Comstock Mining Inc. (“Comstock” or the “Company”) (NYSE American:
LODE) today provided updates on key components of the Company’s
strategic objectives, including updates on its strategic investees,
Mercury Clean Up LLC (“MCU”) 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 strategic advancements with its new
ventures, including its recent investment in and partnership with
Mercury Clean Up LLC and recent investments in and by Sierra
Springs Opportunity Fund Inc.
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, “MCU
has engaged its first international remediation project, signing a
landmark, definitive agreement with Clean Ore Solutions, and
forming a joint venture where MCU will lead and partner in a major
mercury remediation and rehabilitation project in the Philippines.
Additionally, SSOF has acquired and owns 100% of Silver Springs
Regional Airport LLC and Sierra Clean Processing LLC, a 180,000
plus square foot manufacturing facility adjacent to the Silver
Springs Regional Airport.”
MCU Signs Landmark International Joint Venture
Agreement
In 2017, over 125 countries and signatories adopted the Minamata
Convention, an international treaty that pushes governments to
reduce mercury pollution. The treaty bans the mining of mercury
ores, requires implementation of the most up-to-date mercury
reduction technologies, and instructs mercury-using industries to
stop using by 2020.
In June 2019, Comstock Processing LLC, joined 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 and remediate mercury, and contained metals,
from soils and tailings.
On February 7, 2020, MCU signed a definitive joint venture
agreement with Clean Ore Solutions OPC (“COS”), to partner and lead
in a major mercury remediation project located in the
Philippines. The joint venture will be named Clean Mineral
Recovery Technologies (“CMRT”), and be between COS (60%) and MCU
(40%), with the goal of removing mercury in accordance with
government sponsored mercury remediation plans (the “Philippines
Project.”)
MCU and COS shall work closely on securing all of the joint
ventures rights to the Philippines Project and securing and
maintaining all pertinent government permits and approvals using
MCU’s mercury remediation technologies. A seven-member JV Board
shall include three members from MCU, with equipment deliveries
expected this summer.
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, NGO’s,
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 and MCU have also secured the necessary Nevada permits
and approvals and are beginning to mobilize equipment to commence
sampling this week. The state-of the-art mercury remediation
equipment is also scheduled to begin arriving on site this week.
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 for 25% of MCU and other rights that can result
in Comstock receiving up to 62.5% of the profits for each mercury
remediation opportunity.
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
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.
During 2019, SSOF raised over $11 million and acquired Silver
Springs Regional Airport LLC and an adjacent, 180,000 plus square
foot manufacturing complex (shown below), both as qualifying
opportunity zone businesses.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/85f4599c-ae32-4170-8fcd-5c52452cf4bb
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 received an additional $100,000
deposit (totaling over $400,000 escrowed) toward the purchase of
these properties. The closing dates for these sales is now
February 28, 2020. The Company has reduced its debenture down
to approximately $4.8 million, and upon completion of the
non-mining asset sales, the Company’s remaining debt will be
eliminated, plus initial funding for the Company’s growth.
Liquidity and Capital Resources
The following sequence of pro formas represents the near-term
transition of Comstock’s financial position over the next 6 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. 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 Sales2/28/2020 |
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 |
$ |
4,450 |
$ |
-0- |
Tonogold Convertible Preferred Stock (3) |
|
9,195 |
|
9,195 |
|
9,195 |
Total Assets Intended for Sale/Monetization |
$ |
24,963 |
$ |
17,809 |
$ |
9,673 |
Debt and
Other Obligations |
|
|
|
Senior Secured Debenture |
$ |
4,929 |
$ |
-0- |
$ |
-0- |
Northern Comstock JV |
|
6,620 |
|
6,320 |
|
-0- |
Equipment Financing (CAT) |
|
646 |
|
593 |
|
-0- |
Total Debt and Other Obligations |
$ |
12,195 |
$ |
6,913 |
$ |
-0- |
|
|
|
|
Total Common Shares Outstanding(4) |
|
27,236,489 |
|
27,236,489 |
|
27,236,489 |
|
|
|
|
(1) On November 18, 2019, the Company transferred 50% of the
membership interest in Comstock Mining LLC, owner of Lucerne, but
retained entity control.(2) Represents the acquisition of the
non-mining asset (160-acre Downtown Silver Springs) parcel in
December 2019, contracted to sell in February, 2020.(3) 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.(4) Includes 1,833,332 restricted common shares privately
placed in December, 2019, for proceeds of $550,000, and rounding
for fractional shares.
