Comstock Mining Inc. (the “Company”) (NYSE American: LODE) today
announced selected unaudited financial results for the fiscal year
ended December 31, 2019.
2019 Selected Strategic and Operational
Highlights
- Approved a transformational strategy focused on precious
metal-based growth (the “Strategic Focus”);
- Completed corporate and legal entity realignment;
- Closed on the 50% sale of the membership interest in the entity
that owns Lucerne:— Received $5.9 million in non-refundable
cash toward the Lucerne sale;— Received $6.1 million in
non-refundable stock toward the Lucerne sale, valued at $9.1
million; and— Received $2.2 million in expense reimbursements
associated with the Tonogold agreements.
- Partnered and launched Mercury Clean Up LLC, a mercury
remediation, clean technology growth venture;
- Completed concurrent reclamations and reduced reclamation bond
liabilities by $0.4 million;
- Received favorable Court ruling on the Dayton Resource zoning,
enabling accelerated advancement;
- Increased total assets by 38.3%, to $39.6 million, and reduced
total debt by 41%, to $5.4 million; and
- Escrowed non-mining assets for sale, with the goal of
extinguishing all debt.
Corrado De Gasperis, Executive Chairman and CEO of the Company,
said, “Last year was dedicated to repositioning the Company for
precious metal-based growth, including realigning the existing gold
and silver assets to facilitate both transactional and
development-based growth, partnering twice with Tonogold for
advancing our northern mining and exploration properties,
partnering with MCU to advance our operating platform for global
mercury remediation, partnering with Sierra Springs to sell our
Silver Springs non-mining assets and, in each case retaining equity
ownership in all partners. We also cleared the zoning on our
100%-owned Dayton resource area, while significantly increasing our
assets, decreasing our liabilities and reducing our debt toward
extinguishment.”
Unaudited Full Year 2019 Selected Financial
Highlights
The Company experienced record low operating costs and expenses
during 2019, of $5.5 million, including $1.8 million for
depreciation and amortization, or a 26.8% reduction from 2018, and
a 38.5% reduction when compared to 2017. These 2019 reductions
include approximately $2.2 million in cash reimbursements from
Tonogold Resources Inc. (“Tonogold”). The Company anticipates a 10%
reduction in 2020, from lower administrative costs.
- Costs applicable to mining were $1.5 million in 2019, a 45.8%
improvement compared to 2018;
- Exploration and development costs were $0.75 million in 2019, a
21.7% improvement compared to 2018;
- Environmental expenses decreased by $0.5 million in 2019, a
194.5% improvement compared to 2018, driven by a significant
reduction in reclamation liabilities resulting from concurrent
reclamation successes;
- General and administrative expenses were $3.3 million in 2019,
a 2.8% improvement compared to 2018;
- Net loss was $3.8 million, or ($0.20) loss per share for 2019,
as compared to net loss of $9.5 million, or ($0.79) loss per share
for 2018, with improvement from the cost reduction efforts and
Tonogold subsidies;
- Net cash used in operations was $2.3 million in 2019, as
compared to $4.0 million in 2018, a 42.7% improvement compared to
2018, primarily resulting from cost reductions;
- Net cash provided by investing activities was $2.6 million in
2019, as compared to a use of $1.6 million in 2018, a 262.4%
improvement compared to 2018, primarily from Tonogold proceeds for
Lucerne;
- Increased total assets by 38.3%, to $39.6 million, and reduced
total debt by over 41%, to $5.4 million; and
- Cash and cash equivalents at December 31, 2019, were $1.0
million.
Mr. De Gasperis added, “Our continued cost reduction efforts,
coupled with expanded strategic partnerships, now positions us to
advance multiple mining, remediation and exploration projects, on
the Comstock and globally, at a low net cost and an extremely
capital efficient manner, as we begin commercializing our mercury
efforts globally.”
Comstock Mining’s Corporate Realignment & Strategic
Transactions Advancing Value
During 2019, the Company’s Board of Directors approved a
transformational strategy focused on high-value, cash-generating,
precious metal-based activities, (the “Strategic Focus”) including,
but not limited to, metals exploration, engineering, resource
development, economic feasibility assessments, mineral production,
metal processing and related ventures of environmentally friendly,
and economically enhancing mining technologies.
