HYCROFT MINING HOLDING CORPHYMC
HYCROFT MINING HOLDING CORP Income Taxes Disclosure
Income taxes
For the years ended December 31, 2025 and 2024, the Company recorded no income tax benefit or expense. The annual effective tax rate was nil for 2025 and 2024, which was driven primarily by losses for each period.
The Company is also subject to mining taxes in Nevada, which are classified as income taxes as such taxes are based on a percentage of mining profits, but did not incur any mining tax expense due to cessation of mining operations. The Company is not subject to foreign income taxes as all of the Company’s operations and properties are located within the United States.
The Company’s loss before income taxes was attributable solely to domestic activities in the United States. The components of the Company’s income tax expense (benefit) were as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current | |||||||||||
| Federal | $ | — | $ | — | |||||||
| Deferred | |||||||||||
| Federal | (8,170) | (13,786) | |||||||||
| Change in Valuation Allowance | 8,170 | 13,786 | |||||||||
| Income tax expense (benefit) | $ | — | $ | — | |||||||
For the year ended December 31, 2025, and the year ended December 31, 2024, the Company incurred no net income tax expense (benefit).
The following table provides a reconciliation of income taxes computed at the United States federal statutory tax rate of 21% in 2025 and 2024 to the income tax provision (dollars in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Loss before income taxes | $ | (40,664) | $ | (60,896) | |||||||
| United States statutory income tax rate | 21% | 21% | |||||||||
| (8,540) | (12,788) | ||||||||||
| Change in valuation allowance | 8,170 | 13,786 | |||||||||
| Warrant fair value adjustment | (1) | — | |||||||||
| Adjustment of prior year income taxes | 264 | (1,067) | |||||||||
| Nondeductible expenses | 107 | 69 | |||||||||
| Income tax expense (benefit) | $ | — | $ | — | |||||||
For the year ended December 31, 2025, the effective tax rate was a result of an increase in the valuation allowance of $8.2 million.
For the year ended December 31, 2024, the effective tax rate was a result of an increase in the valuation allowance of $13.8 million and adjustment to prior year income taxes.
The components of the Company’s deferred tax assets are as follows (in thousands):
| Year Ended December 31, | |||||||||||
2025 | 2024 | ||||||||||
| Net operating loss | $ | 80,863 | $ | 74,056 | |||||||
| Mineral properties | 56,198 | 52,303 | |||||||||
| Plant, equipment, and mine development | 1,687 | 1,415 | |||||||||
| Intangible assets | 14,181 | 15,687 | |||||||||
| Deferred gain on sale of royalty | 6,266 | 6,266 | |||||||||
| Asset retirement obligation | 2,472 | 2,762 | |||||||||
| Interest expense carryforward | 8,799 | 9,156 | |||||||||
| Accrued compensation | 663 | 629 | |||||||||
| Stock-based compensation | 1,927 | 1,998 | |||||||||
| Inventories | 943 | 947 | |||||||||
| Assets held-for-sale | (39) | 476 | |||||||||
| Other | 895 | 990 | |||||||||
| Valuation allowance | (174,855) | (166,685) | |||||||||
| Total | $ | — | $ | — | |||||||
Based on the weight of evidence available as of both December 31, 2025 and 2024, which included recent operating results, future projections, and historical inability to generate positive operating cash flow, the Company concluded that it was more likely than not that the benefit of its net deferred tax assets would not be realized and, as such, recorded full valuation allowances of $174.9 million and $166.7 million, respectively, against its net deferred tax assets.
The Company had tax loss carryovers as of December 31, 2025 and 2024, of $385.1 million and $352.6 million, respectively, for federal income tax purposes. The carryover amount as of December 31, 2025, can be carried forward indefinitely and can be used to offset taxable income and reduce income taxes payable in future periods, subject to limitations under Section 382. Section 382 of the Internal Revenue Code imposes limitations on the use of U.S. federal net operating losses and other unrealized losses upon a more than 50% change in ownership in the Company within a three-year period. In connection with multiple equity offerings during 2022 and 2025, the Company underwent the following Section 382 ownership changes (in thousands):
Tax Loss Carryovers | Year Ended December 31, | |||||||||||||||||||
Ownership Change Date | Annual Limitation | 2025 | 2024 | |||||||||||||||||
March 25, 2022 | $1,300 | $ | 306,830 | $ | 299,743 | |||||||||||||||
June 13, 2025 | 3,066 | 64,332 | N/A | |||||||||||||||||
October 9, 2025 | 7,229 | 7,620 | N/A | |||||||||||||||||
As a result, utilization of the Company’s above net operating losses and other unrealized losses are limited on an annual basis. If the Section 382 annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that tax year increases the Section 382 annual limitation in the subsequent year and/or subsequent years.
As necessary, the Company provides a reserve against the benefits of uncertain tax positions taken in its tax filings that are more likely than not to not be sustained upon examination. Based on the weight of available evidence, the Company does not believe it has taken any uncertain tax positions that require the establishment of a reserve. The Company has not recorded any
income tax reserves or related interest, or penalties related to income tax liabilities as of December 31, 2025. The Company's policy, if it were to have uncertain tax positions, is to recognize interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. With limited exception, the Company is no longer subject to U.S. federal and state income tax audits by taxing authorities for tax years 2019 and prior; however, tax loss operating loss and credit carryovers from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are utilized.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 3, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 28, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 24, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 25, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.