Comstock Mining Inc. (“Comstock” or the “Company”) (NYSE American:
LODE) today provided a strategic overview and updates on key
components of the Company’s strategic objectives.
Strategic Focus, Corporate Realignment and
Transformation
In early 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, metals exploration, engineering, resource
development, economic feasibility assessments, mineral production,
metal processing and related ventures of environmentally friendly,
and economically enhancing mining technologies.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/40443112-4fb7-45c9-a355-ad67466f0c76
The Company has advanced the Strategic Focus, first with a legal
entity realignment and then more substantively, with a number of
highly focused and strategic transactions, ventures and partners
that facilitate the Strategic Focus.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our
focus on realigning, transforming and investing into the Company is
driven solely by our desire to reposition the Company, and its
balance sheet, to deliver the maximum equity value from our
existing assets and technology. These opportunities and value
propositions from our entire, hard-asset and clean-technology
platform and existing mineral resources are the result of years of
hard restructuring, repositioning and developments that we are now
capitalizing on. We believe we are deeply undervalued and this
transformation enables us to unlock and deliver shareholder
value.”
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 the planned growth from there is based on Comstock’s
existing mineral resources, planned resource developments, new,
clean-technology-based ventures and its established and permitted
platform. This includes the Company’s crushing, leaching,
processing and metallurgical labs and equipment, where the
Company’s clean-technology platform, joint ventures and
partnerships represent 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):
(#’s 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+ |
(#’s 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 have positioned the permitted
platform and tested multiple processing technologies, and are
currently testing the mercury remediation process technologies for
precious metal processing technologies that we plan on developing
and commercializing. We have also partnered with and expect
to realize $24 million from the sale of Lucerne, plus the potential
of an additional $36 million of additional value from leasing,
processing and royalty agreements already in place. We have also
invested in over 9% of the fully diluted opportunity zone fund
that, based on the land valuations and development plans, is
expected grow to potentially $1-2 billion in value, over the next
10-15 years. The platform has been repositioned for tremendous
value growth.”
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 dollars 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/91eff48d-18b8-45e3-acd7-fc5f9c5d7854
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 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/46616da8-97a0-4c27-93c9-64d639e09d96
Comstock expects its ownership, on a fully diluted basis, to be
approximately 9.5% 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 expects to receive an additional
$300,000 deposit toward the purchase of these non-mining properties
this week. The closing dates for these sales is now extended
to January 31, 2020. The Lucerne sale has already more than halved
the Company’s debt and upon completion of the non-mining asset
sales, the Company’s remaining debt will be eliminated, with
funding for the Company’s planned growth initiatives.
The following sequence of pro formas represents the near-term
transition of Comstock’s financial position over the next 2-8
months, giving effect to the elimination of debts and other
obligations, including the Northern Comstock JV obligations and
transitioning to a debt free, JV obligation-free, well-funded
Company, positioned for growth.
(US$ in
thousands, except per share data) |
ActualValue9/30/19 |
Pro FormaLucerne Sale
(50%)11/30/2019 |
Pro Forma Post Silver Springs
Sales1/31/2020 |
Pro Forma Lucerne Sale
(100%)6/30/2020 |
Cash and Cash Equivalents |
$ |
277 |
$ |
1,045 |
$ |
6,700 |
$ |
11,000 |
Assets
Held For Sale and Cash Payments Due |
|
|
Lucerne Properties |
$ |
1,539 |
$ |
769 |
$ -0- |
$ -0- |
Industrial Land &
Water (Silver Springs) |
|
2,739 |
|
2,739 |
-0- |
-0- |
Daney Ranch and Gold
Hill Hotel |
|
2,625 |
|
2,625 |
|
2,625 |
|
487 |
Cash Receivable Due-From-Tonogold |
-0- |
|
5,575 |
|
4,000 |
-0- |
Total Assets Held For Sale &
Due-From-Tonogold |
$ |
6,903 |
$ |
11,708 |
$ |
6,625 |
$ |
487 |
Commercial Land
(Downtown Silver Springs) |
$ |
3,250 |
$ |
3,700 |
$ -0- |
$ -0- |
Tonogold Convertible Preferred Stock (2)(3) |
|
5,650 |
|
5,800 |
|
5,800 |
|
5,800 |
Total All Assets Intended for Sale |
$ |
15,803 |
$ |
21,208 |
$ |
12,425 |
$ |
6,287 |
Debt and Other
Obligations |
|
|
|
|
Senior Secured
Debenture |
$ |
6,419 |
$ |
4,700 |
$ -0- |
$ -0- |
Northern Comstock
JV |
|
7,132 |
|
7,102 |
|
6,922 |
-0- |
Equipment Financing (CAT) |
|
725 |
|
699 |
-0- |
-0- |
Total Debt and Other Obligations |
$ |
14,276 |
$ |
12,501 |
$ |
6,922 |
$ -0- |
|
|
|
|
|
Total Common Shares Outstanding |
|
116,230,203 |
25,394,043(1) |
25,394,043(1) |
25,394,043(1) |
|
|
|
|
|
(1) Represents 126,970,215 outstanding shares on November 25,
2019, that will be reverse split 1:5 into 25,394,043 total
outstanding shares as of November 29, 2019, (excludes 2,269,200
performance-based management incentive shares (not issued) that
were also reverse split into 453,840 available shares.)
