LODE stock is churning in early trade on January 8, 2020, after the company gave investors an excellent business update.
Comstock Mining Inc. (“Comstock” or the “Company”) (NYSE American: LODE) today provided updates on key components of the Company’s strategic objectives.
In 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, precious-metal exploration, resource development, economic feasibility assessments, mineral production, and related ventures of environmentally friendly and economically enhancing mining and processing technologies. The Company has enabled the Strategic Focus with a legal entity realignment that is facilitating both the disposition of non-mining assets while positioning the development of its 100% owned mineral properties (for example, our Dayton Resource Area and our Spring Valley exploration targets) and a number of highly focused and strategic transactions, ventures and partnerships that facilitate the development of our other mineral properties (for example, Lucerne and our other mineral properties located in Storey County) while advancing investments in new ventures, like Mercury Clean Up LLC and Sierra Springs Opportunity Fund Inc., and its subsidiaries, that successfully acquired the Silver Springs Regional Airport and an adjacent 180,000+ square foot manufacturing facility called Sierra Clean Processing LLC.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Our realignment and transformation has repositioned the Company to first unlock unrealized shareholder value and then create and deliver new value from precious metal based innovations and developments, including our Dayton resource and the MCU joint venture.”
Comstock’s foundational value starts with its land, water and mineral rights on and in the historic, world-class Comstock Lode district, and our planned growth is based on Comstock’s exploitation of existing mineral resources, planned resource developments, new, clean-technology-based ventures from its established and permitted platform.
Mr. De Gasperis continued, “We made remarkable progress with numerous objectives completed during the fourth quarter of last year. During November, we closed on the sale of 50% of the membership interest in Comstock Mining LLC to Tonogold and effectively facilitated the launch of Sierra Springs Opportunity Fund Inc. In late December, Sierra Springs closed on its first acquisitions including the Silver Springs Regional Airport LLC and the 180,000 plus square foot Sierra Clean Processing LLC, manufacturing facility, both completed just before last year end. We also regained full compliance with our NYSE listing and further escrowed deposits on our non-mining asset sales in Silver Springs. The platform is now repositioned for tremendous growth and we are starting to close and realize the value of this progress.”
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 in the new USA Parkway and the four-lane expansion of Highway 50, all converging in Silver Springs, NV.
Comstock expects its ownership, on a fully diluted basis, to be approximately 9% of the SSOF.
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 has received an additional $300,000 deposit toward the purchase of these non-mining properties. The closing dates for these sales is now January 31, 2020. The Company has already reduced its debenture down to approximately $4.9 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 planned growth initiatives.
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 ($11.2 million in cash, $6.1 million in stock and over $7 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. The remaining $5.275 million in cash owed to the Company represents a secured obligation of Tonogold with payments continuing through June 2020. The $6.1 million in Tonogold Convertible Preferred Stock is valued at over $9 million at December 31, 2019.
During 2019, Comstock Processing LLC, 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 and MCU have secured the necessary permits and are beginning to mobilize equipment to commence drilling and sampling. The state-of the-art mercury remediation equipment is scheduled to begin arriving on site this month and the Company is targeting domestic and international opportunities with estimated annualized revenues of $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.
Last week, the Company received a letter from the NYSE American LLC (the “Exchange”), stating that the Company was in full compliance with the Exchange’s continued listing standards set forth in Part 10 of the Exchange’s Company Guide. The Exchange specifically noted that the Company has resolved the Company’s previously announced low selling price deficiency. Effective January 3, 2020, the “.bc” designation, signifying below-compliance with NYSE American listing standards was removed from the Company’s trading symbol.
Mr. De Gasperis, concluded, “We are positioned for value growth and we delivered on our commitment to maintain the NYSE American listing standards and we could not be prouder of our commitment to and collaboration with this world-class platform and the regulatory protections it provides for all of our shareholders. We look forward to delivering on our strategic value propositions and updating our investors on all of our progress throughout 2020.
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.