Why Is Hycroft Mining (HYMC) Stock Soaring 15% Today?

  • Precious metals development company Hycroft Mining (HYMC) released its initial drill results.
  • Management claims the identification of higher-grade opportunities.
  • HYMC stock jumped 30% on Tuesday morning before settling around 15% up in the afternoon.
HYMC stock - Why Is Hycroft Mining (HYMC) Stock Soaring 15% Today?

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Despite a steep market selloff, precious metals development firm Hycroft Mining (NASDAQ:HYMC) brushed off major economic concerns, with HYMC stock gaining 30% on Tuesday morning before settling to around 15% up during the afternoon session. Fundamentally, Hycroft delivered encouraging data regarding its initial drill results. As well, its shares commanded unusually bullish activity in the options market.

Before the opening bell of the Sept. 13 session, Hycroft released its initial drill results for its Northern Nevada mining region. Reverse circulation drilling revealed several possible deposits of gold and silver resources. Alex Davidson, vice president of the company’s exploration division, stated, “These initial drill results confirm the higher-grade opportunities identified in the 2021 drill program.” Davidson continued:

While we have only just begun investigating the planned targets of our 2022-23 drill program, these results are very encouraging and further confirm the importance of additional drilling to explore the untapped potential of the Hycroft deposit

Hycroft plans additional drill targets. The testing will involve in part analyzing the “prospective target areas near the current resource” and the “expansion of the current resource along strike and at depth.”

Still, the main catalyst for the robust action bolstering HYMC stock could stem from meme traders. Hycroft became a public entity through a reverse merger with a special purpose acquisition company (SPAC). SPACs generated incredible popularity throughout the first two years of the “new normal” of the pandemic, though interest waned significantly this year.

HYMC Stock Moves Against the Grain

Though anytime a public security swings double digits for the day draws much attention, HYMC stock raised eyebrows for the underlying business. As a precious metals firm, its value increased while the broader economic implications painted a dour picture for the industry.

All three major equity indices declined sharply as a key August inflation report came in hotter than expected. That sent stocks tumbling because of fears that the Federal Reserve will act more aggressively with interest rate hikes. Should borrowing costs rise too much, commercial activity could stumble due to the underlying negative incentivization profile.

Ordinarily, deflationary pressures pose challenges for gold-related companies. Sector leaders such as Newmont (NYSE:NEM) and Barrick Gold (NYSE:GOLD) traded in negative territory on Tuesday. However, HYMC stock swung higher. Hycroft benefitted from unusual options activity, with traders purchasing 14,155 call options on the company.

HYMC stock features a put/call open interest ratio of 0.18, indicating that traders acquired far more call options than puts. Generally speaking, a put/call ratio of 0.70 reflects the delineation point between bullishness and bearishness. Figures higher than 0.70 suggest pessimism as traders have bought more puts than calls, while the opposite scenario rings true for Hycroft.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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