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i-80 Gold Corp. — Q2 2023 FS (company IR deck)
i-80 Gold Corp. (IAUX) · 29 slides · Filed Oct 23, 2026
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Slide 1 — Condensed Consolidated Interim Financial Statements
Condensed Consolidated Interim Financial Statements June 30, 2023 (Unaudited) (Stated in thousands of United States Dollars)
Slide 2 — NOTICE TO SHAREHOLDERS
NOTICE TO SHAREHOLDERS For The Three and Six Months Ended June 30, 2023 i-80 Gold Corp MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying unaudited condensed consolidated interim financial statements of i-80 Gold Corp were prepared by management in accordance with International Financial Reporting Standards ("IFRS"). Only changes in accounting policies have been disclosed in these unaudited condensed consolidated interim financial statements. Management acknowledges responsibility for the preparation and presentation of the unaudited condensed consolidated interim financial statements, including responsibility for significant accounting judgments and estimates and the choice of accounting principles and methods that are appropriate to the Company’s circumstances. Management has established processes, which are in place to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence that (i) the unaudited condensed consolidated interim financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the unaudited condensed consolidated interim financial statements and (ii) the unaudited condensed consolidated interim financial statements fairly present in all material respects the financial position, results of operations and cash flows of the Company, as of the date of and for the periods presented by the unaudited condensed consolidated interim financial statements. The Board of Directors is responsible for reviewing and approving the unaudited condensed consolidated interim financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the unaudited condensed consolidated interim financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the unaudited condensed consolidated interim financial statements together with other financial information of the Company for issuance to the shareholders. Management recognizes its responsibility for conducting the Company’s affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities. 1
Slide 3 — CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Stated in thousands of United States Dollars) (Unaudited) ASSETS Current assets Cash and cash equivalents $ 19,355 $ 48,276 Receivables 1,619 623 Inventory 5 18,796 16,535 Prepaids and deposits 6,717 5,595 Current portion of other assets 6 3,279 6,280 Total current assets 49,766 77,309 Non-current assets Other assets 6 1,867 2,487 Restricted cash and cash equivalents 7 47,572 32,902 Property, plant and equipment 8 629,067 529,261 Total non-current assets 678,506 564,650 Total assets $ 728,272 $ 641,959 LIABILITIES Current liabilities Accounts payable $ 11,846 $ 10,622 Accrued liabilities 10,447 6,612 Current portion of long-term debt 9 16,976 21,288 Current provision for environmental rehabilitation 10 1,087 946 Current portion of other liabilities 11 23,702 46,181 Total current liabilities 64,058 85,649 Non-current liabilities Deferred tax liabilities 76 8,020 Long-term debt 9 138,179 94,588 Provision for environmental rehabilitation 10 71,670 70,680 Non-current portion of other liabilities 11 28,544 49,610 Total non-current liabilities 238,469 222,898 Total liabilities 302,527 308,547 EQUITY Share capital 12 453,264 354,470 Reserves 18,680 15,042 Deficit (46,199) (36,100) Total equity 425,745 333,412 Total liabilities and equity $ 728,272 $ 641,959 Note June 30, 2023 December 31, 2022 Subsequent event [Note 23] See accompanying notes to the Condensed Consolidated Interim Financial Statements Approved by the Board of Directors and authorized for issue on August 2, 2023 /s/ John Seaman /s/ Ewan Downie John Seaman Ewan Downie Director Director 2
Slide 4 — CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME / (LOSS) AND
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME / (LOSS) AND COMPREHENSIVE INCOME / (LOSS) (Stated in thousands of United States Dollars, except for share data) (Unaudited) Three months ended June 30, Six months ended June 30, Note 2023 2022 2023 2022 Revenue $ 11,310 $ 6,383 $ 15,859 $ 9,247 Cost of sales (12,188) (3,966) (18,731) (5,498) Depletion, depreciation and amortization 8 (2,724) (655) (4,145) (823) Mine operating income / (loss) (3,602) 1,762 (7,017) 2,926 Expenses Exploration, evaluation and pre-development 15 11,095 12,132 20,074 21,386 General and administrative 16 4,397 4,565 9,588 7,838 Property maintenance 2,781 464 5,230 789 Share-based payments 12 903 547 2,211 1,989 Loss before the following (22,778) (15,946) (44,120) (29,076) Other income / (expense) 17 10,476 38,772 21,663 28,491 Finance expense 18 (7,898) (5,880) (14,565) (8,238) Income / (loss) before income taxes (20,200) 16,946 (37,022) (8,823) Deferred tax recovery 4,238 2,330 7,944 4,835 Income / (loss) and comprehensive income / (loss) for the period $ (15,962) $ 19,276 $ (29,078) $ (3,988) Income / (loss) per common share Basic income / (loss) per share 13 $ (0.06) $ 0.08 $ (0.11) $ (0.02) Diluted income / (loss) per share 13 $ (0.06) $ 0.08 $ (0.11) $ (0.02) Weighted average number of common shares outstanding Basic weighted average shares outstanding 13 265,433,411 240,312,422 255,573,142 239,800,687 Diluted weighted average shares outstanding 13 265,433,411 245,615,124 255,573,142 239,800,687 See accompanying notes to the Condensed Consolidated Interim Financial Statements 3
Slide 5 — CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Stated in thousands of United States Dollars) (Unaudited) Three months ended June 30, Six months ended June 30, Note 2023 2022 2023 2022 OPERATING ACTIVITIES Income / (loss) for the period $ (15,962) $ 19,276 $ (29,078) $ (3,988) Items not affecting cash Depletion, depreciation and amortization 8 (iv) 3,140 804 4,983 1,215 Non-cash share-based payments 12 (f) 903 547 2,211 1,989 Non-cash items included in other income 14 (ii) (9,800) (39,957) (20,717) (29,915) Gain / (loss) on foreign exchange (43) (645) (43) 199 Finance expense 7,890 5,877 14,545 8,226 Deferred taxes (4,238) (2,330) (7,944) (4,834) Change in non-cash working capital balances related to operations 14 (i) 1,846 (3,977) (3,003) (13,055) Cash used in operating activities $ (16,264) $ (20,405) $ (39,046) $ (40,163) INVESTING ACTIVITIES Acquisition of Paycore Minerals Inc. 4 10,027 — 10,027 — Capital expenditures on property, plant and equipment 8 (12,637) (10,691) (22,817) (14,986) Environmental liability security (14,391) — (14,670) — Reclamation expenditures 10 (309) — (309) — Purchase of investments 6 (i) — — (894) — Cash used in investing activities $ (17,310) $ (10,691) $ (28,663) $ (14,986) FINANCING ACTIVITIES Net proceeds on Convertible Debentures 9 (iii) — — 61,906 — Contingent payments 11 (iv) — — (11,000) — Proceeds from Gold Prepay Agreement — 41,737 — 41,737 Proceeds from Silver Purchase Agreement — 29,889 — 29,889 Principal repayment on Gold Prepay Agreement 9 (iv) (4,088) (5,668) (8,203) (5,668) Principal repayment on Silver Purchase Agreement 9 (v) (21) — (5,662) — Stock option and warrant exercises 12 (b) 189 487 1,903 2,764 Other (89) (115) (189) (96) Cash provided by / (used in) financing activities $ (4,009) $ 66,330 $ 38,755 $ 68,626 Change in cash and cash equivalents during the period (37,583) 35,234 (28,954) 13,477 Cash and cash equivalents, beginning of period 56,910 65,057 48,276 87,658 Effect of exchange rate changes on cash held 28 689 33 (155) Cash and cash equivalents, end of period $ 19,355 $ 100,980 $ 19,355 $ 100,980 Supplemental cash flow information [Note 14] See accompanying notes to the Condensed Consolidated Interim Financial Statements 4
Slide 6 — CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Stated in thousands of United States Dollars, except for share data) (Unaudited) Share Capital Issued and outstanding Note Number of shares Share capital Equity settled employee benefits Surplus / (deficit) Total equity Balance as at December 31, 2021 238,703,817 $ 350,198 $ 13,683 $ 43,097 $ 406,978 Exercise of warrants and stock options 12(d) 1,664,800 3,778 (483) 29 3,324 Share-based payments 12(f) — — 1,299 — 1,299 Loss for the period — — — (3,988) (3,988) Balance as at June 30, 2022 240,368,617 353,976 14,499 39,138 407,613 Exercise of stock options 12(d) 192,400 494 (90) (29) 375 Share-based payments 12(f) — — 633 — 633 Loss for the period — — — (75,209) (75,209) Balance as at December 31, 2022 240,561,017 354,470 15,042 (36,100) 333,412 Shares and options issued on acquisition of Paycore Minerals Inc. 4 30,505,575 78,787 2,515 — 81,302 Shares issued in relation to Ruby Hill contingent payments 12(b) 5,515,313 16,000 — — 16,000 Shares to be issued in relation to Convertible Loan 12(b) 800,449 1,665 — 66 1,731 Exercise of warrants and stock options 12(d) 841,398 2,342 (318) — 2,024 Share-based payments 12(f) — — 1,441 — 1,441 Convertible Debenture conversion option 9(iii) — — — 18,913 18,913 Loss for the period — — — (29,078) (29,078) Balance as at June 30, 2023 278,223,752 $ 453,264 $ 18,680 $ (46,199) $ 425,745 See accompanying notes to the Condensed Consolidated Interim Financial Statements 5
Slide 7 — (Stated in thousands of United States Dollars)
1. NATURE OF BUSINESS i-80 Gold Corp ("i-80 Gold" or the "Company"), is a Nevada-focused, growth-oriented gold and silver producer engaged in the exploration, development and production of gold, silver and polymetallic deposits. The Company's principal assets include the Ruby Hill Mine, Lone Tree Mine, Granite Creek Project, McCoy-Cove Project and FAD project. Each property is wholly-owned by the Company. The Company was incorporated on November 10, 2020, in the province of British Columbia, Canada. The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol IAU and the New York Stock Exchange ("NYSE") under the symbol IAUX. Its head office is located at Suite 460, 5190 Neil Road, Reno, Nevada, 89502. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation and Statement of Compliance These unaudited condensed consolidated interim financial statements (the "Financial Statements") have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB"). Accordingly, certain disclosures included in the annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB have been condensed or omitted and these Financial Statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2022. The Financial Statements and management's discussion and analysis of the Company for the period ended June 30, 2023, were approved and authorized for issuance by the Board of Directors on August 2, 2023. The accounting policies applied in the preparation of these Financial Statements are consistent with those applied and disclosed in the Company's audited financial statements for the year ended December 31, 2022, and as discussed below. (b) Basis of consolidation The Financial Statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the Company is exposed to variable returns and has the ability to affect those returns through power to direct the relevant activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. Subsidiaries will be de-consolidated from the date that control ceases. The Company's principal properties and material subsidiaries are as follows: Subsidiary Location Percentage of ownership Property Principle activity Premier Gold Mines USA Inc. Nevada 100% Holding Mineral exploration Goldcorp Dee LLC Humboldt, Nevada 100% Lone Tree Production Ruby Hill Mining Company LLC Eureka, Nevada 100% Ruby Hill Production Osgood Mining Company LLC Humboldt, Nevada 100% Granite Creek Development Au-Reka Gold LLC Eureka, Nevada 100% McCoy-Cove Pre-development Golden Hill Mining LLC Eureka, Nevada 100% FAD Mineral exploration Argenta LLC Lander, Nevada 100% Inactive Mineral exploration All transactions and balances between the Company and its subsidiaries are eliminated on consolidation, including unrealized gains and losses on transactions between the companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Company. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the period are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable. (c) Functional and presentation currency The functional currency of the Company is the United States dollar ("USD" or "US dollars") which reflects the underlying transactions, events and conditions that are relevant to the entity. Management considers primary and secondary indicators in determining functional currency including the currency that influences sales prices, labor, purchases and other costs. Other indicators include the currency in which funds from financing activities are generated and the currency in which receipts from operations are usually retained. Reference to $ or USD is to US dollars, reference to C$ or CAD is to Canadian dollars. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 6