During 2019, the Company entered into agreements, as amended, to
sell its interest in the Lucerne mine, through its wholly-owned
subsidiary, Comstock Mining LLC, to Tonogold for total
consideration of over $24 million ($11.2 million in cash, $6.1
million in stock and approximately $7.0 million in assumed
liabilities). The Company also retains a 1.5% NSR royalty on
Lucerne and leased other mineral claims through Comstock Northern
Exploration.
Figure 1 – Comstock Corporate
Realignment is available
at: https://www.globenewswire.com/NewsRoom/AttachmentNg/89902fa1-46f1-4073-a3e0-890aa6c9ee3aComstock
Mining Inc. remains as the parent company that wholly owns the
realigned subsidiaries except for Comstock Mining LLC which is 50%
owned. Comstock Mining LLC, the subject of a Membership Interest
Purchase Agreement with Tonogold, owns or controls the Lucerne
properties, including those contained in the Northern Comstock
Joint Venture. Comstock Processing LLC owns the American Flat
processing facility and additional land for potential expansion.
Comstock Northern Exploration LLC owns or controls the remaining
Storey County mining claims and exploration targets, primarily
located north of the Lucerne properties, including the Gold Hill
targets and the Occidental Lode. Comstock Exploration &
Development LLC owns or controls the Lyon County mining claims and
exploration targets, including the Dayton Resource Area and the
Spring Valley target. Comstock Industrial LLC owns 98 acres in
Silver Springs and water rights. Downtown Silver Springs LLC (DTSS)
owns 160 acres in Silver Springs and water rights. Comstock Real
Estate Inc. owns the Daney Ranch and Gold Hill Hotel assets. The
Company has the option to, but has not yet, acquire up to 25% of
Mercury Clean Up LLC.
Tonogold Membership Interest Purchase Agreement
On November 18, 2019, Tonogold received 50% of the membership
interests of CML. Tonogold will receive the remaining 50% after it
has paid the remaining consideration. The Company retains all
management control and authority over CML until Tonogold has made
the remaining $5.2 million in payments. Accordingly, Tonogold’s
membership interest in CML will be accounted for as a
noncontrolling interest in the consolidated balance sheets.
Mineral Exploration and Mining Lease
During 2019, the Company entered into a renewable mineral lease
with Tonogold for certain mineral properties controlled by the
Company in Storey County, Nevada (the "Exploration Lease"). The
Exploration Lease grants Tonogold the right to use these properties
for mineral exploration and development, and ultimately the
production, removal and sale of minerals. The Exploration Lease
requires exploration spending, permitting, and engineering
commitments of a minimum of $1 million per year, for a cumulative
total of $20 million over 20 years. Tonogold also committed to
specific milestones for issuing three technical reports over the
life of the Exploration Lease.
Tonogold will pay a quarterly lease fee of $10 thousand, in
advance. The lease fee will escalate 10% each year on the
anniversary date of the Exploration Lease. The Exploration Lease
also provides for royalty payments after mining operations
commence. For the first year following the commencement of mining,
royalties will be paid at the rate of 3% of NSR for the properties.
The rate will be reduced to 1.5% of NSR thereafter.
MCU, The Comstock and The Carson River
Mercury Superfund Site
Comstock has also secured the necessary Nevada permits and
approvals for localized mercury remediation efforts. MCU has
continued sampling many old Comstock waste dumps and other Comstock
sites over the past two weeks. The state-of the-art mercury
remediation equipment, specifically, the spiral concentrators,
began arriving on site in March, with the remaining system,
including the Low-G mercury centrifuges and concentrators,
proprietary mechanical, hydro, electro-chemical and oxidation
processes, the portable mercury-gold laboratory with assaying
equipment and the Dissolved Air Flotation (DAF) wastewater
treatment processor now scheduled for April 2020.
MCU is focused on its first domestic (Carson River Mercury
Superfund Site) and its first international (Philippines Project)
opportunities, as it establishes itself as the global leader in
mercury remediation and related services. Comstock has ownership
options to acquire 25% of the equity of MCU and other rights that
can result in Comstock receiving up to 62.5% participation in each
mercury remediation opportunity.
