Comstock Inc (LODE)

[TMLonggun]

Within two polarized sides the truth is often somewhere in between.

Does lode have a lot of potential? Of course, and this potential is the main reason people are here. But what most care about is that geological potential turning into a profitable mine. For the 10 years I have been here the perception is that lode has always been on the cusp of greatness, profits are always just a couple-few quarters out. Years go by and every single month that potential that shareholders love is being stolen from them via dilution. For as long as I have been here there are people who will defend lode no matter how they do, no matter much they fail, lie, or dilute. Then there are also people who bash no matter what. Both sides display a fervent religiosity that is frightening and blinds both sides to important issues.

Recent history proves that the rational course is to be skeptical, given that so much of what has been promised over the past decade did not work out favourably or as expected.

There are some compelling long arguments - history/potential of the district, value of the land, claims, and plant/equipment and the sunk capital in the property is in excess of their share price. The UG assays are VERY encouraging. If a new gold bull begins lode will do quite well. From this perspective lode looks like a good deal.

But Longs frequently ignore their biggest risk factor (aside from management) which is dilution. When I bought my first lode/gspg shares the count was at a split adjusted 5 million shares. We are now nearing ~200M for 40x dilution. Did the company value go up more than 40x as Corrado and Faber implied? Nope, we are heading towards those 07 lows.

Dilution is a fact of life for growth. As long is there is no mass dilution or toxic financing

-wshaw

I agree with the first part but only if they actually spend the money wisely. How do you think we got up to such a high share count in the first place? Lode has had A LOT of toxic financing over the years both from Winfield and outside sources. Even if they add zero extra shares in the future the damage is already done.

Where did the ~100 million they raised go? All spent. How much did they make off it? Zero dollars. How will developing a more complex, difficult, and expensive UG mine fair? Will they need an expensive mill upgrade? Rubicon has visible gold up to 1000 oz per ton and all the top experts along with more capital than lode and they still completely and utterly failed. UG interpretative geology is difficult and so is the development of UG ore bodies. Even if they are quite likely to succeed it is by no means certain.

So 18-24 months from now assuming flat gold prices can lode produce profitably? - Maybe, perhaps even probably given that they are now drilling excellent grades but it is irrelevant if the company is bloated and common shareholders will not benefit or if they have to wait 20 years just to get back their money from the 2008 high. Lode's strategy has always been "hope for a bull market" but this industry is cyclical and you have to be able to make money in good times and bad - even at the expense of high grading the project.

Profits must be earned before that "potential" can have some sort of measurable value. Many tout lode's 3.2 million ounces but they are uneconomic at current prices as they have proven. Perhaps only the highest grade sections of what they outlined - maybe 500k-1m ish are mine-able. What is the value of a million ounces of gold that will take 1.2 million ounces to extract? The answer is zero, with the potential of it being worth a small amount at higher gold prices. They should have raised their cutoff to an economic level and updated from there. Touting the CATM instead of AISC or gross value of minerals instead of the estimated profit (zero) is a big red flag. My backyard has infinite potential - millions in dirt, gold, thorium etc if I go deep enough. It could be a gold mine or a rocket factory but both are very unlikely to come to fruition, and certainly will not make a profit. My point is that you need more than just potential to make something.

At the moment it is hard to justify taking the risk here when there are so many other profitable mining companies trading at insane values where you can have huge upside and super low risk all in one package. Many even pay dividends or have other compelling value propositions. In a market where you can buy a Lamborghini for the same price as a civic I know which one I'd purchase.

The turning point here will be similar to Claude - if they ever get to the point where they make money. That moment will probably be a good entry. In the mean time more money will be raised and the message board madhouse will continue as will lode's likely non performance.