Comstock Inc (LODE)

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Comstock Mining Provides Strategic Update; Opportunity Zone Fund, Mercury Remediation and Lucerne Sale



October 01, 2019 06:45 ET | Source: Comstock Mining Inc.
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Comstock Mining’s Corporate Realignment
Comstock Mining’s Corporate Realignment
Comstock Mining’s Corporate Realignment
Comstock Mining Inc.
Sierra Springs Opportunity Zone Fund Inc. and Sierra Springs Enterprises Inc.
Sierra Springs Opportunity Zone Fund Inc. and Sierra Springs Enterprises Inc.
Sierra Springs Opportunity Zone Fund Inc. and Sierra Springs Enterprises Inc.
Comstock Mining Inc.
VIRGINIA CITY, Nev., Oct. 01, 2019 (GLOBE NEWSWIRE) -- 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.”