AMC Theatres, the world's largest movie theater chain, is buying a 22 percent stake in Hycroft Mining Holding Corp., a Nevada-based gold and silver mining company.
AMC's $27.9 million cash investment in Hycroft is the company's latest effort to shore up its finances following the closure of movie theaters due to COVID-19. AMC revealed ambitions to extend its operations outside of the box office by selling popcorn in shopping malls around the country after avoiding bankruptcy and embracing its status as a meme stock last year.
With a daring diversification move, AMC is back on offense. We recently purchased a 22 percent stake in northern Nevada's Hycroft Mining (NASDAQ: HYMC). It has gold reserves of 15 million ounces! And there are 600 million ounces of silver in the ground! On Twitter, AMC CEO Adam Aron stated, "Our expertise to help them improve their liquidity."
The Hycroft Mine, located on 71,000 acres in northern Nevada, contains 15 million ounces of gold and 600 million ounces of silver. On Monday, AMC stock jumped 6.78 percent to $14.48 on the news, while Hycroft stock rose 9.35 percent to $1.52.
Eric Sprott, a leading metals investor, will also invest $27.9 million in cash in Hycroft in return for more than 23.4 million shares, according to AMC.
"Our investment to purchase 23.4 million warrants in Hycroft Mining Holding Corp. for $1.07 per share is a truly fantastic chance to possibly strengthen and enrich our company, and so create considerable value for AMC Entertainment shareholders," Aron said in a statement. "The fact that the investment just demands a small quantity of AMC cash is intriguing."
Despite the fact that overall box office ticket sales have been slow, Aron has remained upbeat about the future of the movie theater industry.
"The strength of 'Spider-Man: No Way Home' and 'The Batman,' as well as the industry's promising box office in 2022, strengthen AMC Entertainment's belief that we are on the right track," Aron stated. "Today's strategic investment is the outcome of our discovery of a firm in a completely unrelated area that appears to be identical to AMC a year ago." It, too, has good assets, but it has been dealing with a serious and immediate cash problem for a variety of reasons. As a result, its stock price has plummeted. We are certain that our engagement will considerably assist it in overcoming its issues – to both its and our benefit.
"To emphasize the obvious," Aron said, "a movie theater company's primary skill does not generally include gold or silver mining." AMC Entertainment, on the other hand, has had tremendous success and demonstrated expertise in guiding a company with otherwise valuable assets through a period of severe liquidity challenges, capital raising, and balance sheet strengthening, as well as communicating with individual retail investors, in recent years. We bring all of our knowledge and experience to the table to help the skilled mining professionals at Hycroft."
Aron declined the opportunity to go beyond the company's press statement at the urging of legal counsel.
