Why Hycroft Mining Stock Is Soaring Today
Key Points
An independent assessment suggests Hycroft may have underestimated the amount of precious metal in the ground at its mine in Nevada.
Getting most of it out of the ground and turned into a marketable product shouldn’t be too complicated either.
Nevertheless, mining any of this gold and silver could still prove very expensive, and very time-consuming.
Wednesday is shaping up to be a banner day for Hycroft Mining (NASDAQ: HYMC) shareholders. As of 3:05 p.m. ET, the gold and silver mining stock is up an incredible 25.9%, reversing a pullback that began in late January following a huge run-up late last year and early this year, when precious metal prices began making a sizable, prolonged gain.
Today's big move, however, isn't about gold and silver prices. It's about the amount of silver and gold in the ground at the company's mine in northwest Nevada.
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More than previously believed
Simply put, Hycroft Mining is sitting on more gold and silver than believed shortly after it began earnest developmental work at its mine back in 2022. An independent mineral resource estimate prepared by Ausenco Engineering USA South, Independent Mining Consultants, and WestLand Engineering & Environmental Services completed late last month indicates 55% more "measured and indicated" gold and silver awaits mining compared to previous estimates first formed in 2023, in fact, while inferred gold resources grew 50% at the same time inferred resources of silver expanded by 38%. These figures conservatively imply a total resource value of well over $50 billion, at today's prices.
Image source: Getty Images.
The amount of this precious metal that's can plausibly extracted is also encouraging. Metallurgical testing suggests that nearly 83% of this gold can be recovered using conventional methods, with more than 77% this silver expected to be turned into marketable product. Those are healthy recovery rates for comparable sites within the precious metals mining industry.
More to the matter than the amount of gold in the ground
The news is encouraging to be sure. Just consider the rest of the story before taking the plunge. It could take years for Hycroft to begin producing meaningful amount of gold or silver, and cost billions to do so. There's no assurance it will be able to profitably, or anytime soon.
Also bear in mind that most precious metals mining stocks are closely tethered to the price of gold and silver. If they start peeling back from their recent peaks (with much of their recent gains being the result of a weak U.S. dollar), that works against Hycroft's stock price regardless of how efficiently or quickly the company's mining it.
The point is, just understand all the risks before piling into this increasingly popular trade.
Should you buy stock in Hycroft Mining right now?
Before you buy stock in Hycroft Mining, consider this:
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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