Materials where localized magnetic moments are coupled to itinerant electrons, the so-called Kondo lattice materials, provide a very rich backdrop for strong electron correlations. They are known to realize many exotic phenomena, including unconventional superconductivity, strange metals, and correlated topological phases of matter. Here, we report what appears to be electron fractionalization in insulating Kondo lattice material YbIr$_3$Si$_7$, with emergent neutral excitations that carry heat but not electric current and contribute to metal-like specific heat. We show that these neutral particles change their properties as the material undergoes a transformation between two antiferromagnetic phases in an applied magnetic field. In the low-field AF-I phase, we find that the low temperature linear specific heat coefficient $gamma$ and the residual linear term in the thermal conductivity $kappa/T(Trightarrow 0)$ are finite, demonstrating itinerant gapless excitations. These results, along with a spectacular violation of the Wiedemann-Franz law, directly indicate that YbIr$_3$Si$_7$ is a charge insulator but a thermal metal. Nuclear magnetic resonance spectrum reveals a spin-flop transition to a high field AF-II phase. Near the transition field, $gamma$ is significantly enhanced. Most surprisingly, inside the AF-II phase, $kappa/T$ exhibits a sharp drop below $sim300$ mK, indicating either opening of a tiny gap or a linearly vanishing density of states. This finding demonstrates a transition from a thermal metal into an insulator/semimetal driven by the spin-flop magnetic transition. These results suggest that spin degrees of freedom directly couple to the neutral fermions, whose emergent Fermi surface undergoes a field-driven instability at low temperatures.
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