Q1 2020 Earnings Call
Good day welcome to the Comstock mining she want to update conference call. Today's conference is being recorded at this time, let's turn the conference over to Lucky Castries. Please go ahead Sir.
You had worked out and good morning, everyone gravity grassroots your field comes back more in line with sex Spencer, our director of external relations and new Treasurer.
Today I welcome you to Commscopes first quarter 2020 conference call I.
I will provide a brief summary, the information that included from our press release from this morning.
<unk> progress on our strategic initiatives.
If you don't have a copy of today's release, if you will find to compete on our new website at Www Dot Comstock mining Dot Com and please just quick on the press releases.
In the mean you bar, we will help our quarterly report on form 10-Q filed today.
And we've also included the basic from Intrastate District, the press release just for your convenience.
We actually had one of our fastest that's scheduled and coordinated closings this quarter despite everyone working remotely.
The full report.
Actually being completed over a week ago, but we've been working.
Well with our team.
And the Blue gene everyone working cooperatively with a disciplined schedule and based on everything that you were able to do this cycle. We expect after reporting going forward, regardless of the discussing mergers required by Covidien team.
Please also let me remind you that we will make forward looking statements on this call, including an update on her 2020 I look at any statements relating to matters that are not historical facts may also constitute and would constitute forward looking statements.
These statements are based on current expectations.
You 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.
All forward looking statements. During this call are subject to go thing and other risks that we cannot identify.
Okay, let's move on to be up the we have now really well and fully repositioned the company for precious metal these growth the activities, we're gonna be talking about.
Now have really.
Substantially all shifted to these initiatives in in 2020, we're just driving gold and silver developments with an extreme focus towards our goal.
Our goal is to grow our intrinsic value to $500 million half a billion dollars, even see that strongly with 120 million or that targeted and identified in the shorter term.
500, the total larger number in the medium and longer term by implementing the plants that develop our precious metal resources and commercialize the cash generating gold and silver processing technologies that we put in place that concern that means you can.
That means the clean.
North of Lucerne, and south of beaten that means the Mercury cleanup initiative and see you.
And that means completing in monetizing our non strategic assets to fund that growth.
Starting with Lucerne as you know you're partnering with someone a gold they have rework the Lucerne resource estimate and they are not updating that estimate based on the higher gold prices and its compelling they're also expanding some of the clean being used as Lucerne geographically Jason area that represents essentially the southern extension to the opposite unload.
So they're working concern and make now expanded and better interconnected.
Oh, right up more into the Occidental load.
Lucerne and those eastern extensions with the Occidental actually combined to surface minimal resources for problems are in mind and resource that piece of the Lucerne mine and again.
Combined they're very compelling.
One of those also planned well conceived an expansive drill program that includes eastern extensions antioxidant alone and much more.
And they have already we see permits for commencing some of that drilling storey county, they wind up the capital.
And with our full support are finalizing the selection of their drilling partner, we expect the tone of will be commencing drilling in the summer, possibly as early as June on some remarkably high grade targets.
We've not only.
I wish the known value in our target list for Lucerne at 25 million, but we're projecting an additional 35 million from the leases from the reimbursements from the royalties that would come from the surface mine groupings.
As I mentioned, we have where views we have a sustained 1.5% NSR royalty on all of these storytelling and Oakley and not just on the Lucerne.
And the accidental but that all of them and in some cases higher.
So there will be much more that we'll be discussing here in the near future. When it comes through the work and the geology, but the geological research into the drilled plantings and the drill programs that have put together are truly impressive.
As you know we own $6.1 million in total go preferred stock.
Majority of which by the way becomes unrestricted this month and if converted to common shares would total well over 33 million Tono common shares.
At the current prices that values, our position at closer to $12 million not $6.1 million as of March 31st or third party valuation firms value. They had a little under 9 million standards at March 31st can keep reporting date.
It's now Faired for us to say the geological work that we've seen and the capital that's been lined up and the drilling that's getting ready to convince that Tony is really starting to exceed expectations and there's much more to come here.
Very much for into it in terms of Dayton.
We are expanding the economic resource <unk>.
Your news finished with our expanded geological interpretation and then working in engineering, having expanded could show.
That work is is actually coming together very nicely, it's almost done but if we just reevaluated deep value right now just just based on the previous economic shelves that we had developed and those economic shelves well developed using cut off grades that are.
More consistent with an 800 dollar gold price.
And it into can you just take those shows in other words no. We didn't engineering, just the ounces and resources that we put in economic shell around.
Now show a low in value, we'll dig in and not 40 million, but closer to 75 or 80 million and that's using a 1600 dollar growth assumption.
Now I'm not.
Saying, we reengineered the economic show with those different cut offs were just simply saying that the hold smaller design and today's gold prices, we have something exception weed out.
So we're going to do that work, we're doing that work towards the Standalone 43, one or one technical report for being a that we will be looking to publish this year.
And I, just don't feel that value range with what we know now that goes between.
75 million in let's say of 250 million.
You then you can get reasonable and the crushing environment.
When we summarize all of our resources, we lower in the low end for the day in the low end forget Western we just literally put beat the investment and asset values of our other investments on the list and what we see is a number that quickly gets us to 120 million.
Log on that recently.
But we're going to be talking about a lot because our focus is simply going to be on implementing these initiatives proving how these technical reports in summaries.
It would be the resources further and realizing that 120 million willing value in market.
If we get if we get just half of that.
Well over $2 a share and if we get all of it here were over $4 a share as you summarized.
Let me move on to M.C. you as you know we've partnered is launched into you uses are clean mercury remediation growth venture.
With two projects in Q.
The domestic one on Comstock is now scheduled for May and one internationally in the Philippines for July in terms of that means landing equipment and processing materials. This weekend the comps backing them see you chemo, making site preparations for the delivery in assembly of the first system.
It was delayed by quite a bit of time because of the covert 19, but unfortunately, the the majority of the system had been completely manufactured and it was just powder coating and painting that was shut down by the third parties that there were not allowed to work and do that that's all in progress now site preparations are underway.
