i-80 Gold (TSX:IAU) - $500M Secured to Advance Development Plan

I80 Gold Recapitalization Plan – Detailed Summary

Key Concepts: Recapitalization, Royalty Financing, Prepaid Metal Facility, Phase Development Plan, Preliminary Assessment (PA), Feasibility Study, Toll Milling, Lone Tree Plant, Mineral Point, Granite Creek, Archimedes, Cove, Merrell Point, Covenants, Dilution.

I. Recapitalization Overview & Timeline

Richard Young, President & CEO of I80 Gold, details the completion of a $500 million recapitalization plan expected by the end of Q1. The process began on September 18th, 2024, building upon a development plan outlined in Q3 2024 results. This financing is intended to fully fund Phase One and Phase Two of the company’s three-phase development plan. Young emphasized this was a long-awaited milestone, representing a significant de-risking event for the company.

II. Financing Structure & Details

The $500 million financing is comprised of two components:

• Franco-Nevada Royalty: $250 million in the form of a 1.5% Net Smelter Royalty (NSR) on the company’s portfolio for the next decade. This royalty increases to 3% in 2031, contingent upon further portfolio development and funding capacity.
• Bank Prepaid Metal Facility: $250 million facility with National Bank and McCory Banks. An initial $150 million will be drawn upon closing, secured by the pre-sale of approximately 40,000 ounces of gold (roughly 10% of production) over a 30-month period. The average net price received for the pre-sold gold is approximately $3,750 per ounce, factoring in fees and interest.

Alongside this financing, I80 Gold intends to call existing convertible notes and potentially sell an Encore asset.

III. Operational Flexibility & Covenants

Despite the financing being non-dilutive to shareholders, Young acknowledges the potential for covenants and operational restrictions. However, he expresses confidence in the terms negotiated, citing a strong existing relationship with Franco-Nevada (having worked with them at five previous companies) and National Bank/McCory Banks (having worked with McCory at three previous companies).

Specifically, the covenants were designed to provide flexibility in executing the development plan. A key negotiation point was securing a working capital facility to address the 120-150 day payment delay inherent in toll milling agreements. The banks initially resisted this, but ultimately conceded due to competitive pressure from other financing offers. The ability to stockpile material and process it through the refurbished Lone Tree plant (saving $1,000-$1,500 per ounce) was another crucial element secured through negotiation.

IV. Market Conditions & Competitive Financing

Young attributes the success of the financing to a competitive environment, receiving five term sheets and three committed term sheets. He believes the high gold price environment and strong margins contributed to the banks’ willingness to compete for the business. He states, “more important than the price of gold was the fact that that there was competition.” This competition allowed I80 Gold to negotiate favorable terms, particularly regarding covenant flexibility.

V. Three-Phase Development Plan & Funding

The $500 million recapitalization fully funds Phase One and Phase Two of the three-phase development plan, and potentially all three phases. While an additional $100-200 million may be needed, Young anticipates this could be secured through a revolving credit facility with the banks at a lower cost. The primary focus is now on executing the plan and demonstrating the value of the company’s assets.

VI. 2026 Deliverables & Value Drivers

Key deliverables for 2026 include:

• Lone Tree Plant Refurbishment: Completion of the refurbishment, enabling processing of material currently sent for toll milling, saving $1,000-$1,500 per ounce.
• Feasibility Studies: Publication of feasibility studies for Granite Creek and Cove underground mines.
• Drilling Programs: Continued drilling at Granite Creek, Archimedes, and Merrell Point, with a focus on resource expansion and infill drilling.
• Mineral Point Advancement: $50 million allocated to a resource expansion and infill drill program at Mineral Point, including initial permitting work. This is a key focus, as Mineral Point is the company’s most valuable asset.

Young believes these milestones will drive value by demonstrating improvements over the Preliminary Assessment (PA) results and accelerating the development timeline.

VII. Measuring Success & Future Outlook

Young emphasizes that success will be measured against the company’s Preliminary Assessments (PAs), aiming to exceed those valuations through successful execution of the development plan. Key metrics include:

• On-schedule and on-budget completion of the Lone Tree plant refurbishment.
• Feasibility studies exceeding the results of the PAs.
• Efficient permitting and operation of projects.
• Increasing gold production at lower costs.

He explicitly states he does not focus on the share price, prioritizing the delivery of technical milestones and value creation. He believes the recapitalization provides the certainty needed to focus on execution and unlock the potential of the company’s assets.

VIII. Notable Quote

“...the cost of the financing is really just a rounding error.” – Richard Young, emphasizing the importance of certainty and flexibility over cost in securing the financing.

This recapitalization represents a pivotal moment for I80 Gold, providing the financial resources and operational flexibility to advance its development plan and unlock the value of its asset portfolio. The focus now shifts to execution and demonstrating the company’s ability to deliver on its promises.