It’s been a brutal stretch of trading, but stocks are trying to rally on Tuesday. One stock not struggling to rally is Hycroft Mining (NASDAQ:HYMC). That’s as HYMC stock is up about 20% so far on the day.
Helping trigger the rally is an update from the company. Alex Davidson, the company’s vice president of exploration, said:
“The initial drilling campaign has focused on higher-grade opportunities primarily in the Brimstone, Vortex, and Central zones. All 20 RC drill holes reported to date have returned ore grade mineralization, of which 14 holes have outperformed the model resulting in higher grades than previously estimated or known.”
Further, Davidson talked about enhanced project economics. Specifically, areas that were previously considered to be a waste are proving to have some value. He noted, “drilling in the Central zone is delivering ore grade mineralization where none was previously modeled.”
Can HYMC Stock Continue to Rally?
Today’s spark in Hycroft Mining stock makes sense and the company update is leading to a substantial rally. However, I think there are a few other factors helping HYMC stock climb.
First, the company has a market capitalization of just $100 million. That makes it much easier for a stock to take off on a big-time rally. Second, the price of precious metals continue to go up.
Silver and gold are up nicely on the day, up 4.5% and 1.5%, respectively. More importantly though, those prices are holding near multi-month highs.
If silver futures can take out last week’s high — and it came within three cents of doing so today — it will hit its highest level since April. If gold can take out last week’s high, it will be its highest price since June.
That’s an obvious tailwind for a company like Hycroft Mining, particularly when coupled with today’s news about higher-grade mining.
Despite today’s strong gains, HYMC stock was just trading at its lowest price since March. In early March, shares made a 52-week low of roughly 28 cents per share. A few weeks later, AMC Entertainment (NYSE:AMC) made a sizable investment in the firm, taking a 22% stake.
That investment was matched by Eric Sprott, “one of the world’s leading gold and silver investors.”
The news helped fuel shares to more than $3 apiece. At this point though — with shares trading at roughly 50 cents — investors would likely be willing to settle for much less of a gain.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Bret Kenwell 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.
