AMC Entertainment Holdings Inc. is buying 22% of a Nevada-based miner of gold and silver, venturing away from its core movie-theater operations as it adapts to a post-Covid-19 world.
AMC said in a statement it would invest $27.9 million in cash in Hycroft Mining Holding Corp. Chief Executive Adam Aron said on Twitter, “AMC is playing on offense again with a bold diversification move.”
AMC shares ticked up 3.1% in premarket trading, while shares of publicly listed Hycroft surged 88%. Hycroft, which owns the Hycroft Mine in northern Nevada, said it had also received an investment from Eric Sprott, a precious-metals investor.
The movie-theater company last year became a fan-favorite stock among individual investors who piled into shares of the company during the meme-stock mania. Many traders still haven’t sold. The company has used its investor base to shore up its finances. Earlier this year, Mr. Aron said he wanted to refinance some of the company’s expensive debt to reduce its interest exposure and push out some debt maturities by several years.
Hycroft owns a more than 70,000-acre mine in northern Nevada that the company says contains 15 million ounces of gold and 600 million ounces of silver.
Hycroft’s shares, however, have been hammered over the past two years.
Mr. Aron characterized the investment as “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.”
AMC will receive 23.4 million units in Hycroft, consisting of one common share and one common share purchase warrant. AMC said that with its investment, it has been granted the right to appoint a representative to the Hycroft board.
Source: Mint