Comstock Mining Inc. (the “Company”) (NYSE American: LODE) today
announced selected unaudited financial results for the fiscal
quarter ended March 31, 2019.
First Quarter 2019 Selected Strategic
Highlights
- Executed the definitive agreement (the “Tonogold Agreement”)
for the sale of the Company’s Lucerne properties to Tonogold for
total consideration of approximately $23 million, consisting of
$11.5 million in cash, $3.5 million in stock and $8.0 million in
assumed liabilities, plus future royalties;
- Received $2 million in non-refundable deposits and reduced
debenture principal to $7.9 million;
- Received commitments for an additional $1 million in
non-refundable deposits in Q2 2019;
- Granted Tonogold an option, upon the Lucerne closing, to lease
American Flat processing facility for:• $1 million per annum, plus
$1 per ton until $15 million received by the Company;• $1
million per annum, plus $0.50 per ton for the next $10 million
received ($25 million total); and• $0.25 per ton for all tons
processed after the Company receives $25 million.
- Executed agreements to sell the Silver Springs non-mining
assets for $9.75 million;
- Commenced the realignment of the Company’s organizational
structure for optimizing future growth; and
- Advanced negotiations of multiple, clean technology ventures
for revenue growth.
First Quarter 2019 Selected Financial
Highlights
- Environmental and reclamation expenses achieved a record low of
$0.05 million in Q1 2019, an 8% reduction as compared to $0.06
million in Q1 2018, driven by higher 2018, site-water management
costs;
- General and administrative expenses were lower at $0.66 million
in Q1 2019, a 9% reduction as compared to $0.73 million in Q1 2018;
driven by lower net administrative costs;
- Net loss was $1.8 million, or ($0.02) loss per share for Q1
2019, as compared to net loss of $2.5 million, or ($0.05) loss per
share for Q1 2018, primarily from lower operating and
acquisition-related expenses;
- Net cash used in operations was $0.9 million in Q1 2019, as
compared to a net use of $1.1 million in Q1 2018, primarily
resulting from lower operating expenses and lower uses for working
capital;
- Net cash provided by investing activities was $1.6 million in
Q1 2019, substantially all from the $2.0 million in non-refundable
deposits from Tonogold, offset by $0.4 million used toward property
purchases;
- Net cash used in financing was $0.8 million in Q1 2019,
primarily reflecting $1.6 million in principal payments in long
term debt, offset by $0.8 million in cash proceeds from the
issuance of common stock;
- Cash and cash equivalents at March 31, 2019, were $0.3
million;
- Received additional $0.35 million in cash for non-refundable
deposits by May 3, 2019;
- Expect an additional $0.65 million in cash for non-refundable
deposits by May 24, 2019; and
- Common shares outstanding at March 31, 2019, were 80,790,273
shares.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
year over year costs are down, primarily from net reductions in our
environmental and administrative expenses. The Tonogold Agreement
ensures further reduced operating and interest expense reductions
of approximately $2 million per annum, effective June 1, 2019.”
Lucerne Resource Area
On January 24, 2019, the Company entered into the Tonogold
Agreement for the sale of its Lucerne properties (~1200 acres) to
Tonogold for $15 million which, upon closing, replaces the option
agreement announced in October of 2017.
On April 30, 2019, the Tonogold Agreement was amended (the
“Amendment”), allowing Tonogold the option to extend the closing
for three additional months, upon the payment of three additional
$1 million non-refundable deposits and other considerations. The
Amendment contemplates that Tonogold will pay the Company $11.5
million in cash and $3.5 million in an interest-bearing,
convertible note at closing. The Amendment also requires Tonogold
to reimburse the Company for the monthly interest expense on the
Company’s Senior Secured Debenture, and over $1 million in annual
operating expenses associated with the American Flat platform, both
beginning on June 1, 2019, regardless of when the Lucerne sale
closes.
