Comstock Mining Inc. (“Comstock” or the “Company”) (NYSE American:
LODE) today provided updates on key components of the Company’s
strategic objectives.
Strategic Focus, Corporate Realignment and
Transformation
In 2019, the Comstock 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, precious-metal exploration, resource
development, economic feasibility assessments, mineral production,
and related ventures of environmentally friendly and economically
enhancing mining and processing technologies. The Company has
enabled the Strategic Focus with a legal entity realignment that is
facilitating both the disposition of non-mining assets while
positioning the development of its 100% owned mineral properties
(for example, our Dayton Resource Area and our Spring Valley
exploration targets) and a number of highly focused and strategic
transactions, ventures and partnerships that facilitate the
development of our other mineral properties (for example, Lucerne
and our other mineral properties located in Storey County) while
advancing investments in new ventures, like Mercury Clean Up LLC
and Sierra Springs Opportunity Fund Inc., and its subsidiaries,
that successfully acquired the Silver Springs Regional Airport and
an adjacent 180,000+ square foot manufacturing facility called
Sierra Clean Processing LLC.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/6834143a-b3ed-4d2a-bc64-e9dd66e8e007
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
realignment and transformation has repositioned the Company to
first unlock unrealized shareholder value and then create and
deliver new value from precious metal based innovations and
developments, including our Dayton resource and the MCU joint
venture.”
Value Proposition
Comstock’s foundational value starts with its land, water and
mineral rights on and in the historic, world-class Comstock Lode
district, and our planned growth is based on Comstock’s
exploitation of existing mineral resources, planned resource
developments, new, clean-technology-based ventures from its
established and permitted platform. This platform includes the 100%
owned Comstock Processing LLC, that has crushing, leaching,
processing, metallurgical labs and equipment, where the Company’s
clean-technology platform, joint ventures and partnerships identify
and enable opportunities for significant value growth, especially
in the area of mercury remediation and reprocessing of
residual-leached mineralized materials. The following table
summarizes the components of Comstock’s announced strategies and a
valuation buildup based on the estimated potential, future
contributions to the value of the Company for each opportunity
(with the low representing the most known and quantifiable and the
high representing least known or most nascent):
| (Dollars in
millions) |
Valuation Targets(1) |
|
Strategic Value Proposition |
Low |
High |
|
Investment in the Sierra Springs Opportunity Fund |
$ |
2.5 |
$ 115.0+ |
| Mercury Clean-up –
International Project #2 |
25.0 |
62.5+ |
| Mercury Clean-up –
International Project #1 |
25.0 |
62.5+ |
| Mercury Clean-up – Comstock
Project |
1.5 |
20.0+ |
| Leach Material Reprocessing –
Comstock Project |
7.0 |
60.0+ |
| Dayton Mineral Resource
Development |
40.0 |
120.0+ |
| Lucerne
Mineral Resource Development |
24.0 |
60.0+ |
|
Initial Consolidated Comstock Value Target
Ranges |
$ |
125.0 |
$ 500.0+ |
| (Dollars in millions) |
Valuation Estimate |
|
Non-Mining Assets |
Low |
|
High |
| Non-Mining Senior Water
Rights |
$ 4.0 |
$ |
4.5 |
| Non-Mining Land Values |
9.0 |
|
10.5 |
|
Residual Land Values (post-reclamation) |
24.0 |
|
32.0 |
|
Total Base Land Value |
$ 37.0 |
$ |
47.0 |
Note (1): Valuation Targets represent management
estimates (please see forward looking statements at the end of this
release).
Mr. De Gasperis continued, “We made remarkable progress with
numerous objectives completed during the fourth quarter of last
year. During November, we closed on the sale of 50% of the
membership interest in Comstock Mining LLC to Tonogold and
effectively facilitated the launch of Sierra Springs Opportunity
Fund Inc. In late December, Sierra Springs closed on its first
acquisitions including the Silver Springs Regional Airport LLC and
the 180,000 plus square foot Sierra Clean Processing LLC,
manufacturing facility, both completed just before last year end.
