Hycroft Mining Almost Doubled Its Market Cap Following AMC, Eric Sprott Equity Purchases

AMC Entertainment Holdings, Inc. (NYSE: AMC) announced today that it will be purchasing 22% equity in Hycroft Mining Holding Corporation (NYSE: HYMC). Canadian businessman Eric Sprott is also buying a 22% equal stake in the mining firm, making the two investors majority shareholders with combined 44% equity.

Through Hycroft Mining’s private placement offering, AMC and Eric Sprott will each invest $27.9 million in cash for 23.4 million company units, each consisting of one common share and one purchase warrant. The theatre chain is also receiving an additional 23.4 million warrants in Hycroft at $1.07 per share.

Following the announcement, Hycroft Mining’s shares jumped by as much as 98% pre-market.

The seemingly bizarre purchase of equity in a mining company has been addressed by AMC CEO Adam Aron, saying the move is a result of identifying “a company in an unrelated industry that appears to be just like AMC of a year ago”.

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“[Hycroft Mining], too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue,” Aron explained. “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.”

Aron acknowledges that “one would not normally think that a movie theatre company’s core competency includes gold or silver mining”. But he maintained that the company has demonstrated expertise “in guiding a company with otherwise valuable assets through a time of severe liquidity challenge”.

“In 2021, our retail shareholders armed us with a $1.8 billion war chest to play on offense and grow our company… Now, we are taking AMC’s demonstrated achievement in writing the playbook as to how to navigate through liquidity challenge and applying our lessons learned to another entity in Hycroft Mining.”

In an earnings call earlier this month, Aron acknowledged that retail investors own 90% of the company’s float.

The announcement got mixed reactions from retail investors and followers of the company on Twitter.

AMC Entertainment last traded at US$18.32 on the NYSE.

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