The system is incredibly impressive I'm really looking forward to this though M.C. you started up in the U.S. collaborating collaborating every single step to the way within the data Division of Environmental Protection. You know we've had at least two meetings with and that I'll just in the last three weeks and its all progressive.
It's all supportive I think people are generally excited you know about what we're about to do here and we certainly will be posting photos of the system as it arrives and gets get set up you know how to new website, but it's impressive.
And for you I think as everyone already knows is also signed a definitive joint venture agreement with clean more solutions, our partner in the Philippines, and we've been working weekly with them on getting things set up.
Enabled and ready to go just the logistics of setting up a foreign branch and and getting organized and being able to do business. It's all happening expeditiously.
The Philippines also have covert 19 restrictions and and those restrictions require if you. If you go there prior to May 15, you have to corn team for for two weeks. So we're not going there until those things start to get listed.
But we're very excited about this project because we recently enhanced the scope of the project by by combining the Mercury clean up intentions, and when you shouldn't that we've already agreed to with the sand and gravel system.
This was really done in collaboration with Philippine Berman regulatory authorities, and it's kind of a breakthrough for us because by by building piece system, which were which is happening you know being built by oral as we speak right now.
Targeted for delivery in July we're we're creating in addition to the Mercury remediation system that will be very very similar to the one that we're bringing here I wanted to Comstock, although bigger.
We're creating a second system, which actually will be the first one that goes on that is really designed for sand and gravel operation.
But we'll be enhanced also with the Burke Threep remediation technologies when it means is that.
We have a definitive a revenue stream and a definitive.
Cash flow that comes from the system just from the sand and gravel operations, which is a certainty and then and Mercury and gold that we know is in the environment I'm.
Really just adds to the profile. So is it actually reflects I'm kind of an expanded scope of what we're going to be doing here.
Meaningful de risk or.
How we're going to enter into that business. Because we have so you know essentially guaranteed off peak of sand and gravel that allows us he's going to get up and running and finishers its profitability.
You know without without quantifying the certainty of you might have mercury and gold that would also you know come out of that process.
Overall, we built these entire systems you know initially on our models at 1200 dollar gold. So we just can you just can't give a better time to begin processing contaminate the materials.
And extracting the gold from them now.
We'd go that you know 500 dollar price higher than it had been.
Let me talk a bit in wrap up about our financial position and our outlook and then we'll I will turn to questions.
As of March 31st we had total assets on our balance sheet of almost $40 million I think that's probably a record our silver springs assets are part of that they're being excuse me held for sale and we're moving forward. We now expect to close this quarter most likely even within the next 30 to 45 days.
The markets were roiled, obviously by the covert 19, Lockdowns and there there are slowly.
Going back to.
Q2, you know at least ability lets say, so that slowed or the opportunity funds capital raising down a bit but in the meantime, the fund was focused on the assets that had a required or last year, including the clean a processing manufacturing facility.
Including the Silver Springs Airport.
And over the last month or six weeks.
The come the fund has been able to lease a its first two company I'm coming into the manufacturing facility.
And also break ground on the first new tenant building.
Hangers on the airport.
The leases that were strongly and where remarkable.
They were they were.
At rates that were well above what we had planned in our models.
Frankly, we were thrilled at the validation.
This and the thesis that northern Nevada, and Silver Springs is the place that manufacturing, especially these conservation based companies impact recycling based companies won a basin cells that.
We're working with.
With a handful of traditional companies small midsize and some frankly are very large that want explicitly to move into our opportunities. So.
You know despite not having raised the second tranche of money because of the could slow down. The company has been rocketing, you know forward maybe to put that in little perspective.
When we acquired when the fund acquired the manufacturing facility it paid less than six and a half million.
We've we valued it based on the expected lease rates lets say models would be safe and an 8% cap rate is about 10 million. So the idea was we're getting an incredible facility at an exceptional value.
But with the current lease rates that we've already secured signed in field.
If you use that saying, 8% cap rate you're talking about evaluation of over 23 million just for that facility. So that's that's a leap forward and it's been a accelerates. It now the rest of our capital raising activities and as you all know everyone's anxious about.
The fund closing on the two comstock properties or the remaining $9.7 million.
Back.
The rate during $9.7 million that will.
Pay off our debt and leave us with email at least $4 million of cash in the bank.
The.
The fund is acquiring much more properties and getting much more investments. So then than just the two comstock properties, but obviously our immediate interest is getting.
What was asset sales closed I'm. So we can be funded and move on.
I've already talked about our told me stopped position earlier in the call.
The the stock is highly valuable and becoming more monetizable for US you know potentially in the range of $9 million to $12 million or can you just look at what other people are telling us the value should be.
I mentioned that pets that for US most of it becomes unrestricted this month until there was really I'm really impressing us with their ability to intelligently put together pretty remarkable drill program.
They also are reimbursed us about three quarters of a million dollars in cash for expenses.
Incurred during the first quarter, so they're very timely with that we appreciate that extremely well.
Even reimbursed us some additional monies.
In anticipation of some of the upcoming expenditures because we're fully supporting them with our staff and that includes a local permitting that includes federal permitting that includes geological support.
For the exploration playing a drilling so we couldn't Devon couldn't be working more closely with them. What we certainly haven't ever been working more closely with them. Then we have been now.
And we also formalize the remaining number.
It is due to us from drilling know regarding or CERN, which is almost 5.5 million.
Did that by formalizing a note receivable that no receivable has a 12% interest component associated with it inserting a last month.
We are now I'm doing and receiving about $55000 a month, just didn't cashing come from that but receivable.
That's allowed us.
Two now.
We continue the you stop sale activities of the past we did have a little bit that were sold and then the March par outstanding shares or 27.875 million.
It was the number at March 31st that's the number today. So let me just conclude.
And summarize with are just six bullet points of our outlook. So number one this quarter hopefully in the next 30 45 days close on the silver Springs assets get the remaining 9.7 extinguish the 5 million a debt, but the cash in the bank that's number one.