We also regained full compliance with our NYSE listing and further
escrowed deposits on our non-mining asset sales in Silver Springs.
The platform is now repositioned for tremendous growth and we are
starting to close and realize the value of this progress.”
Non-mining Asset Sales and the Northern Nevada
Opportunity Zones
Last year, the U.S. Treasury confirmed that all of Storey County
and significant parts of Silver Springs, NV, had been certified as
Qualified Opportunity Zones. The Company owns non-mining assets in
these locations, including substantial lands and senior water
rights in Silver Springs, NV, and the Gold Hill Hotel in Storey
County, NV.
These two, adjacent qualified opportunity zones are located on
growing, high volume, logistical highways, railways and airports,
with the State of Nevada investing over $125 million in the new USA
Parkway and the four-lane expansion of Highway 50, all converging
in Silver Springs, NV.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/a19a6833-7617-4f7d-bae6-7a1dda2be422
Sierra Springs Opportunity Fund Inc. (“SSOF”) was formed to
capitalize on the extraordinary, explosive growth of high-tech
industries in northern Nevada, and its qualified opportunity zones,
and has already purchased the Silver Springs Regional Airport and
an adjacent, 180,000 plus square foot manufacturing complex, and
secured the rights to thousands of developable acres of land and
other assets, including an agreement to purchase Comstock’s Silver
Springs properties and water rights, all within the immediate
proximity of the Tahoe Reno Industrial (TRI) Center.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/76df942f-0267-4c8c-b194-7d0526cf3e8b
Comstock expects its ownership, on a fully diluted basis, to be
approximately 9% of the SSOF.
Non-mining Asset Sales and Repositioned Financial
Position
The Company has agreed to sell and escrowed its two properties
in Silver Springs, and over 200 acre-feet of senior water rights
for just over $10 million and has received an additional $300,000
deposit toward the purchase of these non-mining properties. The
closing dates for these sales is now January 31, 2020. The Company
has already reduced its debenture down to approximately $4.9
million, and upon completion of the non-mining asset sales, the
Company’s remaining debt will be eliminated, plus initial funding
for the Company’s planned growth initiatives. The following
sequence of pro formas represents the near-term transition of
Comstock’s financial position over the next 6 months, giving effect
to the elimination of debts and other obligations, including the
Northern Comstock JV obligations and transitioning to a debt free,
JV obligation-free, well-funded Company, positioned for
growth.
|
(US$ in thousands, except per share data) |
Pro FormaLucerne Sale
(50%)12/31/2019 |
Pro Forma Post Silver Springs
Sales1/31/2020 |
Pro Forma Lucerne & Daney Sales
(100%)6/30/2020 |
|
Cash and Cash Equivalents |
$ |
1,015 |
$ |
4,500 |
$ |
10,000 |
| Assets Held For Sale
and Cash Payments Due |
|
|
|
|
|
Lucerne Properties |
$ |
769 |
$ |
769 |
$ |
-0- |
|
Industrial Land & Water (Silver Springs) |
|
2,739 |
-0- |
-0- |
|
Commercial Land (Downtown Silver Springs) (1) |
|
3,590 |
-0- |
-0- |
|
Daney Ranch and Gold Hill Hotel |
|
2,625 |
|
2,625 |
|
487 |
|
Total Assets Held For Sale |
$ |
9,723 |
$ |
2,704 |
$ |
487 |
|
Cash Obligation Due-From-Tonogold |
$ |
5,275 |
$ |
4,550 |
$ |
-0- |
|
Tonogold Convertible Preferred Stock (2)(3)(4) |
|
9,050 |
|
9,150 |
|
9,150 |
|
Total Assets Intended for Sale/Monetization |
$ |
24,058 |
$ |
16,404 |
$ |
9,637 |
| Debt and
Other Obligations |
|
|
|
|
Senior Secured Debenture |
$ |
4,929 |
$ |
-0- |
$ |
-0- |
|
Northern Comstock JV |
|
7,102 |
|
7,102 |
-0- |
|
Equipment Financing (CAT) |
|
699 |
|
669 |
-0- |
|
Total Debt and Other Obligations |
$ |
12,730 |
$ |
7,771 |
$ |
-0- |
|
|
|
|
|
|
Total Common Shares Outstanding |
27,236,489(5) |
27,236,489(5) |
27,236,489(5) |
|
|
|
|
|
- Represents the acquisition of the non-mining asset (160-acre
Downtown Silver Springs) parcel in December 2019, contracted to
sell in January 2020.
