AMC Entertainment (AMC) shares jumped higher Tuesday after the world's second-largest movie theatre chain, and meme stock favorite, unveiled a $28 million investment in a Nevada gold mine.
AMC Entertainment, along with noted commodity investor Eric Sprott, purchased a collective $56 million stake in Hycroft Mining Holding, the parent company of northern Nevada's 71,000 acre Hycroft mine, which is estimated to have around 15 million ounces of gold.
AMC will own a 22% stake in the group, as well as the right to appoint a representative on the Hycroft board, in exchange for what it called a "nominal amount" of cash from AMC shareholders.
“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," said CEO Adam Aron. "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."
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining," he added. "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.”
AMC Entertainment shares were marked 7.2% higher in early Tuesday trading to change hands at $14.51 each, a move that would still leave the stock with a year-to-date decline of around 45%. Hycroft shares, meanwhile, soared 65.5% to $2.30 each.
Earlier this month, AMC confirmed that revenues for the three months ending in December came in at $1.17 billion, while its net loss narrowed to $134.4 million, thanks in part to the huge success of "SpiderMan: No Way Home" and the James Bond epic "No Time To Die".
CFO Sean Goodman said at the time, however, that while the group's capital allocation would be "balanced and disciplined", but noted that it could "opportunistically pursuing value-enhancing initiatives, including those that lead to diversification of our business."
"It's intriguing to diversify our business away from the pure movie theater industry to diversify our risk and yet capitalize on our knowledge of things like food and beverage, entertainment, selling tickets to things, running buildings that are far apart from each other, dealing with landlords with hundreds and hundreds of leases," Aron told investors on a conference call on March 1. "That expertise is needed in other industries, too. And again, I think for the people who are merely valuing the AMC of 2019 and suggesting that that's all we can do going forward, you're making a mistake."
The move to invest in Hycroft could also be a way to capitalize on the recent surge in gold prices, which briefly topped $2,000 per ounce last week and are up 11% over the past six months.
AMC has also launched a series of non-fungible tokens, or NFTs, coordinated with the release of films such as Spider-Man and The Batman.
Around 800,000 NFTs have been collected by AMC movie-goers over the past three months, the company said on March 1, and are seen as "drivers of attendance for AMC at our theaters and growth in box office revenues for our studio partners."
