Movers and SHAKERS
AMC is Thinking Outside the Box Office and Diversifying
AMC Entertainment (AMC) has just taken business diversification in a surprising direction. The company known for movie theatres announced that it has taken a 22% stake in a gold and silver mining company. The company, Hycroft Mining Holdings (HYMC), has a 71,000-acre gold mine in Northern Nevada. AMC’s announcement explains that an equal and simultaneous stake in Hycroft was also taken by Eric Sprott. Sprott is a major investment player in gold, silver, and other metals.
AMC will invest $27.9 million in cash in Hycroft in exchange for 23.4 million warrant units, with each unit consisting of one common share of Hycroft and one common share purchase warrant. The units are priced at $1.193 a share, while each purchase warrant is priced at about $1.07 a share and carries a five-year term. HYMC had been trading in the $0.30 to $0.33 range during the first week of March. As of 10 am the day after the announcement (March 17), HYMC is trading at $1.40 per share.
AMC also was granted the right to appoint someone to Hycroft’s board.
Eric Sprott's investment was made through a holding company for Sprott, not the alternative investment manager owned by Mr. Sprott, Sprott Inc. The holding company will make an equal investment in Hycroft with the same terms.
Together, AMC and Sprott are investing $56 million in the mining company.
The chairman and CEO of AMC said “Our investment to buy 22% of Hycroft Mining Holding Corporation, and to receive an additional 23.4 million warrants in Hycroft at $1.07 per share is a truly terrific opportunity to potentially strengthen and enrich our company, and thereby create significant value for AMC Entertainment shareholders.It is appealing that the investment requires the commitment of only a nominal amount of AMC cash.”
Diane Garrett, President, CEO and Acting Chairman of Hycroft, commented, “We couldn’t be more
pleased to announce this transformational investment in the future of Hycroft, anchored by Eric Sprott,
one of the world’s leading precious metals investors, and AMC Entertainment Holdings, which has proven its expertise and ability to address liquidity challenges and to raise capital to optimize the value of significant underlying assets.
About the Mine
Hycroft Mining Holding Corporation is a US-based gold and silver development company that owns the Hycroft Mine. This is a well-established asset located 54 miles West of Winnemucca, Nevada. The 71,000-acre property (Manhattan, NY is 15,000 acres) is an open-pit leach operation.
According to the company website, the Hycroft mine is one of the world’s largest precious metals deposits. The mineral resources include:
- Gold – 9.65 million ounces M&I / 5.0 million ounces inferred
- Silver – 456 million ounces M&I / 150.4 million ounces inferred
- Gold equivalent – 15.3 million ounces M&I / 6.9 million ounces inferred
Permits are in place for both heap leach and milling operations. There is substantial equipment and infrastructure in place.
Management is focused on transforming Hycroft into a large-scale mining operation by developing a process capable of extracting the large sulfide gold and silver mineral resources on site, in addition to existing oxide processing capabilities.
Thinking Outside the Box Office
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” said AMC CEO Adam Aron. The company is using the capital acquired during the meme stock short squeeze climb to strategically help a company in an uncorrelated industry navigate liquidity issues.
This is not the first time AMC has taken an untraditional step. In August of 2021, AMC made the business decision that its theatres would accept bitcoin and three other cryptocurrencies for online ticket sales and concessions.
During the big meme stock trading frenzy, silver had a significant rally that lasted a few days, otherwise precious metals producers have been ignored by the retail investors embracing the r/wallstreetbets style. This announcement may put the significant opportunities in small miners on their radar at a time when resources are top performers.
Channelchek has a wealth of data and in-depth research on small publicly traded companies in the mining sector. Following this link then clicking “Metals & Mining” is an excellent way to become acquainted with North American mining companies and their underlying fundamentals.
Managing Editor, Channelchek
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