Comstock Mining Inc. (the “Company”) (NYSE American: LODE) today
announced selected unaudited financial results for the fiscal
quarter ended June 30, 2019.
Second Quarter 2019 Selected Strategic
Highlights
- Received $3.1 million in non-refundable cash deposits toward
the Lucerne Sale;
- Received $3.92 million in non-refundable stock payments toward
the Lucerne Sale, valued at $5 million;
- Amended the Lucerne sale agreement with Tonogold, ensuring a
near-term, third quarter closing;
- Completed corporate and legal realignment positioning future
business growth;
- Partnered and launched Mercury Clean Up LLC, a mercury
remediation, clean technology growth venture;
- Completed concurrent reclamation and reduced reclamation bond
liabilities; and
- Received a most favorable ruling associated with the Dayton
Resource zoning.
Selected Financial Highlights for
the six-months ended June 30, 2019
- Total costs and expenses were $3.1 million for YTD Q2 2019,
compared to $3.9 million for YTD Q2 2018, a reduction of $0.8
million or 20%, primarily from lower environmental and mining
costs.
- Net loss was $3.9 million, or ($0.05) loss per share for YTD Q2
2019, as compared to net loss of $4.9 million, or ($0.09) loss per
share for YTD Q2 2018, primarily from the lower costs and
expenses;
- Net cash used in operations was $1.6 million for YTD Q2 2019,
as compared to a net use of $2.2 million for YTD Q2 2018, primarily
resulting from lower costs and expenses and lower working capital
uses;
- Net cash provided by investing activities was $1.9 million for
YTD Q2 2019, with approximately $3.1 million provided by
non-refundable deposits offset by $1.1 million used for property
purchases;
- Net cash used in financing was $0.6 million in YTD Q2 2019,
primarily from $1.9 million in principal repayments of long-term
debt, offset by $1.3 million in net cash proceeds from common stock
issuances;
- Common shares outstanding at June 30, 2019, and August 6, 2019,
were 85,500,000 and 94,991,386 shares, respectively, with the
latter including 4,500,000 shares for our investment in Mercury
Clean Up LLC; and
- Cash and cash equivalents at June 30, 2019, were $0.1 million,
with an additional $1.1 million cash received on July 1, 2019, from
the issuance of 1,274 shares of preferred stock.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
focus on realigning and transforming the Company and its balance
sheet is finally coming to fruition. We have now received $3.4
million in non-refundable cash deposits and stock valued at $5
million for the Lucerne sale, launched a globally-focused mercury
remediation business with world-class technology and experience and
facilitated the formation of an opportunity zone fund that will
monetize our assets and further fund these strategic ventures, all
while continuing to lower our operating costs.”
Corporate Realignment
During the first quarter of 2019, the Company’s Board of
Directors approved the sale of the Lucerne mine and a
transformational strategy focused on high-value, high
cash-generating, precious metal-based activities, (the “Strategic
Focus”) including, but not limited to, metals exploration,
engineering, resource development, economic feasibility
assessments, mineral production, metal processing and related
supply chain acquisitions and ventures of environmentally-friendly,
conservation-based, economically enhancing mining technologies and
processes. During the second quarter of 2019, the Company
completed the realignment such that all of the Lucerne properties
are now wholly owned or controlled by Comstock Mining LLC, the
entity that Tonogold Resources Inc. (“Tonogold”) will acquire in
purchasing the Lucerne properties. The Company also launched a new
venture through Mercury Clean Up LLC, a globally-oriented, clean
technology-based, mercury remediation business.
Comstock Corporate Realignment Legend
Comstock Mining Inc. is the parent company that wholly owns the
realigned subsidiaries.
- Comstock Processing LLC owns all of the processing facilities,
the fully permitted and infrastructrured platform and additional
lands.
- Comstock Exploration & Development LLC owns or controls the
Lyon County mining claims (Dayton and Spring Valley).
- Mercury Clean Up LLC is a strategic investee of Comstock
Processing LLC formed for global mercury remediation.
- Comstock Mercury Remediation LLC is the agreed upon but yet to
be formed 50-50 joint venture of MCU.
- Comstock Northern Exploration LLC owns or controls the
remaining Storey County mining claims located north of
Lucerne.
