VIRGINIA CITY, Nev.,
March 11, 2014 /PRNewswire/
-- Comstock Mining Inc. (the "Company") (NYSE MKT: LODE) today
announced selected financial results for the year ended
December 31, 2013. The Company
will host a conference call today, March 11,
2014, at 8:00 a.m. Pacific
Time/11:00 a.m. Eastern
Time. The live call will include a moderated Q&A,
after the prepared comments by the Company. The dial-in
telephone numbers for the live audio are as follows:
North American Toll Free: 1-866-544-4625
International: 1-416-849-2726
The audio will be available, usually within 24 hours of the
call, and for 30 days thereafter, at
http://www.comstockmining.com/investors/investor-library
2013 Highlights and Recent Events
- Published our fourth National Instrument 43-101 (NI 43-101)
technical report (the "2013 Report") authored by Behre Dolbear & Company (USA), Ltd. ("Behre
Dolbear"). The 2013 Report declared a mineral
resource estimate of Measured and Indicated Resources containing
more than 2,100,000 gold equivalent ounces1, a 25%
increase over the previous Lucerne Measured and Indicated
estimate.
- Completed first full year of operations, producing 186,482
ounces of silver and 17,739 ounces of gold or a total of 20,815
gold equivalent ounces, exceeding full year guidance.
- Received a major modified water pollution control permit,
increasing our authorized capacity and processing rates from a
previous maximum of 1.0 million tons per annum to 4.0 million tons
per annum and recently expanded our heap leach capacity to
accommodate expanded production plans.
- Restructured patented mining claims in the Dayton Resource
Area, eliminating $2 million of debt
and cancelling all future royalties payable with respect to the
mining claims.
- Received strategic master plan and zoning change approvals from
Lyon County's Board of
Commissioners on critical mining claims and other properties
located in the Dayton Resource Area, supporting accelerated
resource development and feasibility assessments.
- Secured over 300 acres of private lands adjacent to the
approximately 78 acre American Flat processing area, accelerating
potential expansion options.
- Secured a new, lower cost $5
million Revolving Credit Facility. The proceeds of the
Revolving Credit Facility will be used for working capital,
including production ramp up and preparations for expansion of the
Lucerne Mine, including targeted drilling on the east side of the
Lucerne Resource Area.
2013 Financial Results
- Revenue for 2013 totaled $24.8
million, with gold mining revenues of $24.1 million. Realized an average selling
price of $1,361.70 per ounce of gold
and $21.97 per ounce of silver.
- Crushed and stacked 1,072,000 dry tons of mineralized material,
delivering 22,192 estimated ounces of recoverable gold and 396,082
estimated ounces of recoverable silver to the leach pads.
- Cost applicable to mining revenues totaled $26.5 million, net of silver by-product credits,
in line with expectations, and supportive of planned increased
production growth in 2014.
- Reclamation and exploration expenses decreased $9.8 million from $18.3
million in 2012 to $8.5
million in 2013 as the Company fully transitioned into
production in 2013.
- General, administrative, consulting and professional expenses
were $9.6 million in 2013 versus
$12.7 million in 2012, a decrease of
$3.0 million, primarily from reduced
external services as we stabilized production and reduced
stock-based compensation expense.
- Interest expense was $1.2 million
in 2013 versus $0.9 million in 2012,
primarily due to the higher interest rate associated with our
Revolving Credit Facility paid off in 2013.
- Net loss for 2013 was $21.3
million, versus $30.8 million
in 2012, a decrease of $9.5 million,
resulting from lower operating expenses and higher full year
revenues.
- Net cash used by operating activities was $10.3 million in 2013 compared to $22.4 million in 2012. The lower use of
cash results from the higher first full year of revenue and lower
year over year operating expenses, somewhat offset by the higher
cash cost of mining and use of $2.7
million of accounts receivable used to repay debt.
- Net cash used in investing activities in 2013 was $6.7 million, primarily as the result of capital
asset purchases of $6.0 million and
bond deposit increases of $1.3
million, offset by $597
thousand of proceeds received from the sale of equipment
that was previously used in our mining development and production
activities.
- Net cash provided by financing activities was $13.4 million in 2013, comprised of approximately
$18.8 million of net proceeds from
equity, partially offset by the pay-down of our long-term debt
obligations of approximately $4.9
million.
- Total long-term debt and capital lease obligations at year-end
2013 were $7.9 million as compared to
$13.7 million in 2012.
