Small mining firm with troubled history saw big spikes in stock price, trading volume ahead of AMC deal

Hycroft Mining Holding, a small mining firm with a troubled financial history, saw big spikes in its stock price and trading volume in the days before Tuesday’s announcement that movie theater chain AMC Entertainment had agreed to purchase a major stake in the company.

Trading volume in Hycroft averaged hundreds of thousands of shares in the lead-up to March. Then, millions of shares in the company started to change hands daily. On Friday, days before the AMC announcement, trading volume in Hycroft exceeded 340 million shares – over five times the amount of shares it has outstanding.

The company’s share price also surged from just over 30 cents a week ago to nearly $1.40 the day before the announcement. There was no news about the company during that period.

Shares of Hycroft closed up about 9% Tuesday to $1.52 per share.

Adam Aron, the CEO of AMC, cited legal advice and Hycroft’s volume when he explained why he canceled a live interview with CNBC’s Jim Cramer and David Faber on Tuesday morning. “I am excited about our investment in HYMC, but there has been so much volume in that stock today, lawyers insisted I stay off air,” Aron tweeted.

None of the parties involved have been accused of illegal or unethical activity.

On March 1, the 90-day average trading volume of Hycroft shares was around 355,000, according to CNBC analysis of FactSet data. That average would grow dramatically over the next two weeks.

• On March 4, the trading volume began to spike. More than 3.7 million shares exchanged hands on that day, pushing the 90-day average to more than 400,000 shares.
• On March 7, the trading volume jumped to 6.2 million shares. Then it hit 202.7 million the next day. With that, the 90-day average became 2.8 million shares.
• Forty-six million shares of Hycroft changed hands on March 9. The next two days saw extreme increases in volume: 220 million shares were bought and sold on March 10, and 341.4 million were traded on March 11.
• By the close on March 11, the 90-average was 9.9 million. Then, on Monday, the day before AMC’s announcement, 58.6 million shares exchanged hands, and the 90-day average was 10.5 million.

Between March 4 and March 15, the daily volume average was 144.9 million shares. Comparatively, from Feb 22 to March 3, a period that also includes eight trading days, the daily volume average was under 800,000 shares. Hycroft has over 60.4 million shares outstanding, according to FactSet.

Representatives from Mudrick Capital, a large shareholder in Hycroft, and AMC did not immediately respond to CNBC’s request for comment. The Securities and Exchange Commission, which is the leading regulator of U.S. stock markets, declined to comment.

During the days leading up to AMC’s announcement, Hycroft’s share price went from around 33 cents on March 7 to $1.88 on March 11. On Monday, the day before the announcement, shares closed at $1.39.

AMC is spending $27.9 million in cash for the deal and will receive roughly 23.4 million shares in the company and an equal amount of stock warrants. The deal would make AMC the owner of roughly 22% of Hycroft.

The movie theater is purchasing these shares at around $1.19 a piece. Shares of Hycroft closed Monday at $1.39 each, up nearly 400% from the 52-week low of 28 cents seen on March 17, 2021. The stock neared this low on March 3, when shares traded at 29 cents a piece.

Early in the day Tuesday, shares jumped to $2.72 a piece, but settled around $1.60 during midday trading, up 15%.

Aron, the AMC CEO, was slated to appear on CNBC on Tuesday morning, but he canceled his interview, saying he wasn’t comfortable making public comments on the move due to volatility in Hycroft’s stock.

AMC declined to comment beyond what Aron said in the press release announcing the move, but Aron later tweeted to apologize to Cramer and Faber for canceling his appearance.

In addition to a press release, Aron used Twitter to announce the new investment and posted three photographs of him on Hycroft’s property. Many see AMC’s decision to buy up shares in a gold mining company as a way of reigniting fervor among retail investors. In recent months, shares of the movie theater chain have fallen below $15 per share, down from a 52-week high of $72.62.

Hycroft, meanwhile, said in November that it would likely need to raise additional cash to meet its financial obligations over the next year.

That same month, the company laid off more than half of its workers at its mine in western Nevada, ceasing mining operations there. At the time, the company said it would focus more on processing gold and silver sulfide ore, according to a report from the Elko Daily Free Press. Hycroft’s corporate offices are in Denver.

— CNBC’s Chris Hayes contributed to this story.