Wednesday, August 14, 2019 5:46:31 PM
8/14/19, 3:29 PM
VIRGINIA CITY, Nev., Aug. 14, 2019 (GLOBE NEWSWIRE) -- Comstock Mining Inc. (“Comstock” or “the Company”) (NYSE American: LODE) announced today that Tonogold Resources, Inc. (“Tonogold”) has elected to extend the closing date on the sale of the Lucerne properties until August 30, 2019, by remitting a non-refundable cash deposit of $875,000. Under the January 2019 agreement, Comstock is selling the membership interest in Comstock Mining LLC to Tonogold for $15 million, plus the assumption of certain liabilities and a retained 1.5% NSR royalty on Lucerne. The extension brings total cash deposits through August to $4.225 million, all toward the agreed purchase price. The Company has also received $3.5 million in convertible preferred stock (“CPS”), for total pre-close payments of $7.725 million, all applicable to the purchase price, plus fees totaling an additional $1 million in stock.
The Company and Tonogold have also amended the purchase agreement, effective August 15, 2019, allowing Tonogold to close by August 30, 2019, with a majority membership interest of at least 50.3% in Comstock Mining LLC, and an additional cash payment at closing of at least $3.315 million, bringing the total cash payments for closing to $7.54 million. The remaining $4.0 million will be held as a secured obligation with scheduled monthly payments of not less than $500 thousand each, between November 2019, and May 2020. Once the final payment is made, Tonogold will then own 100% of the membership interests Comstock Mining LLC, owner of Lucerne. The prior “earn-in” option agreement between Comstock and Tonogold, signed in October 2017, is terminated as a result of this amendment and the prior payments of $2.2 million becomes income in August 2019.
The amendment also results in a fee of $580 thousand in Tonogold Convertible Preferred Stock (CPS), due by August 30, 2019, in addition to the $420 thousand fee in CPS previously paid on May 31, 2019, neither applying to the purchase price. All $4.5 million of the CPS is convertible on May 22, 2020, at a conversion price representing the lowest of (1) the 20-day volume weighted closing price of Tonogold shares prior to conversion, (2) Tonogold’s most recent private placement or (3) Tonogold’s public offering price. The amendment gives Tonogold an option to extend the closing to September 30, 2019, by paying an additional $250 thousand in CPS.
The Company previously agreed that, upon the closing of the sale of the Tonogold transaction, it will enter into an option to lease the permitted American Flat property, plant and equipment to Tonogold for crushing, leaching and processing. Upon closing, the Company will also enter into a ten-year Mineral Lease for all additional mineral properties in Storey County, granting Tonogold the right to explore, develop and mine these properties.
Mr. Corrado De Gasperis, Executive Chairman and CEO, stated, “The total cash payments at closing of $7.525 million transfers the majority interest in the entity that owns Lucerne to Tonogold with a clear and expedited path for acquiring the full 100%. The closing will immediately reduce our debt to approximately $2.5 million. This deal is getting done in the very near-term and the remaining Tonogold payments (approximately $4 million) eliminates our debt and brings significant free cash to accelerate new revenue growth.”
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