- Cash and cash equivalents at year-end were $2.4 million.
The Company now owns or controls 7,447 acres of mining claims
and parcels in the overall Comstock Mining District, representing a
26% increase since 2012.
"Over the past year, we have significantly increased the
intrinsic value of our company and the communities of the
Comstock. Our strategic land consolidation, responsible ramp
up of operations and community-wide support network continue to
grow in every respect. Our production expansion is still
ramping up, with higher-grade materials now being delivered and
scheduled to be delivered to the heap leach pad with a goal of
doubling year over year production ounces while reducing unit costs
and increasing cash flow," stated Corrado
De Gasperis, President and CEO of Comstock Mining Inc.
Production
During 2013, the Company fully established its operating
infrastructure, including establishing our initial mine, ramps,
roads and utility systems, completed the ramp up and stabilization
activities of the production system, including significant
improvements to the mining, logistics and metal extraction
processes, particularly within the Merrill-Crowe facility. We
invested approximately $1.5 million
for productivity enhancing actions so that the Merrill-Crowe and
heap leach facilities are now operating at sustained fluid
processing rates of over 1,000 gallons per minute in 2014 thus
far.
During 2013, the Company crushed and stacked 1,072,000 dry tons
of mineralized material, delivering 22,192 estimated ounces of
recoverable gold and 396,082 estimated ounces of recoverable silver
to the leach pads with average head grades of gold to the crusher
of 0.021 ounces per ton.
We also expanded our operating and physical leaching capacity by
receiving a major modification of our water pollution control
permit, increasing our authorized capacity and our processing rate
from a previous maximum of 1.0 million tons per annum to 4.0
million per annum. This permit modification also authorized
the completed construction of two new heap leach pad cells and the
supporting ponds and related infrastructure. The system is
now operational and new material is continuously being stacked,
leached and processed.
The completed expansion and improvements represent the next
major phase of growth for the Company, enabling production growth
of 100%, with the goal of reducing per unit costs and increasing
cash flow.
The Company has averaged over 400 gold-equivalent ounces poured
per week in 2013. The Company continuously adjusted its
operations to improve grade, maximize yields and increase tons
crushed and stacked throughout 2013, and averaged nearly 500
gold-equivalent ounces poured per week throughout the second half
of 2013.
For the quarter ended December 31,
2013, the Company realized an average sales price of
$1,324.29 per ounce of gold and
$20.68 per ounce of silver. In
comparison, commodity market prices averaged $1,272.47 per ounce of gold and $20.76 per ounce of silver.
For the year ended December 31, 2013, the Company realized
an average sales price of $1,361.70
per ounce of gold and $21.97 per
ounce of silver. In comparison, commodity market prices in
2013 averaged $1,411.03 per ounce of
gold and $23.83 per ounce of
silver.
Operating Costs and Cost Reductions
During 2013, actual Lucerne Mine costs applicable to mining
revenue were approximately $30.6
million, $26.5 million net of
silver by-product credits. Cost applicable to mining revenue
include mining and processing labor, maintenance, drilling and
blasting and assaying costs associated with higher production rates
and higher absorbed inventory costs incurred in advance of
achieving the targeted production rate. The Company focused
on reducing costs applicable to mining and leveraging the existing
fixed operating expenses for the production of higher ounces in the
latter part of 2013. Costs applicable to mining, dropped
sequentially, on a per ounce basis, every quarter during the
year. Overall, cash costs dropped 55% from the first quarter
to the fourth quarter, starting at over $2,190 per ounce during initial ramp up down to
$989 per ounce in the fourth
quarter.
Costs applicable to mining revenue for the twelve months of 2013
include $1 million of non-recurring,
higher hauling costs, $4.7 million of
depreciation and a $1.5 million write
down of inventory, primarily for lower grade stockpiles, to market
value during 2013.
Management believes the system is now capable of operating at
twice the production rates of 2013, while identifying cost
reductions of annual costs applicable to mining from the 2013
levels by over $6.5 million, to below
$25 million for the 2014 year.
During the third and fourth quarters, once production had
stabilized, the Company also continued focusing on stream-lining
the organization and reducing general, administrative, consulting
and other related costs, resulting in a 23.9% reduction of these
administrative cost categories, when comparing 2013 to 2012.
The Company has identified another $3.5
million of these additional administrative cost reductions
from the 2013 levels, for a total of $10
million in annual cost savings.
