Tonogold Resources to Acquire 100% of the Lucerne Gold deposit and expands its position on the Comstock Lode (Virginia City, Nevada)

This New Agreement leverages off the agreement entered into in October 2017, under which Tonogold had the right to earn a 51% interest in the Lucerne gold project by investing $20 million into the project over 42-months beginning October 2017. The October 2017, agreement will be superseded by the New Agreement once completion has occurred.

Tonogold will now be seeking a listing on the Toronto Venture Exchange (TSXV) by way of an IPO to coincide with a capital raising in order to provide the funding to complete this acquisition and to fund the advancement of the project over the next 12-months. Further details in this respect (timing, IPO terms, participation rights of current Tonogold shareholders, etc) will be advised to the market in due course.

Under the New Agreement, Tonogold will pay Comstock $15 million, of which a non-refundable deposit of $1 million was paid on January 23rd 2019 (on signing the New Agreement), with the remaining $14 million payable, at Tonogold's election, by either:

1. $9 million cash on Completion plus $5 million cash 12-months from Completion, or
2. $10.5 million cash plus $1.75 million in Tonogold shares (at the IPO price) at Completion plus $1.75 million in cash or, at Tonogold's election, Tonogold shares 12-months from Completion at the weighted average share price at that time.

Under alternative 1 above, Comstock will be granted security in respect of the $5 million deferred payment. Under alternative 2, Comstock will not have any security interest, thus providing Tonogold the flexibility to arrange a third-party debt facility to support the TSXV equity raising.

Completion of the transaction will occur once Tonogold has formally secured the funding required. Under the New Agreement, Completion is scheduled for March 31st 2019, although Tonogold has the right to extend this date to April 30th 2019 by paying Comstock a further $1 million deposit and again to May 31st 2019 for another $1 million. In both cases the additional deposits shall be applied in full to the cash payment due on Completion.

In addition, Comstock will be granted a Net Smelter Return Royalty of 1.5% over future production from Lucerne.

EXPANDED LAND POSITION

Under the October 2017 agreement, Tonogold's right to acquire 51% of the Lucerne project comprised some 1,200 acres of mining claims within Storey County. The New Agreement provides Tonogold 100% control over the 1,200 acres being the Lucerne project plus 100% exploration, development and mining rights (via a lease arrangement) over Comstock's remaining mining claims in Storey County (totaling just over 2,800 acres) ("Tonogold's Expanded Land Position"), which cover major areas of the highly significant past Comstock Lode producers to the north of Lucerne, including the Belcher deposit which operated between 1863 and 1916 (1.9 million ounce AuE producer), Crown Point (1.8 million AuE ounces), Consolidated Imperial (1.1 million AuE ounces). A more comprehensive list is provided under the heading "The Comstock Lode - History" section below.

The provisions in respect of Tonogold's Expanded Land Position of the New Agreement enables Tonogold to initiate and roll-out a significant new leg to its regional strategy, which will be the focus of a systematic and aggressive exploration program commencing as soon as possible. The results of this program are expected to substantially change (improve) the already significant value accretive nature of our acquiring 100% of Lucerne.

Comstock will be granted a Net Smelter Return royalty of 3% from production from the Tonogold Expanded Land Position Area, reducing to 1.5% after the first year of production.
Further details of Tonogold's Expanded Land Position strategy are outlined below under the heading "The Comstock Lode - History".

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ACCESS TO AND USE OF THE PROCESS FACILITIES

Under the October 2017 agreement, Tonogold had an option to acquire a 51% interest in the process facility, plant, infrastructure and 983 acres of mining claims to the west of Lucerne (known as the American Flats properties) by paying Comstock $25 million. An alternative arrangement was negotiated and agreed between Comstock and Tonogold and announced to the market in April 2018, which provided Tonogold the right to use the American Flats property for a fee of $1 per ton of material treated plus $1 million per annum.

Under the New Agreement, Comstock shall retain ownership of the American Flats Property but provides Tonogold an option for exclusive operating rights via a 20-year lease to use, operate and manage the American Flats properties, with Tonogold paying Comstock $1 per ton of material treated (variable rate) plus $1 million per annum (fixed rate) commencing once a production decision is made, but with the following adjustments:

1. The variable rate shall reduce to $0.50 per ton once the cumulative payments (both fixed and variable) made to Comstock under this arrangement have reached $15 million
2. The variable rate shall reduce to $0.25 per ton once the cumulative payments (both fixed and variable) made to Comstock under this arrangement have reached $25 million (but with a minimum payment of $100,000 per quarter)
3. The fixed rate of $1 million pa shall be terminated once the cumulative payments (both fixed and variable) made to Comstock under this arrangement have reached $25 million

HOLDING COSTS

1. Tonogold shall be responsible for meeting (or continuing to meet) the carrying costs (lease costs, permits, insurance, annual claim fees, property tax, etc.) associated with the areas covered by the New Agreement, including:
   1. The Lucerne Project - $1 million pa
   2. The American Flats Property $1 million pa, and
   3. The Expanded Storey County Claims - $0.1 million pa (new commitment)
2. The total holding costs to be met by Tonogold pursuant to the New Agreement is estimated at $2.1 million per year, of which over $1 million per year having been Tonogold's responsibility since the October 2017 agreement.

STRUCTURE

The New Agreement provides for Tonogold acquiring a 100% ownership in Comstock Mining LLC (currently a wholly owned subsidiary of Comstock), which owns the mining claims as well as the various permits required to operate, including the Storey County Special Use Permit for mining and processing that was recently extended until 2034.

