Comstock Mining Inc. (“Comstock” or the “Company”) (NYSE American:
LODE) today provided updates on key components of its strategic
objectives, including with Mercury Clean Up LLC (“MCU”), Tonogold
Resources Inc. (“Tonogold”) and Sierra Springs Opportunity Fund
Inc. (“SSOF”).
Strategic Transactions Advancing
Value
During 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, environmentally friendly
and economically enhancing clean mining and processing
technologies, precious-metal exploration, resource development,
economic feasibility assessments and cash-generating mineral
production.
The Company has made major advancements with its
venture partners, including MCU, Tonogold and SSOF.
A photo accompanying this announcement is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/3925e997-3bec-47db-a699-48c97f849bd6
Mr. Corrado De Gasperis, Executive Chairman and CEO
stated, “We have made progress on four major objectives. We just
recently returned from the Philippines, where we secured the
permits for MCU’s first major international mercury remediation
project on the Naboc River, and also expanded the scope of the
project, adding sand and gravel plans for the lower river. Our
joint venture partner, Clean Ore Solutions and MCU will commence
final sampling and site preparations for delivery of mercury
remediation equipment, planned for the second quarter.
Tonogold has also expanded plans for drilling and development
during the second quarter.” MCU’s International Joint
Venture Secures Permits
Comstock and MCU are collaborating 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 from tailings and industrial effluents. Together
with MCU’s Philippines-based joint venture partner, Clean Ore
Solutions OPC (“COS”), the parties confirmed last week that nine
separate permits have been issued that allow for the
commencement of mercury remediation within the 24 kilometer Naboc
River, a goldmine rich area of Mount Diwata, in the Davao de
Oro region of the Philippines (the “Philippines Project”). Rich in
ores and mines, the area represents a federal and provincial
government priority for intensified rehabilitation and mercury
clean up, working with the Philippines Department of Environment
and Natural Resources.
The joint venture between MCU and COS will be named
Clean Mineral Recovery Technologies (“CMRT”), with the ownership
split between COS (60%) and MCU (40%). Testing and staging
are expected to commence in March 2020. Oro will commence the
manufacture of the mercury remediation systems with planned
delivery in July 2020.
Only recently, through the Minamata Convention, has
there been a global effort to stop the use of mercury in mining.
This United Nations priority has united scientists, NGOs,
governments and communities against these practices. More
recently, actual engineered technologies and solutions through MCU,
have begun testing and evaluating mercury remediation solutions
from contaminated sites. This year, governments, led by the
Philippines and others, are zeroing in on the biggest mercury
polluter of all, gold mines, and have begun prohibiting the use of
mercury. MCU, partnered with COS, and coupled with Oro and
Comstock, has the technology, equipment, and process know-how, to
commence the remediation and rehabilitations of these environments
and provide one of the most advanced solutions for remediating
mercury contamination and eliminating future use of mercury by
providing clean solutions.
MCU, The Comstock and The Carson River
Mercury Superfund Site
Comstock has also secured the necessary Nevada
permits and approvals for localized mercury remediation efforts.
MCU commenced sampling old Comstock waste dumps over the past two
weeks. The state-of the-art mercury remediation equipment,
specifically, the spiral concentrators, began arriving on site last
week, with the remaining system, including the Low-G mercury
centrifuges and concentrators, proprietary mechanical, hydro,
electro-chemical and oxidation processes, the portable mercury-gold
laboratory with assaying equipment and the Dissolved Air Flotation
(DAF) wastewater treatment processor scheduled to arrive this
month.
MCU is focused on its first domestic (Carson River
Mercury Superfund Site) and its first international (Philippines
Project) opportunities, as it establishes itself as the global
leader in mercury remediation and related services. Comstock
has ownership options to acquire 25% of the equity of MCU and other
rights that can result in Comstock receiving up to 62.5% of the
profits for each mercury remediation opportunity.
Separately, the Nevada Division of Environmental
Protection—Bureau of Air Pollution Control (NDEP) completed its
technical review of the applications submitted by Comstock
Processing LLC and issued the entity a new Class II Air Quality
Operating Permit. Comstock Processing LLC is the 100% owned,
permitted platform, with processing equipment and metallurgical
labs, that enable the clean-technology platform, joint ventures and
partnerships especially in the area of mercury remediation and
reprocessing of residual-leached mineralized materials.
Mr. De Gasperis, commented, “We are now advancing
the mercury remediation globally, and we remain committed to
maintaining the permitted platform for processing (Tonogold),
remediating (MCU) and developing new clean technologies with our
partners. We are pleased with NDEP’s technical review and the
resulting enhanced Air Quality permit. Our relationships with NDEP
and our recognitions for environmental excellence are second to
none, as we leverage this platform for clean, cash-generating,
economically enhancing mine processing technologies.”