Slide 8 — (Stated in thousands of United States Dollars)
(d) New Accounting Standards and Interpretations not yet Adopted IAS 1 - Classification of liabilities as current or non-current In January 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements to clarify that liabilities are classified as either current or non-current, depending on the existence of the substantive right at the end of the reporting period for an entity to defer settlement of the liability for at least twelve months after the reporting period. The amendments are effective January 1, 2024 with early adoption permitted. The amendments are required to be adopted retrospectively. The Company does not anticipate any significant impact from these amendments on the financial statements as a result of initial application. 3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of these Financial Statements in accordance with IFRS requires management to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities, disclosure of commitments and contingent liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions. Actual results could differ from these estimates. The significant judgments and estimates used in the preparation of these Financial Statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities and earnings within the next financial year were the same as those applied in the most recent annual audited consolidated financial statements for the year ended December 31, 2022, and as described below. Acquisition of Paycore With regard to the acquisition of Paycore, management followed the guidance within IFRS 3 – Business Combinations and determined that the transaction should be accounted for as an asset acquisition. In such cases, the acquirer identifies and recognizes the individual identifiable assets acquired and liabilities assumed. The cost of the group is allocated to the individual identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event will not give rise to recording goodwill. The Paycore transaction was recorded based on the total consideration paid for the assets. Total consideration paid in excess of the acquired assets’ fair values was attributable to the acquired mineral interests. Private Placement of Convertible Debentures The Convertible Debentures described in Note 4 of these Financial Statements were assessed for derivatives within the agreement and a number of instruments were identified that had to be separated from the host contract and valued on a standalone basis. These instruments were valued using a LongstaffSchwartx MonteCarlo simulation, assuming they follow correlated Geometric Brownian Motion and modeling the payoffs of each financial instrument in the Convertible Debentures. The derivatives (including embedded) were fair valued with the residual balance being allocated to the host contracts. The derivatives (including embedded) deemed to be financial assets or liabilities will continue to be recognized at fair value through profit or loss ("FVTPL") whilst the host contract is measured at amortized cost. In determining the fair value at each reporting period, management judgement is required in respect to input variables of the financial model used for estimation purposes. These variables include such inputs as managements estimate of the probability and date of a change of control event, the Company's share price, share price variability, credit spreads, and interest rates. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 7
Slide 9 — (Stated in thousands of United States Dollars)
4. RECENT EVENTS Acquisition of Paycore On May 5, 2023, the Company completed the acquisition of Paycore Minerals Inc. ("Paycore"). Paycore’s principal asset is the FAD property that is host to the FAD deposit located immediately south of, and adjoining, the Company’s Ruby Hill Property located in Eureka County, Nevada. The acquisition consolidates the northern portion of the Eureka District, increasing the Company’s land package at Ruby Hill. The Company acquired 100% of the issued and outstanding shares of Paycore at an exchange ratio of 0.68 i-80 Gold common share for each Paycore common share held (the “Exchange Ratio”). All outstanding options and warrants of Paycore that were not exercised prior to the acquisition date were replaced with i-80 Gold options and warrants, as adjusted in accordance with the Exchange Ratio. The Paycore acquisition was accounted for as an asset acquisition as management determined that substantially all the fair value of the gross assets acquired were concentrated on the FAD mineral property. The components of consideration that were paid is detailed in the table below: Components of consideration paid: Share consideration (i) $ 66,037 Common shares issued in relation to contingent value rights (ii) 12,750 Replacement warrants (iii) 2,675 Replacement options (iii) 2,515 Previously held interest (iv) 4,116 Transaction costs 323 $ 88,416 (i) The fair value of 25,488,584 common shares issued to Paycore shareholders was determined using the Company's share price of C$3.46 per share on the acquisition date. (ii) Following completion of the arrangement and in accordance with the Amendment to the Contingent Value Rights Agreement dated February 26, 2023 among the Company, Paycore, Golden Hill Mining LLC, and Waterton Nevada Splitter, LLC and Waterton Nevada Splitter II, LLC (collectively, "Waterton"), all of the obligations outstanding under the outstanding contingent value rights agreement between Paycore, Golden Hill Mining LLC and Waterton dated April 20, 2022, with an aggregate value of $12.75 million were satisfied through the issuance of 5,016,991 i-80 Gold common shares to Waterton on May 9, 2023. The fair value of 5,016,991 common shares issued to Waterton was determined using the Company's share price of C$3.46 per share on the acquisition date. (iii) The fair value of 1,727,200 replacement options and 3,755,257 replacement warrants was determined using the Black-Scholes pricing model with the following assumptions: Stock Options Warrants Risk free rate 3.55% to 3.91% 3.66% to 4.52% Expected life 18 to 29 months 12 to 24 months Expected volatility 52% to 56% 52% to 58% Share price C$3.46 C$3.46 (iv) On May 5, 2023 and immediately prior to the Paycore acquisition the Company owned 2,336,200 Paycore common shares. The Company's investment in Paycore was remeasured at fair value on the acquisition date using the Exchange Ratio and the Company's share price of C$3.46 per share on the acquisition date with the change in fair value recognized through the statement of income as further described in Note 17 of these Financial Statements. The table below presents the fair values of the assets acquired and liabilities assumed at the date of acquisition: Net assets (liabilities) acquired: Cash $ 10,027 Other assets 206 Mineral properties 78,218 Accounts payable (35) Fair value of net assets acquired $ 88,416 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 8
Slide 10 — (Stated in thousands of United States Dollars)
Private Placement of Convertible Debentures On February 22, 2023, the Company closed a private placement offering of $65 million principal amount of secured convertible debentures (the “Convertible Debentures”) of the Company. The Convertible Debentures bear interest at a fixed rate of 8.00% per annum and mature on February 22, 2027, being the date that is four years from the offering closing date. Outstanding amounts under the Convertible Debentures are convertible into common shares of the Company at any time prior to maturity at the option of the applicable respective lender (a) in the case of the outstanding principal, $3.38 per common share, and (b) in the case of accrued and unpaid interest, subject to TSX approval, at the market price of the common shares at time of the conversion of such interest. The Convertible Debentures are a senior unsecured obligation of the Company and secured on a limited recourse basis by Premier Gold Mines USA Inc. ("Premier USA"), the Company’s wholly-owned subsidiary, with recourse limited to a pledge of all present and future limited liability company units issued by its wholly-owned subsidiary, Au-Reka Gold LLC ("Au-Reka"). The Convertible Debentures are guaranteed on a full recourse basis by Au-Reka which is secured by a first ranking security over all of Au-Reka’s present and future real and personal property (including the McCoy-Cove project). The Convertible Debentures are not redeemable prior to the maturity date; provided, however, that, if the Company has not executed the security documents relating to the security being provided in connection with the offering within 90 days from the closing date, the Company shall be obligated to repurchase the Convertible Debentures, by the date that is 120 days from the closing date, at a price equal to 100% of the principal amount of the Convertible Debentures then outstanding plus any accrued and unpaid interest thereon up to and including the date of redemption. Certain directors and/or officers of the Company subscribed for $0.23 million in principal amount of Convertible Debentures under the offering. 5. INVENTORY June 30, 2023 December 31, 2022 Ore in stockpiles and on leach pads $ 12,558 $ 12,492 Work-in-process 5,019 3,059 Finished goods 1,219 984 Total inventory $ 18,796 $ 16,535 The amount of inventory recognized as an expense in cost of sales for the three and six months ended June 30, 2023 was $12.2 million and $18.7 million ($4.0 million and $5.5 million for the three and six months ended June 30, 2022). During the three and six months ended June 30, 2023, the Company recognized within cost of sales $4.5 million and $8.5 million (nil and nil for the three and six months ended June 30, 2022) in write-downs of inventory to net realizable value, relating to heap leach ore at Ruby Hill, Lone Tree and Granite Creek. 