AMC Theaters buys stake in small – and unprofitable – Nevada gold mine
by Jeniffer Solis, Nevada Current
WINNEMUCCA — In an unusual move cinema giant AMC Theaters has agreed to buy a major stake in a small Nevada gold and silver mining company.
The movie theater chain announced Tuesday that it would purchase 22% of Hycroft Mining Holding Corp., which operates the 71,000-acre Hycroft mine in northern Nevada, for $56 million.
The mine, 55 miles west of Winnemucca, holds 15 million ounces of gold deposits and 600 million ounces of silver, AMC said, citing independent third-party studies.
According to the most recent Net Proceeds of Minerals Bulletin published by the Nevada Taxation Department, published in August 2021, the Hycroft mine produced $47 million worth of gold in 2020, ranking it as one of the smallest mines in an industry that produced more than $8.4 billion worth of gold in Nevada that year.
But Hycroft also reported deductible costs of nearly $120 million at the mine. As a result, neither the state general fund nor Humboldt County received any mining tax revenue from the mine.
For the five years of 2016 through 2020, the mine has produced more than $111 million worth of gold, but reported well over $200 million in deductions, and paid zero mining taxes each year, according to state net proceeds reports.
In November, the company laid off half its workers from the northern Nevada mine after incurring millions in losses, according to the Elko Daily Free Press.
Joining AMC in the investment is Eric Sprott, a gold and silver investor, AMC said in a press release Tuesday. Combined, AMC and Sprott are each investing investing $27.9 million in the mine, a move that will give AMC the right to appoint a representative to Hycroft’s board of directors.
Adam Aron, chairman and CEO of AMC Entertainment, said the investment, “is a truly terrific opportunity to potentially strengthen and enrich our company, and thereby create significant value for AMC Entertainment shareholders.”
As the largest cinema chain in the world AMC cited the box office strength of “Spiderman: No Way Home” and “The Batman” as signs the entertainment company is on “a glide path to recovery.”
Aron said that while AMC is “committed to orchestrating a full recovery from COVID impacts on the cinema industry” the company believes they will need to “play on offense” and make bold diversification moves in the future.
“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. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours,” Aron said in a statement.
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