Number two.
Tono launches a their drill program.
It's very exciting it's going to happen next month, we believe there where do you plan to they've already permitted a significant portion of it that's moving forward number three we're going to land the come to you system. This month you start operating this quarter.
That's going to be a big movement forward for us finally, getting that system on the ground and operating than before.
Going to commercialize the second confused system with sand and gravel Mercury enhance unit first in July and the second unit to follow hopefully before the end of year.
We are number five oh really getting to closer to the finish line of our planning an expansion of the geology in 100% won't be in resource. So that we can update our resource estimate you can start putting economic.
Parameters around it and publishing and updated Standalone deep and 43, one to one resource later this year.
And lastly, not as much of the over the went up milestone has just a focus.
We're just very undervalued by any measure of recognizable I mean, it's just horrible in that regard.
Blog that I mentioned it earlier, but you know our immediate goal is to unlock the value that we see in that no.
Driving this 220 million I know, that's almost 10 X., where we are now.
But we're doing things that are tangible that are technical that our reportable that support that kind of number and we're going to continue to push it.
In the immediate term and continue to layer in the growth.
The growth activities of the Dayton vehicles, and see you and then the projects that will grow and follow be it from a cash that gets generated from that money and can monetizations that we effect, but it's all laid out in clear.
So the focus in the value to realize a sharp it's clear and it's happening so Eduardo I think I'm going to stop there and turn to questions and answers. Please.
Yeah, I suspect to ask a question. Please signaled by pressing star one on your telephone keypad, it's using a speaker phone. Please make sure. Your mute function is turned off to lives signature equipment.
I always talk on the phone line will indicate when your line is open and please state your name before for your question.
And that is star one to ask a question of how suggestible, that's hello, everyone an opportunity to sit now for questions.
I have a lot Chico's first question from James style.
Please go ahead.
[noise] flooring Corrado how are you know he brings or how are you.
Oh, yeah, proponents boxes or do we convert.
Now.
Yes, sure simple things you did you think that deferred over Q.
Regular.
No. So we have 6.1 million of preferred as you said convertible and it's not we're not allowed to convert it until may 22nd.
So.
You know coming soon to a theater near you [laughter].
No problem, but then you know some other points within them.
We're hopeful we'll get you ought to get no okay.
Total having access to be able to copone point of view agreement.
[noise]. Good question I think that just so the sutro tunnel.
Which which originates in D. and you know down you know about three and half mouse, you know south of Virginia City.
You know the in the entry so the tunnel is accessible but its caved in at about 200 feet you know in the immediate term.
So in terms of you know and green the tunnel and using it you know in a free moving plays the answer would be no red Sun, So having said that.
He goes right underneath the Occidental, you know on its way up to Virginia City.
And both we and they have identified some meaningful historical information.
You know from prior reports on that show grade.
You know human meaningful grade like high grade you know for lengths.
At that debt that depth is you know.
[music].
14, 15 1600 feet.
And the Occidental has never been.
Access you know in any meaningful way you know beyond you know, maybe let's say 500 feet you might have a working at 700 feet, but it's very very little.
So the point is we know there's great at surface, we know there's greed and immediately but we have huge evidence that there's great adapt so okay. That's so in that regard we'd have access to use the term tunnel data, but they're not necessarily like you know human entrants.
No my.
Sure.
After that.
But apparently part of your who know contract can release that asset.
No.
Thanks generate more capital.
So we have leased and I may have never understood you, but we have at least the Occidental claims.
To tone at home and yes, it's did it's and it's it's.
I think it's getting in your prepared he's an incredible you know partner should we do get paid somebody's further on it that but it's the money going into ground that really will create huge value.
Okay now with total.
It can make their whole mining operations, a whole lot easier if they can access.
Oh, you know get cleaned out whatever else.
Yeah. So let me let me let me expand the thought Jim just one point, okay. So there's not there's mean.
Yeah, there's mean onto amounts.
Sorry go ahead.
Todd Sutro tunnel is not part of the or.
The lease contract is it.
No.
Okay, let somebody else UBIT leases on say.
Right, potentially and and and but you know so that's a good thought I mean, it's a good thought there's no reason to date any further but access to underground at its even it you know apart from.
The Sutro tunnel could could help facilitate a more efficient exploration and drilling it's just you.
You know safety is the sort of the number one issue, but yes. It's it's it's a it's a good point.
[laughter].
[noise] My last question, where he knows the silver spring so no food it goes on that they're out there.
Other property.
Before they paid us all.
Sure.
You know about.
String to them and.
I want to someone else because I think there just sort of like quote unquote your deals around.
No [laughter] no. So it's it's a fair question, but no. So there were the priority in the queue [noise].
And you know in they've already you know paid $400000.
In escrow, we have secured agreements and you know there's a very logical sequence.
The acquisitions right that you know give give the strongest footprint.
The airport and the manufacturing facility as operating assets you know just just the pressure and and the circumstance those had to be first but the comps that properties. Our next in line and it'll it'll happen here. So I think a little bit more patients. It's it's taken forever I understand but a little more patients and.
To be a big win win and I think everyone's going to be extremely happy so its all happening book.
Well I would tell them that though.
Stockholder equalising patients either.
Uh huh.
Last thing isn't.
[noise] took forever for the Oh, we Temecula got your conference call folks can tell me answer, but the first a third of your presentation.
Your.
Your into operation, we are going to bode well use a a starter gravel pack was it have to clean it up and sell the cleaned up gravel am I correct.
No. It's let me explain a little better. Thank you for that question. So.
So basically be area under permit is about a 27 mile I'm, sorry, 27 kilometer long.
Expanse, Okay, and there's literally there were literally.
I mean this quote there so I'd be conservative and say like 1200 Mel's.
All along the expense and so you know along the soils along with the the surface or ILUVIEN mining activities and all along the river.
There is you know mercury contamination its horribly pool.
The the process that we had in the one that you'll see that we even landing here in the U.S. is basically taking ILUVIEN.
