Hycroft Mining Stock News and Forecast: HYMC is high-risk investing for the long term

Hycroft Mining (HYMC) stock remains one favoured by retail investors, but traders are increasingly running out of patience with the gold mining company. HYMC stock surged in a frenzy of interest earlier in March after AMC announced an investment in the company, which caught many investors by surprise.

To recap the story so far, Hycroft Mining was a largely unsuccessful gold miner with one mine in Nevada. The company was struggling and as recently as November 2021 had to make significant layoffs with 109 workers losing their jobs and ceasing mining operations at the Nevada plant. In effect, the company was close to the edge of bankruptcy. Only an investment from AMC stopped it from likely going under.

Hycroft Mining issued a press release back in November: “As a result of current and expected ongoing cost pressures for many of the reagents and consumables used at the Hycroft Mine, and the timeline for completing its updated technical studies in early 2022, effective immediately the Company is discontinuing pre-commercial scale mining at its run-of-mine (“ROM”) operation.”

HYMC Stock News: AMC to the rescue

A company on the ropes was saved by AMC, which was itself saved by Reddit-inspired retail traders. An unlikely role maybe, but nothing is too left-field for Adam Aron and the AMC apes. AMC took a stake in HYMC, and the stock went to the moon as AMC apes piled in. It got even better from Hycroft as it was able to use this surge of enthusiasm to issue new stock and raise in total about $195 million.

AMC and Eric Sprott put up $56 million, and then Hycroft raised a further $139 million via a share offering. This takes the liquidity issue off the table and allows Hycroft to focus on commercializing its mining operations, but this is a long and costly road. Mining is quite cost-intensive. The cost of extraction is key, and with gold prices at multi-decade highs, it does make more expensive mining operations more viable.

In an interview with Benzinga, Hycroft Mining's CEO said the company is looking to conduct further feasibility studies to scale up production. That is what this cash allows it to do. This may necessitate further offerings, however, which are naturally dilutive. In other words, do not expect a home run here.

"You never say 'never' in our industry. We've got a very long project with a lot of work to do, but for right now, we've got sufficient cash to get us plenty of runway down the road and to be able to do the work we need to do, which is exploration and finalizing our technical studies for the larger commercial scale operation." said CEO Diane Garrett.

HYMC Stock Forecast: As news slows down, so does momentum

Penny stocks do not naturally lend themselves to technical analysis. Volatility can swing wildly based on news flow. This recent spike though has the classic signs of news flow frenzy, which will likely die down. Momentum plays can be identified as slowing by falling social media mentions, falling price and falling volumes. We have all three factors at play here. $2 is the natural support, but once broken HYMC stock is heading straight for $1 in all likelihood. This is not linked to gold as it does not yet produce enough gold. It is really an exploration stock. The mine has proven difficult and expensive to make commercial. The investment and capital raise means that HYMC has enough money to look at more expensive and perhaps commercial means of extracting the proven gold reserves at its Nevada mine, but it is still a long and difficult road ahead. Do not expect a quick home run here.

HYMC stock chart, daily