Comstock Mining Inc. (the “Company”) (NYSE American: LODE)
announced financial updates (unaudited) and strategic highlights
for the third quarter and year to date:
Selected Strategic Highlights
- Completed the sale of the Lucerne
mine to Tonogold Resources Inc. (“Tonogold”) for total cash, stock
and debt consideration of approximately $18.8 million, plus
Tonogold’s assumption of certain current and future obligations,
and recognized a gain on the sale of approximately $18.3
million;
- Retained Investment in Tonogold
share securities valued at $9.7 million at September 30, 2020;
- Retained Receivable in Tonogold
secured note valued at $6.4 million at September 30, 2020;
- Extinguished its $4.8 million Senior
Secured Debenture that was due later this year via a combination of
cash proceeds from the Lucerne mine sale and unsecured promissory
notes with favorable, extended terms;
- Installed and commenced the Mercury
Clean Up LLC (“MCU”) Comstock mercury remediation pilot;
- Shipped and landed through MCU
Philippines Inc. (“MCU-P”), the first landmark Philippines mercury
remediation system, working together with our joint venture partner
Clean Ore Solutions OPC;
- Completed an airborne geophysical
survey of the Dayton-Spring Valley exploration complex;
- Expanded the airborne geophysical
survey over all of the Company’s Comstock District properties;
- Contracted to lease, with an option
to sell, the Daney Ranch for $2.7 million to a drilling company;
and
- Extended the $10.1 million sale of
Comstock’s two Silver Springs, NV properties until December 31,
2020.
Unaudited Third
Quarter and Year
To Date 2020 Selected
Financial Highlights
- Costs applicable to mining decreased
$296,023 during the three months ended September 30, 2020, as
compared to the same period in 2019, as a result of certain assets
becoming fully depreciated. These costs consist solely of
depreciation expense on temporarily idled processing
equipment;
- Real estate operating costs
increased $690,306 during the three months ended September 30,
2020, as compared to the same period in 2019, almost solely due to
depreciation recorded during the third quarter that would have been
charged for previous periods, on the Gold Hill Hotel and Daney
Ranch properties;
- Exploration and pre-development
costs increased $152,978 during the three months ended
September 30, 2020, as compared to the same period in 2019,
primarily due to the costs of conducting an airborne geophysical
survey of the Company's resource areas and exploration
targets;
- Interest expense decreased $15,140
during the three months ended September 30, 2020, as compared
to the same period in 2019, as a result of lower average debt
outstanding, including the retirement of the remaining Senior
Secured Debenture in August 2020;
- Net income was $17.3 million, or
$0.54 per share for the three months ended September 30, 2020, as
compared to $0.4 million, or $0.02 per share in the prior
comparable period, driven by transaction gains;
- Net income was $18.3 million, or
$0.63 per share for the nine months ended September 30, 2020, as
compared to a net loss of $3.5 million, or ($0.20) per share in the
prior comparable period, driven by transaction and investment
gains;
- Invested $1.9 million (in cash and
stock) to date in MCU, as of September 30, 2020;
- Invested $1.0 million (in cash) to
date in MCU-P, as of September 30, 2020;
- Total assets were $48.2 million,
including current assets of $26.0 million, at September 30,
2020;
- Debt obligations totaled $4.8
million at September 30, 2020; reduced to $2.5 million by October
10; and
- Cash and cash equivalents at
September 30, 2020, were $1.7 million.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
successful sale of Lucerne has eliminated substantially all of our
debt and recorded an $18 plus million gain and expectations of
full-year profit for 2020, all while reducing our operating
expenses and positioning our balance sheet for growth. We believe
that our resource-based technology, properties, plant and
equipment, and existing gold and silver mineral properties are
undervalued. Our strategic plan includes establishing and growing
the value of our existing mineral and royalty properties,
commercializing and growing a global, ESG-compliant, profitable
mercury remediation business, while still monetizing over $25
million in assets over the next fifteen months, for funding that
growth.”
Comstock Mining’s Corporate
GrowthThe Company’s goal is to grow per-share
value by commercializing environment-enhancing, precious and
strategic-metal-based products and processes that generate a rate
of predictable cash flow (throughput) and increase the long-term
enterprise value of our northern Nevada based platform. The next
three years are dedicated to delivering that value by achieving the
performance objectives listed below:
Establish and grow the value of our mineral properties:
- Establish the Dayton Resource area’s maiden, stand-alone
mineral resource estimate;
- Expand the Dayton-Spring Valley Complex through exploration
drilling and geophysical modelling;
- Develop the expanded Dayton-SV Complex toward full economic
feasibility, supporting a decision to mine;
- Entitle the Dayton-SV Complex with geotechnical, metallurgical,
environmental studies and permitting; and
- Validate the Comstock NSR Royalty portfolio (Lucerne Mine,
Occidental Lode, Comstock Lode, etc.).