From from the the surface and processing it and cleaning it and there is a huge amount of ILUVIEN sand <unk> gravel both alongside the riverbed and end the river I mean, there we were literally in the river you know.
Processing material, you know you know where format.
All of that material. The number one objective is is is to extract out the mercury, including the river.
Clean soils in primary system.
There is residual material that comes out but it's it's not designed for higher volumes of that right. It's it's more designed to be surgical in terms of getting the contaminated material separating mercury et cetera.
So what we've done because it's such an expansion of 27 kilometers of of soils and reverse beds and materials, we've created a higher volume soiling gravel.
Purposeful system with the same mercury controls the same separators the same spyros by British the higher volume so in that in that machine that system, we're gonna be going to areas, where where there's massive amounts of sand and gravel and let's say new be minimal amounts of.
Mercury and gold.
But even mineral amounts even minimal amounts are meaningful so so you're gonna have to system. When one with the primary purpose of processing sand and gravel.
And still capturing Mercury in gold and the other one with the primary purpose of capturing you know it will still put out some cool soils and some clean gravels, but on a much much lower volume skills. So one of the things is gonna be producing a lot of mercury.
Oh, and the little bit of sand and gravel younger using a lot of sand and gravel and a little bit of gold and so but the coolness of it is that there's such a massive amount of construction and there's such a heavy need for you know construction purpose sand and gravel that we have for securing.
All the off takes in the government's even committed to taking the material for their highway in road projects such that it just de risks the whole damn thing you know, it's just you know because there's still you know despite the sampling that we've done and despite the the knowledge that we have loved the mercury and the metals contained in the Mercury it's.
It's still nascent bank, so to be able to land the sand and gravel primary unit.
Make money generating profits continue the sampling and get the second system ready, bringing with more intelligence. It just makes the whole project it actually salaries the project.
But it also.
Makes it safe or in the way that we deployed you know the first system in the second system. So I hope that helps explain a little better.
Okay helped drive the material when it comes out it.
The Oh.
Oh.
Yeah.
Yeah it cannot be.
No. It's not I mean, I don't I'm not expert in that question, but I think you know for for most intents and purposes. It's its initially whack, it's a wet process into west system and in some cases this system will be right in the water.
It's capable to do that right. So, but ultimately you know it'll be it'll be it'll be prepared and and and ready for for the sand and gravel construction uses that we're targeting for.
Well one other thing for you right coming out of the asphalt ready.
Okay. No other ways, you can help celikkol wake up and build your own asphalt.
And sell them.
Moving to go off Walton they wanted to.
Yeah, our partner I believe the our partner Philippine partner because already involved in some of those lines of businesses, so that that could be a wonderful complement for sure.
For sure.
I want to have this I want to emphasize though like our number one mission. Our number one differentiation is that we get the mercury and the Battle you know how did the environment, which is which is huge.
[noise], creating value, okay and huge.
Lets you it shouldn't.
One thing I'd tell you about it as you create value you Gotta get paid important so yes at all.
Yes people might learn keep working here to the market to hear is unlimited I mean, you know I you know I stopped counting like 1500 sites in U.S. alone that have mercury contamination. Okay. So, but it's a global issue you know and it's a it's the UN priority in the U. ends accord that were signed in 20.
He 17 targeted 2020.
Four countries to see a using mercury in industrial mining activities and so we're seeing it right Philippines actually a leader believe it or not in the world.
No telling the miners to stop using Mercury and to bring you know people like us into clean it up so okay. There's just the beginning just the beginning.
No. This may sound clearly, there's some people don't point is you should be generating a lot of sand and gravel isn't all product of goods and.
Be able to San gravel debatable material.
Levels silver or gold.
Oh.
Still has value.
And.
Just keep in mind to open to because if you accumulate sienna gravel, but eventually it'll get away. So you've got to find a way to get rid of hopefully selling.
I am I'm biased I know I. Thank you thank Jim for that and appreciate the question and I I would just you know as you're signing off I'll, just complement by saying that.
I had to be a penny sitting there in the Philippines talking to the provincial heads.
And they kept asking us like why don't you.
Switch the order and get going right away with sand and gravel and you know you know what I said look we're not that's not our core competency.
Quite frankly it is you know Orleans Street has a lot of competency and believe in gravel systems and Paul might be one of the best will reveal miners and processors I've ever met okay, but but that then they said well what what if we take the material for Fourq from you and I'm like you say that again and the rest of history. So we are.
Hundred percent, we have nine permits now our partner has nine permits that all allow for sand and gravel on the entire expand so.
We're going for it. So that's that's the news that's big update is that we're expanding the scope and including their material and I think it just makes everything so much safer so.
Eduardo next question please.
Slots acre nice question from data breach I'm asking investments. Please go ahead.
David When you hear me, Okay, gentlemen, high gonorrhea I can.
Yes, let's say.
I I mean, the mercury of a goal that you're getting out of the gravel I mean, the hub of the tailings.
Yep.
What form is the goal then is it mineralized dessert recognizable as gold and what about Mercury Merck result, a liquid.
What does that look like when it yeah. Yeah. So great question, David. Thank you so mercury in most intents and purposes is in its liquid form right I think it's the only liquid element and that you know if you if you come onto the Comstock.
And and you drill down to some bad Rocky and in some Riverawaves I mean, you could literally have a little ball of silver liquid in your hand, okay. That's not uncommon.
And [noise] and so you know that the.
The technologies that we have or it's a mercury we color Mercury reactor, it's a centrifuge, which is very very effectively you know and then we have you know spirals and separators that very very effectively I mean.
Light years more effective than any standard in the industry in terms of separating the mercury from the soils, you know and and then we have inorganic solution, which is the fourth technology. We have three engineered a process technologies and then we have a integrate organic solution.
That that allows us to too and this is big not only separate you know the gold, but we I think the biggest differentiator of the technology is that I'm not just the effectiveness that high efficiency effectiveness of separating supplemental mercury liquid Mercury if you will from.
