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The silver screen? AMC invests in junior gold producer Hycroft

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(Kitco News) - The entertainment company AMC that ruled the meme stocks in 2021 has found a kindred spirit in the mining sector as it announces a hefty stake in the Nevada-based Hycroft Mining Holding Corporation (Nasdaq: HYMC).

The junior gold and silver producer announced Tuesday that AMC, along with Eric Sprott, bought a 22% stake in the company valued at $56 million.

AMC Chief Executive Officer Adam Aron, said that he sees value in the mining company as it suffers from liquidity issues.

"To state the obvious, one would not normally think that a movie theatre company's core competency includes gold or silver mining. 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," Aron said in the statement. "It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. We are confident that our involvement can greatly help it to surmount its challenges -- to its benefit, and to ours."

In November, the gold producer said it was halting initial mining operations due to rising costs.

Diane Garrett, president, CEO and acting chairman of Hycroft, said that the investment breathes new life into the company.

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"Collectively, their investment dramatically improves Hycroft's liquidity position and provides years of financial runway. Additionally, their confidence underscores the world-class nature of Hycroft's gold and silver deposit and our potential to unlock value at a pivotal moment in its development. We look forward to working alongside our new investors to advance Hycroft up the value chain," she said in a statement.

The company said that the new capital will be used for general corporate purposes, including the repayment, refinancing, redemption, or repurchase of existing indebtedness, working capital or capital expenditures and other investments.

Commodity analysts at BMO that Hycroft will still have difficulty getting back into production even with the new capital.

"This capital infusion gives Hycroft the time and the capital to complete the studies required to re-engineer the Hycroft mine, but is unlikely to make a significant contribution to the capital required to re-enter full-scale production. We continue to value the Hycroft mine on an in-situ basis at $10/oz of gold-equivalent resources.

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