- Represents Convertible Preferred Stock received from Tonogold
with a stated value of $4,750 and a fair-market-valued of $5,650 as
of September 30, 2019.
- Represents Convertible Preferred Stock received from Tonogold
with a stated value of $6,000 and a fair-market-valued of $9,050 as
of December 31, 2019.
- Represents an additional $100,000 of Convertible Preferred
Stock at the stated value due to be received from Tonogold in
January 2020.
- Includes 1,842,446 restricted common shares privately placed in
December, 2019, for proceeds of $550,000.
Comstock Mining LLC and Tonogold Closing
Tonogold now has a 50% membership interest in Comstock Mining
LLC, the entity that owns the Lucerne mine. The transaction alone
is expected to deliver well over $24 million ($11.2 million in
cash, $6.1 million in stock and over $7 million in assumed
liabilities) of tangible value to Comstock. The agreement also
subsidizes $2.2 million in annualized savings and retains a 1.5%
NSR royalty on Lucerne plus future rents payable under a
Lease-Option for using the Company’s processing facilities. These
agreements are expected to and may deliver additional value to
Comstock of $20-$35 million based on Tonogold’s final mine plans.
The remaining $5.275 million in cash owed to the Company represents
a secured obligation of Tonogold with payments continuing through
June 2020. The $6.1 million in Tonogold Convertible Preferred Stock
is valued at over $9 million at December 31, 2019.
Comstock Processing LLC and Mercury Clean Up
LLC
During 2019, Comstock Processing LLC, entered into a definitive
agreement with Mercury Clean Up LLC (“MCU”), in collaboration with
Oro Industries Inc. (“Oro”), for the manufacture and global
deployment of mercury remediation systems with proprietary
mechanical, hydro, electro-chemical and oxidation processes to
reclaim, treat and remediate mercury, and the entrapped precious
metals, from soils, waste and tailings. Comstock and MCU have
secured the necessary permits and are beginning to mobilize
equipment to commence drilling and sampling. The state-of the-art
mercury remediation equipment is scheduled to begin arriving on
site this month and the Company is targeting domestic and
international opportunities with estimated annualized revenues of
$100 million each. Comstock has ownership options for 25% of MCU
and other rights that can result in Comstock receiving up to 62.5%
of the profits for each of these mercury remediation opportunities.
Securing these mercury remediation opportunities could result in
profits of $25-$62.5 million, per project, for the Company.
Corporate Update and NYSE Compliance with
Continued Listing StandardsLast week, the Company received
a letter from the NYSE American LLC (the “Exchange”), stating that
the Company was in full compliance with the Exchange’s continued
listing standards set forth in Part 10 of the Exchange’s Company
Guide. The Exchange specifically noted that the Company has
resolved the Company’s previously announced low selling price
deficiency. Effective January 3, 2020, the “.bc” designation,
signifying below-compliance with NYSE American listing standards
was removed from the Company’s trading symbol. Mr. De Gasperis,
concluded, “We are positioned for value growth and we delivered on
our commitment to maintain the NYSE American listing standards and
we could not be prouder of our commitment to and collaboration with
this world-class platform and the regulatory protections it
provides for all of our shareholders. We look forward to delivering
on our strategic value propositions and updating our investors on
all of our progress throughout 2020.
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 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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