Q4 2019 Earnings Call
Good day, and welcome to the Comstock mining, Yeah and update conference call.
Today's conference is being recorded and at this time I would like to turn the conference over to news talk right. I guess first please go ahead Sir.
Thank you, Jeff and good morning, everyone, it's probably gas.
Comstock mining on the line.
We'll have an x. I'm sure a director of external relations on the line today as well.
Welcome to the Comstock mining full year 2019 conference call I'll provide a brief summary information included in our press release from this warning.
Including our progress on our strategic initiatives. If you don't have a copy of today's release, you'll find a copy on our website.
Www Dot Comstock mining Dot Com Thunder news Slosh press releases.
We will file our annual report on form 10-K time, we all the accounting and reporting is done and it'll be filed with the audit process season docking patients are complete I can answer any and all relevant questions regarding our financials.
Provided a brief summary, most of those in our press release.
Please also let me remind you that we may make forward looking statements on this call, including New York 2020 outlook, but any statements relating to matters that are not historical facts. They also constitute forward looking statements.
These statements are based on current expectations and are subject to the same risks and uncertainties that could cause actual results could differ materially.
These risks and uncertainties are detailed in previous reports filed by the company with the FCC and in this mornings press release and all forward looking statements made during this call are subject to know seamless and other risks that we can't identify.
Okay. So.
Over the last few years, and especially last year, we dedicated ourselves to repositioning the company.
Precious metal base growth and in 2020.
Only be talking about gold and silver for most.
Intents and purposes.
With extreme focus on driving value through our properties and our partners, we legally realigned to calm stocks existing gold and silver assets.
As depicted in the press release simply to facilitate growth.
Oh properties growth of our natural resources in the ground and the acceleration of value to our shareholders from our growing exposure to gold and silver again through our properties our partners are real fees and our future gold revenues.
We partner twice, what the total gold.
First in selling 50% of Lucerne last November and again can leasing some of our mineral properties.
Also helps found and partnered.
With Mercury cleaned up the Aussie leverage or just the 100% on permitted operating platform that launch the mercury remediation business that we're now commercializing.
In two different locations.
And lastly, we established and partnered with Sears brings opportunity fund to sell or not money handsets and silver spring for 10 plus million dollars.
If I just moving full speed ahead and expect to close on all asset sales in the next 45 to 60 days for sure.
Brian Cox have recently slowed down some of the progress, but not very much at all for US we're picking up very good interest and were so fully expecting a close.
Despite this would be some turmoil.
In all of these ventures position growth, while retaining meaningful equity ownership in all of our partners.
In 2000.
So one.
Oh, the CRT lawsuit, I guess again and again and again.
Like repeated appeals begins Dawson county relating to the zone changes for the resource mineral claims.
For the past, 50% an expanded from being for the Dayton resource area and.
In the spring Valley complex, both of which are continuous and in line County.
Our geologists are doing an incredible amount of work I've not been expanding that resources towards publishing and updated standalone nickel importantly to cheaper.
Well be church of the financials, where we significantly improved our financial position throughout 2019 really continuously throughout 2019, improving shocking to quite a few folks not enough that's our assets increased.
By almost 40%.
Our debt decreased by over 40%.
Putting the debt and the cross hairs pay off next quarter.
Specifically, we close on 50% of learn certain sale of I've just mentioned.
Still opinion full control the entity in doing so.
So you $5.9 million nonrefundable cash received $6.1 million at nonrefundable stock.
At year end at over $9 million.
And we receive $2.2 million an expense reimbursements throughout the year.
We also want to gold, we see Occidental load clean grouping to the north of the Lucerne and some other mineral claims in the second partnership which ultimately through those mineral leases.
Acquires up to $20 million and drilled commitments in Threeq Progressive technical reports to be published with a $4 million and drilling expected required I'm sorry, you know in this fiscal year.
We've also been meeting and working directly with total continuously with our combined technical teams.
With our regulators together often them with our regulators with the county.
