Comstock Inc (LODE)

[cpmill]

Clown-

The implication of your argument is that a company can't profitably mine (or create substantial shareholder value for that matter) without having "proven reserves". It is a flawed argument, as I showed here when someone else made the same argument:

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_C/threadview?bn=128163&tid=15361&mid=15438

While extensive feasibility studies (which convert resources to reserves) provide an added measure of certainty, it is not a pre-requisite for profitable mining.

And let me remind you that there is a category of reserves that is NOT "proven"- do probable reserves have the same magical powers you ascribe to proven reserves?

Are probable reserves more or less certain than measured resources?

And while I agree that exploration juniors have substantial speculative potential, producers have stability and sustainable value based on more solid metrics.

I will also point out that the markets have shifted (especially the Canadian markets, which are dominated by resource companies). Several years ago, institutional investors in the junior space only wanted straight exploration juniors. In the last 6-9 months, the interest has shifted to juniors that are near or in production. If this is a sea change, then the markets will have determined that the better potential is in production... which magnifies the upside on producers.

And you are mistaken about this company- with the exception of a few mortgages on acquired property, and some pending equipment financing, this company has NO debt. None. If you will recall, it was all converted to equity several years ago. Further, the company's covenants will shareholders prohibit them from taking on debt (with the exception of a small revolving account for working capital and equipment financing, which is very attractive right now).

Additionally, you don't need "continuous massive veinage" to mine profitably... there is plenty of ore much closer to the surface, including some substantial quarter ounce ore tonnage. And we are not talking about flat land... which means that if a drill was sitting on the top of Hartford Hill, and hit ore at 200 or 300 feet, it could be easily accessible laterally from within the pit.

In fact, the starter "pit" (which is more of a cut into a hillside) has no more than a 1:1 stripping ration- which helps profitability.

And we can extrapolate cost to mine quite easily through their cut off grade. Anything above the cut off grade is considered profitable- last I heard, they were using a .007 opt cut off, and using a $1600/oz valuation. Using those figures, we get $11.20 per ton to mine and process, including mine administration (but not corporate costs).


By all accounts, that is VERY reasonable cost-wise- especially when your average gold grade is .029 and silver is .28 on their measured and indicated resources. That's roughly a $20 per ton profit, given their expected recovery rates. At 1 million tons per year (their initial production rate), that's a good profitable company.