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 now expected to deliver at least $26 million
of tangible value to Comstock (that is, $11.2 million in cash, $7.6
million in FMV of stock when received and over $7.2 million in
assumed liabilities). Tonogold also agreed to subsidize over $2
million in annualized savings. Comstock retains a 1.5% NSR royalty
on Lucerne. These royalty and lease agreements may deliver an
additional $20-$35 million of cash value to Comstock based on
Tonogold’s ability to successfully implement its final mine
plans.
Tonogold has paid the Company $100 thousand toward
the purchase of Lucerne and $850 thousand toward expense
reimbursements during the first quarter of 2020. The
remaining $5.175 million in cash owed to the Company represents a
secured obligation with payments continuing through June 2020, on
the following revised schedule:
Payment Due Date |
Secured Obligation Due |
|
March 27, 2020 |
$1.725
million |
|
April 24, 2020 |
$1.325
million |
|
May 22, 2020 |
$1.425
million |
|
June 26, 2020 |
$0.700
million |
|
In addition to the amounts owed above, the Company
has received $5.925 million in non-refundable cash payments and
$6.10 million in non-refundable Convertible Preferred Stock (“CPS”)
payments, since January 2019. This CPS was valued at $7.64
million, when received, and was subsequently re-valued at $9.19
million at December 31, 2019. The Company has recognized gains
totaling $1.55 million, in the consolidated statement of operations
for the year ended December 31. 2019, for the increases in the fair
value of the Tonogold CPS. Once finalized, the transaction is
expected to result in a net gain for the Company, in excess of $18
million, most likely during the second quarter.
Sierra Springs Opportunity Fund and
Non-mining Asset Sales
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.
A photo accompanying this announcement is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/76df942f-0267-4c8c-b194-7d0526cf3e8b
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
SSOF was formed to capitalize on the explosive
growth of high-tech industries in northern Nevada, and its
qualified opportunity zones. During 2019, SSOF raised over $11
million and acquired Silver Springs Regional Airport LLC and an
adjacent, 180,000 plus square foot manufacturing complex, both as
qualifying opportunity zone businesses. SSOF also 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. Comstock expects its SSOF
ownership, on a fully diluted basis, to be about 9%.
The Company has definitive agreements to sell its
two properties in Silver Springs, and over 200 acre-feet of senior
water rights for just over $10 million and has now received an
additional $100 thousand deposit (totaling over $400 thousand
escrowed) toward the purchase of these properties. The
closing is expected in the first quarter of 2020.
Corporate Update
The Company has not sold any equity during 2020,
and significantly improved its financial position throughout 2019.
As of December 31, 2019, the Company had cash and cash
equivalents of $1.0 million, current assets of $13.3 million and
current liabilities of $3.4 million. The Company had total assets
of $39.7 million, total current assets of $13.3 million, current
liabilities of $3.4 million and net current assets of $9.9 million
at December 31, 2019. Total assets increased 38.7% over 2018,
and total liabilities decreased 16.4% and the Company reduced its
Senior Secured Debenture debt by 44.4% to $4.9 million. The Company
expects to extinguish the debt when the sale of the two properties
in Silver Springs properties for over $10 million closes during the
first quarter of 2020.
Net cash provided by investing activities for 2019,
was $2.6 million, substantially all from the $5.9 million in
non-refundable cash payments for the purchase of Lucerne from
Tonogold, offset by $2.4 million used for the purchase of
properties, $0.8 million for investment in MCU and $0.3 million for
the investment in SSOF.
Net cash used in operating activities for 2019,
were $2.3 million, as compared to net cash used in operating
activities of $5.0 million for the prior year. The Company's use of
cash in 2019, and 2018, was primarily related to environmental
expenditures, exploration, mine claim cost and general and
administrative. The decrease primarily resulted from dramatically
lower net operating expenses due to reimbursements from Tonogold
and lower spending.
Effective February 28, 2020, Mr. Juan Carlos Giron
informed the Company that he was leaving to pursue other
opportunities. Mr. De Gasperis remains the Company’s
principal financial, accounting and executive officer, as the
Company evaluates all organizational opportunities for best
positioning the Company’s for its growth objectives.
Mr. De Gasperis commented, “We have significantly
increased our total assets to almost $40 million, reduced our debt
by almost half, and look forward to monetizing our non-mining
assets and eliminate our debt and funding new growth. This is the
strongest our balance sheet has been since 2011, with the best
opportunities right in front of us. We thank JC for his
energy, passion and contributions and wish him the very best
success in his future endeavors.”
The following sequence of pro formas represents
additional near-term improvements of Comstock’s financial position
over the next four months, giving effect to the elimination of
debts and other obligations, including the Northern Comstock JV
obligations and transitioning to a debt free, NCJV obligation-free,
well-funded Company. The Company has not raised equity in 2020, and
looks forward to the non-mining asset sales for eliminating debt
and funding growth. The Company expects over $5 million in proceeds
from Tonogold and $10 million in proceeds from non-mining assets
sales, both under existing agreements, for achieving the estimated
pro forma results below.
(US$ in thousands, except per share data.