LUCERNE UPDATE

Mine Development Associates ("MDA"), of Reno, Nevada are in the final stages of completing an updated 43-101 Resource Estimate for Lucerne, which follows Canadian Institute of Mining guidelines and will be reported in a Canadian NI 43-101 Technical Report. That updated report will form the foundation from which to launch Tonogold's previously stated target of securing production of around 80,000 ounces of gold per annum generating around $50 to $60 million of operating cash flow for an initial 4 to 5 years commencing in approximately 2-years.

THE COMSTOCK LODE - HISTORY

The discovery of major gold and silver deposits near Virginia City in 1859, resulted in the highest and most valuable concentration of precious metals ever established over a two- square mile area anywhere on the planet at that time. This area is known as the Comstock Lode.

Most of the 8 million ounces of gold and 200 million ounces of silver produced from the Comstock Lode, occurred during the 20-year period 1860 through 1880. It is reported that the best individual year was 1877 when some 740,000 ounces of gold and 20 million ounces of silver were produced.

Over 80% of the historic production came from 20 deposits (which recovered ~6.9 million ounces of gold and 173 million ounces of silver (11.3 million ounces of gold equivalent) from 7.8 million tonnes of ore (27 g/t gold plus 690 g/t silver or ~45 g/t AuE). See Table 1 below.

The table below provides details of some of the more significant production contributors from the Comstock Lode since 1859, all, with the exception of the Ophir Mine, of which are covered by Tonogold's Expanded Land Position.

As a result of the low prices for precious metals during the mid to late 180's (gold ($19/oz) and silver ($0.50/oz)), profitable operations required a minimum grade of around 30 g/t of gold (or gold equivalent) to merely cover the cost of operations, estimated at that time to have been around $20 per ton.

As a result of the low prices for precious metals during the mid to late 1800's (gold ($19/oz) and silver ($0.50/oz)), profitable operations required a minimum grade of around 30 g/t of gold (or gold equivalent) to merely cover the cost of operations, estimated at that time to have been around $20 per ton.

At grades averaging up to 66 g/t AuE (1.9 ounces of AuE per ton), revenue of up to $36 per ton and costs of around $20 per ton, provided good margins during the second half of the 1800's. However, those margins were eroded as the negative impact of inflation on costs were not compensated by a corresponding increase in the gold price (the result of the gold price being "fixed" to the US dollar (the "gold standard") throughout this period), which would have forced the closure of many of the mines during the early 1900's.

Only when the gold standard was abolished by President Nixon in the early 1970's and the gold price was allowed to float, has its value improved, such that the current price ($1,250/oz) it is some 2.4 times higher today than the CPI adjusted price in 1860 ($530/oz).

In addition, significant technological advancements in mining and metal extraction have seen costs reduce by at least 200% in real terms since 1860.

The combination of macro-economic factors highlighted above, coupled with the regions proven world class endowment, and securing 100% rights over the significant and contiguous landholding that the New Agreement provides, results in an unprecedented opportunity for Tonogold to quickly and substantially increase the resource base.

In this regard, Tonogold's initial exploration strategy at Comstock will be to:

1. Assess those deposits regarded as too low grade at that time (for example Occidental, Justice, etc.) who's workings are regarded to have been more exploratory than productive to determine whether higher grades along the deposit and down dip would improve. These deposits offer an excellent opportunity for what is today regarded as high-grade discoveries which have been virtually untouched by historic mining activities.
2. Test the magnitude and continuity of the ore that the old timers left behind (as waste – i.e. less than ~20 g/t) that would be regarded as economic today,
3. To test the potential for both depth (down-dip) and lateral extensions of the bonanza grade structures that the old timers may not have realized existed due to lack of modernday exploration methods, equipment, techniques and geological understanding.
4. Assess and transact commercial opportunities to further consolidate our landholding in the region.

A drill program is planned to commence as soon as possible.

DURANGO

Tonogold has determined that the exploration opportunities available from the New Agreement are significantly better than those of the three exploration projects in Durango, Mexico that Tonogold had optioned. As a result, Tonogold has decided not to exercise the option over these assets but instead to focus our resources on exploration in and around Lucerne and the Comstock Lode.

FOR FURTHER INFORMATION PLEASE CONTACT

Mark Ashley (CEO Tonogold Resources Inc.)
E: mjashley3@gmail.com
T: 858 456 1273

Forward-Looking Statements

This press release and any related calls or discussions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Tonogold. Forward-looking statements are statements that are not historical facts. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements include statements about matters such as: future prices and sales of, and demand for, our products; future industry market conditions; future changes in our exploration activities, production capacity and operations; future exploration, production, operating and overhead costs; operational and management restructuring activities (including implementation of methodologies and changes in the board of directors); future employment and contributions of personnel; tax and interest rates; capital expenditures and their impact on us; nature and timing and accounting for restructuring charges, gains or losses on debt extinguishment, derivative liabilities and the impact thereof; productivity, production slowdowns, suspension or termination, business process, rationalization and other operational initiatives; investments, acquisitions, joint ventures, strategic alliances, business combinations, asset sales; consulting, operational, tax, financial and capital projects and initiatives; contingencies; environmental compliance and changes in the regulatory environment; offerings, sales and other actions regarding debt or equity securities; including a redemption of the debenture, and future working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, earnings and growth.

The words "believe," "expect," "anticipate," "target," "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. 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 that 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 discussed in Item 1A, "Risk Factors" of our annual report on Form 10-K. 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. We undertake no obligation to publicly update or revise any forward-looking statement. Neither this press release nor any related calls or discussions constitutes an offer to sell or the solicitation of an offer to buy any other securities of the Company.

SOURCE: Tonogold Resources Inc.