Soils, but.
We also have the ability to convert methyl ice mercury so what happens when mercury interest environment is if it pools like you'd expect gravity takes it down the bedrock and typically it you know if it's in a waterway it'll find itself down the reverse.
That's very common okay person river Mercury is a problem because the comstock, so but if it stays in the environment long enough. It will not otherwise it will it will literally absorb itself into the biology and that could be soils it could be a.
Plants it could be fish, you know and when it Netwise is there you know that's has generally been thought of the point of not return your screwed, where we can convert otherwise mercury back into elemental Mercury, that's the breakthrough and the technology and we can do it with organic materials.
So we'll be filing for patents will be protecting your technology and you know that's our claim to fame you know and that's how it can you know without going into the Black box you can't describe how it actually works.
But it works.
So, but no the mercury does it have a value industrially or Sally it okay, yes, and no there are some applications of Mercury.
But for most intents and purposes. It represent you know the disposal in storage of the Mercury represents the highest cost in this entire business plan and model.
In the in the Philippines. For example, the government has agreed and is very critical to us that the government agrees to to handle the you know the.
The storage the disposal the storage of the Mercury, we don't want to see the Mercury go back into the mining environment that would be inconsistent.
I would be you ends mandate, you know and minimize core which is to eliminate it not read we process. It backend right. That's that's the toxic problem.
So you know we have some ideas.
About potential future applications of Mercury, but they're just way too early to talk about and right now what we're trying to do is.
His manage the you know the responsibility and the cost of could safely disposing of it not putting it back into the environment.
Okay, changing the subject just a little bit Tom a goal.
Yeah, I guess, they're gonna be looking for a big chunk of capital.
Given the production.
And your examination of their financial statements and talking to them, but they have a clear path.
They know where they're going to get.
The big Alex you need to produce go.
Yeah. Good question and it made me think of one other thing I may not have said in the call is that.
But I think I did say in the press releases that they they're working very diligently to have fully audited financial statements. There on the schedule of completing.
For audit to with a top you know public accounting firm Markham, they're planning than to file attempting become full reporting entity and they're also have upgraded their board with independent board members.
You know and they've.
Already evaluated in file and prepare themselves to uplift onto a major exchange hopefully New York, but you know they'll be on one.
And all of that activity was driven by a you know a wave of.
I would say more professional capital.
Coming towards the investment so you know they're tracking very serious funds there that are attracting curvier resource expert funds and now they're taking what I would call. The logical evolution of stops break to prepare themselves for that number one number two to answer your question they've lined up.
I believe about $5 million.
Of capital commitments for what is really.
Well thought out drill program really well thought out.
And and exciting quite frankly, and so I think that what we will see them do in the next 12 months is spend.
$345 million drilling that will enable them to publish the technical report that they have technical report will have lucerne as the central aspect.
To that update which is great, but it will also expand geologically.
You know a lot of what you know what we used to that I went there what they're looking at and.
And I think that will that will in my mind represent the next devaluation or revaluation.
The company you know and then I think they would be in a much better posture to then think about you know pass to production and capital for that purpose right. So in other words, there the first priority, which is different than let's say you know a year and a half ago.
Our first priority will be to expand the geological footprint do a meaningful amounts of drilling to prove certain concepts that they've laid out in those concepts.
I'm not speculative per se there they're out there based on a tremendous amount of historic data, but if they can calibrate improve those concepts out just drill program. It's <unk> look out right. There there won't be a shortage of capital in my opinion, because what they will define.
To be much bigger than what everybody's talking about yes exploration drilling is.
Riskier proposition you know then then production and certainly some things that we're doing you think are safer, but Tom, but there's big upside to it in and there are some there's segments of capital that are very excited about it when it comes with data.
And so what would I think what they're doing.
They've been doing is becoming extremely data savvy.
And they you know, it's a small company, but they have some they have a big network of advisors like Super confident you know.
Geological engineers that are that are working with them. So I.
I think there's going to be some very exciting news coming out of the Comstock you know here in the next 369 12 months I can't speak for them, but we're very close now we're working together in a remarkably collaborative way. So it's it's come from Big Circle, It's because it's not a circle. It's just it's just evolved tremendously over the last 12 months.
Thank you for that thank you.
Thank you David.
Well no I'd, rather wait for that.
So I'll take our next question from having bought workouts. Please go ahead.
Sorry are you.
Thanks.
We will take a look at the strategic value targets that you have.
Yep, we're looking at a date in that 75 million back in January six that was valued at 40 million. So it's got up to 70 fives Mercury cleanup.
Was you have value that the two and 3 million a back in those six in January of this year. It was 25 million for each of those categories. So there's some significant shifts in both of Bose.
Okay, and leader, who made it clear address that.
Absolutely, let's talk about it because that's what I want that's all I really want to be talking about is how we evolve that number ultimately hopefully on a path to half a billion, but so with day in let's say, let's just let me just the in really quickly.
You know that 40 million was based on an economic show that are one of our prior Im really excellent senior engineers had had had designed.
It was based on a very high cut off you know him. The average grade of the you economic <unk> over <unk> 0.05 ounces per ton.
Which is which is outstanding you know in terms of an average grade Lucerne by comparison, the mind <unk> at about <unk> 0.0 to nine you know so not quite a double but you know 75% higher.
And the economic showed about a $30 million net cash flow from relatively short mine life, let's say two and half years okay.
So the NPV of that number is almost exactly the same as the number you know it's about 40 million our chief geologist Larry Martin has been doing a remarkable amount of work and that work is based on additional data and additional drilling.
That we did since you know what I just discussed with you. So weird heading geology, adding data building cross sections building level plans keys almost done he's expanded the the footprint of what we know.
And in mind patients for all that work to get them because once that's done then or our senior engineer Mcmoran will we run.
Economic pitch else, Okay, and he will not only add the geology to the equation in the engineering to the equation, obviously he'll change the cut offs based on what's optimal Ah with gold prices.
Second line patients I said, let me just use the smaller show.
