AMC Theatres, the largest theatrical exhibitor in the world, March 15 announced it is buying 22% of Hycroft Mining Holding Corporation and its 71,000-acre gold and silver mine in northern Nevada. AMC contends the mine has some 15 million ounces of gold deposits and some 600 million ounces of silver deposit.
In times of fiscal and global uncertainty, it is believed that investment in gold and silver can be an investment lifeline — as well as an appeal to meme stock traders.
AMC chairman/CEO Adam Aron said the attraction of the investment was that it required only a “nominal amount” ($27.9 million) of AMC cash for ownership of more than 23 million shares.
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” Aron said in a statement.
The executive contends the theatrical chain has been able to successfully navigate the COVID pandemic through its exhibition footprint 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 said.
The CEO said the box office success of Spider-Man: No Way Home and The Batman as well as 2022’s promising theatrical slate, heighten internal convictions that the chain is on the path to fiscal recovery and on solid footing to diversify its investments.
“Our strategic investment … is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago,” Aron said. “Investors should think creatively and boldly about AMC’s future, because within the company, we ourselves have been thinking creatively and boldly about our future.”
In 2021, Aron was able to up AMC’s financial assets to $1.8 billion through long-term debt and stock sales. To monetize that cash, Aron said AMC has to “play on offense” to grow the company. That included adding Imax and Dolby Cinema premium screens, launching non-fungible token (NFT) marketing plans with major studios, accepting cryptocurrency to boost theatre attendance, and entering the retail popcorn sales market.
“Now, we are taking AMC’s demonstrated achievement in writing the play book as to how to navigate through liquidity challenge and applying our lessons learned to another entity in Hycroft Mining,” Aron said.