Hycroft Announces Public Offering of Common Stock

0:03 Now, I'll say good morning, good afternoon, good evening, depending on where in the world you're signing in from. I have with me today none other than Diane Garrett, CEO of iCroft Mining, who is up, I believe, all night working. But Diane, other than presumably exhausted, how are you?

0:15 I'm excellent, thank you. It's a very exciting day for us. And yes, not very much sleep last night, but I'll do my best to sound coherent. I am sufficiently caffeinated. Appreciate it. I am too. So hopefully we're in good shape for today's conversation. Let me tell the folks in the room how this is gonna go. I've got some questions for Diane based on this morning's back to back sensational news releases big news. So I've got some questions run through them. Then I did collect some of the questions you guys sent in advance over email. So we'll be running through those. But this is also as always a live and interactive event. So the chat button on your bottom right of the screen.

0:46 You can ask questions at any time. I'll try to get to as many as we can today. We're sticking to a pretty tight half hour at absolute maximum today. So if I don't get to your questions, I'm going to make sure they still get to the Highcroft team. And this is as always being recorded and will be available for replay in just a few hours. So it'll pop right in your inbox. You can watch it again, share it with your friends, capture the highlights of it, do whatever you'd like with the video. So Diane, right off the bat, one of the key uses of proceeds addressing the existing debt obligations. I'd love if you could tell people in the room what this means for Highcraft's financial flexibility and how it positions the company. Basically, why is this such a big deal?

1:20 This is probably the biggest deal ever in the history of the company, at least since our team has been here. This debt has been growing and has been on our balance sheet for 10 years. And it has been the single biggest barrier to new investors wanting to come in. There's different investors like Eric Sprott who's willing to take that risk, but for the most part, not. And So, eliminating that debt really, truly is the biggest re-rating at this moment right now for the company. And then as commodity prices continue to soar and move up and we have drilling news out and technical report and resource updates out, then we have the ability to really move commensurate with those announcements versus always having this ceiling hanging over us at the overhang. So this is pivotal

2:15 transformative event happening today. This is really outstanding. And it's not just that, but it's a sea change with these new institutional investors coming in. And that's just further underscoring their confidence in what they're seeing in the asset with the team.

2:35 And we could not be more thrilled. It's an excellent day. That's great. It feels like stars aligning. I saw silver hit over 51 this morning. So exciting stuff from all angles. Always fun. I do want to talk about just the timing of the raise, because I know you completed the 60 million private placement with Eric Sprott in September, and now you've got this upsized 150 million public offering. I'm curious if you could help us just understand the timing and how the 2 raises work together as part of the capital strategy for Hedegroft? Sure. Well, after the $60 million raise with Tribeca and Eric Sprott, there was a lot of demand after that wanting to come in. But we knew that the next raise that we did really had to address the elephant in the room, which was getting the debt off the balance sheet. So we were, you know, very careful and planned a very well for that.

3:27 We were getting a lot of inbound request, especially with silver going well over 40 and approaching 50 and then going over 50 the other day.

3:37 With the news that we put out on this potential feeder system and that we're drilling it now. So there's been a lot of We've, you know, taken that inbound interest and we've, you know, timed it with the market and thought this is the time to go. And we had a couple of very significant

3:57 anchor orders that wanted to come in. And So the timing really was outstanding for us. Great. Just let you know, there's a lot of rocket ships in the chat and a lot of general plaudits for your performance.

4:13 People are pleased, I'll say in the chat. I love it. Oh my God. Rocket ships sneaking. I need to put my pin on. This is, this today, everybody, is a to the moon rocket ship day. Absolutely. Without a doubt. I'd love to see that. So I know you've outlined plans to use some of the proceeds for expanding exploration and drilling programs. My question to you, and I always like asking you and Alex, this one I have in mind is, what excites you most about the near mine and the district scale potential that you're looking to unlock here at Highcroft? Well, It's just such, we're gonna show the market that this is not the old Highcroft, large system but low grade. We are truly doing something very unique with this world-class asset. I mean, the high-grade drilling is, and these discoveries we've had, and what we see is the growth and the geophysics we put out on the potential feeder system, this could be 1 really substantial,

5:10 remarkable asset in what we plan to do. And this raise allows us to double the amount of drill rigs we have out there, double our drill budget. We want to make more progress quicker. We've always been a bit constrained by, you know, managing our cash because we know we have the debt obligation in a couple of years. And so we've always had to try to work within a tight little box with the debt being gone, with this money coming in, with the 60 million raised this one, we're able to really step on the gas and advance the project in a meaningful way. And that's very exciting for us and for the team, especially in this commodity environment.

