Hycroft Stock Set To Climb on News of AMC Entertainment Investment

Hycroft Mining (HYMC) stock, which has whipsawed over the last year, rose in March after the announcement of an investment from AMC Entertainment. What’s HYMC stock's 2025 forecast? Could the association with AMC take it even higher?

HYMC, a penny gold mining company, has a measured gold equivalent mineral reserve of 15.3 million ounces and another 6.9 million ounces in the inferred category. It also has around 600 million ounces in silver reserves.

It might seem counterintuitive that a cinema chain company saddled with debt would invest in a struggling gold mining company. However, AMC isn't the only one that sees value in Hycroft stock. World-renowned gold and silver investor Eric Sprott has also bought a stake in HYMC.

AMC admitted that although there seems to be little strategic rationale in its investment in HYMC, there are parallels between Hycroft's current situation and AMC's a year back. After a bankruptcy scare, AMC stock exploded in 2021 with help from Reddit traders.

HYMC could be the next meme stock. After the announcement of AMC and Sprott buying a 22 percent stake each in Hycroft, the company went for an at-the-market stock offering, raising $138.6 million. Including AMC's and Sprott's investments, the company has raised gross proceeds of almost $195 million. AMC might also help HYMC “better communicate with retail investors,” who own a significant stake in AMC and have been supportive of the company’s turnaround under CEO Adam Aron.

HYMC operates the Hycroft Mine in northern Nevada. The 71,000-acre mining complex is among the largest gold mining sites in North America. The company’s stated gold reserves look strong and don’t seem fully reflected in its stock price.

For some time, Hycroft’s biggest issue was its overstretched and bloated balance sheet, but it has addressed some of these issues and pushed the maturity of $156 million of its debt to 2027. This, coupled with its cash raised, could help the company scale up production.

The medium-term outlook for gold looks bullish. Whereas the Fed’s rate hikes are negative for such non-interest-bearing assets, demand amid the geopolitical turmoil and rising inflation could push gold prices higher.

Hycroft's association with AMC could generate retail investor interest in HYMC stock. Supportive macro factors, Hycroft's balance sheet adjustments, the high gold prices, and meme stock mania could take HYMC higher, as we saw with AMC and GameStop. However, given that much of the rally would be speculative, risk-averse investors might want to steer clear of the stock.