Hycroft Mining Holding Corp. reported progress at the Hycroft Mine in Nevada, including higher gold and silver production and revenue totaling $19 million, up from $11.1 million in the 2020 quarter, as the mine moves toward processing sulfide.
The mine 55 miles west of Winnemucca produced 13,858 gold ounces, up 99% over the first quarter of 2020, and 94,845 silver ounces, up 126% over the 2020 quarter, as Hycroft operated at a pre-commercial scale using run-of-mine leaching.
The company reported a net loss of $9.7 million in the first quarter, compared with a loss of $34.6 million in the 2020 quarter.
The average realized gold price was $1,784 per ounce in the quarter and the realized silver price was $26.12 per ounce.
“I am very pleased with the progress we continue to make on many fronts,” Diane R. Garrett, president and chief executive officer of Denver-based Hycroft Mining Holding, stated in the May 17 quarterly announcement.
Hycroft reopened in April 2019 and plans to ramp up production this year, but Hycroft stated that full-year 2021 production costs are expected to exceed gold and silver revenues due to fixed costs and lower planned run-of-mine volumes.
The outlook is for annual production of 45,000 to 55,000 ounces of gold and 400,000 to 450,000 ounces of silver, despite production bumps because of COVID-19, the company reported.
“While we did experience COVID-related workforce shortages that affected our ability to achieve targeted mining rates for the quarter. We are working to make up for these shortfalls and expect to achieve our 2021 production or sales outlook,” Garrett said.
The 2021 focus will be mining and processing run-of-mine oxide and transitional ores aimed at maximizing ounce production and cash flows and preserving company cash, the company reported.
Hycroft Mining Holding had $36.5 million in cash, excluding $39.7 million of restricted cash) at the end of the first quarter, down $19.9 million from Dec. 31, 2020, resulting from cash used in operating activities of $14.8 million and cash used in investing activities of $5.1 million.
“Our goal is to achieve a cash flow positive ROM heap leach operation while we introduce the sulfide oxidation process on sulfide ores in 2022,” Garrett said.
Hycroft also reported that drilling to obtain metallurgical samples for variability testing began in March at the mine site, and Garrett said the drilling program “is critical to completing the database of information on how each geologic domain will perform under the two-step novel sulfide oxidation and heap leach technology.”
The current run-of-mine volumes reflect the current processing capacity that is limited until Hycroft completes expenditures necessary to refurbish the North Merrill-Crowe plant and construct a second refinery, according to the earnings report.
In the fourth quarter of last year, Hycroft developed a stacking plan for the 2021 run-of-mine leaching plan that utilizes existing leach pads, preserving the new leach pad for sulfide ores, deferring the capital expenditures to compete the commission the new leach pad into late 2022 or 2023, the company stated.
The crusher is not operating this year because of the run-of-mine operation.
In the first quarter of this year, Hycroft completed construction activities on the new leach pad to the appropriate point in which the company believes there is minimal risk of adverse impacts to the leach pad. The company also completed the purchase of certain long-lead-times items for the project, Hycroft Mining stated.
The Brimstone leach pad has sufficient capacity to meet production needs with a conventional leach operating plan for three years, the company said.
Additionally, Hycroft Mining stated that a new loader had arrived at the mine and would be placed in operation in May.
Hycroft reported that with the 2021 mining plan under way, the company will have the opportunity to complete and evaluate the results of the ongoing technical and optimization work for the proprietary two-stage heap oxidation and leach process.
Based on the findings, Hycroft may update or file a new technical report, according to the news release.
Hycroft has a 71,000 acre land package, and there has been mining on site since 1983, with a couple of shutdowns along the way.
Hycroft Mining Holding Corp. was formed after Mudrick Capital Acquisition Corp. acquired the operation in May of last year. Allied Nevada Corp. stopped mining in July 2015 when it went into bankruptcy, from which it emerged in October 2015 and took the name of Hycroft Mining Corp.