AMC is using Meme’s money to buy a gold mine. It is “strange”.

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AMC Entertainment

Just hit gold. Literally.

The movie theater company announced that it has acquired a 22% stake in

Haycroft Mining Holdings

and a 71,000-acre gold and silver mine in northern Nevada.

AMC

(Stock ticker: AMC) will invest $27.9 million in cash in Hycroft (

HYMC

) for 23.4 million security units, where each unit consists of one common share of Hycroft and one common share purchase order. Units are priced at $1,193 per share, while each buy order is priced at around $1.07 per share and has a term of five years. AMC has also been granted the right to appoint a representative to the Hycroft Board of Directors.

Eric Sprout, one of the world’s leading gold and silver investors, will make an equal investment in Hycroft with AMC. AMC and Sprott together invest $56 million.

The company clarified that the investment was made through a holding company of Sprott, and not through Sprott Inc, the alternative asset manager named for the investor. Sprott Inc. could not. From commenting on the investment. Eric Sprout and his holding company could not immediately be reached for comment on the investment.

AMC said Hycroft Mine has about 15 million ounces of gold deposits and about 600 million ounces of silver deposits.

“To be clear, one doesn’t usually think that a movie theater company’s core competency includes gold or silver mining,” said Adam Aaron, CEO of AMC.

Indeed, the news came as a surprise to Wall Street analysts.

“It doesn’t seem like a terrible downside, but it’s weird at the same time,” Wedbush analyst Alicia Reese said. “It’s unexpected to say the least.”

Although box office sales are returning, high-profile premieres such as “Batman” It brought in $128.5 million In North American ticket sales during the film’s opening weekend, AMC is changing its model to diversify its holdings after ticket sales have been hit during the pandemic.

The company is using the money it made from the meme investing frenzy — about $1.8 billion, according to Aaron — to fund the investment.

“Our strategic investment announced today is the result of us identifying a company in an unrelated industry that looks like AMC a year ago. It also had very solid assets, but for a variety of reasons, it was facing a severe and immediate liquidity issue,” Aaron said.

Aaron believes that AMC can help the miner overcome its liquidity issues.

“If this company goes back to normal, that will be a nice cash win, and it will create more cash for it later,” said Reese. She added that in the grand scheme of things, $28 million would be relatively inexpensive if the effort went south.

In the past, Oanda analyst Edward Moya wrote, meme traders have tended to flock to cryptocurrencies and other meme stocks, but have typically avoided gold. AMC’s move could change that.

“Meme stock trading appears to be trying to come back with Hycroft Mining, the slightly struggling gold miner, but that should signal that more companies will follow suit,” Moya wrote.

Other AMC investments include adding new theaters, increasing IMAX (IMAX) and Dolby Cinema screens, and NFT programming. The chain has also moved to accepting cryptocurrencies in theaters to increase attendance, and has a new initiative to enter retail popcorn.

“Even with the enthusiasm the audience has for going to the movies in our theaters, it’s not enough for us to just bring back the old AMC,” he said.

AMC shares rose 6.9% to $14.49 on Tuesday, while Hycroft shares rose 9.4%, after rising more than 24% earlier in the day.

Write to Sabrina Escobar at [email protected]