AMC buys stake in Nevada gold miner Hycroft Mining

Movie theater chain AMC Entertainment has agreed to purchase a major stake in a Nevada gold and silver miner, the companies announced Tuesday, an unusual expansion for the one-time meme stock.

AMC will spend $27.9 million in cash for the deal, receiving roughly 23.4 million shares for the company, Hycroft Mining Holding Corp., and an equal amount of stock warrants. The deal would make AMC the owner of roughly 22% of Hycroft.

Hycroft shares rose over 30% Tuesday morning to $1.86 after it more than doubled at one point in premarket trading. AMC shares, which are down 50% this year alone, slipped slightly.

AMC CEO Adam Aron was slated to appear on CNBC on Tuesday morning, but he canceled his interview, saying he wasn’t comfortable making public comments on the move due to volatility in Hycroft’s stock, CNBC’s David Faber reported.

In a quarterly securities filing released in November, Hycroft included a “going concern” clause, saying that that it would likely need to raise additional cash to meet its financial obligations over the next year.

Aron, in a release explaining the move, cited the recent success of theatrical releases “Spider-Man: No Way Home” and “The Batman,” as well as positive forecasts for the box office this year. He also drew parallels between his company and the miner.

“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,” he said. “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.”

AMC’s stock emerged as one of the main “meme stocks” last year, surging as an army of retail investors bought into shares of companies that were heavily shorted by hedge funds. Aron has embraced the new shareholders, including offering popcorn deals for owners of the company.

The company has also used its newfound popularity to raise billions in additional capital, with Aron saying some of that money would be used for strategic acquisitions. Aron has sold tens of millions of dollars of his own shares in AMC, which he has attributed to estate planning. AMC is also experimenting with a new pricing model that charges more for certain movies.

In addition to AMC, the same number of shares and warrants in Hycroft is being purchased by metals investor Eric Sprott. Hycroft said in its release that investment vehicle Sprott Private Resource Lending II has agreed to extend the maturity of its debt to May 2027 from May 2025.

As part of the deal, Hycroft will no longer be required to make regular principal payments on that debt and will instead be expected to pay it all back in a single “bullet” payment in 2027, according to a securities filing.

In a separate securities filing, Hycroft said it had entered an agreement with B. Riley Securities to sell up to $500 million of its stock in an at-the-market offering program.