6. OTHER ASSETS June 30, 2023 December 31, 2022 Investment in Paycore (i) $ — $ 2,185 Gold Prepay Agreement embedded derivative (ii) 663 2,916 Silver Purchase Agreement embedded derivative (iii) 2,350 1,898 Forced conversion option (iv) 366 — Other assets (v) 1,767 1,768 Total other assets 5,146 8,767 Less current portion 3,279 6,280 Long-term portion $ 1,867 $ 2,487 (i) The asset balance in the comparative period represents the Company's investment in Paycore, as further described in Note 4 of these Financial Statements. The Company recorded its investment in Paycore at fair value. For the three and six months ended June 30, 2023, the Company recorded a fair value gain related to the revaluation of the investment of $0.2 million and $1.0 million ($1.2 million loss for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. (ii) The asset balance represents the embedded derivative in relation to the fixed gold price included in the Gold Prepay Agreement as further described in Note 9 (iv) and Note 21 (d) of these Financial Statements. The Company recognizes the embedded derivative at fair value with changes in fair value recognized in profit or loss. For the three and six months ended June 30, 2023, the Company recorded a fair value gain / (loss) related to the valuation of the embedded derivative of $0.8 million and $(2.3) million ($4.1 million gain for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. As of June 30, 2023, the current portion of the Gold Prepay Agreement embedded derivative was $0.6 million. (iii) The asset balance represents the embedded derivative in relation to the silver price included in the Silver Purchase Agreement as further described in Note 9 (v) and Note 21 (d) of these Financial Statements. The Company recognizes the embedded derivative at fair value with changes in fair value recognized in profit or loss. For the three and six months ended June 30, 2023, the Company recorded a fair value gain related to the valuation of the embedded derivative of $1.3 million and $0.5 million ($9.1 million gain for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. As of June 30, 2023, the current portion of the Silver Purchase Agreement embedded derivative was $0.9 million. (iv) The asset balance represents the forced conversion option included in the Convertible Debentures as further described in Note 9 (iii) and Note 21 (d) of these Financial Statements. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 9
Slide 11 — (Stated in thousands of United States Dollars)
(v) This balance represents other non-core assets acquired in the Argenta Property acquisition, as further described in Note 8 (b) of these Financial Statements. 7. RESTRICTED CASH AND CASH EQUIVALENTS Property June 30, 2023 December 31, 2022 McCoy-Cove, Nevada (i) $ 787 $ 1,955 Lone Tree, Nevada (ii) 39,377 25,877 Ruby Hill, Nevada (iii) 6,942 4,604 Granite Creek, Nevada (iv) 466 466 Total restricted cash and cash equivalents $ 47,572 $ 32,902 (i) The Company has $0.8 million in restricted cash relating to the reclamation of the Company's McCoy-Cove property. (ii) The Company has $39.4 million in restricted cash relating to the reclamation of the Company's Lone Tree property. (iii) The Company has $6.9 million in restricted cash relating to the reclamation of the Company's Ruby Hill property. (iv) The Company has $0.5 million in restricted cash relating to the reclamation of the Company's Granite Creek property. 8. PROPERTY, PLANT AND EQUIPMENT Cost Mine properties (i) Development properties (ii) Exploration, evaluation and pre- development properties (iii) Buildings, plant and equipment Total Balance as at January 1, 2022 $ 2,160 $ 76,385 $ 223,220 $ 206,241 $ 508,006 Additions — 32,422 241 23,450 56,113 Disposals — — — (24) (24) IFRS 16 Right of Use assets — — — 280 280 Change in estimate of provision for environmental rehabilitation — (994) (22,608) — (23,602) Transfers — 899 7,182 (8,081) — Balance as at December 31, 2022 2,160 108,712 208,035 221,866 540,773 Additions — 7,505 83,276 11,450 102,231 Disposals — — — — — IFRS 16 Right of Use assets — — — 247 247 Balance as at June 30, 2023 $ 2,160 $ 116,217 $ 291,311 $ 233,563 $ 643,251 Accumulated depreciation and impairment Balance as at January 1, 2022 $ 2,160 $ — $ — $ 3,197 $ 5,357 Depletion, depreciation and amortization — — — 6,177 6,177 Disposals — — — (22) (22) Balance as at December 31, 2022 2,160 — — 9,352 11,512 Depletion, depreciation and amortization — — — 2,672 2,672 Balance as at June 30, 2023 $ 2,160 $ — $ — $ 12,024 $ 14,184 Carrying amounts Balance, December 31, 2022 $ — $ 108,712 $ 208,035 $ 212,514 $ 529,261 Balance as at June 30, 2023 $ — $ 116,217 $ 291,311 $ 221,539 $ 629,067 (i) Mine properties include the Ruby Hill Archimedes open pit, fully depleted in 2021. (ii) Development properties include Granite Creek. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 10
Slide 12 — (Stated in thousands of United States Dollars)
(iii) Exploration, evaluation and pre-development properties: Property January 1, 2023 Additions Change in estimate of environmental provision Transfers June 30, 2023 McCoy-Cove, Nevada $ 61,203 $ 5,058 $ — $ — $ 66,261 Ruby Hill, Nevada 92,889 — — — 92,889 Lone Tree, Nevada 52,533 — — — 52,533 Argenta, Nevada 1,410 — — — 1,410 FAD, Nevada — 78,218 — — 78,218 Total $ 208,035 $ 83,276 $ — $ — $ 291,311 Property January 1, 2022 Additions Change in estimate of environmental provision Transfers December 31, 2022 McCoy-Cove, Nevada $ 54,105 $ — $ (84) $ 7,182 $ 61,203 Ruby Hill, Nevada 103,594 — (10,705) — 92,889 Lone Tree, Nevada 65,521 — (12,988) — 52,533 Argenta, Nevada — 241 1,169 — 1,410 Total $ 223,220 $ 241 $ (22,608) $ 7,182 $ 208,035 (iv) Depreciation, depletion and amortization on property, plant and equipment during the three and six months ended June 30, 2023 and 2022 include amounts allocated to: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Depreciation, depletion and amortization $ 2,724 $ 655 $ 4,145 $ 823 Recorded in exploration, evaluation and pre-development 22 116 55 231 Recorded in general and administrative 110 33 215 161 Recorded in property maintenance 284 — 568 — Depreciation, depletion and amortization capitalized into properties 16 40 38 80 3,156 844 5,021 1,295 Inventory movement (1,716) 849 (2,349) 1,639 Total depletion, depreciation and amortization $ 1,440 $ 1,693 $ 2,672 $ 2,934 (v) The Company’s leased assets include buildings and vehicles. Right-of-use assets include: Buildings Equipment Total As at December 31, 2021 $ 582 $ — $ 582 Additions — 280 280 Depreciation 212 128 340 As at December 31, 2022 370 152 522 Additions 143 104 247 Depreciation 118 115 233 As at June 30, 2023 $ 395 $ 141 $ 536 (a) Impairment The Company regularly reviews the carrying amount of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. Mineral property interests are tested for impairment when events or changes in circumstances indicate that their carrying amount may not be recoverable. In the absence of other factors, a mineral property that has not been actively explored within the past three years and for which no future exploration plans exist will be considered to be impaired. In the Company's review for the six months ended June 30, 2023 there was no indication of impairment, and accordingly, no test was performed at June 30, 2023. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 11
Slide 13 — (Stated in thousands of United States Dollars)
(b) Acquisitions and option agreements Argenta Property Acquisition On November 10, 2022, the Company through its wholly owned subsidiary Argenta LLC ("Argenta") acquired a strategic property package located in Lander Country, Nevada (the “Argenta Property”), that includes water rights, a rail heading, barite deposits, and barite processing infrastructure from Baker Hughes Oilfield Operations LLC for consideration of $3.7 million. The strategic acquisition provides the Company with water rights for development and operation of the McCoy-Cove Project. The Company determined that the Argenta Property acquisition represents an asset acquisition. The underlying assets purchased and liabilities assumed were recorded at cost allocated based upon their relative fair values at the date of purchase. The table below presents the values of the assets purchased and liabilities assumed on the date of acquisition: Net assets (liabilities) acquired: Property, plant and equipment $ 3,122 Other assets 1,767 Provision for environmental rehabilitation (1,169) Fair value of net assets acquired $ 3,720 Granite Creek Project On April 15, 2021, the Company completed the acquisition of Osgood Mining Company LLC ("Osgood") from Waterton Global Resource Management, Inc. (“Waterton”). Osgood is the owner of the Granite Creek Project (formerly the "Getchell Project") in the Getchell gold belt near Winnemucca, Nevada. Consideration paid to Waterton consisted of (i) $23.0 million in cash, (ii) 13,036,846 common shares of the Company, (iii) warrants to purchase 12,071,152 common shares of the Company, with an exercise price C$3.64 per common share, for a period of 36 months following the closing date, and (iv) contingent value rights including a payment to Waterton in the amount of $5.0 million upon the public announcement of a positive production decision related to the Granite Creek Project (underground or open pit), and an additional $5 million upon production of the first ounce of gold (excluding ordinary testing and bulk sampling programs) following a 60 consecutive day period where gold prices have exceeded $2,000 per ounce. The Osgood acquisition was accounted for as an asset acquisition as management determined that substantially all the fair value of the gross assets acquired were concentrated on the Granite Creek Project mineral property. For contingent consideration and payments related to asset acquisitions, an accounting policy choice exists, and an entity may recognize a liability for the expected variable payments at the time control of the underlying asset is obtained or they may only recognize such a liability as the related activity that gives rise to the variability occurs. For the Osgood acquisition, management did not recognize a liability for contingent payments as the conditions required for these payments had not been met as of the date the assets were acquired. On May 6, 2022, the Company entered into an agreement to acquire strategic land sections adjoining the Company’s Granite Creek Property from Nevada Gold Mines ("NGM"). The total consideration for the purchase of the property sections consists of a cash payment of $4.0 million and the inclusion of the acquired sections into the existing 10% net profits royalty that NGM held on the existing property. Subsequent to the date of the agreement the 10% net profits royalty was transferred to Gold Royalty as disclosed in Note 8 (c) of these Financial Statements. In September 2022, the Company paid to Waterton $5.0 million as part of the contingent value rights payment due upon the public announcement of a positive production decision related to the Granite Creek Project. The $5.0 million contingent value rights payment is recorded in property, plant and equipment on the consolidated statements of financial position. Tabor Exploration and Option Agreement On August 24, 2020, the Company through its wholly owned subsidiary Au-Reka entered into an option agreement with Renaissance Exploration, Inc. to acquire a 100% interest in the Tabor Project located in Esmeralda County, Nevada. The option agreement is subject to a firm commitment to spend $0.3 million towards exploration activities by the one-year anniversary date that the Company acquires an exploration permit on the property plus initial earn-in option payments of $5.2 million. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 12