- Comstock Mining LLC owns or controls all the Lucerne
properties, including those contained in Northern Comstock Joint
Venture (“NCJV”) and represent the entities that are being
transferred and/or assigned to Tonogold.
- Comstock Industrial LLC and Downtown Silver Springs LLC own the
Silver Springs properties (98-acre certified industrial park) and
senior water rights and the (160-acre commercial development) that
are being sold to the opportunity zone fund for over $10
million.
- Comstock Real Estate Inc. owns the Gold Hill Hotel and the
Daney Ranch listed for sale for a combined $5 million.
Mercury Clean Up LLC and Comstock Mercury Remediation
LLC
On June 21, 2019, Comstock 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 from tailings and industrial effluents derived
from mining and other industrial applications. MCU has the
exclusive worldwide rights to the proprietary mercury treatment
system (the “Mercury Remediation System.”) MCU, in partnership with
Comstock, will deploy that solution globally.
MCU will demonstrate the feasibility of the Mercury Remediation
System within the historic, world-class, Comstock Lode mining
district. Comstock will provide the platform for testing the
Mercury Remediation System and MCU will conduct the initial trials
starting with 2 tons per hour pilot operation that could scale up
to 25 tons per hour and deliver the final feasibilities. Comstock
and MCU would enable the 50-50 venture called Comstock Mercury
Remediation LLC for pursuing these global business
opportunities.
MCU has already engaged and scheduled meetings for this week
with the Nevada Division of Environmental Protection and will work
closely with our Nevada and U.S. regulators and under Comstock’s
existing Mercury Sampling and Analysis Plan (SAP) and NDEP’s and
the U.S. EPA’s Long Term Sampling And Response Plan (LTSRP). Oro
has commenced manufacturing for the deployment of the 2-25 ton per
hour mercury recovery plant coupled with a 200 gallon-per-minute
dissolved air flotation water recycling treatment plant and field
laboratory. The entire system will be mounted on three separate
trailers for mobility. Initial equipment setup will rest on the
Company’s fully contained, double-lined processing facility.
Comstock and MCU will work closely with the NDEP on all protocols,
including test areas, documentation standards and routine, periodic
reporting towards full technical and economic feasibility processes
over the next 12 to 18 months. Mr. De Gasperis stated, “Both
parties have a proven track record of environmental excellence and
mercury remediation as we solve a critical, global contamination
problem. We have already been contacted with requests for
mercury solutions and we are committed to safe, clean solutions for
global jurisdictions and their miners.”
Lucerne Resource Area
On August 15, 2019, the Company amended the Tonogold agreement
for the sale of its membership interest in Comstock Mining LLC, the
entity that owns the Lucerne properties for $15 million
(representing $11.5 million cash and $3.5 million in stock) plus
the assumption of certain liabilities and a 1.5% NSR royalty on
Lucerne. This amendment results in an additional non-refundable
cash deposit of just under $0.9 million, bringing total pre-close
cash deposits applicable to the purchase to over $4.4 million. The
amendment requires cash payments at closing of over $3.3 million,
bringing the total cash payments to over $7.5 million, and allows
Tonogold to receive a majority membership interest of 50.3% in
Comstock Mining LLC. The remaining $4.0 million in cash owed
represents a secured obligation with scheduled monthly payments of
at least $500 thousand each, starting in November 2019, through May
2020, resulting in Tonogold’s 100% ownership.
The amendment requires an additional $0.6 million in Convertible
Preferred Stock (CPS), due August 30, 2019. The prior option
agreement between Comstock and Tonogold was terminated as a result
the new amendment. This will result in prior option payments of
$2.2 million being recorded as income during the third quarter of
2019. Dayton Resource Area
The Company recently announced the Third Judicial District Court
of the State of Nevada ruled in favor of the Company and Lyon
County on the one remaining Due Process rights claim associated
with the Lyon County Board of Commissioners Master Plan amendment
and zone change associated with the mineralized properties within
the Company’s Dayton Resource Area, just south of the Company’s
Lucerne properties and near Silver City, Nevada. The Company is now
advancing the Dayton Project to full feasibility assessment. The
Company’s technical staff is currently compiling a detailed
structural interpretation of the Dayton resource area, which will
provide the framework for the 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 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.
