Comstock Mining Schedules Lucerne Closing for October 15; Non-Refundable Payments of Over $8.67 million Paid-To-Date
September 23, 2019 06:45 ET | Source: Comstock Mining Inc.
VIRGINIA CITY, Nev., Sept. 23, 2019 (GLOBE NEWSWIRE) -- Comstock Mining Inc. (“Comstock” or “Comstock Mining”) (NYSE American: LODE) announced today that Tonogold Resources, Inc. (“Tonogold”) has agreed to a closing date of October 15, 2019, on the sale of Lucerne and delivered non-refundable stock-based fees totaling $830 thousand that have been paid timely. Tonogold also recently paid $575 thousand in non-refundable cash deposits bringing total cash deposits to $3.925 million plus $3.50 million in non-refundable Convertible Preferred Stock (“CPS”), for a grand total of $7.425 million in cash and stock paid toward the purchase price. Comstock has also received additional stock fees of $1.25 million, bringing total non-refundable payments to $8.675 million. Comstock currently holds $4.75 million in CPS, convertible at the lowest of Tonogold’s (1) 20-day volume-weighted closing price prior to conversion, (2) most recent private placement or (3) public offering price.
So far in September, Tonogold has also paid approximately $450 thousand in reimbursements directly to Comstock Mining, in addition to over $350 thousand from the second quarter, primarily for permitting, development activities and interest expense reimbursements. Tonogold is current on all payment obligations and the non-refundable purchase price payments have reduced Comstock’s Debenture to under $6.1 million.
Under the agreement, Comstock will sell 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 amended purchase agreement allows Tonogold to close by October 15, 2019, with an additional cash payment at closing of at least $3.625 million. This results in total cash payments at closing of $7.55 million for a 50.3% ownership. The remaining cash purchase price of $3.95 million will be held as a secured obligation with monthly scheduled payments of at least $650 thousand, between January 2020, and June 2020. Once the final payment is made, Tonogold would then own 100% of Comstock Mining LLC, the owner of Lucerne assets and its mining permits.
Mr. Corrado De Gasperis, Executive Chairman and CEO, stated, “Tonogold has completed some extraordinary analysis of the northern District, innovatively correlating historical data with modern geological assessments, and creating a larger exploration opportunity while recently assembling an impressive list of resource investors that has enhanced their liquidity and capital base. We look forward to this closing and accelerating our growth.”
Effective September 16, 2019, the Company also entered into a ten-year, renewable Mineral Lease for its other Storey County mineral properties, granting Tonogold the right to explore, develop and mine these properties. This arrangement was part of the original agreement entered into in January, 2019, but has been accelerated as Tonogold has committed to exploration expenditures of at least $5 million in the first, ten-year term, with the right to extend for a second, ten-year term if they commit to another $5 million and delivering a feasibility report. The lease requires quarterly lease payments with a 3% royalty that adjusts to 1.5% after the first year of mining.
The previous “earn-in” agreement with Tonogold, signed in October 2017, was terminated effective September 18, 2019, and the associated option payments of $2.2 million were recorded as income in the third quarter.