2014 Outlook
Under our current mine plan, we anticipate doubling ounces
produced when compared to 2013, for both gold and silver, targeting
40,000 gold equivalent ounces of production this year. These
increases come with lower costs applicable to mining due to focused
cost reduction efforts, as well as lower non-mining operating
expenses. Once stabilized at the 40,000 ounce per annum run
rate, the operating expenses per ounce mined will be significantly
lower in 2014 than in 2013. The Company expects cash costs
per ounce of gold mined of less than $750 per ounce.
Exploration and Development
The 2013 drilling program (the "Drill Program") included a total
of 22 drill holes and 4,065 feet. For Billie the Kid,
we drilled six holes with an average depth of 340 feet. For
Lucerne, we drilled thirteen holes with an average depth of 120
feet. For Justice, we drilled six holes with an average depth
of 160 feet, and for Keystone, we drilled one well-positioned hole
down to 120 feet. The Drill Program was defined for specific
information and collected information that confirmed predicted
geologic and attributes and metallurgical properties.
The Company has finalized its plans for near term, high priority
targets, including The East Side, Dayton and Spring
Valley exploration areas. The East Side Drill Program
includes infill drilling, metallurgical testing, and geotechnical
analysis to enhance the known mineralization on the East Side of
State Route 342 for near term expansion. In addition, the
Company has designed a new phase of exploration drilling to include
its highest-potential targets, including scoping studies of the
Chute Zone in the Lucerne Resource area, and plans for expanded
exploration and development drilling in the Dayton Resource area
that will allow for proper mineral assessment, resource expansion
and mine plan development in the latter half of 2014.
Strategic Land and Mineral Right Acquisitions
The Company continues to increase its footprint in the Comstock
District through strategic acquisitions. We consider the
historic Comstock district central to our growth strategy. In
late 2013 and early 2014, the Company secured over 300 acres of
private lands adjacent to the approximately 78 acre American Flat
processing area providing valuable expansion opportunities for
leaching, processing, refining and potentially, milling solutions
for the district. The Company now owns or controls 7,447
acres of mining claims and parcels in the overall Comstock Mining
District, representing a 26% increase since 2012.
Earlier this year, the Lyon
County Board of Commissioners unanimously approved
breakthrough zoning changes on certain Company mining claims and
other properties located in the Dayton Resource Area, enabling a
more comprehensive assessment. These claims represent the
Company's second largest classified gold and silver resource and
include the historic Marble, Alhambra and Kossuth lode patented
mining claims. The Company previously announced the positive
restructuring of the debt and royalty obligations related to these
patented mining claims. The restructured transaction
eliminated $2 million of long-term
debt and canceled all existing royalty obligations with respect to
these mining claims.
Corporate
Cash and cash equivalents on hand at December 31, 2013 totaled $2.4 million.
Total long-term debt and capital lease obligations at year-end
2013 were $7.9 million as compared to
$13.7 million in 2012.
For 2014, we plan on $2-3 million in
capital expenditures, primarily to prepare for future expanded
mining operations, including mining of The East Side of the Lucerne
Resource. We will also pay down an additional $2.7 million in long-term debt obligations.
Comstock's Chief Executive Officer, Mr. Corrado De Gasperis, concluded, "We have grown
our strategic resource in excess of 3 million gold equivalent
ounces, established and are expanding production, lowered and
continue lowering costs, all while expanding our land position in
one of the most prolific geological districts. From a pure
sources and uses perspective, we had an operating cash profit in
the fourth quarter before capital expenditures, and we are
positioned to grow that profitable base, through the remainder of
this year."
About Comstock Mining Inc.
Comstock Mining Inc. is a
producing, Nevada-based, gold and
silver mining company with extensive, contiguous property in the
Comstock District. The Company began acquiring properties in
the Comstock District in 2003. Since then, the Company has
consolidated a significant portion of the Comstock District,
amassed the single largest known repository of historical and
current geological data on the Comstock region, secured permits,
built an infrastructure and commenced production in 2012. The
Company continues acquiring additional properties in the district,
expanding its footprint and creating opportunities for further
exploration, development and mining. The near term goal of
our business plan is to deliver stockholder value by validating
qualified resources (measured and indicated) and reserves (proven
and probable) of at least 3,250,000 gold equivalent ounces from our
first two resource areas, Lucerne and Dayton, achieve initial commercial mining and
processing operations in the Lucerne Mine with annual production
rates of approximately 40,000 gold equivalent ounces and
significantly grow the commercial development of our operations
through coordinated, district wide plans that are economically
feasible and socially responsible.