Additionally, Tonogold is in advanced stage negotiations
with a third party over securing additional significant claims in
Storey and Lyon County, with the Company’s concurrence and support,
that enhances the scope and potential of the Lucerne project and is
conditioned upon: (a) closing the sale of the Lucerne properties;
(b) Tonogold assigning certain Lyon County patented and unpatented
mining claims to the Company for no additional consideration; (c)
the new Storey County claims to be acquired by Tonogold being
subject to the NSR Royalty Agreement with the Company and (d)
Tonogold assigning any royalty interests owned on the Company’s
existing Dayton property patented and unpatented claims package to
the Company.
According to Tonogold’s public statements, Tonogold has secured
significant interest for funding the purchase of the Lucerne
properties and is finalizing negotiations with optimal terms and
allocations. Tonogold has also stated that it has executed a
term sheet for a $5 million debt financing with the option for
drawing an additional $25 million for development, production
start-up and working capital, subject to customary due diligence
and closing conditions. Tonogold also stated they have engaged Mine
Development Associates ("MDA") of Reno, Nevada to undertake and
complete a 43-101 compliant Preliminary Economic Assessment ("PEA")
on the Lucerne Deposit. The 43-101 compliant PEA is expected
to be completed by July 2019.
Mr. De Gasperis commented, “Tonogold has made consistent
progress toward acquiring the Lucerne mine and has worked
effectively to secure sufficient strategic investment capital for
closing this transaction and funding Lucerne development. We
have received $2.35 million in non-refundable deposits with an
additional $0.65 million due in the next 2 weeks. These payments
will bring our Debenture principal down to $7.2 million. These
results are truly outstanding and we look forward to closing
transaction in the next few months.”
Dayton Resource Area The Company plans to
advance the Dayton Project to full feasibility assessment, with a
production ready mine plan within two years of commencing that
work. This work has not yet commenced but with the completion of
the Lucerne transaction, the Company should have the capacity and
wherewithal for advancing the plan.
The Company also plans continuing its exploration activities
southerly into Spring Valley 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 will all lead to
publishing an updated, NI 43-101 compliant, mineral resource
estimate for the Dayton Project and the expanded exploration
opportunities in Spring Valley during 2019. The Company has also
commenced collaborating on community development planning
activities in Silver City associated with Dayton Mine planning and
expects to begin local permit activities in 2019, for the Dayton
Project following those planning activities.
Corporate Realignment
During the first quarter of 2019, the Company’s Board of
Directors determined that it would be in the best interests of the
Company and its stockholders to implement a strategy (the
“Strategic Focus”) focused on high-value, high cash-generating,
precious metal-based activities, including, but not limited to,
metals and mining and related supply chain asset acquisitions,
exploration, engineering, resource development, economic
feasibility assessment, mineral production, metal processing and
environmentally-friendly, conservation-based, economically
enhancing mining technology and processes. The Board
commenced realigning its assets in the first quarter of 2019.
The Board also determined to facilitate the formation of a new
entity to be named Comstock Capital Partners, LLC (“CCP”) or such
other name deemed appropriate by management of the Company that
qualifies as an opportunity zone fund in accordance with the Tax
Cuts and Jobs Act in order to minimize unnecessary dilution, access
capital efficiently, position the Company to maximize the potential
benefits of the existing Northern Nevada platform in the existing
and potential opportunity zone assets and foster metals and mining
based investments that are consistent with the Strategic Focus.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/015ee819-d599-483f-869b-82ba5d656415
The Company and Comstock Processing LLC, a wholly owned
subsidiary of the Company, are pursuing strategic ventures for
mercury remediation, leach pad, tailings and waste dump
reprocessing and water remediation and purification.
Liquidity & Capital Resources During the
first quarter, the Company received $2.0 million in cash proceeds
from Tonogold and used $1.4 million to pay down Senior Secured
Debenture principal. The Company had total assets of
$28.2 million, total current assets of $10.1 million, current
liabilities of $3.9 million and net current assets of $6.2 million.
The Company’s current capital resources include cash and cash
equivalents and other net working capital resources, along with an
equity sales agreement (the "Sales Agreement") with Murray FO, LLC
("Murray"), with aggregate unused capacity of $5.0 million, for a
5% fee subject to certain volume and pricing restrictions pursuant
to the Company’s shelf registration statement on Form S-3, filed on
February 26, 2019. The 5% fee will be paid with 657,778 restricted
shares and 408,000 unrestricted shares.