5:48 Awesome. Now the chat's got some moons and money bags, too. So I always like to see emoji enthusiasm in the chat. Appreciate it, guys. One thing is, and I apologize for the noise in the background, given current market conditions and investor sentiment, What aspects of Highcraft's story do you think are going to resonate most strongly in this offering? Well, I can tell you it was the opportunity to clear the debt entirely. That was the biggest feedback we've gotten today with the participants and others is that this is the moment we've been waiting on is to see this company debt-free and unencumbered.

6:26 And then the other thing is the excitement around the high grade and us really pushing forward on that. And looking at the restart of the heap leach operation to those are the things that are really driving it. And also, I think we've been told for a long time and Eric is saying it as well as you know, he believes high crop is the best play on silver in the market. I mean, we're in the US. It's a massive resource is one of the world's largest on silver and gold and were permitted and we have infrastructure and you know, it's there's a lot of people looking for a home for money in these assets and they want to be in good safe jurisdictions

7:04 and also some that are well advanced in the development process. And we check all those boxes. And now we check the box of a clean balance sheet. And I know we've been asking you about that for a couple of years now, so it's really exciting to turn it off. You know what, Romeo, you're so right, because I can tell you for all the marketing that I do, the debt conversation sucks the air out of the room in every single meeting. So my presentation is now

7:30 gonna be very short because I'm not going to have to talk about that. I'm really looking forward to removing those slides from our presentation deck. Those will be a fun delete button hit for sure. So there you go. Now I've got a couple of questions that came in advance over email, and then we get to the ones that are in the chat. So appreciate everybody's patience in the chat. I just want to get through these email ones first. One person asked if we're currently buying or sourcing machinery and infrastructure to begin mining in the future at Highcroft.

7:56 We will be doing that. We've got to get the technical report completed which the final engineering work the metallurgy is being done now. That's going to define you know sort of the scale. Are we doing pressure oxidation? Are we doing roasting? You know, how many roasters would we need? You know, what size grinding mills? All that engineering work is coming to a conclusion sometime around the end of the year. And then that's going to tell us the equipment that we need to be ordering. So that will come that that's the first step before we do order equipment. As far as the start, the restart of a heap leach, we have referenced that in a lot of our public disclosure. And, you know, that's something we can start up very quickly. It's minimal capital. We need some loading equipment. We would contract mine it. And we have a lot of low hanging fruit for leach material. And with the higher commodity, a lot more of that material has become economic.

8:51 And we think that would be, you know, a very smart business decision to do. And we, this money today also allows us to advance that and they, in much more aggressive manner. It's some of the drilling that we need to do to fill in gaps and

9:10 get that operation to a point where we could feel comfortable starting it up and having a sufficient mine life ahead of it and then transitioning from that to a milling operation, which is the way a typical mine should go. Sure. Now, appreciate that. 2 questions back to back that are similar but different. One is, Are we going to be making gold and silver high-croft coins and bars for public purchase? We are. And as much as we've done a lot of silver and we actually

9:39 had a conversation yesterday before all this came to light that, you know what, maybe everybody would like some gold bars and do bars instead of the rounds. We've been very busy and, you know, there was a period there where our treasury is getting a little low, but what we want to do now is we've got some really cool ideas and we want to, you know, increase our inventory, if you will, of swag items. And

10:05 one of those things does involve the gold bars and silver bars and some addition, you'll be surprised to see. So I've got the team working on it and we're hoping to roll something out soon. Awesome. One question also came over email. What percentage is Eric Sprott own at this point? He's around 40% of the company. So Eric was

10:27 the lead order in this. He put $50 million in. Eric has invested over $100 million in the last since early June. He actually was just at site. He flew in and did a tour of site on the weekend. He was very excited about what he saw. He's gonna be speaking at the upcoming conference week after this SCP in Toronto and I am working to get him on a webinar with all of us. And he said he'd be delighted to do it. And I think you'll be extremely impressed when you listen to him and his views on silver. He has been absolutely spot on with where these silver markets are going and it's not over yet. And he's one of the biggest silver, silver bulls out there as we know. He loves gold too.

11:15 Don't don't get me wrong on that. But sure. Yeah. About 40 percent right now. And he's a great shareholder. Right. I mean he trusts management. He backs teams. He was a big shareholder of our last company. He knows value. He understands

11:30 you know what needs to happen on the ground and you trust me to execute. Awesome. Yeah. For those who never heard Eric speak, he's certainly one of more interesting speakers on Silver. So anytime he speaks up on the commodity, I encourage you to listen. One question that was asked is how soon can you talk to institutions since the debt was believed to have blocked their interest in the company beforehand?