He just use the more conservative assumptions and slap $1600 on the number instead of a 1200 and then number went from 40 to 75, so that's simple answer.
And and and I just thought it was prudent.
I don't think it's prudent to put or 1900 dollar gold price on it yet for 2000 1600.
In my opinion was was good I see people now using in the field.
Okay whitewash divided Mercury why didn't Mercury go down from 50 million until <unk>. So mirth, yeah. So mercury when I first did when I first did that chart a they think it was at the annual meeting you know the at the idea and this is still the case right. It could still the case that we're going to target projects and this one.
I would be difficult right, we're going to target projects that have at least $100 million.
Value and by the way I didn't say earlier, but use the Philippines. An example, we were talking yesterday about the life of the sand and gravel.
Easily 10 years, there's going to easily running for 10 years very easily, but we're targeting <unk> hundred million and the way we structured our ownership for them to you because that if we do nothing defense you decides to take the project on you know in an area that.
Maybe we're not interested in participating we get 25%. So that's to me every project you know should accrue value to Comstock of 25 million.
And then.
But we have the right of first refusal to to be have a 50% direct ownership.
In any project K week, where we have the right to first say, we would actually like to do more and be more involved in this wouldn't have directly 50%. So 50% direct and then technically you're getting 25% or the other 50% through M.C. you you get 62.5% and so that's the 62 indefinitely. So that was like <unk>.
Sexual you look we know we got two projects coming we should be between 25, and 62 and half million conceptually and that's still craft. However, now we have agreements and in the Philippines. For example, we are going to I'm going to propose that we do 50% direct because it's it's exciting it's it's economic it's it's looking.
Really good but the ultimately that's gonna be.
62, and half percent of 962 and half percent afford <unk> right. So so what I did in Philippines. It looks the asset values getting that we're going to where now we have a now haven't don't project the asset values 2 million or the asset values 3 million. That's the minimum that's you know those assets or by the way all these mercury systems our lives.
You know mining systems that even if you weren't going to Mercury contaminated area would magnificently placer mine you know the surface metals, you know out of that even if there wasn't a mercury.
So the point there as these assets have value, even if we weren't using them for the specific purpose that we're using four so the low end I'm, just putting asset value into the high end I'm, putting what I believe our percentage of of the project will be and it's now right, so, but but I expect all of those overtime to grow to a minimum.
As we learn more as we have more hard financial data you know grow to 25 minimum and 62 and a half is not the maximum.
Could you know projects can be hundreds of millions, but so I'm just being more conservative with more specific data.
I hope that ending the year to from now there's 12 Mercury projects listed on that on nothing no. No I just don't understand why why have you ever <unk> 25 per and now you're still Yahoo, and I was sort of laying out a concept of what we were targeting and that is exactly what we're targeting but now it's more tangible and I just wanted to be more as we have a good.
We missed their signed I want to be more precise right.
But you know our biggest issue I think with them. So you you know outside of you know just getting the technical proves out to the market. Once we get operating is gonna be how we managed to grow.
You know there won't be a lack of opportunity.
Okay, if we shift over to the Oh.
Ah assets and liability page.
We're looking at.
39 million of assets.
And Ah that that is up significantly from the 24 million that some shows in January.
Yeah, the album and the obligations.
The selling at 16.8.
So in a ironically ironically, the the or change the profile of those net assets there at the bottom of that chart.
You know again I think more conservatively previously in theory, I was showing sort of Comstock land values that was almost in a sort of the liquidation mindset like what would our land be worse and I took that number out quite frankly, so what I did put in there was assets that are now known and Monetizable.
So we have the assets that are have nothing to do with her mind platform that we're selling as you know, but you know the investment and tone is also.
Monetizable asset and we have a receivable from tono.
And we have some debt so I tried to be more pedantic and not like speculate about other values and tried to say look this is money and this was money that we're gonna get.
And I know, it's ridiculous that the net value is higher than our market cap and that's why I wanted just tying that into the market and I've had at least 10 calls.
With new types of investors three yesterday.
I'm asking these questions and you know slowly, but surely you know they like what they like that they're hearing you know as they get they get their head around it.
So and that magnitude pound this into the market.
I understand the 5.3 million the depth, but I don't understand the 16.8 million of liabilities.
And what and what happened to the northern Comstock.
That was 7 million Yep Yep. So the six yes, okay. The 60 million liabilities is is reasonably simple. Okay. So 5.3 that is the debt.
You have about 6 million per reclamation liabilities, which is the you know the long term reclamation liability associated with the you know associated with the.
You know the leach pad.
Okay. So that's not that we don't view that in any kind of near term cash obligation. So you have debt being younger Commission I believe that's 12 to 16.
And the other 4 million is.
Either you know 1 million of it is deferred liability, which is just some expenses that we receive from tono in advance of spending and so it's not a reliability and then you have deposits for them. So you, which we have to show that liability until we close on the actual transaction.
And just have a couple of million of payables and accrued expenses. So that's the balance sheet pretty simple and pretty clean.
And what happens in the northern Comstock, though the northern Comstock is is is a real obligation.
It's about 6.6 million, it's not on the balance sheet weirdly, because it's kind of a lease.
Type of an obligation if you will and so tono.
Has guaranteed and his reimbursing us for that 100% so.
It should still be on the radar screen, because technically we're really obligor, but but we're not paying any of that right now.
But once we close the tone or deal Harvey that will legally also you know be gone, but right now its substantively fun.
Okay, how about the a number of shares outstanding it appears to have increased by over 600000 shares. Yes. So we do this small placements at the end of March because.
I.
Had a strong sense that the asset sales were going to be delayed by a couple of months, which is you know what's happened and [noise].
We just had to ensure that we had sufficient liquidity to get to.
The asset sales and by my math I wanted to be conservative and make sure that you know even if we didn't close this thing until the ended June or July we wouldn't have any issues with that so but relatively smaller in terms of anything we've done historically I don't see any more of that happening in the near term at all.
