the ore grades are higher in some instances as well.
AngloGold Ashanti owned about 20% of Corvus gold, they decided to buy the rest at $380M this summer. The amount of gold/silver ore is a fraction of Hycroft. They have nothing built out, Hycroft has hundreds of millions of infrastructure already built out.
"Sophisticated" investors who bought into SPAC before launch were apparently valuing the company at $500M ie $10/share X's roughly 50M shares (Think they issued more shares to increase to 60M, and warrants, within a year of going public to dilute). That was when PM prices were significantly lower pre covid.
Mudrick's team blew through a ton of money with their bogus "novel process". Now the valuation is $30M, roughly what they have in cash. You take the $158M - $30M cash on hand and liquidation value at about $125M now.
If you believe in their last feasibility report this is a $2B asset, and that was before the spike in PMs. The new study supposedly coming out this quarter should shed more light.
Sprott was probably shorting the stock because he owns the debt. Sprott is the only real hope here though because he is the only one who knows what he is doing amongst this group of hedge funds.
You simply cannot value this company because Mudrick will dilute further it's simply what he does as a distressed debt investor. The asset is great but the puppet master behind the asset wants to trade against you not build shareholder value.
That's why Sprott is having to get involved at this point. Mudrick has failed at so many ventures now his reputation is toast. Our share price reflects Mudrick's 40% ownership, nobody trusts him or wants to do business with him. The other hedge funds don't help either, they bring negative value as they too want to trade against you not build shareholder value.
That is why they have their poison pills, they don't want a major miner to take a stake and help develop the asset. So nobody will touch it except retail who they will trade against.
Is this asset worth more than current liquidation value? Almost certainly. But in the hands of Mudrick + 3 other hedge funds that control 80%, the value is worth 49 cents. Partially because that's the way they want it, they don't want real investors they want to trade against retail. They are lending out shares at 16-18% making money. They don't care about the low share price as much.
Sprott now realizes he's in bed with a bunch of hedge funds that know absolutely nothing about mining. He needs Garrett for the moment. Nevada Gold Mines (Newmont + Barrick assets in Nevada) has the money and resources to build this mine out right. But that's not what Mudrick and the hedge funds want, they don't want a legitimate partner.
So price stays here or they take it even lower. This is not an investable asset given the current ownership structure. They will dilute you, they are the masters of figuring out how to dilute away instead of build shareholder value.
Sprott converting his debt to equity could turn this around and bring in new investment money. But why should he keep Mudrick & company as his hedge fund partners around? Because a stalking horse bid will most likely pay more for the company then debt he is owed, and he loses the asset and gets his cash. They all lose.
But don't underestimate their creativity in trying to dilute or take the mine in a different way. They are good at that, just not at actual operations. It's a problem with finance guys I've encountered during my career. Take operations for granted.
Cal Implosion2 days ago
According to latest 8-K Sprott has Mudrick by the balls. The mystery behind the Chairmans departing makes more sense now. Sprott is a sensible man got caught up with huckster specializing in distressed debt. Sprott will probably end up converting his debt into equity if his horse in the race, Dr. Garrett, can actually perform.
Travesty to see the layoffs and destruction of shareholder value. Agree with Mr. Sprott on Stanton Rideout he is an innocent vitcim in this Mudrick disaster. Garrett trusted Mudrick and his short selling buddies, and chairman's "novel process", and got burned badly. Perhaps she has now seen the light. Sprott holds all the cards, for now, as the mine is economically viable at these PM prices per traditional ACID pox mining in the region. But a BK means liquidation and Sprott knows he will also lose the mine to a stalking horse bid for only $158M.
Sprott is overall a positive for the stock as he is bullish on precious metals, its his primary business. Mudrick's primary business is fleecing retail investors and dealing with meme stocks. The more control Sprott has the better.
Garrett has a second life now but still should not be Chairwoman, and Sprott seems to agree. She oversaw the complete destruction of shareholder value in just one year. She did nothing and said nothing to stop the stock slide.
Hopefully Sprott keeps a short leash on Garrett and ends up finding someone better.
Not sure Mudrick can ever recover from all of these body blows, nobody trusts him or his minions. HYMC stock price is now barometer for Mudrick Capital and stock is at 49 cents.
Good luck Dr. Garrett at least you have a believer in Sprott. Maybe you can prove me wrong too. You lost your fire and sullied your reputation.