Slide 14 — (Stated in thousands of United States Dollars)
(c) Summary of mineral property Net Smelter Return ("NSR") royalties (as at June 30, 2023) Active properties NSR (i) McCoy-Cove, Nevada 1.5% NSR Maverix Metals Inc. 2% NSR Maverix Metals Inc. 2% NSR Chiara Tabor, Nevada 3% NSR Renaissance Granite Creek 1-4% NSR Royal Gold/D.M. Duncan 3-5% NSR Royal Gold/D.M. Duncan 2% NSR Franco-Nevada/S&G Pinson Portions of 7.5% NSR K.Murphy/Noceto/Phillips 2% NSR Stoffer/Noceto/Phillips/Murphy/Christison 10% NPI Gold Royalty 2% Franco-Nevada 0.5% NSR Nevada Gold Mines Lone Tree 3% NSR 5% NSR VEK/Andrus 1% NSR Franco-Nevada Mining Corporation, Inc. 4-5% NSR Bronco Creek, Inc. 5% NSR Richardson 5% NSR BTF Properties 0.5%-1.5% NSR Newmont USA Limited Ruby Hill 2.5% NSR Placer Dome U.S. Inc. 3% Biale Trust 4% NSR Asarco Incorporated 3% RG Royalties Golden Hill 4% NSR Asarco Incorporated 3% NSR RG Royalties 0.5-1.5% NSR Royalty Consolidation Company 3% Biale Trust (i) These royalties are tied to specific mining claims and may not apply to the entire property. 9. LONG-TERM DEBT Orion Convertible Loan (i) Sprott Convertible Loan (ii) Convertible Debentures (iii) Gold Prepay Agreement (iv) Silver Purchase Agreement (v) Other (vi) Total As at January 1, 2022 $ 32,956 $ 7,685 $ — $ — $ — $ 795 $ 41,436 Fair value on inception — — — 41,737 29,889 — 71,626 Additions and adjustments — — — — — 334 334 Amortization of finance costs 308 — — 45 — — 353 Principal repayment — — — (14,498) (134) (348) (14,980) Finance charge 6,477 1,218 — 6,720 2,692 — 17,107 As at December 31, 2022 39,741 8,903 — 34,004 32,447 781 115,876 Fair value on inception — — 42,459 — — — 42,459 Additions and adjustments — 315 — — — 244 559 Amortization of finance costs 201 — 142 29 20 — 392 Principal repayment — (2,038) — (8,465) (6,152) (188) (16,843) Finance charge 3,696 679 2,723 3,966 1,647 — 12,712 As at June 30, 2023 $ 43,638 $ 7,859 $ 45,324 $ 29,534 $ 27,962 $ 837 $ 155,155 Less current portion — — — 11,005 5,404 567 16,976 Long-term portion $ 43,638 $ 7,859 $ 45,324 $ 18,529 $ 22,558 $ 270 $ 138,179 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 13
Slide 15 — (Stated in thousands of United States Dollars)
(i) Orion Convertible Loan On December 13, 2021, the Company entered into a Convertible Credit Agreement with OMF Fund III (F) Ltd., an affiliate of Orion Mine Finance ("Orion") to borrow $50 million (the "Orion Convertible Loan"). The Orion Convertible Loan bears interest at a rate of 8.0% annually and matures on December 13, 2025. The Orion Convertible Loan contains a change of control feature, a conversion feature, and a forced conversion feature that are considered embedded derivatives by the Company. The change of control feature and conversion feature are classified as derivative financial liabilities, measured at FVTPL, whereas the forced conversion feature is classified as an equity instrument measured at fair value on inception and is not subsequently remeasured. During the period ended June 30, 2023, none of the features were exercised. The derivative financial liability was recorded at $13.6 million at inception and $18.8 million at June 30, 2023 ($27.0 million at December 31, 2022). For the three and six months ended June 30, 2023, the Company recorded a fair value gain related to the valuation of the embedded derivatives of $0.9 million and $8.2 million (gain of $14.0 million and $8.3 for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. The equity instrument was recorded at $2.0 million at inception and period end.Interest expense is calculated by applying the effective interest rate of 18.90% to the host liability component. Interest expense is included in finance expense. The initial fair value of the liability portion of the convertible loan was determined using a market interest rate for an equivalent non- convertible loan at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on change of control, conversion or maturity of the loan. The remainder of the proceeds, after removing components classified as liabilities, is allocated to the forced conversion option and recognized in shareholder's equity, net of income tax, and not subsequently remeasured. (ii) Sprott Convertible Loan On December 10, 2021, the Company entered into a Convertible Credit Agreement with a fund managed by Sprott Asset Management USA, Inc. and a fund managed by CNL Strategic Asset Management, LLC (“Sprott”) to borrow $10 million (the "Sprott Convertible Loan"). The Sprott Convertible Loan bears interest at a rate of 8.0% annually and matures on December 9, 2025. The Sprott Convertible Loan contains a change of control feature, a conversion feature, and a forced conversion feature that are considered embedded derivatives by the Company. The change of control feature and conversion feature are classified as derivative financial liabilities, measured at FVTPL whereas the forced conversion feature is classified as an equity instrument measured at fair value on inception and is not subsequently remeasured. During the period ended June 30, 2023, Sprott converted $1.8 million in principal and $0.2 million in interest into 800,449 common shares of the Company. The derivative financial liability was recorded at $2.7 million at inception and $3.1 million at June 30, 2023 ($5.3 million at December 31, 2022). For the three and six months ended June 30, 2023, the Company recorded a fair value gain related to the valuation of the embedded derivatives of $1.2 million and $2.2 million (gain of $2.3 million and $1.9 for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. The equity instrument was recorded at $0.4 million at inception and $0.3 million at period end. Interest expense is calculated by applying the effective interest rate of 14.92% to the host liability component. Interest expense is included in finance expense. The initial fair value of the liability portion of the convertible loan was determined using a market interest rate for an equivalent non- convertible loan at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on control, conversion or maturity of the loan. The remainder of the proceeds, after removing components classified as liabilities, is allocated to the forced conversion option and recognized in shareholder's equity, net of income tax, and not subsequently remeasured. Under the Sprott Convertible Loan and Orion Convertible Loan (the "Convertible Loans"), if a change of control occurs prior to the maturity date, the Company shall make an offer to prepay the Convertible Loans in cash, in an amount equal to 101% of the then outstanding principal amount. Outstanding amounts under the Convertible Loans are convertible into common shares of the Company at any time prior to maturity at the option of the applicable respective lender (a) in the case of the outstanding principal, C$3.275 per common share, and (b) in the case of accrued and unpaid interest, subject to TSX approval, at the market price of the common shares on the TSX at time of the conversion of such interest. Commencing 120 days following the closing date of the Convertible Loans, on any date when the volume weighted average price equals or exceeds 150% of the conversion price for each of the preceding 20 days, the Company may at its option elect to require the lenders to convert at the conversion price all of the then outstanding principal amount and any accrued and unpaid interest into common shares of the Company. (iii) Convertible Debentures On February 22, 2023, the Company closed a private placement offering of $65 million principal amount of secured Convertible Debentures of the Company. The Convertible Debentures bear interest at a fixed rate of 8.00% per annum and will mature on February 22, 2027. Outstanding amounts under the Convertible Debentures are convertible into common shares of the Company at any time prior to maturity at the option of the applicable respective lender (a) in the case of the outstanding principal, $3.38 per common share, and (b) in the case of accrued and unpaid interest, subject to TSX approval, at the market price of the common shares at time of the conversion of such interest. The Convertible Debentures contain a conversion feature, a change of control feature, and a forced conversion feature that are considered embedded derivatives by the Company. The change of control feature is classified as a derivative financial liability and the forced conversion feature is classified as a derivative financial asset, both measured at FVTPL whereas the conversion feature is classified as an equity instrument measured at fair value on inception and is not subsequently remeasured. During the period ended June 30, 2023, none of the features were exercised. The change of control liability was recorded at $1.4 million at inception and nil at June 30, 2023 and the forced conversion asset was recorded at $0.9 million at inception and $0.4 million at June 30, 2023. For the three and six months ended June 30, 2023, the Company recorded a fair value gain related to the valuation of the embedded derivatives of $0.9 million (nil for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. The equity instrument was recorded at $18.9 million at inception and at June 30, 2023. Interest expense is calculated by applying the effective interest rate of 19% to the host equity component. Interest expense is included in finance expense. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 14
Slide 16 — (Stated in thousands of United States Dollars)
