Comstock Mining Provides Strategic Update; Opportunity Zone Fund, Mercury Remediation and Lucerne Sale
VIRGINIA CITY, Oct. 01, 2019 - 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