Comstock Mining Inc. (the “Comstock” or “Comstock Mining”) (NYSE
American: LODE) today announced selected strategic business
updates.
Third Quarter 2019 Selected Strategic
Highlights
- Facilitated the launch of an independent, qualified opportunity
zone fund, Sierra Springs Opportunity Fund Inc., whose wholly-owned
qualified opportunity zone business, Sierra Springs Enterprises
Inc., has:° Secured Lyon County approval for acquiring the Silver
Springs Regional Airport;° Secured and escrowed new agreements for
acquiring Comstock’s Non-mining Property;° Secured and escrowed
150,000 square foot, state-of-the-art manufacturing and processing
facility;° Secured an Option on approximately 2,000 acres of land
and 1,500 acre-feet of water rights;° Secured high-quality, high pH
(9.2+) water rights from Tahoe-sourced spring water; and°
Consolidated the aforementioned properties and water rights in a
qualified opportunity zone.
- Advanced Mercury Clean Up LLC, a mercury remediation, clean
technology growth venture;
- Amended the Lucerne sale agreement with Tonogold, with closing
scheduled this month;
- Leased the Occidental Lode and other mineral claim targets with
near-term exploration plans; and
- Hired Juan Carlos (“JC”) Giron, Jr., as President & CFO,
accelerating the Company’s strategic plans.
During the first quarter of 2019, the Company’s 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, metals
exploration, engineering, resource development, economic
feasibility assessments, mineral production, metal processing and
related ventures of environmentally-friendly, and economically
enhancing mining technologies.
The Company advanced the Strategic Focus by facilitating the
formation of a qualified opportunity zone fund named Sierra Springs
Opportunity Fund Inc. and Sierra Springs Enterprises Inc., its
qualified opportunity zone business. Sierra Springs Enterprises,
Inc. has formally agreed to acquire Comstock’s non-mining assets
and has also secured over a dozen independent projects, including
the development of the Silver Springs Airport, a centrally located
regional airport, the acquisition of certain exceptionally well
located and adjacent lands and water rights, and the rights to a
number of conservation-based, non-mining businesses. These
businesses include a Tahoe-based, high pH spring water, an
agricultural-ready manufacturing and processing facility and a
business to manufacture and sell a totally compostable green bottle
and cap, designed to displace single-use petroleum-based
plastics.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
focus on realigning and transforming the Company is accelerating,
especially with the addition of JC to our team. Our 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 platform. The formation of the Sierra
Springs Opportunity Fund enables our goal by first facilitating the
sale of our non-mining assets and then enabling a meaningful asset
consolidation of ideally located and strategically positioned
investments in Silver Springs.”
Comstock Mining’s Corporate Realignment
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/fac8505e-ace9-464c-a319-f461d3f790c5
Sierra Springs Opportunity Zone Fund Inc. and Sierra
Springs Enterprises Inc.
Last year, the U.S. Treasury confirmed that all of Storey
County, NV, and significant parts of Silver Springs, NV, had been
certified as Qualified Opportunity Zones. We are actively engaged
in plans to enhance our mining and non-mining assets and core
competencies in these locations, including an expanded land, water
and technology portfolio, to maximize the value of our platform,
first and foremost by selling our non-mining assets. Sierra Springs
Opportunity Fund Inc. was formed to capitalize on the
extraordinary, explosive growth of high-tech industries in northern
Nevada and its qualified zones and has already secured the rights
to thousands of developable acres of land and more, 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 and its over 100 businesses.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/4fc77477-1ce8-4aa0-a663-371e419adddd
Comstock will passively own approximately 9.5% of the Sierra
Springs Opportunity Fund Inc. Mr. De Gasperis and a diverse team of
qualified financial, capital markets, real estate and operational
professionals will govern, lead and manage the fund, its
investments and operations. The fund owns 100% of Sierra Springs
Enterprises Inc., a qualified opportunity zone business (the
“QOZ-B”), that has secured and consolidated the rights mentioned
above, all located in northern Nevada. These properties are all
ideally situated on the intersections of Highway 50, Interstate 95
and Interstate 80 with a recently connected “USA Parkway” that runs
through the TRI Center, from Interstate 80 to Highway 50 in the
immediate vicinity of Comstock’s properties and home to high-tech
companies such as Google, Panasonic, Switch, Tesla, iJet, Walmart,
Zulily and Blockchains LLC.
Comstock Processing LLC and Mercury Clean Up
LLC
During 2019, Comstock and Comstock Processing LLC, the
wholly-owned subsidiary that 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, Virginia
City, NV, 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
soils, waste and tailings.
MCU has the exclusive, world-wide rights to four patentable
technologies and equipment that we believe will demonstrate
feasible, economic mercury remediation. Comstock provides the
platform for testing the mercury remediation system, and MCU will
conduct the trials that prove scalable feasibility. MCU plans to
deploy the solution globally and is working on at least one major,
international remediation project. Comstock’s award-winning mercury
reclamation experience coupled with MCU’s technology and processing
know-how positions a new, global growth opportunity consistent with
the Company’s Strategic Focus and cash-generating growth plans.