Commercialize a global, ESG-compliant, profitable, mercury
remediation system:
- Establish the technical efficacy of
MCU’s Comstock Mercury System, and protect the intellectual
property;
- Initiate and operate the first
international mercury remediation project by deploying MCU’s second
and third mercury remediation systems into the Philippines;
and
- Identify, evaluate and prioritize a
pipeline of potential mercury remediation projects; then deploy the
third and fourth mercury remediation projects, producing extended,
superior cash flow returns.
Monetize non-strategic assets and build a
quality organization:
- Monetize our third-party, junior mining securities responsibly,
for $12.5 million or more;
- Monetize our non-mining assets for $12.5 million, excluding the
Gold Hill Hotel;
- Grow the value of our Opportunity Zone investments to over $30
million; and
- Deploy a systemic organization, capable of accelerating growth
and handling complexity.
The strategic plan is designed to deliver per-share value over
the next three years, while positioning the Company for continued
growth beyond 2023.
Comstock Mining's Corporate Realignment
Figure 1 - Comstock's Corporate Realignment is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/8c0a3495-99f3-4c8c-b6fa-908db29922da
Comstock Mining Inc. is the parent company that wholly owns the
realigned subsidiaries and is expanding its mineral resources,
mercury remediation operations and royalty portfolios.
Mr. De Gasperis continued, “The realignment enables partnerships
and transactions that increase value-creating opportunities and
accelerate our precious and strategic-metal-based products and
process growth. Our goal is to deliver over $500 million of value,
or at least $12 per share, from our existing assets and the
commercialization of these environmentally friendly metal
processing and mining technologies, partnerships and ventures.”
Comstock Exploration and
DevelopmentOur district-wide exploration and development
plans contemplate three specific, geological areas that the Company
has organized into wholly-owned subsidiaries called Comstock
Exploration and Development LLC, Comstock Northern Exploration LLC,
and Comstock Mining LLC. Comstock Exploration and Development LLC
includes the Dayton and Spring Valley areas. Comstock Northern
Exploration LLC includes the Occidental and Gold Hill exploration
targets now leased to Tonogold, and Comstock Mining LLC, recently
acquired by Tonogold, includes the Lucerne properties. These
exploration targets represent over 7 miles of mineralized strike
length, with current and historical grades of gold and silver, and
significant historical mine production.
Comstock Processing LLCComstock Processing LLC
("CPL"), owns all of the property, plant, equipment, and permits
for the crushing, agglomerating, leaching, Merrill Crowe
processing, mercury retort, refining, and metallurgical operations
located at 1200 American Flat Road, Virginia City, Nevada. The
facilities represent a fully permitted platform, best positioned
for implementing our Strategic Focus on high-value,
cash-generating, precious and strategic metal-based activities.
To date, Comstock Processing has entered into two strategic
ventures that leverage its platform for nearer-term cash
generation; first with Tonogold for the Lease-Option Agreement to
lease and operate the facilities and second, with Mercury Clean Up
LLC (“MCU”) for the commercial pilot of the MCU mercury remediation
system.
Dayton Resource and Spring Valley Exploration
AreasDuring the third quarter of 2020, the Company engaged
Geotech Ltd ("Geotech") of Aurora, Canada, to conduct an airborne
geophysical survey of the Dayton resource area, Spring Valley
exploration targets, and the rest of the Company's Comstock
district properties. The survey included both magnetic and
Geotech's proprietary Versatile Time-Domain Electromagnetic
("VTEM") surveys.
The survey was flown from September 19, through October 3, 2020,
with 1,161 line-kilometers. The interpreted, three-dimensional
results have been recently delivered to the Company and our
geological team is just now assessing a deep trove of geophysical
and geological data. The results will greatly increase the
Company’s understanding of the Dayton resource area, the Spring
Valley resource expansion potential, and the rest of the Company's
Comstock district properties.
The Company’s technical staff is currently compiling a detailed
structural interpretation of the Dayton resource area, which will
provide the framework for a completely new resource model. The
detailed interpretation is leading to a list of highly prospective
drill targets to further define and expand the mineral
resource.
The Company is proceeding to publish a separate S-K 1300
compliant, Initial Assessment technical report for the Dayton
resource area to validate a mineral resource estimate. The new
technical report will provide not only a new resource estimate, but
also a phased drilling plan for further defining and expanding the
resource for sustainable, profitable mining. The Company plans to
continually advance the Dayton to full feasibility, towards a
production ready mine plan. Mining on lands 100% privately held by
the Company should shorten the permitting cycle.