Towards the launching of very exciting drill program that has been very was very very well researched and find out that we expect to commence in the second quarter that would be chronicled drilling.
Every county in the second quarter.
It's also mentioned, we partner and watch the Mercury cleanup.
Oh, I see company, which is a global Mercury remediation clean technology growth Company project, starting this year, both on the Comstock and in the Philippines.
Equipment started to arrive last month meaningful equipment has arrived on site and we've already put tests material from multiple samples sample locations.
Around the Comstock through the spirals.
With both Mercury and goals cited just in the small sample process pass through those spiral.
System is something quite different than just the spirals it's impressive it's.
Over 18 feet.
Tall, it's quite a or a technological spectacle in our opinion, it's being manufactured for all intents and purposes in California.
Being finally assembled and intended to be shipped onto the Comstock I'm certainly in the second quarter expectation isn't people. There had been additional slow downs again is open to just everyone's lives being sort of semi paralyzed for last few weeks, but we're not.
I would say the impact on overall on the circumstances have been last dramatically less then empathy for a lot other companies out there you know we have a small team. We're all working full time. We are now you know affected this past week, all working remotely and just trying to schedule around.
Certain obstacles, which we've been so far been able to do effectively.
And lastly.
As you all know we've asked road the 10 plus million dollar several of those two non mining assets to the fund in Silver Springs. We have also received $400000 in non refundable deposits in escrow and we're looking forward to closing them in the second quarter and extinguishment all of our remaining debt next quarter.
Financially as I mentioned, we'll be filing the 10-K. This month on time all that work is done well just finalizing somebody's audit procedures, where its publishing but overall, let me share some of the detail.
Year on year, our overall operating expenses were down 27%.
Anticipate another 10% reduction from those numbers in 2020.
The focus primarily on lower administrative cost much of this work has already been done and we expect to see at least a 10% reduction in general administrative cost Gerald Ministry to costs were down a year on year, but only slightly we expect that to be more significant next year again most of that work has already been completed and those results.
We will already be evident in the first quarter of 2020.
Our exploration and development costs are down 22%, our environmental costs were down almost 200%, but that was really driven by.
A remarkable result of our reclamation efforts we finished.
A big part of Lucerne reclamation requirements early resulting in Nevada Department of environmental protection leasing almost $400000 worth of our reclamation liabilities. So that reduction was reflected in that expense line.
But it was real savings and reduction of liability. So we're quite proud of that.
Overall that resulted in our net loss decreasing by almost $6 million for this year I will have a 3.8 billion dollar loss for the full year with Gloucester 20 cents per share resulting from that.
We certainly believe that we're going to have net income for the first time getting 2020.
Not only because of dramatically lowering costs, which I'll talk about just the second but also resulting from some of these transaction actually being consummated. So we're very happy about that real so happy about.
The tax free nature.
Those are income just because we can shelter all of that with our net operating losses.
Overall are most impressively I think in my mind, our total assets grew by almost 40% almost $40 million.
This includes the investments that we haven't or partners.
Including investment as I said until the gold.
But tremendously strong growth.
The asset side of our balance sheet that coupled with a dramatic reduction in our liabilities, including or total debt being reduced by over 41% to just over 5 million cashing crush equivalents at the end the year over a million.
Our net assets alone now.
Sure and you'll see on the balance sheet for just about 24 million in net assets.
That will grow it's almost 35 million wouldnt be consummate.
These transactions.
So our net assets alone our net assets alone.
Show a value of over Dollarsthirty per share.
So you know the fact that.
The fact that were undervalued is becoming more and more evident just on the face of the balance sheet. Most importantly, we have not sold any stock in 2022 day I'm, you'll see that when we file the 10-K, it's not happening in it hasn't happened. So that's good.
I'm just going to summarize all of these points now with an outlook. So I'll give you summary bullet points and the outlook and I'll turn back to Jeff for questions right. After I do that so number one.