Asset Sales, Liquidity & Capital Resources
The Company had total assets of $34.2 million, total current
assets of $11.7 million, current liabilities of $10.6 million and
net current assets of $1.1 million, including cash and cash
equivalents of $0.1 million at June 30, 2019. The Company
received net proceeds of $1.1 million on July 1, 2019, from the
issuance of preferred stock. The Company’s current capital
resources include cash equivalents and other working capital
resources plus existing equity and debt facilities. These resources
are in addition to planned non-mining asset sales with expected
cash proceeds of over $15 million and the additional cash proceeds
from the Tonogold transaction of over $8 million. The Company
also received $3.92 million in Tonogold CPS currently valued at
approximately $5 million and is due an additional $580 thousand of
CPS by August 30, 2019. The entire $4.5 million of the CPS is
convertible May 22, 2020, at a conversion price representing the
lowest of (1) the 20-day volume weighted closing price of Tonogold
shares prior to conversion, (2) Tonogold’s most recent private
placement or (3) Tonogold’s public offering price. Tonogold expects
to close by August 30, 2019, or extend until September 30, with
another $250 thousand in CPS. The Company’s outstanding common and
preferred shares on August 6, were 94,991,386 and 1,000,
respectively. Reclamation
The Nevada Division of Environmental Protection’s (NDEP) Bureau
of Mining Regulation and Reclamation (BMRR) approved a reduction in
the Company’s Lucerne reclamation bonding requirement from several
successful environmental reclamation and restoration efforts. Along
State Route (SR) 342, just south of Gold Hill, Nevada, the Company
also completed a variety of reclamation and/or environmental
restorations, using progressive earthwork. Mr. De Gasperis stated,
“This restoration work was performed concurrently with mining from
2013 through 2015, and our reclamations were innovative, timely,
efficient and especially effective for the regrading and
revegetation efforts. The current reclamation obligation has been
reduced down to $6.75 million from over $7.10 million.” In 2015 and
2017, the Company received Nevada Excellence in Mine Reclamation
Awards from a committee comprised of NDEP’s BMRR, Nevada Division
of Minerals, Nevada Department of Wildlife, Bureau of Land
Management (BLM) Nevada, and the U.S. Forest Service. In 2018, the
Company also received the U.S. Department of the Interior BLM’s
Reclamation and Sustainable Mineral Development Award.
Outlook
The Company’s 2019 operating expenses were planned at $4.0
million, but effective June 1, 2019, approximately $2.2 million of
that amount, prospectively, is being reimbursed under the existing
Tonogold agreement to purchase Lucerne, resulting in more than $1
million in additional, annualized savings. 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 new partners such as MCU and Oro Industries
Inc., and others, and includes reclamation and enhanced mineral
recoveries that present nearer term revenue opportunities for us,
potentially enhance the economic feasibilities of our existing
properties and new global growth. The Company expects to
close on the sale of the Silver Springs properties during the
fourth quarter of 2019, for total net proceeds of over $10 million,
in addition to over $8 million in cash proceeds from the Tonogold
sale. The Dayton resource area will now be the Company’s top
wholly-owned exploration and mine development target. The Company
is developing a completely new geological interpretation that will
be used for a new resource estimate. The new geological
interpretation is also being used to design phased drilling
programs in with high-potential for additional mineral resources.
Multiple layout plans for the mine and corresponding processing
facilities have been conceptually developed and located on lands
100% privately held by the Company, thus simplifying and shortening
the critical permitting chain. The Company plans to issue a new,
stand-alone Dayton resource technical report, followed by a
preliminary economic assessment in the fourth quarter 2019. The
Company expects to announce progress on the MCU and other ventures,
all designed for profitable revenue growth, during the third and
fourth quarters of 2019. The ventures and our strategic partners
will be showcased during our annual meeting, planned for October
31, 2019, at the Gold Hill Hotel in Gold Hill, Nevada.
Conference Call
The Company will host a conference call today, August 15, 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 number for the live
audio are as follows:
Toll Free: 1-800-263-0877
Conference ID: 1232689
The audio will be available, usually within 24
hours of the call, on the Company website:
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, 2018, 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
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/f99d7de7-18a6-4190-8845-c29c9e6f4f52
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