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Will AMC retail investor army boost Hycroft Mining (HYCM)?

By Kevin Donovan

12:42, 15 March 2022

AMC theatre in Voorhees, NJ
AMC invests in distressed gold and silver mining company Hycroft Mining - Photo: Capital.com

Hycroft Mining Holding (HYMC) stock surged as much as 85% on Tuesday after US movie theatre chain AMC Entertainment (AMC) announced a $56m equity private placement investment, in partnership with precious metals investor Eric Sprott, for 22% each of the distressed gold and silver mine operator.

AMC CEO Adam Aron announces $56m investment in Hycroft MiningAMC CEO Adam Aron announces $56m investment in Hycroft Mining

After hinting during AMC’s most recent post-earnings conference call it may deploy free cash flow for strategic acquisitions, AMC CEO Adam Aron announced the move over Twitter before the market opened Tuesday morning.

“We just purchased 22% of Hycroft Mining of northern Nevada,” Aron tweeted, noting Hycroft’s 15 million ounces of gold and 600 million ounces of silver resources. “Our expertise to help them bolster their liquidity.”

Hycroft produced 55,668 ounces of gold and 355,967 ounces of silver in 2021. Gold production topped company guidance. Silver was 20% below the company's forecast.

Both stocks get a boost

Hycroft Mining Holding Corp. (Nasdaq: MYMC) 2 Jan. 2000 - 14 Mar. 2022Hycroft Mining Holding Corp. (Nasdaq: MYMC) 2 Jan. 2000 - 14 Mar. 2022 - Photo: Koyfin

Leawood, Kansas-based AMC stock traded 7.6% higher on the news, reaching $14.60 per share, versus Monday’s $13.56 closing share price. AMC stock trades over the NYSE under the ticker ‘AMC’.

Winnemucca, Nevada-based Hycroft Mining stock got an immediate boost on the news, more than doubling in pre-market trading to $2.89 per share, versus Monday’s $1.39 closing share price.

Trading volume after the open topped 60 million shares, far outpacing the 17.8 million daily average. Hycroft Mining stock trades over the Nasdaq exchange under the ticker ‘HYMC’.

Hycroft stock has been beaten down after remaining relatively steady pre-Covid-19. Shares reached $15.47 in August 2000, but have fallen over 91% to close Monday at $1.39 per share.

The company went bankrupt in 2015 and emerged after shedding $447.7m of debt from its balance sheet.

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AMC Entertainment Holdings Inc. (NYSE: AMC) 2 Jan. 2000 - 15 Mar. 2022AMC Entertainment Holdings Inc. (NYSE: AMC) 2 Jan. 2000 - 15 Mar. 2022 - Photo: Koyfin

‘Will the Apes like this?’

While Aron’s thinking is likely the so-called “Ape Army” of AMC’s retail investors will follow suit and buy Hycroft stock, Redditors on the WallStreetBets forum were less than impressed.

“Wait, AMC bought a gold mine?” asked user windmilldisrespektor. “Seriously, a mining company?” added user kdeselms. “If there were ever a sign of total disarray in executive leadership and direction this is a big flashing sign.”

CNBC’s Jim Cramer asked, “Will the Apes like this?” and tweeted “The empty chair is back,” adding the hashtag #AMC.

Gold and silver prices

Transaction terms

Under the terms of the agreement, AMC and Sprott will each invest $27.9m in cash for one share and one share purchase warrant of Hycroft Mining stock for $1.19 per unit.

The share purchase warrants carry a $1.07 per share for a five-year period from the 15 March closing date. Both AMC Entertainment and Sprott will each own 21.8% of Hycroft.

Gold futures 2 Jan. 2000 - 14 Mar. 2022Gold futures 2 Jan. 2000 - 14 Mar. 2022 - Photo: Koyfin
Silver futures 2 Jan. 2000 - 14 Mar. 2022 Silver futures 2 Jan. 2000 - 14 Mar. 2022 - Photo: Koyfin

While Hycroft stock is down, both gold and silver have soared since Covid-19 erupted in March 2000. Gold futures are up a more modest 18% since 19 March 2020; silver futures are over 107% higher.

After topping $2,000 an ounce last week as inflation fears spike, Gold futures are currently in the mid $1,700 range. Silver, on the other hand, has remained rangebound between roughly $24 per ounce to the high $20s, failing to top $30 per ounce.

 

Markets in this article

Gold
Gold
2415.65 USD
37.76 +1.590%
HYMC
Hycroft Mining Holding Corporation
3.6089 USD
0.08 +2.300%
Silver
Silver
31.514 USD
1.843 +6.240%

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