AMC movie theatres has announced the purchase of $27.9m (£21.3m) in shares in a gold and silver mining company, Hycroft Mining Holding Corp.
In an announcement on Tuesday, AMC chairman and chief executive officer Adam Aron said his investment totals $56m (£42.9m) as part of an agreement along with Canadian fund manager Eric Sprott, a well known investor in gold and silver, who will also buy $27.9m or 22 per cent of shares in Hycroft.
Mr Aron said the investment by AMC Entertainment, which some argue is a “meme stock”, would help his theatre company diversify and strengthen financially after rebounding from Covid shutdowns.
“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,” said Mr Aron. “It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue.”
The unusual investment will see AMC Entertainment appoint a Hycroft board member and take ownership of a 71,000 acre Hycroft Mine in northern Nevada.
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” Mr Aron said in his announcement. “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(s).”
The chairman and CEO, who said his move theatre business now had the financial strength and expertise to “assist the talented mining professionals at Hycroft”, also pointed to recent success at the box office for his company’s investment in Hycroft.
“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 Mr Aron. His company is the largest movie theatre business in the US.
In 2021, AMC was at the centre of the so-called meme stocks phenomenon, when investors from the social media platform Reddit bought shares in previously undervalued companies and caused major losses for investors and hedge funds who bet against the companies in the process.
Its shares have gained nearly 22 per cent in last 12 months.
The Independent has approached AMC for further comment.
Additional reporting by Reuters
