AMC’s Hycroft deal triggers meme-stock gold rush

Hycroft Mining has raised roughly $140 million by selling new shares since AMC Entertainment bought its own stake in the gold miner earlier this month (Photo: Hycroft Mining Holding )
Hycroft Mining has raised roughly $140 million by selling new shares since AMC Entertainment bought its own stake in the gold miner earlier this month (Photo: Hycroft Mining Holding )

Summary

The gold-mining company has raised roughly $140 million from stock sales since AMC said it was buying a stake

Hycroft Mining Holding Corp. has raised roughly $140 million by selling new shares since cinema giant and meme-stock favorite AMC Entertainment Holdings Inc. bought its own stake in the gold miner earlier this month, according to people familiar with the matter.

Hycroft launched an at-the-market stock offering on March 15 after announcing that AMC and a prominent precious-metals investor, Eric Sprott, had each committed to put $28 million into the company. Combined with the proceeds from the stock offering and the investments of AMC and Mr. Sprott, the company has raised about $196 million.

Hycroft did not immediately respond to requests for comment.

Hycroft was on the verge of bankruptcy last month, down to just $8 million of cash on its balance sheet because it hadn’t obtained sufficient financing to build a mill it needed to economically mine its ore, the people familiar with the matter said.

But the company, which owns a more than 70,000-acre gold and silver mine in northern Nevada, caught the attention of meme-focused individual investors after Russia’s invasion of Ukraine last month. The ensuing sanctions and geopolitical instability caused metals prices to soar, spurring day traders to post on social media that Hycroft was an attractive bargain stock.

One of the company’s main investors, hedge-fund manager Jason Mudrick, thought that sudden attention presented Hycroft with a good opportunity to raise much-needed financing, the people said.

Mr. Mudrick had also invested in AMC when it was fending off bankruptcy during the pandemic. The cinema chain had obtained much of the financing it needed to escape chapter 11 by conducting share offerings available to individual investors.

He called AMC Chief Executive Adam Aron to ask that he give Hycroft’s CEO, Diane Garrett, advice on how to raise money from individual investors while also contending with bankruptcy risk.

Mr. Aron decided that AMC itself should buy a stake in Hycroft.

The theater chain has been scouting out possible buyout opportunities with the aim of diversifying its business. In addition to setting up its own wholesale popcorn line, AMC has been experimenting with offering nonfungible tokens, a kind of digital asset, to its investors. It is also letting customers pay with cryptocurrencies like Dogecoin.

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