Comstock Exploration & Development (100% owner of
Dayton Resource and Spring Valley Exploration Areas)
For the Dayton resource, Comstock previously discovered a newly
recognized, mineralized, cross-cutting shear zone. An assay sample
of the material identified three feet of 0.246 ounces per ton (OPT)
gold and 3.553 OPT silver. Sampling was expanded and exposed
another 90.8 feet of mineralized shear zone, beginning deep inside
the Dayton adit. This overall sampling program identified precious
metals averaging 0.043 OPT gold and 0.404 OPT silver for the entire
zone, including 7.5 feet averaging 0.121 OPT gold and 0.753 OPT
silver. The Company is proceeding to publish a separate NI 43-101
compliant, updated technical report for the Dayton resource that
supports the subsequent scope of publishing a Preliminary Economic
Assessment (“PEA”) for the Dayton project.
The Company is also continuing its exploration activities
southerly into Spring Valley with plans for incremental exploration
programs that include exploration and definition drilling of
targets identified by geophysical surveys, surface mapping, prior
drilling and deeper geological interpretations that together are
expected to lead to publishing an updated, NI 43-101 compliant,
mineral resource estimate for the Dayton Project and the expanded
opportunities. Comstock Northern Exploration LLC
(Occidental Lode and Other Northern Target Mineral Claims)
Tonogold has commenced further analysis of our northern targets
that we believe is extraordinary, correlating historical data with
modern geological assessments and creating a larger exploration
opportunity. Accordingly, the Company signed a new mineral lease
with Tonogold that commits Tonogold to a minimum of $5 million
towards the exploration of Comstock’s northern mineral claims and
an additional minimum of $5 million for exploration and economic
feasibility development, while eliminating the Company’s related
maintenance costs and retaining the Company’s rights to a 1.5-3.0%
NSR royalty. The Company believes this will accelerate the
development of its northern targets and enhance the value of its
mineral property portfolio and royalty package.
Comstock Mining LLC (100% owner of the Lucerne Resource
Area)
Comstock’s collaborative efforts with Tonogold have evolved
extensively during 2019, resulting in an enhanced sales agreement
that immediately values Lucerne at more than $24 million ($11.5
million in cash, $4.75 million in stock and $8 million in assumed
liabilities) plus a 1.5% NSR royalty on Lucerne’s future production
while already delivering over $2 million in annualized savings. The
Company’s recent agreements require additional cash payments at
closing of $3.625 million, bringing total cash payments to over
$7.5 million, providing Tonogold a majority membership interest of
50.3% in Comstock Mining LLC. The remaining $4.0 million in cash
owed represents a secured obligation of Tonogold with scheduled
monthly payments of at least $650 thousand each due starting in
January 2020, through June 2020. Upon completion of such payments
Tonogold will own 100% of Comstock Mining LLC. Comstock also
terminated the previous option agreement, resulting in prior option
payments of $2.2 million being recorded as income during the third
quarter of 2019.
Outlook
The Company’s 2019 operating expenses were planned at over $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 for 2019. The Company’s
second half 2019, plans include advancing the commercialization of
MCU’s mercury remediation processing technologies. Oro has
commenced manufacturing the 2-to-25 ton per hour mercury recovery
plant and recently completed the critical “Reverse-Helix Spiral
Concentrator” component of the system. The entire system will be
mounted on three separate trailers and will be set up on the
Company’s fully contained, double-lined processing area during the
fourth quarter with an expected start date in January 2020. During
the fourth quarter, MCU will also identify sample locations within
the Carson River Mercury Superfund Site (“CRMSS”) that will be
sampled per an EPA-approved and updated Sampling and Analysis Plan
(“SAP”). Once suitable sites have been identified, bulk samples
will be extracted and transported to the MCU mercury remediation
system located at the Company’s American Flat processing facility.
MCU has also ordered the 200 gallon-per-minute dissolved air
flotation (“DAF”) water treatment plant, also scheduled for
delivery in December 2019.
The Company plans on commencing trial operations in January 2020
that reclaim and remediate its existing properties, enhance the
values of, and potential economic feasibilities for, these
properties and present new global growth opportunities in mercury
remediation by demonstrating MCU’s technological effectiveness and
efficiency. During the fourth quarter of 2019, the Company expects
to close on the agreed upon sale of certain non-mining assets
located in Silver Springs, NV, to Sierra Springs Enterprises Inc.,
for total net proceeds of $10.1 million. The agreements were signed
in September 2019, with deposits currently in escrow. The Company
also expects to close on the sale of 50.3% of the membership
interest in Comstock Mining LLC, owner of the Lucerne properties,
after receiving an additional $3.625 million in cash from Tonogold
in October 2019. The agreement allows them to earn up to 100% of
Comstock Mining LLC, after receiving an additional $4 million in
installment payments in 2020. The Dayton resource area will become
the Company’s top wholly-owned exploration and mine development
target. The Company is developing a completely new geological
interpretation 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 2020. Mr.
Corrado De Gasperis, concluded, “The benefits and value of the
Sierra Springs Opportunity Fund, Sierra Springs Enterprises, MCU,
Dayton, Spring Valley, Tonogold and all of our strategic ventures
will be showcased during our annual meeting, scheduled for November
12, 2019, at the Gold Hill Hotel in Gold Hill, Nevada. We look
forward to overviewing our strategy and introducing our
shareholders to our partners and other stakeholders.”
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: 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 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: 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, 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.151 questions@comstockmining.com
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