11:52 We can talk to them anytime. We talk to them all the time anyway. Yeah, we're always mark, that's one of my jobs is I'm always marketing, meeting with people, introducing the story to new people. I've been doing a lot of that the last couple of months. A lot of those big institutions came in. One of the other things that I want to say is, who you have in your shareholder registry is very, very important. When you have the kind of institutions that subscribed heavily to this. And we're talking very large order sizes. Well, you know, we did 150 million dollars and a few hours warning these big large chunky orders by these institutions who hold stock for a decade or more. You ask yourself, OK, well, maybe I don't know much about the asset. Maybe I don't know much about silver and gold. But when I see an Eric Sprott or a BlackRock or one of these big institutions investing in this company, that's smart money and maybe I should be following their investments in this sector. And I think it's interesting that they see the timing as being right.

12:57 The commodity price is moving, our results last year, the news we've been putting out, seeing what's coming up in terms of news flow, getting closer to that point of making operations decisions, you know, all of that, the timing and knowing when to come in. They're very sophisticated investors and I've worked with all of them in the past. They were very large shareholders of Remarco Minerals, our former company, and it's just great to have them in this registry and they are very excited about it. So we'll be disclosing all the names. They'll be on our website and everything. I think we closed this offering, officially closed it on October 14th.

13:37 And then we'll refresh all of our web materials and you'll see the list of the ownership positions of these companies. It's Very impressive. It's an envious shareholder registry. I will say that. That's the dream. But you all know I love you so much. You're the key critical part of this shareholder registry, and I appreciate everything you all do. There you go. I think the chat's going to crucify me unless I ask you in very specific words. Do you believe the shorts are fudged is the specific wording they've asked me to use. They actually use fudged. Okay. They did. I thought I was impressed too. I was very impressed.

14:16 Yes, I do. Because now you can't stop this momentum. What are you going to you know, there's no there's nothing to play for the downside. Right. The debt was there. You can always play against that. You can short against that, you know, and markets. But now it's sort of like when gold was being we believe Eric believes to that. It was being very manipulated. It couldn't get over 2000. It kept getting knocked down again. And once it broke through 2000, it can no longer be controlled. It flew to, you know, $4,000 today is similar with silver when silver finally broke through that $30 range. It was just like unstoppable. And now you're seeing that resistance at 50, but it's, you know, we all believe it's going to go well beyond 50 and Eric speaks to it as well. And Michael Oliver, who's one of the best forecasters

15:06 of silver out there. So I think it's similar when we look at something like Highcroft and the shorting. I mean, it's really to no benefit for them to do it because I don't think you can stop this train now. I mean, this, we trade at like half or less than half of our peers, who our peers have a fraction of the resources we do. Most of them don't have any infrastructure, permits in place or anything. We are well beyond them in terms of value in the ground and location and all of that. And so what happens is,

15:42 you know, you start seeing that the debt was the really biggest overhang to for us being traded equal to our peers. And so we we believe and others believed and all those investors that came in today said if we can clear all of this debt and give the company more money to do a more aggressive job, then the re-rating on this stock is going to be huge. And so that's what we're hoping to see. And I think we will see it. Okay, there you go. I've got one question. There are a couple more further down that cover the same thing. But somebody asked right at the beginning of the hour. Is there any chance the U.S. Government comes into high crop like they did for trilogy metals?

16:20 Well, I think so. I mean, look, silver has been designated a critical mineral. The government is going to be stockpiling silver. I do have connections in Washington And I do plan to visit and talk to folks, because if you wanna start stockpiling metal and take a strategic position, what better place than the USA, which we know Trump's and that administration's favorable to looking in your own backyard first.

16:48 But not just that, but one of the world's largest deposits. And for the stockpile quantities that the government's going to need, having an investment in that to help us expedite development too will be huge. And my gosh, I mean, we all saw what happened with Trilogy and good for them. That was outstanding. But it's also that extra side of endorsement that, you know, this is for a long, you know, this is a long-term commitment to advance this and utilize that. And that's can be a really good supportive backer as well. So I think it's a very strong possibility for Highcroft. Awesome. And for those interested in the Trilogy deal, I'm speaking with CEO Tony Giardini and Rick Van Nuen Isabel on Monday. So you can learn more about that if you're interested.

17:35 I'll put it throughout to you in the chat. One person, David, asks, they say they're a big supporter, long-time shareholder. They're just curious why the offering was priced at $650. What was the strategy behind that? Typically what you see in these things is that the large lead orders, the anchor orders will

17:54 often determine pricing. I can tell you that that was about an 8% discount in the market. We look at the VWAP trading, we look at NASDAQ minimum pricing rules. We thought that was a very fair price

18:13 and so did the investors coming in. Nobody pushed back on the price, which said they really have appetite for this story, irrespective of where the pricing was. Many of the deals that we've seen done in the market are high single digits, but a lot of them are in double digits. And we weren't going to go that far in our discount. We didn't think we had to. This was not a desperation financing. We had money in the bank.

