Comstock Mining Inc. (the “Company” or “Comstock”) (NYSE American:
LODE) announced today that it has completed the sale of its Lucerne
mine to Tonogold Resources, Inc. (“Tonogold”) for total value and
consideration of approximately $25.9 million. The consideration
includes $7.1 million in cash, $6.1 million in Convertible
Preferred Stock (“CPS”), and a $4.475 million, 12% notes
receivable, due and payable on September 20, 2021, plus the
assumption of $6.7 million in future lease and reclamation
obligations, that together represent a permanent reduction of
annual operating expenses of approximately $1 million. The CPS had
an initial recorded fair value of $7.6 million (and a higher fair
value of $10.4 million at June 30, 2020). Comstock retained a 1.5%
net smelter return (NSR) royalty on Lucerne and will recognize a
tax-free gain on the sale of approximately $18 million, with
substantially all of the gain expected in the third quarter.
Mr. Corrado De Gasperis, Executive Chairman and CEO, stated,
“This transaction delivered strong value for our shareholders,
advanced Lucerne for expansion and growth toward production, and
just enabled us to eliminate all of our secured debt, while
securing NSR royalties, cost subsidies and future lease revenues
for our processing facilities. We are also very excited that
Tonogold has commenced drilling associated with their mineral lease
to explore, develop and mine properties in Storey County.”
The Company also entered into a long-lived Mineral Lease with
Tonogold for additional mineral properties in Storey County,
Nevada, granting Tonogold the mineral rights to these
properties. Tonogold also announced that it recently
completed a $4.25 million equity capital raise, with now over $6
million in cash on hand and an additional $3.5 million in drilling
equity credit, fully funding an estimated $7 million drill program,
in one of the most historically significant portions of the
Comstock Lode. Tonogold’s initial drill program will focus on
the nearly 2-mile mineralized strike where most of the historical
production and where more favorable mining conditions were enabled
by the dewatering of the Sutro Tunnel. Comstock retains a 3% net
smelter return royalty on these additional leased properties,
reduced to 1.5%, one year after the commencement of mining
operations.
Mr. De Gasperis concluded, “Our collaboration with Tonogold has
expanded greatly and their recently announced, expansive
exploration drilling program is targeting some of the highest-grade
sections of the Comstock Lode. We remain a stakeholder and
royalty holder, and we very much look forward to the exploration
results over the next few months and well into next year.
There is a genuine excitement on the Comstock at seeing the core
drill rigs turning with great prospects of future high-grade
discoveries.”
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. 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 near term goal of our business plan is to maximize
intrinsic stockholder value realized, per share, by continuing to
acquire mineralized and potentially mineralized properties,
exploring, developing and validating qualified resources and
reserves (proven and probable) that enable the commercial
development of our operations through extended, long-lived mine
plans that are economically feasible and socially responsible.
Forward-Looking StatementsThis
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; profitability; future industry
market conditions; future changes in our exploration activities,
production capacity and operations; future exploration, production,
operating and overhead costs; production of feasibility studies,
technical reports or other findings related to estimated
mineralization; 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 (by the Company or
other parties) 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, sustainability, production slowdowns, suspension or
termination, business process, rationalization and other
operational initiatives; investments, acquisitions, joint ventures,
strategic alliances, business combinations, asset sales;
consulting, operational, tax, financial and capital projects and
initiatives; contingencies; environmental compliance and changes in
the regulatory environment; offerings, sales, equity dilution, and
other actions regarding debt or equity securities; including a
redemption of the debenture, 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. 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 other securities of the Company.
Contact information: 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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