Under the Convertible Debentures if a change of control occurs prior to the maturity date, the Company shall make an offer to prepay the Convertible Debentures in cash, in an amount equal to 104% of the then outstanding principal amount, plus accrued and unpaid interest on such Convertible Debentures up to, and including, the change of control purchase date. The holder of the Convertible Debentures shall have the right, at any time, to convert all or any portion of the principal amount of the Convertible Debentures into common shares of the Company at the conversion price of $3.38 per common share. The holder shall also have the option to elect to convert all or any portion of the accrued and unpaid interest into common shares at a price equal to the greater of (i) the conversion price, (ii) the current market price of the common shares on NYSE at the time of the conversion of such amounts owing, or (iii) 5-day VWAP of the common shares on the TSX. If after 120 days after the issue date and prior to the maturity date, the VWAP of the common shares of the Company as measured in U.S. dollars on the NYSE American equals or exceeds 150% of the conversion price for 20 consecutive trading days, the Company shall have right to convert all but not less than all of the principal amount of the Convertible Debentures, and subject to the approval of the TSX or any applicable stock exchange, all accrued and unpaid interest on the Convertible Debentures (however, that such conversion price of the accrued and unpaid interest must not be less than the VWAP of the common shares on the TSX during the five trading days immediately preceding the relevant date), into common shares at the conversion price. (iv) Gold Prepay Agreement On December 13, 2021, the Company entered into a gold prepay agreement with Orion (the "Gold Prepay Agreement"). In April 2022, the Gold Prepay Agreement was amended to adjust the quantity of the quarterly deliveries of gold, but not the aggregate amount of gold, to be delivered by the Company to Orion over the term of the Gold Prepay Agreement. Under the terms of the amended Gold Prepay Agreement, in exchange for $41.9 million, the Company is required to deliver to Orion 3,100 troy ounces of gold for the quarter ending June 30, 2022, and thereafter, 2,100 troy ounces of gold per calendar quarter until September 30, 2025, for aggregate deliveries of 30,400 troy ounces of gold. As of June 30, 2023, the Company had delivered 11,500 troy ounces of gold towards the Gold Prepay Agreement with Orion, leaving 18,900 troy ounces of gold remaining to be delivered under the agreement. The Gold Prepay Agreement is recognized as a financial liability at amortized cost and it contains an embedded derivative in relation to the embedded gold price within the agreement that is measured at FVTPL each reporting period, as further described in Note 6 (ii) and Note 21 (d) of these Financial Statements. Interest expense is calculated by applying the effective interest rate of 24.48% to the financial liability. Interest expense is included in finance expense. (v) Silver Purchase Agreement On December 13, 2021, in exchange for $30.0 million, the Company entered into a silver purchase and sale agreement with Orion (the "Silver Purchase Agreement"). Under the Silver Purchase Agreement, commencing April 30, 2022, the Company will deliver to Orion 100% of the silver production from the Granite Creek and Ruby Hill projects until the delivery of 1.2 million ounces of silver, after which the delivery will be reduced to 50% until the delivery of an aggregate of 2.5 million ounces of silver, after which the delivery will be reduced to 10% of the silver production solely from Ruby Hill Project. Orion will pay the Company an ongoing cash purchase price equal to 20% of the prevailing silver price. Until the delivery of an aggregate of 1.2 million ounces of silver, the Company is required to deliver the following minimum amounts of silver in each calendar year: (i) in 2022, 300,000 ounces, (ii) in 2023, 400,000 ounces, (iii) in 2024, 400,000 ounces, and (iv) in 2025, 100,000 ounces. The Silver Purchase Agreement was funded April 2022. On January 13, 2023, the Company delivered 293,509 ounces of silver to Orion in satisfaction of the 2022 Annual Minimum Delivery Amount of 300,000 ounces (6,491 ounces of silver delivered to Orion in 2022). As of June 30, 2023, the Company had delivered 301,656 ounces of silver towards the Silver Purchase Agreement with Orion. The current portion of the liability is $5.4 million at June 30, 2023, which is mainly comprised of 398,344 ounces in relation to the 2023 Annual Minimum Delivery Amount. The Silver Purchase Agreement is recognized as a financial liability at amortized cost and it contains two embedded derivatives as further described in Note 6 (iii) and Note 21 (d) of these Financial Statements. Interest expense is calculated by applying the effective interest rate of 12.28% to the financial liability. Interest expense is included in finance expense. The obligations under the Gold Prepay Agreement and Silver Purchase Agreement are senior secured obligations of the Company and its wholly-owned subsidiaries Ruby Hill Mining Company LLC, and Osgood Mining Company LLC, and secured against the Ruby Hill project in Eureka County, Nevada and the Granite Creek project in Humboldt County, Nevada. (vi) Lease liability Lease liabilities relate to leases on buildings and mobile mining equipment which have a remaining lease term between one and five years and an interest rate between 3.3% and 14.4% over the term of the lease. The schedule of undiscounted lease payment obligations is as follows: June 30, 2023 Less than one year $ 508 One to three years 154 More than three years 53 Total undiscounted lease liabilities $ 715 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 15
Slide 17 — (Stated in thousands of United States Dollars)
10. PROVISION FOR ENVIRONMENTAL REHABILITATION The Company's provision for environmental rehabilitation results from mining activities and previously mined property interests. The provision consists primarily of costs associated with mine reclamation and closure activities. These activities, which tend to be site specific, generally include costs for decommissioning the mill complex and related infrastructure, physical and chemical stability of the tailings area and, post-closure site security and monitoring costs. The Company considers such factors as changes in laws and regulations, and requirements under existing permits in determining the estimated costs. Such analysis is performed on an on-going basis. The Company estimates that the undiscounted un-inflated value of the cash flows required to settle the provision is $8.6 million for the McCoy-Cove property, $1.8 million for the Granite Creek property, $67.2 million for the Lone Tree property, $18.1 million for the Ruby Hill property and $1.2 million for the Argenta property. In calculating the best estimate of the Company's provision, management used risk-free interest rates ranging from 3.88% to 4.14%. A reconciliation of the discounted provision is provided below: Argenta McCoy-Cove Granite Creek Lone Tree Ruby Hill Total Balance as at January 1, 2023 $ 1,170 $ 6,812 $ 1,473 $ 48,898 $ 13,273 $ 71,626 Accretion expense 23 141 31 971 274 1,440 Reclamation expenditures — — — (309) — (309) Balance as at June 30, 2023 1,193 6,953 1,504 49,560 13,547 72,757 Less current portion 601 — — 486 — 1,087 Long-term portion $ 592 $ 6,953 $ 1,504 $ 49,074 $ 13,547 $ 71,670 Argenta McCoy-Cove Granite Creek Lone Tree Ruby Hill Total Balance as at January 1, 2022 $ — $ 6,684 $ 2,394 $ 60,592 $ 23,179 $ 92,849 Acquisitions 1,170 — — 77 — 1,247 Change in estimate capitalized — (84) (995) (13,066) (10,704) (24,849) Accretion expense — 212 74 1,917 798 3,001 Reclamation expenditures — — — (622) — (622) Balance as at December 31, 2022 1,170 6,812 1,473 48,898 13,273 71,626 Less current portion 398 — — 548 — 946 Long-term portion $ 772 $ 6,812 $ 1,473 $ 48,350 $ 13,273 $ 70,680 11. OTHER LIABILITIES June 30, 2023 December 31, 2022 Warrant liability (i) $ 8,323 $ 15,945 Share-based payment liability (ii) 1,753 983 Orion - Conversion and change of controls rights (iii) 18,805 27,029 Sprott - Conversion and change of controls rights (iii) 3,052 5,299 Deferred consideration (iv) 19,583 45,805 Offtake liability (v) 730 730 Total other liabilities 52,246 95,791 Less current portion 23,702 46,181 Long-term portion $ 28,544 $ 49,610 (i) Warrant liability Waterton warrants In connection with the acquisition of Osgood the Company issued to Waterton 12.1 million common share warrants which are exercisable into one fully paid and non-assessable common share of the Company at an exercise price of C$3.64 per share until April 14, 2024. The warrants included a four month hold period. The initial fair value of the warrants recognized on inception was $6.1 million and at June 30, 2023 $3.3 million ($10.1 million at December 31, 2022). During the first quarter of 2023, Waterton exercised 350,000 warrants to purchase 350,000 common shares of the Company. Orion warrants In connection with the Orion financing package the Company completed during the fourth quarter of 2021, the Company issued 5.5 million common share warrants exercisable at C$3.275 per share with an exercise period of 36 months or until December 13, 2024. The initial fair value of the warrants recognized on inception was $3.5 million and at June 30, 2023 $3.1 million ($5.9 million at December 31, 2022). NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 16
Slide 18 — (Stated in thousands of United States Dollars)
Paycore replacement warrants In connection with the Paycore acquisition discussed in Note 4 of these Financial Statements, the Company issued a total of 3.8 million common share warrants for Paycore warrants outstanding on the date of acquisition. The replacement warrants are comprised of 0.2 million common share warrants at an exercise price of C$3.09 per common share until April 20, 2024, 0.3 million common share warrants at an exercise price of C$2.40 per common share until February 9, 2025, and 3.3 million common share warrants at an exercise price of C$4.02 per common share until May 2, 2025. The warrants are considered derivatives because their exercise price is in C$ whereas the Company’s functional currency is in USD. Accordingly, the Company recognizes the warrants as liabilities at fair value with changes in fair value recognized in profit or loss. For the three and six months ended June 30, 2023, the Company recognized a gain on the revaluation of the liability of $4.6 million and $10.2 million ($12.0 million and $8.9 million gain for the three and six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. The fair value of the warrants were calculated using the Black-Scholes option pricing model, or a Monte Carlo simulation model, if applicable taking into the account the four months hold restriction, and with the following weighted average assumptions: June 30, 2023 December 31, 2022 Risk free rate 4.62% to 5.23% 3.96% to 4.25% Warrant expected life 9 to 21 months 15 to 24 months Expected volatility 52% to 55% 56% to 60% Expected dividend 0% 0% Share price C$2.98 C$3.78 As of June 30, 2023, there were 20,966,409 warrants outstanding (17,561,152 at December 31, 2022). (ii) Share-based payment liability The Company recognized a share-based payment liability of $1.8 million at June 30, 2023 ($1.0 million at December 31, 2022) under the Company's restricted and deferred share unit plans as discussed in Note 12 (e) of these Financial Statements. The current portion of the liability is $0.8 million at June 30, 2023 ($0.4 million at December 31, 2022) representing the cash settlement expected on the next vesting date. (iii) Conversion and change of controls right The financial liability represents the conversion and change of control rights included in the Orion and Sprott Convertible Loans as further described in Note 9 (i), Note 9 (ii) and Note 21 (d) of these Financial Statements. (iv) Deferred consideration In connection with the acquisition of Ruby Hill the Company recorded a financial liability associated with the milestone payments. The four milestone payments and corresponding early prepayment options are as follows: • $17 million in cash and/or shares of i-80 Gold payable on the earlier of 60 days following the issuance of a press release by the Company regarding the completion of a new or updated Mineral Resource estimate for Ruby Hill or 15 months after closing, based