During the second quarter of 2020, we expect to close in the seller Silver Springs, we expect to bring in the remaining net proceeds from those sales of $9.7 million, we expect to extinguish all of our debt approximately 5 million when that happens number two total going to launch their drilling program in the second quarter.
We've never been closer in their working relationship we've never been closer in the activities and planning for we're extremely excited about it.
Number three we didn't break dancing commercializing M.C. you in the second quarter Comstock system will be on display it will be operating there will be videos. There will be photos people will be impressed and we're very excited about all the work that goes into commercializing that system in the third quarter, we're going to do something very similar.
In the Philippines.
We'll be tailored.
To the specific circumstances.
Very excited about that.
Number four.
Currently planning to expand our 100% on the resource planning publishing updated technical report.
Later, this year and depending on resources and timing of resources were looking to do so.
Real drilling and development.
That property this year number five.
Our annual operating expenses net are planned to be $2.6 million, that's the lowest that they've ever been we're proud of that we're proud that we can have.
I'm very very low operating profile and remain fully functional with our assets in our partners at the same time.
Number six of it just mentioned, we're certainly significantly undervalued in my opinion by any measure we look at but just using the most basic net asset.
Plus the total receivables was plus the silver spring transaction puts us at over $1.30 a share. That's just the next stop for this train in terms of value a journey, a we grow much more stable either from there with our growth activities.
So Jeff that's my brief summary, let me stop there and turned to question.
Or to answering any questions.
Thank you very much.
If you would like to ask a question. Please signaled by pressing star one on your telephone keypad. If you are using the speaker phone. Please make sure. Your mute function is turned off to allow you'll see more to retail equipment.
Again, Please press star one to ask a question, we'll pull so just a moment 20 <unk> everyone an opportunity to ask a question.
Again, Please press star one if you would like to ask a question.
And we can take your first question from James Dell Who's a private investor. Please go ahead Sir.
Gordon Jim.
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Corrado how are you.
Good morning, Jim I'm Fine how are you Sir.
Okay.
Are you going to replace a year on time so.
Oh I'm, sorry can you read your onto a floor I missed.
Are you going preapproved you're wrong.
Yeah. So we don't have any immediate plans you know tour to replace the position, we've really kongregate had very strong weird as a team.
You know I think ultimately it's its a role that we will want has the company's growing but there's no immediate plans to do that.
Okay. Thanks.
Your asset record.
No nothing a date when do you tend to get to put out.
It's coming but [noise].
It's gonna be a second quarter third quarter, what do you think.
In terms of the day engine.
Yes, Big Spring Valley, Yeah. So there's been a tremendous amount of work I cant exaggerate the amount of work that you know primary we you know Larry Martin, our chief geologist and and and why Cowen and Mike nor at sort of the technical core team have put into the D. and I mean, it's almost.
A comprehensive.
Reevaluation every aspect of it and none of that is meant to be negative at all you know there had been a tremendous amount of surface mapping and a tremendous amount of surface drilling that was never incorporated into the first technical report that some people aren't even aware that there isn't.
Technical report out there because it was buried you know in the you know sort of in the appendix of the of the Comstock report that that though let's say emphasize the Lucerne.
So you know what we're finding so much more connectivity of information so much more connectivity your data so much more stronger.
For a geological control.
Its and its resulting in an above our ability to update the resource estimate and.
Three things right update the resource estimate propose a very very precise next phase of drilling program.
And also start to put in most of the variables that would that would contribute to Uh huh.
Sort of they call it a P.A. preliminary economic assessment. So I think the next report not only will it be standalone just for the day in spring Valley complex, which I think a lot of people appreciate because it's really and recognized asset in our portfolio, we can say, but the street.
Piece that you have none of that net asset dollars and I just mentioned have any a reflection of the day in any material reflection of the day asset in them. So it's it's and it's in you know to on valued assets in our portfolio. So that Standalone report I think we'll have a tremendous impact on people.
So were innocent appreciation of that but secondly.
