VIRGINIA CITY, Nev.,
July 22, 2014 /PRNewswire/ --
Comstock Mining Inc. (the "Company" or "CMI" or "we") (NYSE MKT:
LODE) today announced selected unaudited financial results for the
quarter ended June 30, 2014.
2014 Second Quarter Highlights
- Nevada Mining Association's 2014 Safety Awards Honors Comstock
Mining with a first place Safety Award. Barrick and Newmont
were the only other winners in the medium-sized category.
- Mining revenue from the sale of gold for the current quarter
was $6.0 million.
- Gold and silver shipments totaled 4,645 ounces and 48,621
ounces, respectively, in the current quarter, with silver netting
$1.0 million in by-product
credits.
- Weighted average gold grade was 0.034 ounces per ton and silver
gold grade was 0.546.
- Net loss for Q2 2014 was $3.4
million, as compared to $5.5
million for Q2 2013.
The $2.1 million decrease in net loss
primarily resulted from a $2.9
million decrease of costs applicable to mining and operating
expenses, offset by lower revenue of $0.8
million resulting primarily from a lower average price of
gold.
- Costs applicable to mining were $5.5
million for Q2 2014, as compared to $8.2 million for Q2 2013.
The decrease of $2.7 million from Q2
2013 to Q2 2014, resulted from lower mining, maintenance and
material costs from specific cost reduction actions and stabilized
operations since last years start up, more reliable production
scheduling and a slightly lower production rate.
- Metallurgical yields improved to 76%, from a previous average
estimate of 74%.
- Operating expenses, excluding costs applicable to mining,
totaled $3.8 million for Q2 2014, as
compared to $4.4 million for Q2
2013. The decrease is primarily the result of lower third
party legal and advisory expenses, including external relations,
and lower stock-based compensation expense.
- Cost reductions, when comparing 2014 to 2013, totaled
$3.3 million, with a run rate for the
second quarter achieving a higher rate and approaching our stated
annual targets of over $6 million
from mining and $3.5 million from
administration.
- Cash and cash equivalents were $12.2
million at June 30, 2014.
2014 Year-to-Date Highlights
- For the six months ended June 30,
2014, the Company poured 9,152 ounces of gold and 97,979
ounces of silver, as compared to 7,182 ounces of gold and 58,591
ounces of silver during the same period in 2013, an increase of
over 27% for gold ounces and over 67% for silver ounces.
- Net cash used in operating activities was $2.3 million for the six months ended
June 30, 2014, as compared to a use of $8.4 million for the six months ended
June 30, 2013, an improvement of $5.1
million. Operating activities during the second quarter,
including working capital, provided a positive cash increase.
- Net cash used in investing activities was $1.9 million for the six months ended
June 30, 2014, primarily as the result of $1.5 million purchase of land and mining
vehicles, and bond increases of $0.6
million, offset by $0.2
million of proceeds from the sale of equipment previously
used in our mining activities.
- Net cash provided by financing activities for the six months
ended June 30, 2014, was $14.0
million, comprised of net proceeds of $11 million from sale of securities and proceeds
of $4.6 million from the
revolving credit facility (the "Revolving Credit Facility") with
Auramet International, LLC, partially off-set by the pay-down of
our long-term debt obligations of approximately $1.5 million.
Comstock's Chief Executive Officer, Corrado De Gasperis commented, "We achieved
significant progress in four focus areas so far this year:
lowering our costs, strengthening our balance sheet,
enhancing our mine plan and operations, including grades and
scheduling, and expanding our land position. Cash cost
of mining for the second quarter was below $900 per ounce despite challenging strip ratios
so far this year, boding very well for the second half."
Production
During the second quarter of 2014,
the Company poured 4,645 ounces of gold and 48,621 ounces of
silver, averaging over 423 gold equivalent ounces poured per
week. The Company mined approximately 944 thousand tons of
material (mineralized material and waste) as it continued
persistently moving through higher stripping ratios. Total
mineralized material delivered to the leach pad was over 122
thousand tons and represented some of the highest gold and silver
grades crushed to date.