on the market price of i-80 Gold's shares at the time of such payment (the "First Milestone Payment"); • $15 million in cash and/or shares of i-80 payable on the earlier of 60 days following the issuance of a press release by the Company regarding the completion of a Feasibility Study for Ruby Hill or 24 months after closing, based on the market price of i-80 Gold's shares at the time of such payment (the "Second Milestone Payment"). An early prepayment option to reduce the payment by $5 million to $10 million is available if the payment is made less than 15 months after closing and if the payment in shares of the Company does not exceed up to $7.5 million of the total amount, at the Company's discretion. • $15 million in cash and/or shares of i-80 Gold payable on the earlier of 30 months after closing and 90 days following the announcement by the Company of a construction decision related to a deposit on any portion of Ruby Hill that is not currently being mined, based on the market price of i-80 Gold's shares at the time of such payment (the "Third Milestone Payment"); and • $20 million in cash and/or shares of i-80 Gold payable on the earlier of 36 months after closing and 90 days following the announcement by the Company of achieving Commercial Production related to a deposit on any portion of Ruby Hill that is not currently being mined, priced based on the market price of i-80 Gold's shares at the time of such payment (the "Fourth Milestone Payment"). An early prepayment option to reduce the payment for the third and fourth milestone payments to $20 million is available if the payments are done prior to 24 months after closing, if the payment in shares of the Company did not exceed up to $10 million of the total amount, at the Company's discretion, and if shares held by Waterton do not exceed 9.99% of the outstanding shares of the Company. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 17
Slide 19 — (Stated in thousands of United States Dollars)
The Company recognizes the liability at fair value with changes in fair value recognized in profit or loss. The initial fair value of the liability recognized on inception was $41.9 million and $19.6 million at June 30, 2023 ($45.8 million at December 31, 2022). For the six months ended June 30, 2023, the Company recognized a loss on the revaluation of the liability of $0.8 million ($1.6 million loss for the six months ended June 30, 2022) through the statement of income as further described in Note 17 of these Financial Statements. During the first quarter of 2023, the Company exercised the early prepayment option and paid to Waterton total consideration of $27.0 million in satisfaction of the First Milestone Payment and Second Milestone Payment. Consideration paid to Waterton consisted of $11.0 million in cash and 5,515,313 common shares of the Company, as further described in Note 12 (b) of these Financial Statements. (v) Offtake liability The financial liability represents the gold look back component of the offtake agreement. The Company originally entered into an offtake agreement with Orion in April 2021 (the “Offtake Agreement”) to sell (i) an aggregate of 29,750 ounces of refined gold for 2021, and (ii) up to an aggregate of 31,500 ounces of refined gold annually (the "Annual Gold Quantity") from the Company's Eligible Projects until March 1, 2027. The offtake agreement was amended and restated (the “A&R Offtake Agreement”) in December 2021. The main amendments reflected in the A&R Offtake Agreement include the increase in the term of the agreement to December 31, 2028, the inclusion of the Granite Creek and Ruby Hill projects, and the increase of the annual gold quantity to up to an aggregate of 37,500 ounces in respect of the 2022 and 2023 calendar years and up to an aggregate of 40,000 ounces in any calendar year after 2023. The final purchase price to be paid by Orion will be, at Orion’s option, a market referenced gold price in US dollars per ounce during a defined pricing period before and after the date of each sale. In the event that the Company does not produce the Annual Gold Quantity in any given year, the obligation is limited to those ounces actually produced. During 2022, Orion assigned all of its rights, title and interest under the A&R Offtake Agreement to TRR Offtakes LLC ("Trident"). 12. SHARE CAPITAL (a) Authorized share capital At June 30, 2023, the authorized share capital consisted of an unlimited number of common shares without par value. (b) Issued share capital On June 27, 2023, Sprott converted $1.8 million in principal and subject to obtaining approval of the TSX $0.2 million in interest of the Convertible Loans into 800,449 common shares of the Company. On July 7, 2023, upon approval of the TSX the Company issued 800,449 common shares to Sprott. On May 9, 2023, the Company issued 5,016,991 common shares to Waterton in settlement of the contingent value rights agreement between Paycore and Waterton, as further described in Note 4 of these Financial Statements. On May 5, 2023, the Company acquired 100% of the issued and outstanding shares of Paycore at the Exchange Ratio issuing 25,488,584 common shares to Paycore shareholders, as further described in Note 4 of these Financial Statements. On January 16, 2023, the Company issued 5,515,313 common shares to Waterton at a price of C$3.8945 for total gross proceeds of C$21.5 million ($16.0 million) as partial consideration of the the First Milestone Payment and Second Milestone Payment, as further described in Note 11 (iv) of these Financial Statements. During the six months ended June 30, 2023, the Company issued 841,398 common shares for stock options and warrants exercised and received proceeds of C$2.7 million ($2.0 million). During the year ended December 31, 2022, the Company issued 1,857,200 common shares for stock options and warrants exercised and received proceeds of C$4.7 million ($3.7 million). (c) Share option plan The Company has a share option plan (the "Plan") which is restricted to directors, officers, key employees and consultants of the Company. The number of common shares subject to options granted under the Plan (and under all other management options and employee stock purchase plans) is limited to 10% in the aggregate and 1% with respect to any one optionee of the number of issued and outstanding common shares of the Company at the date of the grant of the option. Options issued under the Plan may be exercised during a period determined by the Company's Board of Directors which cannot exceed ten years. Vesting periods may range from immediate to five years. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 18
Slide 20 — (Stated in thousands of United States Dollars)
(d) Stock options The continuity of stock options issued and outstanding are as follows: Options outstanding # Weighted average price C$ Outstanding at December 31, 2021 6,689,000 2.21 Granted 2,673,179 2.65 Exercised (1,047,200) 2.45 Expired (320,106) 2.71 Forfeited (116,127) 2.62 Outstanding at December 31, 2022 7,878,746 2.30 Issued in Paycore Acquisition 1,727,200 1.89 Granted 2,088,687 3.20 Exercised (491,398) 2.65 Expired (16,000) 2.91 Forfeited (50,532) 2.75 Outstanding at June 30, 2023 11,136,703 2.38 The weighted average share price at the date of exercise for the six months ended June 30, 2023 was C$3.17 (C$2.80 for the six months ended June 30, 2022). At June 30, 2023, the following options were outstanding, and outstanding and exercisable: Outstanding Outstanding and Exercisable Exercise price CAD Options # Weighted average exercise price C$ Weighted average remaining life in years Options # Weighted average exercise price C$ Weighted average remaining life in years $0.59 - $1.55 2,513,600 $1.25 1.41 2,513,600 $1.25 1.41 $1.56 - $2.64 3,756,078 $2.36 3.80 2,954,697 $2.30 3.83 $2.65 - $3.17 2,450,300 $2.72 3.08 2,411,532 $2.72 3.07 $3.18 - $3.67 2,416,725 $3.25 4.40 1,108,266 $3.28 4.13 11,136,703 $2.38 3.23 8,988,095 $2.24 2.98 Total vested stock options at June 30, 2023 were 8,988,095 with a weighted average exercise price of C$2.24 (5,998,738 at December 31, 2022 with a weighted average exercise price of C$2.17). The Company applies the fair value method of accounting for all share-based compensation awards and accordingly, $1.4 million was recorded for options issued as compensation during the six months ended June 30, 2023 ($1.3 million for the six months ended June 30, 2022) per the table in (f) share-based payments below. The options had a weighted average grant date fair value of C$3.20 at June 30, 2023. As of June 30, 2023, there were 2,148,608 unvested stock options (1,880,008 at December 31, 2022). For purposes of the options granted, the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model, with the following assumptions: June 30, 2023 December 31, 2022 Risk-free interest rate 3.47% to 4.03% 1.55% to 4.20% Annualized volatility based on historic volatility 52% to 60% 51% to 62% Expected dividend Nil Nil Forfeiture rate 0.0% to 4.4% 0% to 5.7% Expected option life 2.4 to 3.5 years 3.0 years (e) Restricted and Deferred Share Unit Plan The Company adopted the RSU plan to allow the Board of Directors to grant its employees non-transferable share units based on the value of the Company's share price at the date of grant. The awards have a graded vesting schedule over a three-year period. Under the RSU plan, the awards can be equity or cash settled immediately upon vesting. The Company adopted the DSU plan to grant members of its Board of Directors non-transferable share units based on the value of the Company's share price at the date of grant. The awards have a graded vesting schedule over a three-year period. DSUs must be retained until the Director leaves the Board, at which time the awards will be equity or cash settled. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 19
Slide 21 — (Stated in thousands of United States Dollars)
