Faithful investors who helped pull AMC Entertainment Holdings Inc. back from the financial brink are cheering its unorthodox investment in Hycroft Mining Holding Corp., a troubled gold and silver mining company.

The investment follows a challenging run for Hycroft, which went public in early 2020 through a merger with a special purpose acquisition company backed by hedge fund manager Jason Mudrick. It had lost around 80 per cent of its value since its debut, and the company asked its lenders to grant it some breathing room on its debt last month.

Hycroft’s largest shareholder, Mudrick Capital, has experienced this phenomenon before. Mudrick was an architect of AMC’s narrow escape from bankruptcy last year. When AMC’s shares jumped in early 2021, Mudrick encouraged the theater operator to capitalize on the rally. The company issued about US$400 million worth of new shares and used the proceeds to pay down debt.

This time around, Mudrick’s role was more involved.


After rushing AMC management to a remote Nevada location to visit the mine before finalizing the decision, Mudrick, AMC’s Chief Executive Officer Adam Aron and a handful of lawyers hashed out the details via Zoom. 

From the jump, time was short. Hycroft had only six days to put together its deal in order to preserve a low price for AMC’s stock purchases; Nasdaq requirements meant they would price at the average of the past several days of trading, and delay would include post-rally prices in that average.

Representatives from Mudrick Capital, AMC, and Hycroft did not provide comment. 

Reddit investors started talking about Hycroft and drove its stock up to a high of US$1.88 on March 11, the stock’s highest price since August. Social media activity preceded a surge in the shares last Tuesday that caught the attention of stakeholders, according to a person with knowledge of the dealmaking over the past week.

Jason Mudrick recognized a familiar opportunity and called on an old partner -- AMC’s Aron, who had become a skilled Reddit-whisperer -- to help him sell Hycroft on the idea, according to the person familiar. Instead, it also led to a surprise investment offer from the AMC CEO.

Today, Hycroft said it would sell up to US$500 million of additional shares in a future at-the-market issuance. It may use proceeds from that and the AMC investment to help finance new technology to better process its reserves, according to the person familiar.

Hycroft shares fell as much as 9.9 per cent to US$1.37 in New York on Wednesday. AMC climbed as much as 6.9 per cent to US$15.48.


Aron has attracted retail investor support due to what they say is his willingness to listen to individuals and solicit their ideas on Twitter.

AMC has spent months touting a move into crypto, with plans to create its own token and accept cryptocurrencies as payment, which investors had pushed for amid a broader movement positioning crypto as a new safe haven investment.

But that thesis has come into question in recent weeks after a sell-off in the stock market and concerns about inflation and the war in Ukraine. Gold -- the traditional safe haven -- has soared to record highs this year.

“That seemed like a pretty good move to me anyways, before I even read the release,” said Jolene Roderick, 37, who bought shares in AMC and Hycroft on Tuesday after the announcement. “Gold is supposed to be considered a relatively safe investment for companies to be adding to their portfolios.”

To some AMC investors, the Hycroft investment is a much-needed pivot away from the movie chain’s traditional business. Zack Dillon, 23, bought more AMC shares after Tuesday’s announcement and is taking a look at Hycroft.

Hycroft potentially has precious metal reserves that could be very beneficial for AMC, he said. “I think that will be a positive outlook for the future for AMC’s revenue.”

Gerardo Maya, 28, owns both AMC and Hycroft shares. He bought Hycroft shares about a year ago and sold last week at a profit amid a Reddit-spurred rally, before quickly buying back in. Hycroft could benefit from a strong retail investor community like AMC’s, he said in an interview, and he plans to buy more shares if there’s a sell-off.

“Everyone who invests in AMC is all about holding, and they see the CEO investing in another company that’s having trouble financially, like Hycroft,” he said. “I can see that helping Hycroft itself.”


Observers may see some irony in AMC’s newfound role as a rescuer. The theater chain itself was itself on the brink of bankruptcy just over a year ago until it, too, caught the sight of rally-happy Redditors.

In a matter of months, AMC’s fate turned dramatically, albeit without much clarity on how the company was going to actually remedy the business. The company discussed creating commemorative nonfungible tokens, or NFTs, related to major films.

More immediately important was the seemingly self-perpetuating narrative in which stock surge begat stock surge, without much consideration for fundamentals. 

Aron acknowledged the likeness between the fates of the two companies in AMC’s press release Tuesday. Hycroft “appears to be just like AMC of a year ago,” with “rock-solid assets” but “facing a severe and immediate liquidity issue,” he said. “We are confident that our involvement can greatly help it to surmount its challenges -- to its benefit, and to ours.”

Hycroft, which filed for and exited bankruptcy in 2015, rallied as much as 95 per cent Tuesday after AMC said it was taking a 22 per cent equity stake in the company.