Gold and silver grades continued improving and the weighted
average for the second quarter of 2014, was 0.034 ounces per ton
gold and 0.546 ounces per ton silver as compared to a weighted
average for the second quarter of 2013 of 0.017 ounces per ton gold
and 0.284 ounces per ton silver. April
2014, represented our best month to date, with an average of
0.049 ounces of gold per ton and almost 0.749 ounces of silver per
ton.
During the first six months of 2014, the Company poured 9,152
ounces of gold and 97,979 ounces of silver, as compared to 7,182
ounces of gold and 58,591 ounces of silver in the first half of
2013, an increase of over 27% for gold ounces produced and over 67%
for silver ounces produced when compared to the first six months of
2013.
Throughout the first six months of 2014, the Company realized an
average price of $1,269.35 price per
ounce of gold and a $20.25 average
sales price per ounce of silver. In comparison, commodity
market prices in the first six months of 2014, averaged
$1,291.25 per ounce of gold and
$20.05 per ounce of silver.
Operating Costs
During the first six months of
2014, actual Lucerne Mine costs applicable to mining revenue were
approximately $12.2 million,
$10.2 million net of silver credits
as compared to $13.5 million,
$12.1 million net of silver credits,
during the first six months of 2013. Costs applicable to
mining revenue include mining and processing labor, maintenance,
drilling and blasting, and assaying costs, among others.
Costs applicable to mining revenue for the first six months of 2014
and 2013, also include $2.6 million
of depreciation and $1.5 million of
depreciation, respectively.
During the second quarter, the Company continued reducing costs
applicable to mining, targeting over $6
million in reductions for 2014, as compared to 2013, and an
additional $3.5 million in
administration and all other costs. The Company has already
realized annual savings of approximately $3.3 million from reduced staffing in crushing,
related maintenance, mining and administrative, drilling and
blasting, logistics and administration cost reductions, with second
quarter run rates well exceeding these achieved levels. Costs
applicable to mining have been reduced over the past six quarters,
with second quarter costs of sales, on a cash cost per ounce basis,
at the lowest since inception, at slightly under $840 per ounce.
2014 Production Outlook
Through the end of
2013, the Company began transitioning into production at higher
rates and grades with lower sustainable costs. The recently
acquired permit now allows processing rates of up to 4 million tons
of mineralized material to be placed on the leach pad per annum,
and the Company's 2014 business plan calls for processing at the
rate of 40,000 gold equivalent ounces. Two additional cells
were constructed in late 2013 and stacking on these cells commenced
during the fourth quarter of 2013. The Company is also fully
permitted to add an additional cell when needed.
Under our current mine plan, we anticipate doubling the
rate of ounces produced when compared to 2013, for both gold and
silver, targeting a production rate of 40,000 gold equivalent
ounces in the latter half of 2014. 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. The
Company expects cash costs per ounce of gold mined of less than
$750 per ounce. The Company
updated its financial analysis for the Lucerne Mine and anticipates
annual operating expenses, including all mining and processing
costs, of less than $25 million per
annum, a more than a $6 million
reduction over prior year 2013. The Company has also
identified $3.5 million of cost
reductions in all other non-mining activities, including general,
administrative and environmental areas.
Exploration and Development
The Company
continues to evaluate high priority targets, including in the
nearer term, the East Side of the Lucerne and Dayton Resource Areas
and also the Spring Valley Target Area. Future programs would
include the Occidental, Oest and the Northern Target areas.
The proposed evaluation of the East Side Target areas includes
continuing infill drilling, metallurgical testing and geotechnical
analysis to confirm the mineral potential and expand the mine plan
on the East Side of State Route 342. In addition, the Company
is designing 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 and mine plan
development. The drill program is currently being expanded
with approximately 100,000 feet of reverse circulation and 20,000
feet of core drilling, for both Lucerne and Dayton, planned at an investment of
approximately $7 million.
The Company completed a successful phase of exploration drilling
in Spring Valley in 2012.
