AMC Theatres (AMC) Enters Gold and Silver Mining

AMC to buy 22% stake in Hycroft Mining (HYMC)

AMC Entertainment Holdings, Inc. (AMC), the leading operator of movie theaters worldwide, has announced it is buying a 22% stake in Hycroft Mining Holding Corporation (HYMC), including the 71,000-acre Hycroft Mine in northern Nevada. According to independent third-party studies cited by AMC, the Hycroft Mine has some 15 million ounces of gold deposits and some 600 million ounces of silver deposits. AMC also will receive an additional 23.4 million warrants in Hycroft at $1.07 per share.

Making an investment equal to AMC's is Eric Sprott, a leading gold and silver investor. Combined, AMC and Sprott are investing $56 million. AMC will obtain the right to appoint a member of Hycroft's board of directors.

Key Takeaways

  • Theatre operator AMC is buying a 22% stake in gold and silver miner Hycroft for $27.9 million.
  • Gold and silver investor Eric Sprott is making an identical investment.
  • AMC sees value in Hycroft that can be unlocked with its expertise in managing through the sorts of liquidity issues that Hycroft faces.

Details of the Deal

AMC and Sprott will each invest $27.9 million in cash in Hycroft in exchange for 23,408,240 units, with each unit consisting of one common share of stock of Hycroft and one common share purchase warrant (the “units”). The units are priced at $1.193, which complies with the minimum bid price required by Nasdaq for an at-the-market purchase. Each purchase warrant is exercisable for one common share of Hycroft at a price of $1.068 per share and will carry a five-year term from the date of issuance. The closing of the private placement is expected to occur on or about March 15, 2022.

Views From AMC and Hycroft

Adam Aron, chairman and CEO of AMC Entertainment, stated in a press release: “Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours.”

Later in the press release, Aron said: “... one would not normally think that a movie theatre company’s core competency includes gold or silver mining. In recent years, however, AMC Entertainment has had enormous success and demonstrated expertise in ... the raising of capital, and strengthening of balance sheets, as well as communicating with individual retail investors. It is all that experience and skill that we bring to the table to assist the talented mining professionals at Hycroft.”

For Hycroft, the only way to go is up. The stock has been in the bearish zone, down 70% over the last year, even with the bump it got from the AMC and Sprott investments. Aron believes his company's involvement will help Hycroft navigate its liquidity issues.

Market Reaction

By late morning on March 15, 2022, shares of AMC were up by about .5%, while shares of Hycroft had gained about 13%. Both stocks, however, had drifted down from larger gains immediately after the opening.

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  1. AMC Theatres. "AMC Entertainment Holdings Inc. Announces Significant Investment, Buying 22% of Hycroft Mining Holding Corporation."