Separately, the Nevada Division of Environmental
Protection—Bureau of Air Pollution Control (NDEP) completed its
technical review of the applications submitted by Comstock
Processing LLC and issued the entity a new Class II Air Quality
Operating Permit. Comstock Processing LLC is the 100% owned,
permitted platform, with processing equipment and metallurgical
labs, that enable the clean-technology platform, joint ventures and
partnerships especially in the area of mercury remediation and
reprocessing of residual-leached mineralized materials.
Corporate Update, Liquidity & Capital
Resources
The Company has not sold any equity during 2020, significantly
improving its financial position throughout 2019.
As of December 31, 2019, the Company had cash and cash
equivalents of $1.0 million, current assets of $13.3 million and
current liabilities of $4.4 million. The Company had total assets
of $39.6 million and total liabilities of $16.1 million at December
31, 2019. Total assets increased 38.3% over 2018, and total
liabilities decreased 16.4% and the Company reduced its Senior
Secured Debenture debt by 44.4% to $4.9 million. The Company
expects to extinguish its debt when the $10.1 million sale of its
Silver Springs properties closes during the second quarter.
Mr. De Gasperis commented, “We have significantly increased our
total assets to almost $40 million, reduced our debt by almost
half, and look forward to monetizing our non-mining assets and
eliminating our debt. This is the strongest our balance sheet has
been since 2011, with the best growth opportunities for gold right
in front of us.”
Outlook
During the first half of 2020, the Company expects to close on
the agreed upon sale of certain non-mining assets located in Silver
Springs, NV, to Sierra Springs Enterprises Inc., for total net
proceeds of $10.1 million. The agreements were signed during 2019,
with $0.3 million of non-refundable deposits made and released to
the Company from escrow. The Company will use the remaining $9.8
million of proceeds to extinguish the entirety of its outstanding
Senior Secured Debenture obligation, principal and make-whole of
approximately $4.9 million, plus accrued interest of approximately
$0.3 million. During 2020, the Company expects to receive a total
of approximately $2.3 million in cash for expense reimbursements
required under the various Tonogold agreements.
The Company’s annual operating expenses, including other income
and expenses and excluding depreciation, are planned to be $4.9
million for fiscal year 2020, with approximately $2.3 million of
that amount currently being reimbursed under the various Tonogold
agreements, resulting in 2020 net operating expenses of $2.6
million.
Tonogold is currently planning and permitting a drilling program
for the Storey County exploration targets, including the leased
mineral claims, just north of the Lucerne area, and expects to
begin drilling in the second quarter of 2020. Under the Exploration
Lease, Tonogold must spend at least $1.0 million per year on
exploration.
The Company’s 2020 plans also include obtaining the local
permits for Dayton, expanding Dayton’s current resource and
continuing southerly into Spring Valley with incremental
exploration programs that include exploration and definition
drilling of targets identified by geophysical surveys, surface
mapping, prior drilling and deeper geological interpretations that
lead to publishing an updated, Dayton NI 43-101 mineral resource
estimate.
The Company’s 2020 plans also include advancing the investment
in and the commercialization of MCU’s mercury remediation
processing technologies. The Company expects to close on the MCU
transactions during the second and third quarters of 2020. MCU
plans to commence trial operations in the second quarter of 2020,
at the Company's processing facility, to validate the mercury
extraction and remediation process, with the objective of
remediating the Company's existing properties within the Carson
River Mercury Superfund Site, enhancing the values of, and
evaluating the potential economic feasibilities for these
properties and creating new growth opportunities in mercury
remediation by demonstrating MCU’s technological and operational
effectiveness.
MCU has agreed and plans to commence international reclamation
operations in the third quarter 2020. This represents the first
real international opportunity for large-scale mercury remediation
and environmental reclamations, using MCU’s system, establishing
MCU as a leader in large scale, mercury remediation projects.
Mr. De Gasperis concluded, “While the markets remain in turmoil,
we are methodically strengthening our Company, accelerating our
growth and maximizing the breadth of our exposure to gold, in the
most innovative, environmentally responsible and capital sensitive
way possible. We are looking forward to 2020 and beyond.”