The following table summarizes the continuity of the RSUs and DSUs for the period ended June 30, 2023: RSUs outstanding # DSUs outstanding # Outstanding at December 31, 2021 — — Granted 772,170 175,091 Settled (236,301) — Forfeited (70,227) — Outstanding at December 31, 2022 465,642 175,091 Granted 731,543 120,339 Forfeited (26,873) — Outstanding at June 30, 2023 1,170,312 295,430 As the RSUs and DSUs are expected to be settled in cash, at June 30, 2023 a current liability of $0.8 million and a long-term liability of $0.9 million was outstanding and included in other liabilities ($0.40 million and $0.60 million, respectively, at December 31, 2022). For the six months ended June 30, 2023, $0.8 million has been recorded as an expense and included in share-based payments ($0.7 million for the six months ended June 30, 2022). The total fair value of the vested and unvested RSUs and DSUs at June 30, 2023 was C$4.4 million ($1.7 million at December 31, 2022). For purposes of the vesting of the RSUs and DSUs, the fair value of the liability was estimated using the share price of the valuation date and an expected weighted average forfeiture rate of 2% and nil, respectively. (f) Share-based payments Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Stock option valuation $ 373 $ 269 $ 1,441 $ 1,299 RSU and DSU valuation 530 278 770 690 Total $ 903 $ 547 $ 2,211 $ 1,989 13. BASIC AND DILUTED INCOME / (LOSS) PER SHARE Basic income / (loss) per share is calculated based on the weighted average number of common shares and common share equivalents outstanding during the three and six months ended June 30, 2023, and 2022. Diluted income / (loss) per share is based on the assumption that stock options and warrants that have an exercise price less than the average market price of the Company's common shares during the period have been exercised on the later of the beginning of the year and the date granted. Net income / (loss) and basic weighted average shares outstanding are reconciled to diluted net income / (loss) and diluted weighted average shares outstanding, respectively, as follows: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Net income / (loss) loss for the period $ (15,962) $ 19,276 $ (29,078) $ (3,988) Basic weighted average shares outstanding 265,433,411 240,312,422 255,573,142 239,800,687 Dilution adjustment for stock options — 5,302,702 — — Diluted weighted average shares outstanding 265,433,411 245,615,124 255,573,142 239,800,687 Basic income / (loss) per share $ (0.06) $ 0.08 $ (0.11) $ (0.02) Diluted income / (loss) per share $ (0.06) $ 0.08 $ (0.11) $ (0.02) 11,136,703 stock options (Note 12 (d)) and 20,966,409 warrants (Note 11 (i)) were excluded from the computation of diluted weighted average shares outstanding for the three and six months ended June 30, 2023 (8,037,841 and 25,299,806 respectively, for the six months ended June 30, 2022), as their effect would be anti-dilutive. 7,538,841 stock options that are issued and in the money were included in the computation of diluted weighted average shares outstanding for the three months ended June 30, 2022. The dilutive impact has been calculated using the treasury stock method. The impact of the convertible loans has been ignored as the impact is antidilutive. 499,000 stock options and 25,299,806 warrants were excluded from the calculation. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 20
Slide 22 — (Stated in thousands of United States Dollars)
14. SUPPLEMENTAL CASH FLOW INFORMATION (i) The following table summarizes the increase and (decrease) in non-cash working capital balances: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Receivables $ (1,019) $ (2,785) $ (924) $ (2,900) Prepaids and deposits (2,518) (1,812) (1,335) (283) Inventory (1,320) (268) (4,609) (2,589) Accounts payable and accrued liabilities 6,703 888 3,865 (7,283) Increase / (decrease) in working capital $ 1,846 $ (3,977) $ (3,003) $ (13,055) (ii) The following table summarizes non-cash items included in other income / (expense): Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Gain on warrants $ 4,607 $ 12,004 $ 10,175 $ 8,900 Gain on Convertible Loans derivative 2,097 16,307 10,463 10,214 Gain / (loss) on Convertible Debenture derivative 900 — 900 — Loss on deferred consideration (351) (792) (778) (1,636) Gain / (loss) on investments 239 (1,229) 997 (1,229) Gain on sales from Gold Prepay Agreement 158 454 262 454 Gain / (loss) on Gold Prepay derivative 838 4,084 (2,252) 4,084 Gain on Silver Purchase derivative 1,309 9,125 452 9,125 Other 3 4 498 3 Total non-cash items included in other income / (expense) $ 9,800 $ 39,957 $ 20,717 $ 29,915 15. EXPLORATION, EVALUATION AND PRE-DEVELOPMENT (i) The following table summarizes the Company's exploration, evaluation and pre-development expenditures by property: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 McCoy-Cove, Nevada $ 3,776 $ 794 $ 7,057 $ 1,286 Granite Creek, Nevada 407 6,139 407 10,692 Ruby Hill, Nevada 5,977 5,173 11,540 9,207 FAD, Nevada 743 — 743 — Other 192 26 327 201 Total exploration, evaluation and pre-development $ 11,095 $ 12,132 $ 20,074 $ 21,386 (ii) The following table summarizes the Company's exploration, evaluation and pre-development expenditures by activity: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Drilling $ 6,591 $ 8,403 $ 13,021 $ 16,120 Assays 893 1,497 1,318 1,657 Salaries and benefits 400 616 695 949 Field support 945 516 1,682 962 Operating supplies 245 418 401 687 Studies and permits 694 254 1,019 257 Consulting and professional fees 1,187 178 1,685 301 Claim filing and maintenance fees 118 134 198 222 Depreciation & amortization 22 116 55 231 Total exploration, evaluation and pre-development $ 11,095 $ 12,132 $ 20,074 $ 21,386 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 21
Slide 23 — (Stated in thousands of United States Dollars)
16. GENERAL AND ADMINISTRATIVE Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Corporate administration $ 1,336 $ 1,822 $ 3,425 $ 2,846 Salaries and benefits 2,317 1,888 4,657 3,213 Professional fees 744 855 1,506 1,779 Total general and administrative $ 4,397 $ 4,565 $ 9,588 $ 7,838 17. OTHER INCOME / (EXPENSE) Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Gain on warrants $ 4,607 $ 12,004 $ 10,175 $ 8,900 Gain on Convertible Loans derivative 2,097 16,307 10,463 10,214 Gain on Convertible Debenture derivative 900 — 900 — Loss on deferred consideration (351) (792) (778) (1,636) Gain / (loss) on foreign exchange 43 (135) 45 (199) Gain / (loss) on investments 239 (1,229) 997 (1,229) Gain on sales from Gold Prepay Agreement 158 454 262 454 Gain / (loss) Gold Prepay derivative 838 4,084 (2,252) 4,084 Gain on Silver Purchase derivative 1,309 9,125 452 9,125 Other 636 (1,046) 1,399 (1,222) Total other income $ 10,476 $ 38,772 $ 21,663 $ 28,491 18. FINANCE EXPENSE Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Interest accretion on Convertible Loans $ 2,245 $ 1,881 $ 4,375 $ 3,768 Interest accretion on Gold Prepay Agreement 1,929 2,197 3,966 2,197 Interest accretion on Silver Purchase Agreement 829 794 1,647 794 Interest accretion on Convertible Debentures 1,947 — 2,723 — Amortization of finance costs 221 93 392 176 Environmental rehabilitation accretion 720 912 1,440 1,292 Interest paid 7 3 22 11 Total finance expense $ 7,898 $ 5,880 $ 14,565 $ 8,238 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 22
Slide 24 — (Stated in thousands of United States Dollars)
19. SEGMENTED INFORMATION Results of the operating segments are reviewed by the Company's chief operating decision makers ("CODM") to make decisions about resources to be allocated to the segments and to assess their performance. Each CODM is a member of the senior management team who rely on management positioned in each operating segment of the Company. Operating mine property, development and exploration projects The Company's operating segments are reported by operating mine properties and exploration and development projects. The results from operations for these reportable segments are summarized in the following tables: Six months ended June 30, 2023 Nevada Production1 Exploration and Development2 Corporate and other Total Revenue $ 15,859 $ — $ — $ 15,859 Cost of sales (18,731) — — (18,731) Depletion, depreciation and amortization (4,145) — — (4,145) Exploration, evaluation and pre-development (12,248) (7,826) — (20,074) Overhead costs (4,683) (268) (12,078) (17,029) Other income / (expense) (144) 32 21,775 21,663 Finance expense (1,284) (140) (13,141) (14,565) Loss before income taxes (25,376) (8,202) (3,444) (37,022) Deferred tax recovery — — 7,944 7,944 Income / (loss) for the period $ (25,376) $ (8,202) $ 4,500 $ (29,078) Six months ended June 30, 2022 Nevada Production1 Exploration and Development2 Corporate and other Total Revenue $ 9,247 $ — $ — $ 9,247 Cost of sales (5,498) — — (5,498) Depletion, depreciation and amortization (823) — — (823) Exploration, evaluation and pre-development (20,097) (1,289) — (21,386) Overhead costs (650) (147) (9,819) (10,616) Other income / (expense) (2,851) 41 31,301 28,491 Finance expense (1,196) (96) (6,946) (8,238) Income / (loss) before income taxes (21,868) (1,491) 14,536 (8,823) Deferred tax recovery — — 4,835 4,835 Income / (loss) for the period $ (21,868) $ (1,491) $ 19,371 $ (3,988) Three months ended June 30, 2023 Nevada Production1 Exploration and Development2 Corporate and other Total Revenue $ 11,310 $ — $ — $ 11,310 Cost of sales (12,188) — — (12,188) Depletion, depreciation and amortization (2,724) — — (2,724) Exploration, evaluation and pre-development (6,561) (4,534) — (11,095) Overhead costs (2,524) (135) (5,422) (8,081) Other income / (expense) 32 32 10,412 10,476 Finance expense (640) (71) (7,187) (7,898) Loss before income taxes (13,295) (4,708) (2,197) (20,200) Deferred tax recovery — — 4,238 4,238 Income / (loss) for the period $ (13,295) $ (4,708) $ 2,041 $ (15,962) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 23 1 Includes Ruby Hill, Lone Tree and Granite Creek 2 McCoy-Cove and FAD
Slide 25 — (Stated in thousands of United States Dollars)
Three months ended June 30, 2022 Nevada Production1 Exploration and Development2 Corporate and other Total Revenue $ 6,383 $ — $ — $ 6,383 Cost of sales (3,966) — — (3,966) Depletion, depreciation and amortization (655) — — (655) Exploration, evaluation and pre-development (11,454) (678) — (12,132) Overhead costs (489) 20 (5,107) (5,576) Other income / (expense) (1,781) 15 40,538 38,772 Related party interest expense — — — — Finance expense (845) (67) (4,968) (5,880) Income / (loss) before income taxes (12,807) (710) 30,463 16,946 Deferred tax recovery — — 2,330 2,330 Income / (loss) for the period $ (12,807) $ (710) $ 32,793 $ 19,276 As at June 30, 2023 Nevada Production1 Exploration and Development2 Corporate and other Total Capital expenditures $ 18,717 $ 83,386 $ 128 $ 102,231 Property, plant and equipment 475,547 149,681 3,839 629,067 Total assets 549,695 151,962 26,615 728,272 Total liabilities $ 128,309 $ 9,947 $ 164,271 $ 302,527 As at December 31, 2022 Nevada Production1 Exploration and Development2 Corporate and other Total Capital expenditures $ 46,412 $ 9,180 $ 522 $ 56,114 Property, plant and equipment 458,765 66,331 4,165 529,261 Total assets 511,298 69,584 61,077 641,959 Total liabilities $ 148,655 $ 8,301 $ 151,591 $ 308,547 Revenue by customer The following table represents sales to individual customers representing 100% of the Company's gold and silver revenue: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Customer 1 $ 2,857 $ 4,549 $ 6,083 $ 5,782 Customer 2 36 1,834 1,359 3,465 Customer 3 5,355 — 5,355 — Customer 4 2,821 — 2,821 — Customer 5 241 — 241 — Total revenue from major customers $ 11,310 $ 6,383 $ 15,859 $ 9,247 The Company is not economically dependent on a limited number of customers for the sale of its product because gold and other metals can be sold through numerous commodity market traders worldwide. 20. COMMITMENTS Surety bonds At June 30, 2023, the Company has outstanding surety bonds in the amount of $132.8 million in favor of either the United States Department of the Interior, Bureau of Land Management ("BLM"), or the State of Nevada, Department of Conservation & Natural Resources as financial support for environmental reclamation and exploration permitting. This includes surety bonds for the Lone Tree project and the Ruby Hill property in the amounts of $87.0 million and $27.0 million, respectively. The surety bonds are secured by a $47.6 million deposit and are subject to fees competitively determined in the marketplace. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations. As specific requirements are met, the BLM and State of Nevada as beneficiary of the instruments, will return the instruments to the issuing entity. As these instruments are associated with operating sites with long-lived assets, they will remain outstanding until closure. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 24 1 Includes Ruby Hill, Lone Tree and Granite Creek 2 McCoy-Cove and FAD
