Comstock Mining Inc. (the “Company”) (NYSE American: LODE) today
announced that on March 20, 2020, the Company amended and restated
its Membership Interest Purchase Agreement (the “Purchase
Agreement”) with Tonogold Resources Inc. (“Tonogold”), increasing
and accelerating certain expense reimbursements, accelerating
certain exploration drilling and development programs, and
extending and securing the remaining obligations due toward the
purchase of the remaining ownership interests (the “Membership
Interests”) in Comstock Mining LLC (“CML”), the entity that owns
the Lucerne mine and related obligations.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated,
"Earlier this year we leased certain mineral rights to Tonogold,
including the Occidental Lode (aka, the Brunswick Lode) claims, one
of the least explored and more promising mineral claims groupings,
running parallel to some of the most significant Comstock Lode
discoveries. This amendment allows Tonogold to plan a broader
drilling program, with our full collaboration and support. Tonogold
has also reimbursed, and we have anticipated certain higher
expenses, associated with this effort.”
In consideration for the sale of Lucerne, to date, Tonogold has
made non-refundable cash payments of $6.025 million and
non-refundable stock payments of $6.1 million and Tonogold received
50% of the Membership Interests of CML. For the remaining cash due,
Tonogold issued a 12% secured debt note with principal amount of
$5.475 million (the “Note”) dated March 20, 2020, with $1 million
payable October 15, 2020, and the remaining $4.475 million payable
on September 20, 2021, with cash interest paid monthly.
Additional Membership Interest will be delivered to Tonogold
proportionately to the cash principal payments received on the
Note.
The Convertible Preferred shares (“CP shares”) can be converted
to Tonogold common stock any time on or after May 22, 2020. The
restated Purchase Agreement adjusted the conversion price for the
CP shares to the lower of (1) $0.18 or (2) 85% of the 20-day volume
weighted closing price. Tonogold can redeem the CP shares at any
time prior to conversion, at a redemption price of 120% of the face
value of the CP shares.
The Note is initially secured by the Membership Interests owned
by Tonogold and will be secured by all of CML’s assets after the
Company’s 11% Debenture has been paid in full and the liens
relating thereto have been released. The Note can be prepaid at any
time without penalty or premium. The Note can also be converted
into common shares of Tonogold, under certain circumstances, at a
conversion price equal to the lower of (1) 85% of the twenty (20)
consecutive trading day volume weighted average price of Tonogold
common stock or (2) an applicable price stepping up to $0.40, at
the Note’s maturity date.
COVID-19
On March 12, 2020, Nevada Governor Stephen Sisolak issued a
Declaration of Emergency to facilitate the State’s response to the
COVID-19 pandemic. The Governor's guidance for the mining industry
includes limiting gatherings to no more than 10 people, maintaining
social distancing protocols where 10 or less are gathered, limiting
travel, and working remotely when possible. The Company is
currently operating in alignment with these guidelines for
protecting the health of our employees, partners, and suppliers,
and limiting the spread of COVID-19.
Liquidity & Capital Resources
The Company had total assets of $39.6 million, total current
assets of $13.3 million, current liabilities of $4.4 million and
net current assets of $8.9 million, including cash and cash
equivalents of $1.0 million at March 25, 2020. The Company’s
has approximately $5 million in debt due on January 17, 2021.
Delays in management plans, including its asset sales, or accesses
to the equity or debt capital markets, from extended market
disruptions, coupled with the short term nature the Company’s debt,
raises substantial doubt about the Company’s ability to continue as
a going concern. The Company’s current capital resources include
the aforementioned cash and cash equivalents of $1.0 million, other
net working capital resources, including Tonogold’s note receivable
to the Company of $5.5 million, the Company’s Convertible Preferred
Stock in Tonogold of $6.1 million (valued at $9.1 million at
December 31, 2019), escrowed non-mining asset sales of over $10
million, expecting to close in the second quarter and other
non-mining assets of over $4 million, plus equity agreements to
issue securities, subject to limitations, and a loan commitment
agreement with $10.0 million in unused capacity, ($9.5 million, net
of fees).
Mr. De Gasperis concluded, “We are excited about Tonogold's
plans for exploration drilling during the second quarter of 2020,
and MCU’s deployment on both the Comstock and in the Philippines.
Our entire staff is working progressively and diligently and we
have not experienced any significant disruptions as a result of
distancing and remote workplace disbursements that are critical for
avoiding the spread of this terrible virus. We are open for
business and moving all strategic projects forward, including the
sale of our non-mining assets. We look forward to extinguishing our
debt during the second quarter and funding these exciting growth
initiatives.”
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 Statements This 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
89440ComstockMining.com |
Corrado De Gasperis Executive Chairman & CEO Tel (775)
847-4755degasperis@comstockmining.com |
Zach Spencer Director of External Relations Tel (775) 847-5272
Ext.151questions@comstockmining.com |
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