The preliminary economic data dialogue because some of it shows that have been developed you know show average grades of 1.75 grams per tonne you know over <unk> 0.05 ounces per ton very very much higher than you know we've previously talked about.
And then maybe a path for for drilling and a path for permitting we're going to move forward on the permitting regardless. We currently have a permit in line county that allows us to be an extensive amount of exploration and development, we're going to expand that for sure.
And we're going to encroach on you know a broader especially use permit.
You know, which which will ultimately need the drilling the drilling will be initiated off of a the finalization.
All of that plan, which they're very close.
Larry knows where he wants to drill he's just documenting it also the rest of the bus can catch up to and and then consummation of some of these transactions, which will allow us to fund you know the first phase of that program. So I think if if everything.
Worked out well you know we could be you know reporting and third quarter and hopefully starting to do some of that geological work you know in the third quarter as well I think that's likely.
Just not certain because we have to close these other transactions first but if we go on or current schedule, that's what would happen.
Okay are you all.
This will be out wanting to go a long form too soon.
So can you just say that a little one more time, a little slower I, just keep missing since I'm sorry.
You are doing at all.
Permitting or anywhere else.
Take it but to your it's creating the peso silver mine plan to correct.
Yeah, the preliminary economic assessment.
Which ultimately I think this you know the steps our resource estimate.
Preliminary economic assessment of that resource.
Pre feasibility of a mine plan for feasibility of a mine can so when you do preliminary economic activity you have to have concepts of a pit shell you have to have concepts of mine plan, b or albeit a surface or underground whatever whatever whatever the delineations of.
These economic ore bodies would be has to start to take shape. So it's exciting for us to start talking about P.A.. Because then you start talking about.
Economics in the context of of mine plan correct.
Okay.
Huh.
[laughter], we're bearing in mind, we're still talking more onto the shallow surface mine you're correct.
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We we so.
I have to wait for all of Larry's work to be done there's a tremendous amount of near surface.
Less than 200 feet from the surface gold and silver so that that's just the actual there's a tremendous amount of it.
Work that Larry is doing is extending structures deeper and extract extending structures.
South and correlating structures to each other which is remarkable so the answer to your point is yeah with more to come from there.
Okay.
Do you expect <unk> gold to start absolutely among digging Burton stop selling stuff, you're a processing plant.
Yeah. So so.
Most recent activity has been tremendous amount you know, while they're already well make progress and remain current without you know on their list certain work and as an aside you know I'm just as an aside before I answer your question.
You know most of the work you know that they do it internally on Lucerne you know obviously was based on you know more like a 1200 dollar gold range, you know with gold sort of continuously bouncing around 1500, you know, there's some reassessment of that going on right now, which obviously is.
Positive.
But I have to say that they've just done tremendous amount of work.
And then contracted a tremendous I mean, they've done a tremendous amount of incredibly good work they've done a tremendous amount of very very impressive geological assessment and I'm quoting my guys. You know when I say that we my guys are.
Tough and skeptical, but we've seen some incredible amount of analysis, you know relating to historic grades historic structures and incredible consolidation of data new data and old data that's developing a remarkable.
Well drill program.
You know the drilling drilling will be Bose.
I'm going to say you know we were seeing drill targets of seven and 800 feet and we're seeing drill targets of 1500 plus fees.
But you know you're talking about targeting grades of half an ounce per tonne three quarters of announced per ton.
And multi ounces per ton I mean, it's.
It's really the stuff of of the Comstock War and I mean that seriously you know the you know this is the fundamental thesis.
Is that you know the old timers.
Had head grades of you know 50 grams per tonne, which you know in English is one and a half ounces per ton and and you know and once they put exploration dress in place.
They had head grades of.
33 grams per tonne like an ounce per kind in English, right, and and and and what that means.
Is that they were only knowingly taking grades that were there and above and so as we calibrate.
You know areas, where we're where we know dress were put in and we know material wasn't taken how it just leaves a tremendous amount of opportunity there that it's exciting when I say, it's exciting that are attracting.