Conference Call
The Company will host a conference call today, March 19, 2020,
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:
Toll Free: 1-888-297-8935Direct:
1-646-828-8143Confirmation Code: 5910203The audio will be
available, usually within 24 hours of the call, on the Company
website:http://www.comstockmining.com/investors/investor-library
About Comstock Mining Inc.Comstock Mining Inc.
is a Nevada-based, gold and silver mining company with extensive,
contiguous property in the Comstock District and is an emerging
leader in sustainable, responsible mining that is currently
commercializing environment-enhancing, precious-metal-based
technologies, products and processes for precious metal recovery.
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
completed its first phase of production. The Company continues
evaluating and acquiring properties inside and outside the district
expanding its footprint and exploring all of our existing and
prospective opportunities for further exploration, development and
mining. The Company’s goal is to grow per-share value by
commercializing environment-enhancing, precious-metal-based
products and processes that generate predictable cash flow
(throughput) and increase the long-term enterprise value of our
northern Nevada based platform.
Forward-Looking StatementsThis press release
and any related calls or discussions may include forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical facts, are forward-looking statements. 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. Forward-looking statements include
statements about matters such as: consummation of all pending
transactions; project, asset or Company valuations; future industry
market conditions; future explorations, acquisitions, investments
and asset sales; future performance of and closings under various
agreements; future changes in our exploration activities; future
estimated mineral resources; future prices and sales of, and demand
for, our products; future impacts of land entitlements and uses;
future permitting activities and needs therefor; future production
capacity and operations; future operating and overhead costs;
future capital expenditures and their impact on us; future impacts
of operational and management changes (including changes in the
board of directors); future changes in business strategies,
planning and tactics and impacts of recent or future changes;
future employment and contributions of personnel, including
consultants; future land sales, investments, acquisitions, joint
ventures, strategic alliances, business combinations, operational,
tax, financial and restructuring initiatives; the nature and timing
of and accounting for restructuring charges and derivative
liabilities and the impact thereof; contingencies; future
environmental compliance and changes in the regulatory environment;
future offerings of equity or debt securities; the possible
redemption of debentures and associated costs; future working
capital, costs, revenues, business opportunities, debt levels, cash
flows, margins, earnings and growth.
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, many of which are unforeseeable and beyond our
control and 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 set forth in our filings with the SEC and
the following: counterparty risks; capital markets’ valuation and
pricing risks; adverse effects of climate changes or natural
disasters; global economic and capital market uncertainties; the
speculative nature of gold or mineral exploration, including risks
of diminishing quantities or grades of qualified resources;
operational or technical difficulties in connection with
exploration or mining activities; contests over title to
properties; potential dilution to our stockholders from our stock
issuances and recapitalization and balance sheet restructuring
activities; potential inability to comply with applicable
government regulations or law; adoption of or changes in
legislation or regulations adversely affecting businesses;
permitting constraints or delays; decisions regarding business
opportunities that may be presented to, or pursued by, us or
others; the impact of, or the non-performance by parties under
agreements relating to, acquisitions, joint ventures, strategic
alliances, business combinations, asset sales, leases, options and
investments to which we may be party; changes in the United States
or other monetary or fiscal policies or regulations; interruptions
in production capabilities due to capital constraints; equipment
failures; fluctuation of prices for gold or certain other
commodities (such as silver, zinc, cyanide, water, diesel fuel and
electricity); changes in generally accepted accounting principles;
adverse effects of terrorism and geopolitical events; potential
inability to implement business strategies; potential inability to
grow revenues; potential inability to attract and retain key
personnel; interruptions in delivery of critical supplies,
equipment and raw materials due to credit or other limitations
imposed by vendors or others; assertion of claims, lawsuits and
proceedings; potential inability to satisfy debt and lease
obligations; 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 list our securities on any securities exchange or
market; inability to maintain the listing of our securities; 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. Except as may be required by securities or other
law, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Neither this press release nor any related calls or discussions
constitutes an offer to sell, the solicitation of an offer to buy
or a recommendation with respect to any securities of the Company,
the fund or any other issuer.
Contact information: |
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Comstock Mining Inc. P.O. Box
1118 Virginia City, NV 89440 ComstockMining.com |
Corrado De Gasperis Executive
Chairman & CEO Tel (775) 847-4755
degasperis@comstockmining.com |
Zach Spencer Director of
External Relations Tel (775) 847-5272
Ext.151questions@comstockmining.com |
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