Comstock Mining Inc. (the “Company”) (NYSE American: LODE) filed
its Quarterly Report on Form 10-Q last week and announced selected
strategic and financial results for the fiscal quarter ended June
30, 2020, including the arrival and assembly of our first mercury
remediation system.
Recent 2020 Selected Strategic
Highlights
- Extinguished the current Senior Secured Debenture from a
combination of $0.9 million in accelerated cash proceeds from
Tonogold and new, unsecured promissory notes, with favorable,
extended terms;
- Investments in Tonogold Resources Inc. (“Tonogold”) valued at
$10.4 million at June 30, 2020, a $1.6 million increase in fair
market value driving positive net income for the three months ended
June 30, 2020;
- Investment in Mercury Clean Up LLC (“MCU”) increased to $1.75
million (in cash and stock) at June 30, 2020, with on-site
installation of the Comstock mercury remediation system underway
(pictured below);
- Extended agreements for the sale of Comstock’s two non-mining
properties in Silver Springs, NV, for total expected proceeds of
$10.1 million, with the closings expected this quarter; and
- Consummated the April acquisition of 25% of PELEN LLC, owner of
the historic Sutro Tunnel Company.
Second Quarter 2020 Selected Financial
Highlights
- Total operating costs were $1.3 million in Q2 2020, a $0.2
million or a 15.9% improvement over Q2 2019;
- Interest expense was $0.1 million in Q2 2020, a $0.1 million or
a 49.6% improvement over Q2 2019;
- Other income, net was $2.2 million, primarily driven by gains
of $1.6 million on equity investments in Tonogold and $0.4 million
on the contingent forward assets receivable still committed to us
by Tonogold;
- Net income was $1.3 million, or $0.05 per share for
three-months ended June 30, 2020, as compared to a prior period net
loss of $2.1 million, or ($0.13) loss per share, driven by
investment gains and lower costs;
- Net income was $1.0 million, or $0.04 per share for six-months
ended June 30, 2020, as compared to a prior period net loss of $3.9
million, or ($0.24) loss per share, driven by investment gains and
lower costs; and
- Cash and cash equivalents at June 30, 2020, were $1.0
million.
Mr. Corrado DeGasperis, Executive Chairman and CEO stated, “We
have grown and strengthened our balance sheet, extinguished our
secured debt, and deployed and installed the first MCU - Comstock
system as we prepare for material testing within the boundaries of
the Carson River Mercury Superfund Site (“CRMSS”). We have also
reserved shipping containers as we prepare to ship our first
international unit to the Philippines.”
Comstock Mining’s Corporate Growth
The Company has enacted its Board-approved transformational
strategic plan, focused on high-value, cash-generating, precious
metal-based activities, (the “Strategic Focus”) including, but not
limited to, environmentally friendly, and economically enhancing
mining technologies, like mercury remediation. Our goal is to
deliver over $500 million of value from our existing assets and the
commercialization of these environmental mining technologies,
partnerships and ventures. Comstock Mining Inc. is the parent
company that wholly owns the realigned subsidiaries and is
expanding its mercury and royalty portfolios. We believe that our
resource-based technology, properties, plant and equipment and
existing gold and silver resources are deeply
undervalued.
Our realignment positions us for growth, especially in mercury
remediation, and we are quickening the pace.
Figure 1 - Comstock's Precious Metal-Based Growth Organization
(dotted lines indicate activities in progress) accompanying
this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/307b5d87-c98d-40ac-8322-a7507b1b4d93
Mr. DeGasperis continued, “The realignment enables partnerships
and transactions that increase value-creating opportunities and
accelerates our precious-metal based growth. Since the realignment,
we have expanded our partnerships with both MCU and Tonogold.
The MCU investments provide broad opportunities for higher, faster
returns and long-lived cash flows. We are working closely
with all our partners to grow those values.”
Comstock Mercury Remediation System and the American
Flat Processing Platform
Our American Flat processing platform is fully permitted, and
the infrastructure has been prepared, including pads, power, water
and retaining walls, for the delivery of the brand new MCU mercury
remediation system. The system components have been arriving for
the last few weeks and assembly and hook ups are nearly complete
(see below). The Company is collaborating with regulators and
policy makers for maximum social and environmental impact. Please
also see our Mercury Remediation update blog on the
https://www.comstockmining.com/category/ceo-blog/.
