On March 14 it was announced that Hycroft Mining (NASDAQ: HYMC) had received a $56m equity investment from recognized gold investor Eric Sprott and cinema chain AMC Entertainment (NYSE: AMC).
The random investment from AMC has given HYMC a cult-like meme stock status in recent weeks. Indeed the gold stock has soared over 600% in the past three weeks.
What is Hycroft Mining?
Hycroft Mining is a gold explorer and mining company operating in Northern Nevada. On March 9 HYMC stock had a $60m market cap, but this has since risen to $248m. The company is a junior miner and speculative investment.
The company was founded on August 28, 2017, and is headquartered in Winnemucca, Nevada.
2021 Highlights
Safety: Hycroft's safety performance was significantly improved with a 0.64 Total Recordable Injury Frequency Rate (TRIFR) at the end of 2021, an 80% reduction from 3.24 at the end of 2020. At month-end January 2022, the TRIFR improved to a new low of 0.31.
Gold production for the year ended December 31, 2021, of 55,668 ounces exceeded the high end of the guidance range as the process team continued to improve equipment, process control, and costs.
Silver production of 355,967 ounces was approximately 20% below guidance due to slower than planned leach kinetics. Processing ore on leach pads is currently scheduled to proceed through the second quarter of 2022.
Cash Position: The Company ended 2021 with $12.3 million of cash on hand and complied with debt covenants.
HYMC Competitors
Key competitors to Hycroft Mining include US Gold Corp (NASDAQ: USAU) and Karora Resources (TSE: KRR).
Sadly, the war in Ukraine is causing severe economic price shocks, and the uncertainty is driving people to seek out gold as a safe haven investment.
As the price of gold has been shooting up, so has a speculative interest in these miners. On March 8, 2022, the trading volume for USAU stock was 3x higher than the prior 30-day average.
Why did HYMC stock jump 200%?
The main reason for HYMC stock's initial surge on March 9 appeared to simply be the gold price. However, it soon became apparent these investments from Sprott and AMC were fuelling the rally.
The gold price has slipped 6% since March 8.
Risks to investing in Hycroft Mining stock
In November, Hycroft stopped pre-commercial scale mining at its run-of-mine operation. Rising costs for reagents and consumables were hurting the business. Meanwhile, pressure to complete its updated technical studies in early 2022 were also an issue.
Hycroft continues to produce gold and silver from ore on its leach pads as long as it's economical. While the gold price is rising, this bodes well for the company. But it must also scale its workforce.
The company has had money worries with debt restructuring underway. Hycroft Mining reported a credit-agreement waiver with Sprott Private Resource Lending II at the end of February.
Volatility in HYMC shares
Over the past year, Hycroft Mining Holding Corporation (HYMC) has traded between $0.28 and $5. Year-to-date, HYMC stock is up by 274.19% while the S&P 500 is down -4.61% over the same period of time.
Shares in Hycroft Mining Holding Corporation (HYMC) closed at $2.32 on March 28 after shares jumped by 81.25% during Monday's session.