I'm back down we did have to do something so and I wanted to be out there and transparent 27 million hundred 50000 shares at the end of March 31st It's the same number today and it's the same number that we're projecting.
Oh last question based on her comment based on a valuation why are we not buying back our own stock at this point.
Oh, good its effect, it's attacking tapper.
Yeah, I thought it really wasn't quite as luck.
There's two answers to the question right. The first one is liquidity okay. The first one liquidity and you know we have to be did fiduciaries, but but the second answer which I think is stronger is that look we're going to close on these asset sales were going to land and murky system. We're gonna published for R&D and then if we don't get that if we don't.
I get that Valeo and there is cash in the bank that we have discretion over then we would.
I think we weren't I'd have to your board approval, but but I would I think though that build to order violent oriented but yet.
Well I think conceptually everyone would say that if we did a b C and D and it's real and its solid and done can you have catching the bank and tomorrow and the stock is that a stupid valuation then we would approve buying some that Bakken and show that confidence the market and get the value for ourselves, but big.
I don't think a b C and D and really you know get that foundation, and frankly get to that paid off and frankly had the cash and bank. So, but I think it's all going to happen.
[laughter] nothing nothing happening with the Dana.
We had a couple of people look at it and we had and they seem to interested but we haven't heard back and I think within the last four or five weeks.
We also have an inquiry about you know leasing the whole facility and so were you know with the other assets sales coming to finish line here you know if it isn't going to be sold its value. We think it's worth and you know it could become a nice revenue stream for us and remember to everyone that you know we have 150 million have been operate.
Any loss carry forwards so any revenue that we bring into the system.
For almost all intents and purposes for us the tax rate.
What did whatever we pay for the then.
So the total cost of the entire facility plus the extra 120 acres plus about 400 acres of mineral claims that we saw.
It was really the original reason we wanted it one of the mineral claims that were between us and that property. It means that if just buying the whole thing because it came as package deal was about 2.1 million.
To know if we have one right thinking.
I'm sure we could sell it for 2.1 right now medical then quickly valued by the stock back.
So we haven't listed on in two pieces right now like the the before a buildings on 70 acres for 2.6 million and and 120 acres of freelance or 1.1 million and any offers that we get you know we'll be talking to the people.
So.
We'll be engaged in you know you know.
There are pockets there over I think you're better off blowing it out what we paid for them buying our stock back.
Much better return.
Yeah. So if we could blow it out for what we pay for it and then the very first uses I will be to pay to pay off or debt and then as I said, if we get the other thing done and we had cash and the bank then it becomes an option.
Okay. Thank you Corrado every time, we have that we have to we have to pay off the debt for straight I thought I don't understand.
Yeah. So thanks Harvey Thank you so much either.
All right well now take our last question from Jeremy Harrison. Please go ahead.
[noise] I'd, rather than I speak with you.
Thank you choose resting up I'm I got on kind of late.
Yes that assistance jacking up again, but stars I don't know if you've talked about any of the sampling numbers for a into use as far as run to the small samples you guys rented the spirals or have you got any numbers on that as far as all the time <unk>.
Yeah, well, what we've been modeling.
Now what we've been modeling.
[noise] is very I would say excuse me [laughter], it's been very conservative range, meaning you know we've been modeling grades that I would say here.
Half of Gram per tonne.
Okay, you know and we've got feasibility you know in that range. Okay.
You know I think that you know, where we're believing and seeing a grades of at least a gram per tonne you know and ultimately.
Some of these jurisdictions, there's 2357 grams per tonne so.
You know.
In the Comstock were sort of planning for the lower end to the range you know, what's Abraham Gram per tonne.
But it gets incredibly exciting when the great start growing because.
Sure years, something we Didnt say it I think it's obvious but it's worth saying.
If you compare ILUVIEN mining, which you know, it's kinda, but kind of like a loss thing. It's like a lost our if you will but if you compare rubio mining hard rock mining, there's two or three things that jump right out of you.
One is hard rock mining takes tens if not hundreds of billions of dollars you know to define improve the resource ultimately a reserve.
And then you know tens if not hundreds of millions dollars to build facilities and can process it and usually the lead times are.
Sadly 810 years right to bring something into production so tough business right.
Rubio mean.
And then MCV system on average three.
$3 million and when I say $3 million you have the entire system you have the Mercury technologies.
Have learnt metallurgical lab that you have portable retort, you have a water system I mean it hits. This thing is impressive okay 3 million Bucks.
And could it throw off a million dollars a month.
Oh I had two grams easy.
Easy.
Okay. So so.
The speed the cycle time, the throughput the low capital fast return.
I mean, I don't know, if I'm weird, but like I love it.
[laughter] like I was going to I take it you know any day over you know the hard stuff right and I guess I don't Wanna Disparage, you know hard rock mining be open pit or underground at all because I work, we have a love affair with cold.
And that's our core competency right, but if there's ways to get package faster.
Deeper there other risks, obviously, a tough but the biggest one is is how well can you sample you know I'm you know how to how often you sample and confirm the amount of material. That's there and in some cases. The answer is gonna be easy you know you just got piles of contaminated stuff.
Other cases were earlier in the river.
You know, it's not it's not as easy.
And that's why the sand and gravel a component of our of our next business is really a a wonderful evolution because it gives us.
Conventional cash stability or you know well well you know, allowing for all the upside become as we get the Mercury and gold so.
Does that answer the question that's that could I guess at this point.
Yeah. It does I was just curious if we would ever get any actual numbers from that I know you guys are in a sample and they will be as soon as this is yet to size the system yeah as soon as the systems in place up and running well start sharing the you know I'm you know you know with the regulators and everyone. You know the grades that we're putting in grades that we're getting out the efficacy of the system how well it.
So you know doing all the things it's supposed to do so right it's coming.
Okay, and I I did have a couple just a clarification because.
Yeah, Let me equipments then on order for a while I think the first mentioned longer caught bleed back in October.
And there's just been.
People kind of guessing what what kind of whats the holder positive design changes was that and then if I also think too there's others too simple yeah. Two simple answers you know, we we we comstock slowed down the funding.