CorporateDuring 2019, the Company received $6.1
million in Tonogold convertible preferred stock (“CPS”). The CPS
became convertible into common shares on May 22, 2020. On May 22,
2020, and September 29, 2020, the Company elected to convert $1.1
million and $2.8 million of CPS, respectively, at $0.18 per common
share, for a total of 21,777,778 common shares. Through November
13, 2020, the Company has sold 5,057,894 common shares at an
average price of $0.40 per share for proceeds of over $2 million
and still holds 16,719,884 shares.
On October 2, 2020, Tonogold redeemed the remaining $2.2 million
of CPS for $2.6 million in cash, representing 120% of the CPS face
value. The Company promptly reduced its debt from approximately
$4.8 million at September 30, 2020, to approximately $2.5 million
in early October.
The Company is also owed $4.5 million, in the form of a 12% note
receivable, due and payable by Tonogold on September 20, 2021, plus
Tonogold’s 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.
Cash and cash equivalents at September 30, 2020, were $1.7
million, total common shares outstanding at both September 30,
2020, and November 17, 2020, were 34,440,766 shares.
OutlookThe Company expects to monetize its
non-mining assets over the next fifteen months, for over $22
million, net of debt. The Company expects to close on the sale of
certain properties and senior water rights in Silver Springs,
Nevada, to Sierra Springs Enterprises Inc., for total proceeds of
approximately $10 million. The Company also expects to monetize the
remaining $9.7 million in Tonogold securities over the next fifteen
months and collect on the $4.5 million in notes receivable in the
next 10 months. The Company will use the proceeds to extinguish the
outstanding $2.5 million in debt obligations, plus accrued
interest, and fund the Company’s growth initiatives.
The Company’s fourth quarter 2020 plans also include updating
the Dayton’s current resource estimate and continuing southerly
into Spring Valley with incremental exploration programs that
include recently completed geophysical surveys, surface exploration
and definition drilling of targets identified by the geophysical
surveys, surface mapping, prior drilling and deeper geological
interpretations that all lead to publishing a new, S-K 1300
compliant, mineral resource estimate.
The Company’s remaining 2020 plans include advancing the
investment in and the commercialization of MCU’s mercury
remediation processing technologies. The Company expects to close
on the MCU transaction during the fourth quarter of 2020, meaning
it will then own 15% of MCU and expects to close on the MCU
Philippines transaction in the first quarter of 2021, meaning it
will then own 25% of MCU and 50% of its first joint venture in the
Philippines. Oro Industries Inc. has delivered the 25-ton-per-hour
mercury recovery plant and is testing and preparing the system for
its pilot operations on the Comstock, including a 200
gallon-per-minute dissolved air flotation water treatment plant.
These pilot trial operations will continue throughout 2021, at the
Company's American Flat processing facility, to validate and
fine-tune the mercury extraction and remediation process, with the
objective of reclaiming and remediating the Company's existing
properties, enhancing the values of, and evaluating the potential
economic feasibility for, these properties, and creating new global
growth opportunities in mercury remediation by demonstrating MCU’s
technological and operational effectiveness, efficiency, and
feasibility.
MCU-P has delivered its first international system to the
Philippines and plans to commence reclamation operations during the
fourth quarter 2020. MCU-P will operate under a joint venture
agreement with Clean Ore Solutions, a Philippine Company, for
mercury extraction and remediation of Mount Diwalwal and the Naboc
River, one of the most mercury polluted, gold mining regions in the
world. This represents the first real international opportunity for
large-scale mercury remediation and environmental reclamations,
using MCU’s systems, and establishing MCU as a leader in mercury
remediation projects, and in particular, contamination caused by
artisanal and small-scale miners.
Conference CallThe Company will host a
conference call today, November 17, 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. Please join the event 5-10 minutes prior to
scheduled start time. When prompted, provide the confirmation code.
The dial-in telephone numbers for the live audio are as
follows:
Toll Free: 1-800-367-2403Direct:
1-334-777-6978Confirmation Code: 2739116The audio will be
available, usually within 24 hours of the call, on the Company’s
new
website:http://www.comstockmining.com/investors/investor-library
About Comstock Mining Inc. Comstock Mining Inc.
is a Nevada-based, precious and strategic metal-based exploration,
economic resource development, mineral production and metal
processing business with a strategic focus on high-value,
cash-generating, environmentally friendly, and economically
enhancing mining and processing technologies and businesses. The
Company has extensive, contiguous property in the historic Comstock
and Silver City mining districts (collectively, the “Comstock
District”) and is an emerging leader in sustainable, responsible
mining and processing, and is currently commercializing
environment-enhancing, metal-based technologies, products, and
processes for precious and strategic metals
recovery.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; asset sales 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 DeGasperisExecutive Chairman & CEOTel (775)
847-4755degasperis@comstockmining.com |
Zach SpencerDirector of External RelationsTel (775) 847-5272
Ext.151questions@comstockmining.com |
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