A view of the massive Nevada-Hycroft Allied gold and silver mine near Sulfur in Black Rock Desert, Nevada, near the small towns of Sulfur and Gerlach.
Federica Grassi | Moment | beautiful pictures
Hycroft Mining Holdinga small mining company with a troubled financial history, saw a spike in share price and trading volume in the days leading up to the announcement that the cinema chain AMC Entertainment agreed to buy a major share of the company.
Shares of Hycroft were up about 12% Tuesday afternoon to $1.55, after previously surging even higher. No party involved has been accused of illegal or unethical activity.
Adam Aron, CEO of AMC, cited Hycroft’s volume and legal advice as he explained why he canceled a one-on-one interview with CNBC’s Jim Cramer and David Faber on Wednesday morning. Three. “I’m excited about our investment in HYMC, but there’s been so much volume in that stock today, lawyers insist I’m not broadcasting,” Aron tweeted.
Two weeks before Tuesday’s announcement, on March 1, Hycroft stock’s 90-day average trading volume was about 355,000, according to CNBC analysis of FactSet data. That average should increase significantly over the next two weeks.
- On March 4, trading volume started to spike. More than 3.7 million shares changed hands that day, pushing the 90-day average to more than 400,000 shares.
- On March 7, trading volume spiked to 6.2 million shares. Then it hit 202.7 million the next day. With that, the 90-day average volume becomes 2.8 million shares.
- Forty-six million shares of Hycroft changed hands on March 9. The next two days saw a dramatic increase in volume: 220 million shares were bought and sold on March 10, and 341.4 million traded on March 11.
- At the end of March 11, the 90 average was 9.9 million. Then, on Monday, the day before AMC’s announcement, 58.6 million shares changed hands and the 90-day average was 10.5 million.
From March 4 to March 15, the average daily volume was 144.9 million shares. In comparison, from February 22 to March 3, a period consisting of eight trading days, the average daily volume was less than 800,000 shares. Hycroft has more than 60.4 million shares outstanding, according to FactSet.
Representatives from Mudrick Capital, a major Hycroft shareholder, and AMC did not immediately respond to CNBC’s request for comment. The Securities and Exchange Commission, the top regulator of the US stock market, declined to comment.
Also in the days leading up to AMC’s announcement, Hycroft’s share price jumped from about 33 cents on March 7 to $1.88 on March 11. On Monday, the day before the announcement, shares The coupon closed at $1.39.
AMC is spending $27.9 million in cash on the deal and will receive approximately 23.4 million shares of stock in the company and an equal amount of warrants. The deal will make AMC the owner of about 22% of Hycroft’s shares.
Cinema is buying these shares for about $1.19 a piece. Shares of Hycroft closed Monday at $1.39 per share, up nearly 400% from a 52-week low of 28 cents seen on March 17, 2021. Shares hit a low. on March 3, when the stock was trading at 29 cents a piece.
Early Tuesday, the stock rallied to $2.72 a piece, but has stabilized around $1.60 in midday trading, up 15%.
Aron, AMC CEO, was scheduled to appear on CNBC Tuesday morning, but he canceled his interview, saying he’s uncomfortable making public comment on the move due to volatility in Hycroft’s stock.
AMC declined to comment beyond what Aron had said in the press release announcing the move, but Aron later tweeted to apologize to Cramer and Faber for canceling his appearance.
Hycroft, meanwhile, said in November that it will likely need to raise more cash to meet its financial obligations next year.
That same month, the company laid off more than half of the workers at its mine in western Nevada, shutting down mining operations there. At the time, the company said it would focus more on processing gold and silver sulfide ores, according to the report a report from Elko Daily Free Press. Hycroft’s corporate offices are in Denver.
– CNBC’s Chris Hayes contributed to this story.