Comstock Inc (LODE)

[TMLonggun]

I would say the chance is quite high that they will raise more capital.

I did read the PR and this is what is said:

They have 2.8 M cash.

They lose money every quarter on every ounce so far.

They are planning a 7M drill program.

For the remainder of 2014 they plan to spend 3.5 million in the short term and pay off 6 million in debt, for a total of 9.5 million or -6.7 million in the treasury. This heavily implies lode will raise money as they have historically when their treasury gets low.

Yes, they will have some cash-flow from operations but since these operations cost more than they generate and have yet to earn their first dollar it is unrealistic to assume that in the next quarter or two they will suddenly become not only profitable but materially so. As you point out, the ratio of overburden to ore is high for lode and it will come down along with their costs as their grades and throughput rise. This is the slow trend to become profitable, but we have a ways to go. Say hypothetically they increase production 50% next quarter (~7500) and earn $200 x7500 = $1.5 million, they will still need to raise capital shortly.

Do not be fooled by pretty sounding numbers. Even at 40k/oz at $750 cost applicable to mining they may very well still lose money at current prices when considering all in sustaining cash costs. So if you are expecting cash to come from operations and that it will somehow prevent a capital raise, I would say this is unlikely and that cash-flow will be anemic at best for another quarter or two. (IMO)

They explained CATM in the PR:

Costs applicable to mining include mining and processing labor, maintenance, drilling, blasting and assaying costs.

So what is CATM? Answer: An arbitrary number that is completely useless. Why is it worded like that? Why are labour costs specifically mentioned instead of total mining costs, or the cost of production at the mine site? Are the expensive items excluded? (it appears so) Where are the hauling costs? Consumables? Interest? Admin? Permitting? Refining? Head office costs? Sustaining capital? Does the cost applicable to mining contain no mining equipment? etc

In my mind $750 CATM is very shabby and is equivalent (rough estimate) to $1000 cash cost per ounce which is (roughly equivalent) to $1250 all in sustaining cost per ounce.