You know.
Smart capital like you know, where we were seeing you know that the trend of investment go from.
So astute high net worth people, you know not not not flipped the people and serious people who pay attention to extremely technical fun.
So we like that development. If you if you want to say that.
Lucerne has slowed down are taking a little bit of a back seat to that.
That would be probably true I can't speak for that because I do know that they are reassessing the Lucerne tradeshows and their research thing that must be assessing the mine plans with current gold prices, which is a positive thing, but there's just so much interest in this drilling program that its really taken I mean.
I can safely say like 90 plus percent of their their collective calories and we've gotten much more involved you know and those programs. So we're right now were.
We're pretty excited about everything that they're working on.
I would think that the conversation and to be more about drilling and development I would expect some drilling to happen in Lucerne I you know, it's not that it's not the immediate priority, though based on you know if your without their top 30. Your top 40 drill holes you know most of 'em, if not substantially all of them are you know attack.
Turning some of these high grade target. So I think they're looking at the you know they're looking at the you know this whole Lucerne Occidental corridor or a little bit more holistically I think that's very intelligent right. If you if you're familiar with the Occidental load.
You know we have some 40 claims congregated I think we wanted a few people that were able to kongregate, all private and private patented and Unpatented claims into one grouping, but most people aren't as aware that you know that Occidental tail goes all the way right down into the you know right right just to.
The east of the whole Lucerne property right down to the storey County line County border. So it's a it's a big gas trend. So you know there's a lot of attention so they're starting to.
Rather than it be Lucerne Lucerne concerned there certain.
Correlate with Sterne to Occidental up the screen to Virginia City I mean, it's it's coming together very nicely and and you know it's being talked about more holistically and I think that's in college and I think that's that's where you're going to get your long life mine plans from you know so.
I think we just have to wait to see some these results, but I think it's going to start right now in the second quarter, you know, they're going to start doing some drilling.
Work by the way, we're working already working with that we're working with them Jim in almost every way to enable that right like we have royalties on all of those properties not just lucerne, but all of the Occidental and all those properties, where we're in the same boat obviously.
You know Lucerne has the nearest term extraction.
Mining opportunity and that's not a loss on anybody, but it's not the whole pie the whole pie is bigger.
Okay.
Although you go to producing a movie for people with all this activity picking up.
Yes, so that's a great question. So in the leases that Weve signed with you know Occidental and otherwise.
You know Weve put I'm not only do we have about $20 million of drill commitments required certainly over a longer period of time, but we have immediately required you know a minimum of a million year. My my understanding is they're hoping to spend over 5 million. This year. So so our minute.
Moms are really a meaningful to their intentions, but but you know at least we know but also to your point over the course of leasing period. There's three progressive technical reports required one will be a resource estimate one will be a a prefeasibility and one will be a full.
So we have very very strong and its mutual between us and them like no ones here for promotion, we want to progress. This thing too technical reports, okay, and so we've got control that every single year, we have to make progress towards a those technical reports ultimately with three being published over the life.
Most of the leases that get us to production so.
It's exciting lending when you combine.
Pat activity with Lucerne, you know you're going to get you know a lot going on in the north.
Throw in Dayton Spring Valley, which is 100% owned by US you know, we're gonna get Oh activity in the South and I think for the first time well have you know even though we're doing it with partners. We'll have all all of the properties you know in some way shape or form active a you know towards development, which.
Rich, which to me is the driver of value. So you know so it's been a long time coming for Grad Tabak me back here and now let's get a moving forward you either directly with us or us working directly with our partners.
Okay. One last question.
Kerry Hawkley implement too it was I'm concerned about this a luxury venture in the Philippines the.
Hi, startup cost palm politics.
No associated with dealing with that.
It's pretty much a Byzantine pulled your out there.
You know the local joint venture partner that that's going to be pretty stable.
