Canadian billionaire Eric Sprott faces a Delaware suit over a $1.2 billion silver windfall

A Hycroft Mining shareholder sued Eric Sprott and the company's senior leadership in Delaware Chancery Court on Wednesday, Sept. 23, claiming the board concealed a major silver discovery while handing the Canadian billionaire a 42% stake that rose in value from $112 million to $1.28 billion in four months.

The complaint calls it a windfall of nearly $1.2 billion.

Its central allegation is that Hycroft's directors gave away control cheaply. The board issued Sprott stock in a series of transactions without demanding a control premium, the extra price a buyer normally pays to take command of a company, while it was already sitting on favourable information about what the suit describes as a game-changing silver strike.

Two things allegedly followed. The board paid management millions of dollars in bonuses, then rewrote Hycroft's bylaws so that Sprott alone can block any sale or takeover of the company.

Hycroft owns a single asset. The Hycroft Mine sits on about 70,671 acres in northern Nevada and holds one of the largest precious metals deposits in the world, and it has spent years idle while its owners tried to work out how to process the ore economically.

What changed is the drilling. Hycroft raised its measured and indicated resources by 55% to 16.4 million ounces of gold and 562.6 million ounces of silver, and established an initial high-grade silver resource of 90.2 million ounces with underground potential. A hole at its Vortex zone announced on April 2, 2026 intersected 33.70 grams of gold and 2,890 grams of silver per tonne, grades far above anything the company had previously reported.

Silver then went to record highs, and the shares followed.

Sprott built his position through 2025 and 2026. His holding went from 7% to 22% in a $45 million public offering in mid-2025, and he spent $187 million from June 13 of that year to nearly double it again. He bought most of AMC Entertainment's Hycroft stake for $24.1 million in November 2025, then kept buying through the following year at prices between $40 and $50 a share, reaching about 36.9 million shares and 44.45% of the company by late February. He has committed more than $225 million since mid-2025.

The cinema chain's exit is its own story. AMC bought 22% of Hycroft in March 2022 for $27.9 million on Sprott's advice, describing it as a way to diversify away from the box office, and sold to him weeks before silver's run began.

Sprott had older claims on the mine too. He provided Hycroft with a secured credit line of up to $110 million in 2019 and holds a royalty entitling him to 1.5% of the company's gold and silver proceeds in perpetuity, which gave him a direct interest in keeping the operation alive through the years it produced nothing.

Hycroft's own filings show what the suit means by bonuses. The board approved compensation actions on Jan. 27, 2026 that produced about $33.8 million of pre-tax expense in the first quarter, comprising make-whole share awards for executives whose incentive targets had been cut between 2023 and 2025, and a one-time extraordinary bonus to named executive officers and certain employees for what the company called the leadership team's execution of transformational financings during 2025. About $19.4 million of it was paid in cash.

The company ended the first quarter with roughly $189 million of unrestricted cash and no debt.

Its leadership changed as the share price climbed. Diane Garrett, the chief executive, was also made executive chairman on May 11, 2026, a move Hycroft said would align board and management, and the company began a process to appoint three additional independent directors. It hired Eric Colby as executive vice president for corporate development in April.

Sprott is a Toronto investor who built Sprott Inc. into one of the best-known precious metals fund managers in North America and has spent decades arguing that gold and silver are undervalued. His Hycroft stake was worth close to $2 billion earlier this year, a return of 678% on what he had put in.

None of the allegations has been tested. They are claims in a civil complaint, no defence has been filed, and neither Sprott nor Hycroft has responded publicly.