Silver Screens: AMC Theaters Buys Into Struggling Precious Metals Mine

They’re thinking outside the box office.

Cinema giant AMC announced Tuesday plans to purchase a stake in a struggling Nevada mining company for $27.9 million in the hopes of turning a profit on something other than overpriced concession stand nachos.

Can You Dig It?

Hycroft, the owner of a 70,000-acre mine in Nevada with up to 15 million ounces of gold deposits and 600 million ounces of silver deposits, has a precarious financial past. It halted operations last November because of the rising cost of chemicals needed to extract ore and laid off half of its workforce. That month, Hycroft also revealed in a securities filing that it would struggle to stay in business if it didn’t raise cash.

Enter AMC, fresh off its best quarter in two years. The world’s largest movie theater chain and gold-and-silver investor Eric Sprott are offering to take a 22% stake in Hycroft for $56 million, giving the small miner its much-needed cash injection. AMC chief Adam Aron acknowledged the deal will surprise investors — Wedbush analyst Alicia Reese told Barron’s it’s “bizarre” — but pointed to similarities between the movie and mining firms’ trajectories:

• AMC, which will spend $27.9 million on the transaction, barely avoided bankruptcy last January, and was saved by a swoon of retail investors during the meme investing craze. That helped AMC bring in $1.8 billion, according to Aron.
• Hycroft, which at one point had only $8 million in cash according to The Wall Street Journal, was similarly kept alive by meme traders in recent weeks, in this case, ones searching for cheap stocks that could benefit from commodity market upheaval caused by Russia’s invasion of Ukraine. Aron said AMC can help the mining firm deal with its liquidity issues from their eerily similar near-bankrupt experience.

Hollywood Gold: AMC’s movie theaters have recently seen an uptick in sales thanks to the winding down of Covid restrictions and the arrival of new Spider-Man and Batman films. Revenue in the three months ended in December grew to $1.17 billion from $162.5 million in the same period a year earlier.