Are are you referring to are you referring to Tono, you like who we're talking about the mercury cleanup venture in the Philippines.
Oh, yeah. So no so the partner the partner there is incredibly stable.
It's its thought it's the largest claim owner or one of the three largesse. There's three principal you know mining concerns.
You know, it's one of the longest lived operating we've been advising them well before and see you you know on some of their processing when I say, we I mean, you know like our partners you know Paul and our team and see you you know on their processing when the government move.
To shutdown Mercury.
You know what they were one of the strongest supporters of reaction.
They they really look to see all of.
The artist and on Mercury mining, you know being eradicated.
From the district and my thing you know we're in a position both to introduce clean processing technology together, but also provide ultimately this isn't in the current plan, but ultimately provide clean processing solutions for the artist and all miners right. So.
It's not it's not just mining you know, it's not just cleaning the river and the mountain, which is our number one priority. It's not just mining the claims which is their priority kids, it's providing the community in the district, a clean solution that avoids them having to go back.
Tim Mercury. So this break through his tremendous where you know certainly just going out and cleaning up contaminated areas is a breakthrough and it's it's remarkable.
But if we don't have a solution that we can then provide a you know.
People will still continue to use mercury in the absence of any alternative.
We have that solution as well and so that's yeah, we've always viewed that as the second and third phase of our growth you know either partnering with.
Clean or solutions, there or or or partnering with the local community due to provide let's say a shared processing facility or or toll processing facility. That's all part in the grander scheme of things like what we've only announce it won't be focused on cleaning up there.
River.
But but doing that with stable solid partners. You know should create you know add on opportunities to us to proliferate the clean technology. So.
This is the opportunities with this.
Our endless we're putting a tremendous amount of I am personally I've been there twice already tremendous amount of time legally financially organizationally.
Partnership Wise Regulatorily government politically.
You know into making sure for us doing the first one hand second one right.
Oh lays the foundation for you know this global opportunity. So we're very much in early stages of laying that foundation, but we're taking great care and most of our most of our decisions are based on you know the the operation being successful overhaul other things because for US it's not just.
The success that we get there. It's you know said setting the stage for the rest of the world.
Okay I just want to express my concerns I hope most of your.
Someone who's going to be a.
Technological transfer versus hey.
Boots on the ground stuff.
Yeah. It every single project will be different you know, obviously, you're referring to you know non U.S., obviously in the in the U.S. we have.
I don't like last week to week before we were processing sample, who you know things like coal.
Yeah, each jurisdiction will be different right some lumpy Julius tower boots on the ground. Some we won't want to touch with a 10 foot pull some will only one a lease equipment to protect the technology I mean, all of the a buck in some cases the government just hire us clean something up you know it's it's it's it's a full spectrum of possible.
With these were starting to stay very focused on these first two it really ensure improve to everything that we have the solution that works.
Okay. Thank you Corrado it took a lot of everybody else is thought.
Alright, Thank you and Keith.
Thank you we can't take out Nick's question from David to bring in from bringing me investments. Please go ahead you along these lines.
Please go ahead, Sir your line maybe muted.
Hey, what appears to bring them has stepped away from it.
Oh yeah.
This concludes today's question and I'll section.
I just talking about to hand, the call back to used to that he'd be small closing remarks.
Yeah, I just want I went first of all I want to thank everyone for their interests I want to thank everybody for their patients or the last couple or three years I really feel we're at the turning point here 2020 is gonna be very exciting for us I also want to just really emphasize to everybody.
To take caution there there's so many various opinions out in the world about this krona virus, but I think the simplest most fundamental one is you know stay remote work from home get all your work on remotely minimize interaction and let's just flattened this curve out so we can get the damn thing.
Behind us and we wish everyone and their families. You know you know the safe you know safe next 234 or five weeks whatever whatever this is getting the tail end where available for follow up directly with any of our investors. So thank you all.
Thank you. This concludes today's call ladies and gentlemen, thank you for your participation you may now disconnect.
Correct.
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