These capital resources are in addition to certain planned
non-mining asset sales and proceeds of the transaction contemplated
by the Tonogold Agreement, including an additional $350,000
received from Tonogold through May 3, 2019, and an additional
$650,000 due by May 24, 2019. The Company expects the
Tonogold transaction to close on or before June 21, 2019,
otherwise, an additional $1 million non-refundable deposit becomes
due on that date. On February 25, 2019, the Company entered into
agreements to sell one non-mining asset, that is, the 98-acre
certified industrial site and related water rights, and to sell the
purchase agreements and option on the 160 acres of land, all
located in Silver Springs, NV, for a total of $9.75 million plus a
residual 3% future share of the profit. The transactions are
expected to be finalized in 2019, and the Company expects to record
gain of about $5 million. The shares outstanding on May 9, 2019,
and March 31, 2019, were 81,290,273 and 80,790,273,
respectively.
Outlook The Company’s annual operating expenses
are planned at $3.8 million, with approximately $1.2 million of
that amount currently being reimbursed under the existing Tonogold
Option Agreement. The Company anticipates over $1 million in
additional, annualized savings from the Tonogold Amendment,
effective June 1, 2019, regardless of when the transaction
closes. The transaction would also result in an early
extinguishment of its approximate $7.9 million outstanding Senior
Secured Debenture obligation, eliminating more than $1 million in
annualized interest expense. Theses interest savings will also be
effective June 1, 2019, regardless of when the transaction
closes.
The Company’s second half 2019 plans include advancing the
commercialization of certain mining and processing technologies
that the Company has been collaborating on, with partners such as
Itronics Inc., and Oro Industries Inc., and others, and includes
reclamation and enhanced recoveries that present nearer term
revenue opportunities and potentially enhance the economic
feasibilities of our existing properties. The Tonogold
Amendment supports these opportunities by reaffirming the Company’s
right to use the American Flat PP&E for any purpose that does
not materially interfere with Tonogold’s processing plans,
including but not limited to, testing, reprocessing, removing,
and/or selling previously stacked and leached material.
The Company expects to announce various ventures and alliances,
all designed for profitable revenue growth, during the second and
third quarters of 2019. The ventures and our strategic partners
will be showcased during our annual meeting, planned for early
September 2019, at the Gold Hill Hotel in Gold Hill, Nevada.
Conference Call
The Company will host a conference call today, May 9, 2019, 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. The dial-in telephone numbers for the live audio
are as follows:
Toll Free: 1-888-241-0551
International Direct: 1-647-427-3415
Conference ID: 8058709
The audio will be available, usually within 24
hours of the call, on the Company website:
http://www.comstockmining.com/investors/investor-library
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 and developments that are economically feasible and socially
responsible. 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: future industry market conditions; future
explorations or acquisitions; future changes in our exploration
activities; future prices and sales of, and demand for, our
products; land entitlements and uses; production capacity and
operations; operating and overhead costs; future capital
expenditures and their impact on us; operational and management
changes (including changes in the board of directors); changes in
business strategies, planning and tactics; 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; including the nature and timing and
accounting for restructuring charges, derivative liabilities and
the impact thereof; contingencies; environmental compliance and
changes in the regulatory environment; offerings, limitations on
sales or offering of equity or debt securities; including asset
sales and the redemption of the debenture 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 this report and our Annual Report on Form
10-K for the fiscal year ended December 31, 2017, and the
following: 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 our title to
properties; potential dilution to our stockholders from our stock
issuances, 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 our businesses;
permitting constraints or delays; business opportunities that may
be presented to, or pursued by, us; acquisitions, joint ventures,
strategic alliances, business combinations, asset sales, and
investments that we may be party to in the future; changes in the
United States or other monetary or fiscal policies or regulations;
interruptions in our 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 our 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; assertion of
claims, lawsuits and proceedings against us; 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 or the solicitation of an offer to buy
the Debenture or 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
Comstock (AMEX:LODE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Comstock (AMEX:LODE)
Historical Stock Chart
From Apr 2023 to Apr 2024