The drilling in the northern portion of Spring Valley was partially predicated to
confirm buried mineralization by drilling specific magnetic
geophysical anomalies that had similar magnetic signatures as
defined by mineralized drill holes, drilled prior to the
geophysical surface survey. The drill program is currently
being expanded to test the full extent of the geophysical target
with approximately 35,000 feet of reverse circulation and 5,000
feet of core drilling planned at an investment of approximately
$2 million.
The total 2014-2015, drilling programs, including Lucerne,
Dayton and Spring Valley would represent approximately
135,000 feet of reverse circulation drilling, and approximately
25,000 feet of core drilling at a total investment of approximately
$9 million. The drilling would
be planned to start in the latter half of 2014.
Corporate
The Company had total current assets
of $15.5 million at June 30,
2014. Cash and cash equivalents on hand at June 30, 2014
totaled $12.2 million.
Inventories, stockpiles, and mineralized material on leach pad
totaled $1.1 million.
For the six months ended June 30, 2014, the Company
incurred an operating loss of $6.5
million, used $2.3 million of
cash in operations, and used $1.5
million for debt repayments. The Company continues its
efforts to increase production, reduce costs and working capital
needs, improve efficiencies, and maximize funds available for
working capital.
In May 2014, the Company raised
$11.9 million in gross proceeds
(approximately $11 million, net of
issuance costs) through an underwritten public offering of
7,475,000 shares of our common stock at a price of $1.59 per share.
During 2013, the Company's first full year of production, it was
limited, by permit, to up to 1 million tons of stacked and
processed mineralized material. In late November 2013, the Company modified the permit,
increasing the limit to up to 4 million tons per annum, and
accordingly, the Company's current business plans reflect increased
production, reduced costs and improved efficiencies, and generating
prospective, positive cash flows. The Company continues
reducing costs applicable to mining, targeting over $6 million in reductions for 2014, as compared to
2013. The Company has already realized annualized savings of
approximately $3.3 million from
reduced staffing in crushing, related maintenance, mining and
administrative, drilling and blasting, logistics and administration
cost reductions. The Company's 2014 goal remains doubling the rate
of year over year production ounces and increasing cash flow, while
reducing costs and achieving a cash cost applicable to mining of
less than $750 per ounce.
For the remainder of 2014, the Company plans on spending up to
$3.0 million in capital expenditures,
primarily infrastructure and development needs for the expansion of
the Lucerne Mine and related heap leach processing capacity.
The Company also plans to pay down an additional $5.3 million in debt obligations, including
$3.9 million on the Revolving Credit
Facility.
Land Enhancements and Zoning
During the second
quarter, the Storey County Board
of Commissioners unanimously approved important zoning changes on
certain mining claims and other properties located in the Lucerne
Resource Area, enabling a more comprehensive mine plan and
completing a critical prerequisite for proceeding with a request
for an expanded Special Use Permit. These rezoned properties are
situated in the Lucerne Resource Area, that includes the historic
Justice and Keystone mining claims and near the Historic Woodville
Bonanza. Earlier this year, the Lyon County Board of Commissioners unanimously
approved break-through zoning changes on certain Company mining
claims and other properties located in the Dayton Resource
Area. 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. All
the zoning in the Company's resource areas are now zoned
consistently with the Company's goals and objectives. These zoning
changes position the Company for immediate permit expansion in the
Lucerne Resource Area and intermediate planning for similar
permitting opportunities in the Dayton Resource Area.
Comstock's Chief Executive Officer, Corrado De Gasperis concluded, "Our second half
mine plan is significantly enhanced, with continued good grades,
lower strip ratios and significantly lower costs. The
recent zone changes in the district reflect tremendous local
support for our responsible efforts and have positioned us for
further growth in 2015."
Conference Call
As previously announced, the
Company will host a conference call on July
22, 2014 at 8:00 a.m. Pacific
Time/11:00 a.m. Eastern Time
to report the Second Quarter 2014 results, business update and
outlook. The live call will include a moderated Q&A, after
the prepared remarks. The dial-in telephone numbers for the live
audio are as follows:
North American Toll Free: 1-866-253-4737
Canada Local / International: 416-849-4292
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
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.:
PO Box
1118
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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SOURCE Comstock Mining Inc.