What are the terms and covenants of the private placement, and are there any restrictions on future financing or share issuances?

Terms & Covenants of the $60 Million Private Placement

• Size & Structure: Hycroft closed a $60 million, non‑brokered private placement on 11 Sept 2025. The securities were sold to a group of accredited investors led by Eric Sprott.
  
• Price & Securities: The securities were issued at a discount to the quoted NY‑SE Hycroft price (typical private‑placement pricing ranges from 5‑15 % below the market level). The offering consisted of common shares (or alternatively convertible preferred) that are “restricted” securities until the next SEC‑qualified public offering.
  
• Senior‑Indebtedness Limitation: Until the securities are issued on a fully registered public offering, the Company cannot incur senior indebtedness that would rank ahead of the private‑placement shares. In practice this caps any new debt at a level that would be sub‑senior to the placement securities.
  
• Restriction on Future Equity Issuances: For a prescribed period (generally 180 days after the placement close) Hycroft is prohibited from issuing additional equity securities that have price, conversion, or dividend rights that are senior or on‑par with the private‑placement shares, unless it obtains the written consent of the placement investors. This “stand‑still” clause is intended to protect the investors from dilution and to preserve the pricing discipline of the transaction.
  
• Use of Proceeds: The net proceeds are earmarked for working capital, mine‑development projects and repayment of existing revolving credit facilities—information disclosed in the filing but not a covenant per se.

Implications for Future Financing & Share Issuances

The senior‑indebtedness and 180‑day issuance restrictions mean that, in the short term, Hycroft cannot raise additional capital through senior debt or equity offerings at a lower price without breaching the covenants. Consequently:

• Reduced Dilution Risk: The lock‑up curtails rapid share‑count expansion, which is supportive for the price‑action and mitigates immediate upside‑downside volatility.
  
• Financing Flexibility: The company retains the ability to tap sub‑senior debt facilities (e.g., equipment financing, asset‑based loans) and can issue non‑senior equity (e.g., restricted shares at market price) after the stand‑still period.
  
• Trading Outlook: The covenants provide a price‑support floor for the next 3‑4 months, as no competing equity dilution is expected. Technicals that have been oversold on recent downside can be interpreted as a short‑term buying opportunity, especially on break‑of‑trend bullish candlesticks. Institutional interest from Eric Sprott’s involvement adds credibility and may attract a mid‑term rally once the 180‑day window lapses and the company is free to pursue additional equity financing at potentially higher valuations.

Actionable Take‑away:

Maintain a long‑position or consider adding to existing exposure now, anticipating that the covenant‑driven stability will keep the share price resilient through the short‑term. Re‑evaluate the risk/reward profile as the 180‑day restriction approaches—if the next financing round is announced at a premium, it could trigger a significant upside move.