In a left-field move, AMC Theatres on Tuesday announced the acquisition of a 22% minority stake in Hycroft Mining Holding Corporation, a gold and silver investment, for $27.9 million in cash.
Hycroft oversees a 71,000-acre mine in northern Nevada that independent third-party studies have said hold some 15 million ounces of gold deposits and some 600 million ounces of silver deposit, according to AMC. In addition, AMC will receive an additional 23.4 million warrants in Hycroft at $1.07 per share.
Eric Sprott, a leading gold and silver investor, is making an equal investment in Hycroft; AMC will also gain the right to name a member of Hycroft’s board as part of the deal.
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” AMC Theatres chairman CEO Adam Aron said in a statement. “In recent years, however, AMC Entertainment has had enormous success and demonstrated expertise in guiding a company with otherwise valuable assets through a time of severe liquidity challenge, 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.”
Aron also credited the company’s recent success in ticket sales, though the company reported a $134 million net loss for the fourth quarter of 2021. “The strength of ‘Spider-Man: No Way Home’ and ‘The Batman,’ as well as 2022’s promising industry box office, heighten AMC Entertainment’s conviction that we are on a glide path to recovery,” he said. “Of course, as the largest movie theater chain in the world, we are passionately committed to orchestrating a full recovery from COVID impacts on the cinema industry.”
Aron argued that the Hycroft investment was part of a strategy to pursue new opportunities, even ones outside the core entertainment field. “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.”
He also credited the meme-stock surge last year that spiked the company’s share price as high as $76.62 despite the pandemic shutdown of cinemas. The stock closed Monday at $13.56.
The Reddit-fueled stock surge enabled the company to refinance and pay down a portion of its substantial debt load. “In 2021, our retail shareholders armed us with a $1.8 billion war chest to play on offense and grow our company,” he said. “To that end, we have already started adding highly appealing and what we believe will be nicely profitable theaters to our global network, committed to increasing Imax and Dolby Cinema premium screens, which are so successful within our theaters, introduced NFT programs and accepted cryptocurrency to boost theater attendance.”
