View of the huge Allied Nevada-Hycroft gold and silver mine near Sulfur in the Black Rock Desert, Nevada, near the small towns of Sulfur and Gerlach.
Federica Grassi | Moment | Getty Images
Hycroft Mining Holding, a small mining company with a troubled financial history, experienced a spike in its share prices and trading volumes in the days leading up to the announcement that movie theater chain AMC Entertainment had agreed to acquire a large stake in the company.
Shares of Hycroft jumped about 12% on Tuesday afternoon to $1.55 after surging even higher earlier. None of the parties involved have been accused of illegal or unethical activities.
Adam Aron, CEO of AMC, cited Highcroft’s legal advice and volume when he explained why he canceled a live interview with CNBC’s Jim Cramer and David Faber on Tuesday morning. “I’m thrilled with our investment in HYMC, but there were so many promotions today that the lawyers insisted that I not appear on the air,” Aron tweeted.
Two weeks before the announcement on Tuesday, March 1, Hycroft’s average 90-day trading volume was around 355,000, according to CNBC’s analysis of FactSet data. This average will rise sharply over the next two weeks.
- On March 4, trading volume began to rise sharply. Over 3.7 million shares were traded that day, bringing the 90-day average to over 400,000 shares.
- On March 7, trading volume jumped to 6.2 million shares. Then the next day it reached 202.7 million. At the same time, the average value for 90 days was 2.8 million shares.
- Forty-six million Hycroft shares changed hands on March 9th. Over the next two days, volumes increased dramatically, with 220 million shares bought and sold on March 10 and 341.4 million shares sold on March 11.
- By the close on March 11, the average of 90 was 9.9 million. Then, on Monday, the day before the AMC announcement, 58.6 million shares were traded for a 90-day average of 10.5 million shares.
Between March 4 and 15, the average daily trading volume was 144.9 million shares. By comparison, from February 22 to March 3, a period that also includes eight trading days, the average daily volume was less than 800,000 shares. Hycroft has over 60.4 million shares outstanding, according to FactSet.
Representatives for Hycroft’s major shareholder Mudrick Capital and AMC did not immediately respond to a CNBC request for comment. The Securities and Exchange Commission, which is the leading regulator of US stock markets, declined to comment.
Also in the days leading up to the AMC announcement, Hycroft’s share price dropped from about 33 cents on March 7 to $1.88 on March 11. On Monday, the day before the announcement, the stock closed at $1.39.
AMC will spend $27.9 million in cash on the deal and receive approximately 23.4 million shares of the company and the same number of share warrants. The deal would make AMC a roughly 22% stake in Hycroft.
The movie theater buys these shares for about $1.19 each. Hycroft shares closed Monday at $1.39 a share, up nearly 400% from a 52-week low of 28 cents on March 17, 2021. Shares approached that low on March 3, when shares traded at 29 cents a share.
The stock jumped to $2.72 a share early Tuesday but settled at $1.60 during midday trading, up 15%.
Aron, the CEO of AMC, was scheduled to speak on CNBC Tuesday morning, but he canceled his interview, saying he was uncomfortable commenting publicly on the move due to the volatility in Hycroft’s stock.
AMC declined to comment on what Aron said in the press release announcing the move, but Aron later tweeted to apologize to Kramer and Faber for canceling his show.
In addition to the press release, Aron used Twitter to announce the new investment and posted three photos of himself on Highcroft’s property. Many see AMC’s decision to buy shares in the gold miner as a way to spark enthusiasm among retail investors. Shares in the movie theater chain have fallen below $15 a share in recent months from a 52-week high of $72.62.
Meanwhile, Hycroft said in November that it would likely need additional cash to meet its financial obligations over the next year.
That same month, the company laid off more than half of its workers at its mine in western Nevada, shutting down mining there. According to an Elko Daily Free Press report, the company said at the time that it would focus on processing gold and silver sulphide ore. The Hycroft corporate office is located in Denver.
-Chris Hayes of CNBC contributed to this story.