MCU’s State-of-the-Art Mercury Remediation System On
Comstock and Getting Prepped for Mercury
Testing accompanying this announcement is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/fe4832cb-d105-439b-aaeb-90036dd816d7
This impressive aggregation of state-of-the-art alluvial mining
technologies, operating as one, fully integrated mercury
remediation system. The system, which is mobile, stands almost
twenty feet high and comes with an additional, specialized, mobile
metallurgic laboratory and an integrated Dissolved Air Flotation
(DAF) system, one of the most effective, mobile
wastewater reuse operations.
Corporate – Extinguishment of Senior Secured
Debt
On August 11, 2020, the Company completely paid off its
remaining $4 million Senior Secured Debenture from a combination of
recent cash proceeds from Tonogold and new, unsecured promissory
notes, with favorable terms. The Company entered into three
promissory notes (the “Promissory Notes”) that refinanced its
existing, secured indebtedness, on more favorable terms, through a
known group of existing LODE investors. The Promissory Notes are
unsecured and have an aggregate principal amount of $4,475,000 (net
of an original discount of $255,000), and a maturity date of
September 20, 2021, with no prepayment penalties, and a portion of
which that can be extended for an additional two years. The
Promissory Notes were designed to mirror the amount still
receivable from Tonogold, including the same maturity date and the
same 12% interest rate payable monthly.
The Promissory Notes also permit other indebtedness but contain
covenants that prohibit the Company from incurring debt that
matures prior to September 20, 2021, or that is senior in
right of their payment. The Company must also prepay the
Promissory Notes, without penalty, with at least 80% of the net
cash proceeds with respect to the sale of the Company’s non-mining
assets in Silver Springs, NV. The Company received $0.9
million in two payments from Tonogold, one in late June and one in
early August, that were otherwise maturing on October 15,
2020. These payments reduced the amounts due to Comstock to
$4,475,000, and when coupled with the $4,220,000 of net proceeds
from the Promissory Notes, enabled the full, early extinguishment
of the Senior Secured Debt.
Non-mining Assets
Our non-mining assets are now valued at over $25 million, net of
debt. In addition to the over $10 million from the Silver Springs
assets, we also have the $5.0 investment in Tonogold Convertible
Preferred Stock (CPS) plus over 6 million common shares, together
valued at $10.4 million at June 30, 2020. We are also owed
approximately $4.475 million from Tonogold through a 12%, cash
interest paying forward instrument, perfectly mirroring our new
promissory notes, in both interest and principal payments
payable.
Outlook
The Company is working diligently with Tonogold to consummate
the acquisition of the entity that owns Lucerne, and facilitate the
commencement of a well-planned and permitted exploration drilling
program. We expect these transactions to be consummated and the
exploration plans announced over the next few weeks.
MCU will soon commence Comstock trial operations that will
continue throughout the second half of 2020, to validate and
fine-tune the mercury extraction and remediation process, with the
objective of remediating the Company's existing properties within
the Carson River Mercury Superfund Site ("CRMSS"), enhancing the
values of, and evaluating the economic feasibilities for, these
properties while creating new global growth opportunities in
mercury remediation with MCU’s technological and operational
effectiveness, efficiency, and feasibility.
MCU-P has agreed and plans to commence reclamation operations
during the third quarter 2020, in the Philippines. MCU-P will
secure containers, load and ship the first mercury remediation
system in the upcoming week. This represents the first real
international opportunity for large-scale mercury remediation and
environmental reclamations, using MCU’s systems, with the objective
of establishing MCU as a leader in mercury remediation projects,
and in particular, contaminations caused by Artisanal and
Small-Scale Miners (ASM).
Mr. Corrado DeGasperis, Executive Chairman and CEO stated, “It
would be difficult to exaggerate the importance of eliminating the
overhang created by the Senior Secured Debenture, releasing all of
our assets from restrictive security encumbrances and covenants.
This positions us to fully consummate the 100% sale of Lucerne and
more fully benefit on the closing of our $10 million plus
non-mining asset sales in Silver Springs, NV, and funding our
growth with more flexibility and speed, especially with MCU.”
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: Comstock Mining, Inc. P.O. Box 1118
Virginia City, NV 89440 ComstockMining.com
Corrado DeGasperis 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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