America’s largest cinema chain has surprised Wall Street by acquiring a stake in a troubled Nevada miner after concluding that the company’s strife was “just like” its own during the pandemic.
AMC Entertainment is to buy 22 per cent of Hycroft Mining, which owns a gold and silver mine in northern Nevada, for $27.9 million. Hycroft shares almost doubled after the announcement but then fell back.
Adam Aron, 67, AMC’s chairman and chief executive, said: “To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining.”
However, he said that “our strategic investment 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.”
The chain is investing in Hycroft alongside Eric Sprott, the billionaire Canadian precious metals investor, who is buying an equal stake.
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AMC has 380 cinemas and a market value of about $7 billion. It was pushed to the brink during the pandemic but rallied when it emerged as one of the biggest “meme stocks” championed by retail investors. It capitalised on this status, raising hundreds of millions of dollars to shore up its balance sheet. It capitalised on this status, raising hundreds of millions to shore up its balance sheet.
Hycroft went public via a blank-cheque merger in 2020. Its shares came under pressure, at one point halving in eight weeks of trading, but have recovered in recent weeks.
Shares in Hycroft rose 13 cents, or 9.4 per cent, to close at $1.52 last night; AMC was up nine cents, or 6.9 per cent, at $14.49.