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 ($11.2 million in
cash, $7.6 million in FMV of stock received and over $7.2 million
in assumed liabilities) of tangible value to Comstock. The
agreement also subsidizes $2.2 million in annualized savings and
retains a 1.5% NSR royalty on Lucerne plus future rents payable
under a Lease-Option for using the Company’s processing facilities.
These agreements are expected to and may deliver additional
value to Comstock of $20-$35 million based on Tonogold’s final mine
plans.
Tonogold is current on payments to date and the remaining $5.175
million in cash owed to the Company represents a secured obligation
of Tonogold with payments continuing through June 2020. The stated
value of the $6.1 million in Tonogold Convertible Preferred Stock
was valued at $7.6 million, when received, and was subsequently
valued at $9.15 million at December 31, 2019, by an independent
third-party valuation firm.
Value Proposition
Comstock’s foundational value starts with its land, water and
mineral rights on and in its mineral properties on the historic,
world-class Comstock Lode, and our planned growth from Comstock’s
existing mineral properties, including planned resource
developments, and new, clean-technology-based ventures from its
permitted platform.
This permitted platform includes the 100% owned Comstock
Processing LLC, 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.
The following table summarizes the components of Comstock’s
announced strategies, and upward arrows identifying areas of recent
progress, based on the estimated potential of future value
contributions for the Company (with the low representing the most
known and quantifiable and the high representing least known or
most nascent):
(Dollars in
millions) |
Valuation Targets(1) |
Strategic Value Proposition |
|
|
High |
Investment in the Sierra Springs Opportunity Fund,
Inc. |
$ |
3.3 |
↑ |
$ |
115.0+ |
Mercury Clean-up –
International Project #2 |
|
25.0 |
|
|
62.5+ |
Mercury
Clean-up – Clean Mercury Recovery Technology
(Philippines) |
|
25.0 |
↑ |
|
62.5+ |
Mercury
Clean-up – Comstock Remediation Project (USA) |
|
1.7 |
↑ |
|
20.0+ |
Leach Material
Reprocessing – Comstock Project |
|
7.0 |
|
|
60.0+ |
Dayton Mineral
Resource Development |
|
40.0 |
|
|
120.0+ |
Lucerne Mineral Resource Development |
|
26.0 |
↑ |
|
60.0+ |
Initial Consolidated Comstock Value Target
Ranges |
$ |
128.0 |
|
$ |
500.0+ |
(Dollars in
millions) |
Valuation Estimate |
Non-Mining Assets |
Low |
High |
Non-Mining Senior Water Rights |
$ |
4.5 |
↑ |
$ |
4.5 |
Non-Mining
Land Values |
|
5.6 |
↑ |
|
10.0 |
Residual Land Values (post-reclamation) |
|
24.0 |
|
|
32.0 |
Total Base Land Value |
$ |
34.1 |
|
$ |
46.5 |
Note (1): Valuation Targets represent management
estimates (please see forward looking statements at the end of this
release).
Mr. De Gasperis concluded, “We are making remarkable progress
since the fourth quarter of last year. MCU has both signed
onto its first international remediation project and commenced
drilling on the Comstock, with equipment scheduled to begin
arriving in Nevada this week. The launch of SSOF and the OZ
Funds closing on $11 million in new capital increased the value of
Comstock’s investment to over $3 million. SSOF also closed on
its first acquisitions, including Silver Springs Regional Airport
LLC and the 180,000 plus square foot Sierra Clean Processing LLC,
manufacturing facility and looks to close on the $10+ million
purchase from Comstock this month. The platform is positioned
for tremendous growth and we are starting to realize the higher
values for this progress.”
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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