18:38 There was a very elegant plan of what we were gonna do with additional money and the institution saw that and approached us. So it was a good discount and I think it worked well for this financing. And I don't think that type of a discount hurt the company. It's rare to do a financing at market. It just, as you know, Romeo, it just doesn't happen. Get it at a discount where we did so tight and especially given the performance of the stock this year up over 200%.

19:14 You know, a lot of investors will make an argument that, you know what, it's moved up too fast. You need to take a 20%. We've seen some deals that were cut back 20% on the discount. We weren't going to allow that. We didn't need to and we held firm. Yeah, would others have liked it to get in cheaper? Sure. We all want to get in cheaper, right? We all held firm and said no, and they just piled in the door anyway. So awesome. Brattlemore from the chat asks, are the beautiful year end feasibility studies still on track? We hope so. That's our

19:50 current plan. We don't know any different today. The metallurgy on the roasting is not finished yet. We're in the middle of that. We're like halfway through the testing. So as long as everything is on track, we'll be on track. But we will be looking to also, we're looking at putting up a resource update and we'll have drill news and everything else. But so far I've been given no indication

20:11 that that won't be the case. I think we've said for fourth quarter, but we've also said closer to the end of the year. We just hope holidays and stuff don't complicate that. But we've got a full team working on it. So our goal is to get it out. There you go. There's 1 fun comment from the chat where they say, Diane, you should do a tick tock where you remove the debt slides from your deck. Might help you out with that. I should, that might be fun. Oh, I love you guys. You have the greatest ideas. That's, that's great. And I'm just hands on the rocket ship.

20:40 Guys, no, I can't help myself. I have to look so if I seem like I'm distracted in my answers, because I'm watching what you're saying. I'm trying to keep up with the chat, but it's moving. It's moving so quickly. So let me see. You know what we're going to give. I just see one of these. We're going to give Eric Sprott his own office anywhere he wants with a beautiful panoramic view of the Brimstone Vortex and the whole deposit. He had a great time inside. He really enjoyed it.

21:08 That's awesome. One person, Eek 1001 asks, now with the debt gone, what's the next steps? Just let us know the path forward from here. The path forward from what? Sorry, I missed that. With the debt gone, what comes next? Well, we're putting orders in for a couple of more drill rigs, so we can start making greater progress on that and looking at a potential high-grade underground starter mine. A underground starter mine. We are also stepping on the gas with the restart of a heap leach operation. And, you know, getting that debt paid off and writing that check soon after closing is also another goal of ours. But we'll be able to expedite things

21:49 in a better fashion than we've not been able to do before. Awesome. Amcape from the chat just says, they remember buying shares at $0.28. Thank you for all your hard work in bringing big green numbers to our portfolio. So it's obviously listen, you know what? It takes a team. It's the whole team that does it, but it also takes a really good supportive shareholder base with which all of you have been and I know it hasn't always been easy and we've had some ups and downs and not just, you know, high crop at market conditions and everything else. And you've stayed with us and you've stayed loyal. And I always said we were going to deliver for you. But here's what I will also leave you with. This is not over. This is not delivering.

22:29 We have a lot of great things to do. And I think this is just the beginning of what we're gonna see in a really nice run for this company. It's wonderful to see it come to fruition after all this time. Awesome. Well, you know what? I think I'm gonna wrap it there just because that's such a stellar ending to this that we haven't even gotten started yet. This isn't delivering yet. So I'm going to leave it there. Diane, thank you so much. I know. Long night. Really appreciate you jumping on and talking to investors today. So soon after being up all night with this news. I really do appreciate your time so much.

23:01 Thank you all. And listen, keep those memes coming. You know, I love them. I think we talked about support before about a mind your meme contest. I think I think now that we've got this behind us, let's get on something like that. But anyway, it's great. I also plan to do an x space soon with the group. So look forward to seeing you there and planning to get Eric to join us.

23:21 So thank you for your support, stay with us. We have excellent things to come. And thank you, Romeo, as always, for being available on short notice. No, no, this is great, Thank you. And I appreciate everybody in the room. I know that you guys are always so fun in the chat. Appreciate you jumping in. And Diane, thanks so much. So this will be available for replay in just a couple hours. Please do share it around. I think this is fun news. So Diane, I hope you have a great end of your day. Thank you. Thank you so much. Everybody have a great day. Cheers.