And spread it out over time, you know in part because we needed to but in part because you know has the winter sort of came in you know it's sort of if you missed the November December window, which we kind of slowed down to then it doesn't make sense and then we targeted March and everything is built in Daddy Oh.
Needed to be was powder coating painted and we assembled and went to covert thing hit the via the powder coating company that we use.
Down.
So the good news that they've been up now for about a couple of weeks and you know we expect within a few weeks it'll all be here and we're very excited about it so that's what happened there.
Okay, Philippines, the Philippines, you know, we really were not thinking about a second project until we got to the tail end of the Comstock.
Work, but the markets sort of coming to us on that one and demanding that we go faster, which has been a little stressful for US you know because you know we got to build two systems and we got to get moving forward and again, we're trying to manage capital and manage.
Yeah, I, usually you know, but it's all it's going very well.
Okay Fantastic I I guess, that's than the one thing because with the scalability of it from what I understood and in the Philippines, let's not talk that would be.
I guess, you're trying to understand exactly how.
Has already done already done some scalability testing.
As.
Ours the process because you know to take on a Philippines projects. It's just not proven so yeah. Yeah. So let me answer that question in there.
Yeah, No that's a good question so.
So in substance the system that we're landing on Comstock is is gonna be in up to 25 ton per hour system.
It's it's from metabolic is impressive but in the Grand scheme of things. It's a smaller rate cuts capacity. Okay that is by grow intention and design because we want to a trial. It at two tons Brower four times per hour.
We want to have heavy involvement of engineering, we want to have heavy involved that regulators, we want to make sure that we can perfect. You know the scale ops and perfect asked me like you're in the high nineties.
Efficiency.
And so and so that that you know that system is going to be our last.
You know you know sort of proof of concept. If you will to how high that percentage can go okay. I don't want to bottoms and use that I don't want to confuse that with the fact that these systems are already very efficient <unk>.
<unk> eat rice that 90%, 91% I don't know like but their official they already work. So so you know depending on the project and depending on the needs right. We can deploy now.
You know so gotcha. So so so it doesn't apply to win the Philippines, what size or yell Plano sitting there and how many of them.
Yeah, So let's say two it let me say two other things to the exact question. So first of all despite the system being as impressive as it is and is let's say big as it is.
There are all mobile believe it huh, okay. So our at Comstock that there's 25 ton per system, we're going to be.
Getting material on the test bases for up for all intents and purposes at those levels and bringing it up and processing there I'm test basis, it'll be it'll it won't be continuous like we'll be running trials will be running campaigns. If you want to think of it that way right.
But but you know.
Let's say there wasn't enough material. We you know we can take that anywhere we want we can take it to the Nextcyte. We can take it to the next I would you got the permit its use at that site, but the equipment will be used again and again now the idea is the idea though is to then scale to 100 ton per hour system.
You know I don't know as Paul has a notion of of optimal and his head, but you know I think we've we've heard and talked about you know one to 200, maybe one to 310 per hour. One of these the objective is to figure out what is what is optimal what's the larger scale that we feel good about the Philippines system. The.
First one that remains to be sending I think is gonna be like 50 to 75 come prowler.
Okay lot of rock I saw that sized for the the top hard over the river and the rugged nature of the environment that it's going to be it now at the bottom part you know assuming there's you know the sufficient mercury and Tim Nations There too you might put a much bigger system in the same.
An example, satellite is bigger, but but but its bigger for sand and gravel. So that's good yeah. So its that's the range I think that where we're okay is that system currently being built or.
So right just to recap the Comstock systems Bill, it's being paid in powder coated rightly sand and gravel system is I think the be system, except for all the Mercury additions is built I seen pictures of it because but there's still work to do for that with the centrifuge.
You, Jim the spirals and those kind of thing so it's in progress and then and that's the sand and gravel equipped unit and then the third one has not been started yet.
Okay.
Last question that person I thought I try to get on last call no problem, the leach pad, what's hot Tronics.
Yeah, Sonya evaluation, what is the plan with that.
Or is that.
It's that part of the new clean Tech. This reference yeah, yeah, what else was so <unk> timeframe that so yeah. Thank you for that so that's that's great. That's a great last question because it's the only questioning that really didnt get aggressive so.
The we really really like you know the thiosulfate based solutions and you know Dr. Whitney that are Tronics isn't it is a deep.
Oh, it's an evolution of that at something even you know technically more remarkable and we like it a lot we think it's feasible.
Hasn't we just have we just have not been able to prioritize the final design of you know essentially what we want to do there is the same thing we're doing with the first Mercury system here right is build the system, that's not to the ultimate scale, but to an economic scale that proves the concept once and draw.
Having said that we have signed some additional MD eightys with some remarkable technology. That's completely you know it's different always organic oh easier wasting it's in its objective.
And were Hell bent, we're hell bent on the notion of.
Of commercializing the reprocessing of those tailings.
Okay. So those materials bigger buckets, the it's the lowest priority of the list, but it's on the list, which be right priority right.
Gotcha, and so yeah, there will be news coming on that I'm, a little bit longer term, a little bit stuff, but it's we're hell bent on making that work and I think we know enough to see a feasibility then we just have to prove that then to the world like like we're doing well Calgary and then it goes from there.
Fantastic was great talking to Colorado, and I'll get Lucky you got stay safe.
Thank you same and I, you know I'm Eduardo as we wrap up and close I, just like to apologize because I do know.
I don't know what the cause of it is and you know exactly follow up with a more go after this call, but you know about people did have difficulty getting in at the beginning and yeah. You know usually I leave a few extra minutes to allow for some of that but I'm just seems like it was a bigger issue than that we will absolutely address it I apologize.
As for it if anybody wants to follow up with call. It. Please reach out to either exactly right directly and down we'll we'll take every step to make sure that it doesn't happen again. Thank you all.
[noise] five snow.
That concludes today's call. Thanks, you for your participation you may now disconnect.
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