Slide 26 — (Stated in thousands of United States Dollars)
21. FINANCIAL INSTRUMENTS The Company's operations include the acquisition and exploration of mineral properties in the State of Nevada. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other risks. Where material, these risks are reviewed and monitored by the Board of Directors. (a) Credit risk Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of offset exists and also includes the fair values of contracts with individual counterparties which are recorded in the Financial Statements. (i) Trade credit risk The Company closely monitors its financial assets and does not have any significant concentration of trade credit risk. The Company sells its products exclusively to large international financial institutions and other organizations with strong credit ratings. The historical level of customer defaults is negligible and, as a result, the credit risk associated with trade receivables is considered to be negligible. The trade receivable balance outstanding was $1.4 million at June 30, 2023 (nil at December 31, 2022) (ii) Cash In order to manage credit and liquidity risk the Company invests only in highly rated investment grade instruments that have maturities of 90 days or less and which are liquid after 30 days or less into a known amount of cash. Limits are also established based on the type of investment, the counterparty and the credit rating. The credit risk on cash and cash equivalents is therefore negligible. (b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. The following table summarizes the Company's contractual maturities and the timing of cash flows as at June 30, 2023. The amounts presented are based on the undiscounted contractual cash flows and may not agree with the carrying amounts on the Financial Statements. With 1 year 1-2 years 2-3 years Thereafter Total Accounts payable and accrued liabilities $ 22,293 $ — $ — $ — $ 22,293 Convertible Loans — — 58,200 — 58,200 Convertible Debentures — — — 65,000 65,000 Gold Prepay Agreement 17,155 17,569 8,929 — 43,653 Silver Purchase Agreement 8,472 8,836 2,015 — 19,323 Deferred consideration (i) 20,000 — — — 20,000 Reclamation and closure obligations 1,043 833 592 94,378 96,846 Total $ 68,963 $ 27,238 $ 69,736 $ 159,378 $ 325,315 (i) As further described in Note 11 (iv) of these Financial Statements, the Company can elect to pay up to $10 million in shares subject to the condition that shares held by Waterton do not exceed 9.99% of the outstanding shares of the Company. (c) Market risk (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As the Company holds excess cash in interest bearing bank accounts rather than investments, the interest rate risk is minimal. (ii) Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Company’s functional currency. The Company’s management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 25
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(d) Fair value (i) Definitions IFRS 13 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). (ii) Valuation techniques used to determine fair values The Company calculates fair values based on the following methods of valuation and assumptions: a. Financial assets Financial assets other than the Company's investment described below are carried at amortized cost. The fair value of cash and cash equivalents and receivables approximate their carrying value due to their short-term nature. The Company's investment as further described in Note 6 (i) of the Financial Statements was classified within level 2 of the fair value hierarchy and was fair valued using the common share price from the most recent subscription agreement, however during the second quarter of 2022, the investment listed on the TSX and therefore a quoted market price for this investment became available and was classified within level 1 of the fair value hierarchy. b. Financial liabilities Financial liabilities not classified as fair value through profit or loss are carried at amortized cost. Accounts payable and accrued liabilities approximate their carrying value due to their short term nature. The share-based payment and warrant liabilities are classified within level 2 of the fair value hierarchy and are fair valued using a valuation model that incorporates such factors as the Company’s share price volatility, risk free rates and expiry dates including managements assumptions on forfeiture rates. Deferred consideration related to Ruby Hill was recognized at fair value on acquisition and at June 30, 2023. This liability is classified within level 3 of the fair value hierarchy as it involves management's best estimate of whether or not the key activities as described in Note 11 (iv) of these Financial Statements required for each milestone payment will be achieved. Management has assumed that all milestones will be achieved and the early repayment option will be taken so the fair value of the deferred consideration at June 30, 2023 is the $20 million ($47 million at December 31, 2022) discounted at 7.5%. The Convertible Loans contain conversion and change of control rights that are separately measured at FVTPL each reporting period (level 3). The valuation of these options are dependent on the changes in the prices of the underlying assets and the probability that a change of control event would be expected to occur. The forced conversion rights were measured at fair value on inception but do not get revalued subsequently. The Gold Prepay Agreement is recognized as a financial liability at amortized cost and it contains an embedded derivative in relation to the embedded gold price within the agreement that is measured at FVTPL each reporting period (level 3). The change in fair value is dependent on the movement in gold prices and the change in the risk free borrowing rate. The Silver Purchase Agreement is recognized as a financial liability at amortized cost and it contains two embedded derivatives; one in relation to the embedded silver price within the agreement and the other in relation to the gold substitution option whereby i-80 Gold can choose to deliver gold instead of silver at a ratio of 75:1, both are measured at FVTPL each reporting period (level 3). On initial recognition and at June 30, 2023, the gold substitution option did not have any value. The change in fair value of the embedded derivative related to the silver price is dependent on the movement in silver prices and the change in the risk free borrowing rate. The Convertible Debentures contain forced conversion and change of control options that are separately measured at FVTPL each reporting period (level 3). The valuation of these options are dependent on the changes in the prices of the underlying assets and the probability that a change of control event would be expected to occur. The conversion rights were measured at fair value on inception but do not get revalued subsequently. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 26
Slide 28 — (Stated in thousands of United States Dollars)
(iii) Fair value measurements using significant unobservable inputs (level 3) The following tables present the changes in level 3 items for the periods ended June 30, 2023 and December 31, 2022: Convertible Loans Convertible Debentures Orion conversion and change of control rights Sprott conversion and change of control rights Change of control option Forced conversion option Balance as at January 1, 2022 $ (18,534) $ (3,895) $ — $ — Fair value adjustments (8,495) (1,404) — — Balance as at December 31, 2022 $ (27,029) $ (5,299) $ — $ — Initial recognition — — (1,409) 875 Fair value adjustments 8,224 2,247 1,409 (509) Balance as at June 30, 2023 $ (18,805) $ (3,052) $ — $ 366 Silver Purchase Agreement - silver price derivative Gold Prepay Agreement - gold price derivative Deferred consideration A&R Offtake gold lookback option Balance as at January 1, 2022 $ — $ — $ (42,543) $ (730) Fair value adjustments 1,898 2,916 (3,262) — Balance as at December 31, 2022 $ 1,898 $ 2,916 $ (45,805) $ (730) Principal repayment — — 27,000 — Fair value adjustments 452 (2,253) (778) — Balance as at June 30, 2023 $ 2,350 $ 663 $ (19,583) $ (730) (iv) Valuation inputs and relationships to fair value The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurements: Balance as at June 30, 2023 Unobservable input Fair Value Change in Fair Value Assumption: -10% 10% Silver Purchase Agreement - silver price derivative Change in forecast silver price 2,350 2,347 (2,347) Gold Prepay Agreement - gold price derivative Change in forecast gold price 663 3,250 (3,250) 22. MANAGEMENT OF CAPITAL The Company manages its share capital and equity settled employee benefits reserve as capital, the balance of which is $471.9 million at June 30, 2023 ($369.5 million at December 31, 2022). The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going-concern in order to pursue the exploration and development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, acquire or dispose of assets or acquire new debt. In order to maximize ongoing exploration and development efforts, the Company does not pay out dividends. The Company's investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with short-term maturities, selected with regard to the expected timing of expenditures from continuing operations. To effectively manage its capital requirements, the Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company’s ability to execute its plan and fulfill its commitments as they come due is dependent upon its success in obtaining additional financing. While management has been successful in raising additional funds in the past, there can be no assurance that it will be able to do so in the future. Given the Company’s current operating losses and management’s expectation of future losses until it has fully executed its strategy, the inability of the Company to arrange appropriate financing in a timely manner could result in the carrying value of the Company’s assets being subject to material adjustment. These conditions indicate the existence of material uncertainties which casts significant doubt as to the Company’s ability to continue as a going concern. These consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might be necessary if the Company is not able to continue as a going concern. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 27
Slide 29 — (Stated in thousands of United States Dollars)
23. SUBSEQUENT EVENT Private Placement of Common Shares On August 1, 2023, the Company completed a private placement of common shares led by CIBC Capital Markets on behalf of a syndicate of underwriters. An aggregate of 13,629,800 shares were issued by the Company at a price of C$2.70 per common share for aggregate gross proceeds of C$36.8million. Certain directors and/or officers of the Company subscribed for C$0.5 million in common shares and Equinox Gold Corp. subscribed for C$2.7 million in common shares under the private placement, both of which are related party transactions. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Stated in thousands of United States Dollars) (Unaudited) 28