Non-GAAP) |
Pro Forma - UnauditedLucerne Sale
(50%)12/31/2019 |
Pro Forma EstimatePost Silver Springs
Sales3/31/2020 |
Pro Forma EstimateLucerne & 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 (1) |
$ |
1,539 |
$ |
1,539 |
$ |
-0- |
Industrial Land & Water (Silver Springs) |
|
2,739 |
-0- |
-0- |
Commercial Land (Downtown Silver Springs) (2) |
|
3,590 |
-0- |
-0- |
|
|
|
|
Daney Ranch and Gold Hill Hotel |
|
2,625 |
|
2,625 |
|
478 |
Total Assets Held For Sale |
$ |
10,493 |
$ |
4,164 |
$ |
478 |
Cash Obligation Due-From-Tonogold |
$ |
5,275 |
$ |
3,450 |
$ |
-0- |
Tonogold Convertible Preferred Stock (3) |
|
9,195 |
|
9,195 |
|
9,195 |
Total Assets Intended for Sale/Monetization |
$ |
24,963 |
$ |
16,809 |
$ |
9,673 |
Debt and
Other Obligations |
|
|
|
Senior Secured Debenture |
$ |
4,929 |
$ |
$ -0- |
$ |
-0- |
Northern Comstock JV |
|
6,590 |
|
6,500 |
-0- |
Equipment Financing (CAT) |
|
646 |
|
565 |
-0- |
Total Debt and Other Obligations |
$ |
12,165 |
$ |
7,065 |
$ |
-0- |
|
|
|
|
Total Common Shares Outstanding(4) |
|
27,236,489 |
|
27,236,489 |
|
27,236,489 |
|
|
|
|
- On November 18, 2019, the Company transferred 50% of the
membership interest in Comstock Mining LLC, owner of Lucerne, but
retained entity control.
- Represents the acquisition of the non-mining asset (160-acre
Downtown Silver Springs) parcel in December 2019, contracted to
sell in February, 2020.
- Represents Convertible Preferred Stock from Tonogold with a
stated value of $6,100,000 and a fair-market-value of $9,195,000,
as of December 31, 2019.
- Includes 1,833,332 restricted common shares privately placed in
December 2019, for proceeds of $550,000, and rounding for
fractional shares.
Outlook
Our 2020 annual operating expenses are planned at
$3.9 million, with approximately $2.0 million of that amount
currently being reimbursed from Tonogold resulting in net operating
expenses for 2020, of less than $2 million, excluding any
discretionary exploration and development expenses that would not
occur until assets are sold.
During the first and second quarters of 2020, the
Company expects to receive an additional $5.2 million in cash from
Tonogold toward their purchase of 100% of the membership interest
in Comstock Mining LLC, the entity that owns the Lucerne
properties. The CPS has a fair market value at December 31, 2019,
of $9.2 million, and we plan on monetizing a portion of the CPS
during the second half of 2020, depending on price performance and
liquidity.
During the first quarter of 2020, the Company
expects to close on the agreed upon sale of the non-mining assets
located in Silver Springs, NV, for total net proceeds of $10.1
million. The agreements were signed in September, with $0.4 million
of non-refundable deposits made into escrow. The Company will use
the remaining $9.7 million of proceeds to extinguish the entirety
of our outstanding Senior Secured Debenture principal and
make-whole obligations of approximately $4.9 million, plus accrued
interest of $0.1 million.
Tonogold is currently planning and permitting a
drilling program for the northern exploration targets and expects
to begin drilling in the second quarter of 2020. Under the Mineral
Exploration and Mining Lease, Tonogold must spend at least $1.0
million per year on exploration with 2020, being the first year of
the mineral leases.
The Company’s 2020 plans also include obtaining the
local permits for Dayton in 2019, expanding Dayton’s current
resource with incremental exploration programs that include
exploration and definition drilling of targets identified by
geophysical surveys, surface mapping, prior drilling and deeper
geological interpretations that all lead to publishing an updated,
NI 43-101 compliant, mineral resource estimate for the Dayton.
MCU plans to commence trial operations in March
2020, on the Comstock, to validate and fine-tune the mercury
extraction and remediation process, with the objective of
reclaiming and remediating the Company’s existing properties within
the Carson River Mercury Superfund Site (CRMSS), enhancing their
values of, and evaluating the potential economic feasibilities for,
these properties and creating new global growth opportunities in
mercury remediation by demonstrating MCU’s technological and
operational effectiveness, efficiency and feasibility.
MCU has agreed to and plans to commence reclamation
operations in the second quarter 2020, in the Philippines. This
represents our first international project for large-scale mercury
remediation and environmental reclamations, using MCU’s system.
Testing and staging are expected to commence in March, 2020, and
Oro will commence the manufacture of the mercury remediation
systems this month with planned delivery in June and July 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 |
Comstock (AMEX:LODE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Comstock (AMEX:LODE)
Historical Stock Chart
From Sep 2023 to Sep 2024