Forward-Looking Statements
This press release and any
related calls or discussions may include forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 about Comstock. Forward-looking statements are
statements that are not historical facts. All statements,
other than statements of historical facts, are forward-looking
statements. Forward-looking statements include statements about
matters such as: future prices and sales of, and demand for, our
products; future industry market conditions; future changes in our
exploration activities, production capacity and operations; future
exploration, production, operating and overhead costs; operational
and management restructuring activities (including implementation
of methodologies and changes in the board of directors); future
employment and contributions of personnel; tax and interest rates;
capital expenditures and their impact on us; nature and timing and
accounting for restructuring charges, gains or losses on debt
extinguishment, derivative liabilities and the impact
thereof; productivity, business process, rationalization,
investment, acquisition, consulting, operational, tax, financial
and capital projects and initiatives; contingencies; environmental
compliance and changes in the regulatory environment; offerings,
sales and other actions regarding debt or equity securities; and
future working capital, costs, revenues, business opportunities,
debt levels, cash flows, margins, earnings and growth.
The words "believe," "expect," "anticipate," "estimate,"
"project," "plan," "should," "intend," "may," "will," "would,"
"potential" and similar expressions identify forward-looking
statements, but are not the exclusive means of doing so. These
statements are based on assumptions and assessments made by our
management in light of their experience and their perception of
historical and current trends, current conditions, possible future
developments and other factors they believe to be appropriate.
Forward-looking statements are not guarantees, representations or
warranties and are subject to risks and uncertainties that could
cause actual results, developments and business decisions to differ
materially from those contemplated by such forward-looking
statements. Some of those risks and uncertainties include the risk
factors discussed in Item 1A, "Risk Factors" of our annual report
on Form 10-K and the following: current global economic and capital
market uncertainties; the speculative nature of gold or mineral
exploration, including risks of diminishing quantities or grades of
qualified resources and reserves; operational or technical
difficulties in connection with exploration or mining activities;
contests over our title to properties; potential dilution to our
stockholders from the conversion of securities that are convertible
into or exercisable for shares of our common stock; potential
inability to continue to comply with government regulations;
adoption of or changes in legislation or regulations adversely
affecting our businesses; business opportunities that may be
presented to, or pursued by, us; changes in the United States or other monetary or fiscal
policies or regulations; interruptions in our production
capabilities due to unexpected equipment failures; fluctuation of
prices for gold or certain other commodities (such as silver,
copper, diesel fuel, and electricity); changes in generally
accepted accounting principles; geopolitical events; potential
inability to implement our business strategies; potential inability
to grow revenues organically; potential inability to attract and
retain key personnel; interruptions in delivery of critical
supplies and equipment raw materials due to credit or other
limitations imposed by vendors; assertion of claims, lawsuits and
proceedings against us; potential inability to maintain an
effective system of internal controls over financial reporting;
potential inability or failure to timely file periodic reports with
the SEC; potential inability to maintain the listing of our
securities on any securities exchange or market; and work stoppages
or other labor difficulties. Occurrence of such events or
circumstances could have a material adverse effect on our business,
financial condition, results of operations or cash flows or the
market price of our securities. All subsequent written and oral
forward-looking statements by or attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
these factors. We undertake no obligation to publicly update or
revise any forward-looking statement.
Neither this press release nor any related calls or discussions
constitutes an offer to sell or the solicitation of an offer to buy
any securities.
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Contact information
for Comstock Mining Inc.:
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PO Box
1118
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Virginia City,
NV 89440
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questions@comstockmining.com
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http://www.comstockmining.com
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Corrado De
Gasperis
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Kimberly
Shipley
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President &
CEO
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Manager of Investor
Relations
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Tel (775)
847-4755
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Tel (775)
847-0545
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degasperis@comstockmining.com
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shipley@comstockmining.com
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1 Gold equivalent ounces were calculated using
January 31, 2013 London PM prices of
$1,664.75 per ounce of gold and
$32.03 per ounce of silver, as
published by kitco.com. This resulted in a ratio of 51.97
ounces of silver per equivalent ounce of gold, without taking into
consideration the relative recoveries of gold and silver. The
Company's current estimates for heap leach recovery are 68% for
gold and 48% for silver.
SOURCE Comstock Mining Inc.