(2) 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.
(3) Represents Convertible Preferred Stock received from
Tonogold with a stated value of $5,800 and not yet
fair-market-valued as of November 30, 2019.
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 ($11.5 million in
cash, $5.8 million in stock and over $7 million in assumed
liabilities) of tangible value to Comstock. Comstock also retains a
1.5% NSR royalty on Lucerne plus rents that are payable to Comstock
under a Lease-Option agreement to use the Company’s processing
facilities. The agreements are expected to subsidize $2.2
million in annualized savings and may deliver additional value to
Comstock of $20-$35 million based on Tonogold’s final mine plans.
The remaining $5.575 million in cash owed to the Company represents
a secured obligation of Tonogold with payments continuing through
June 2020.
Comstock Processing LLC and Mercury Clean Up
LLC
During 2019, Comstock Processing LLC, Comstock’s wholly-owned
subsidiary that owns all of the property, plant, and permits at
1200 American Flat Road, near 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, and the
entrapped precious metals, from soils, waste and tailings.
Comstock recently announced that it has received the
prerequisite approvals from the Nevada Division of Environmental
Protection (NDEP) approving the Mercury Remediation Pilot Test
Plant that will be located within Comstock's existing leaching
system. The NDEP (and U.S. Environmental Protection Agency)
approvals for sampling, analysis, and management of historically
contaminated soils on Comstock properties enables MCU to commence
sampling and testing materials. Last week, drilling and sampling
equipment arrived on site and the Company is finalizing the testing
locations for drilling, sampling and testing the mercury and metal
contents.
Mr. De Gasperis continued, “Our team has secured the necessary
permits and we are mobilizing our equipment to commence drilling
and sampling. Our investment is $2 million, secured by the state-of
the-art equipment now arriving on site. The platform is in
place for developing a world-class, state of the art global mercury
remediation system in 2020, and we are targeting domestic and
international opportunities with estimated annualized revenues of
at least $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.”
Comstock Exploration & Development
(100% owner, Dayton Resource & 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 an updated National
Instrument 43-101 (“NI 43-101”) technical report for the Dayton
resource for the purpose of conducting a new preliminary economic
assessment for the Dayton project. The Company’s most recently
updated resource estimates and engineered economic shells with
assumed $1,200 price per ounce of gold equivalents and an $850
gold-equivalent cutoff grade, could represent approximately
$40 million of potential net cash flow. Comstock is now
developing updated geotechnical analysis 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 target a potential doubling to tripling of
the value of the estimated cash flows and such estimates and a
preliminary economic assessment (PEA) will be included in the stand
alone NI 43-101 or comparable U.S. compliant technical report.
Corporate Update and 1-for-5 Reverse Stock
Split and Adjustment of Authorized Shares
The Company plans on completing the non-mining sales by the end
of January 2020, and the Company has agreed to receive additional
deposits of $300,000 into escrow this week for extending the
closing to January 31, 2020. The Company and the New York Stock
Exchange (NYSE) approved and will effect a reverse split of its
common stock, $0.000666 par value (“Common Stock”), at a ratio of
1-for-5 (the “Reverse Split”), effective November 27, 2019. The
Common Stock will begin trading on a split-adjusted basis when the
market opens on November 29, 2019. The Reverse Split will result in
each outstanding five pre-split shares of Common Stock
automatically combining into one new share of Common Stock without
any action on the part of the stockholders. The total number of
outstanding common shares will be reduced from approximately 126
million to approximately 26 million shares. The Company’s
authorized number of shares of Common Stock of the Company will
also be proportionately decreased from 790,000,000 to 158,000,000
shares. The Company also voluntarily applied the reverse split to
its 2011 Equity Plan, reducing available shares from 2,269,200
authorized performance-based management incentive shares (not
issued) to 453,840 available shares. No fractional shares
will be issued as a result of the Reverse Split as any fractional
shares resulting from the Reverse Split will be rounded up to the
nearest whole share. The Board of Directors of the Company approved
the action in accordance with Nevada law (NRS Section 78.207). The
NYSE approved the 1-for-5 reverse stock split on November 22, 2019.
No additional Company or stockholder approval is required because
both the number of authorized shares of Common Stock and the number
of outstanding shares of Common Stock are proportionally reduced as
a result of the Reverse Split, and the Reverse Split does not
adversely affect any other class of stock of the Company and the
Company will not pay money or issue scrip to stockholders who would
otherwise be entitled to receive a fractional share as a result of
the Reverse Split. The NYSE and the Company's transfer agent,
Corporate Stock Transfer, will provide instructions to stockholders
regarding the process for exchanging certificated shares. The
Common Stock will continue to trade on the NYSE American under the
trading symbol "LODE", but will trade under the new CUSIP number
205750300. Mr. De Gasperis concluded, "We have effected this split
simply to satisfy the NYSE American minimum share price requirement
and we are compliant with every other NYSE requirement. We are
strong advocates of the NYSE platform, brand and related
shareholder protections the exchange provides. We consider
this a mechanical change that does not impact our available
capital, strategy, business plans, liquidity, operations or the
intrinsic value of the shares. This action puts the last
uncertainty about our continued listing behind us so we and our
shareholders can now focus solely on growing our equity value, as
described within this release, with a growing investor base."
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.151
questions@comstockmining.com |
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