Q2 2020 Comstock Mining Inc Earnings Call
Good day and welcome to the Q2 okay.
Today's conference is being recorded.
Let's turn the conference over to Mr. Corrado just series.
Thank you Casey and good morning, everyone. This is corrado CEO Comstock mining in line with Saks Spencer, our director of external relations and Treasurer and we welcome you to the Comstock mining second quarter 2020 conference call.
I'll provide a brief summary, the information included in our press release from this morning.
During our progress on our strategic initiatives, especially with the word mercury remediation business.
If you don't have a copy of today's release, you'll find a copy on our new website at www Dot com start mining dot com.
Please just click on the press releases.
[noise] tab excuse me on the main menu bar.
We will file or quarterly report on form 10-Q next month on time, most likely on or before.
As 14th.
As we finalize our full Q2 financial statements.
He also let me remind you that we will make forward looking statements on this call, including an update on or 2020 outlook.
Any statements relating to matters that are not historical facts may 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 to differ materially.
These risks and uncertainties are detailed in previous reports filed by the company with yes, you see and in this mornings press releases and all forward looking statements made during this call are subject to the same and other risks that we can't necessarily identified.
Okay, let's jump in.
Our aligned our realignment.
Which we've been really working hard out over the last year.
It is complete and really now all of our daily activities are designed to simplify focus and accelerate our business activity. So we're starting to see already in the last few communications.
Movements, and we're driven identifying develop only economically feasible gold and silver in the ground validate it through our technical reporting in our analysis.
Communicated in the way that the market can better value and then grow that value from there.
Despite some of the koby delays mainly relating to the M.C. you equipment manufacturing over the past few months.
And some of our coordination on international travel in shipments relating to the Philippines.
We feel like we're now fully driving gold and silver developments forward toward our goal without any other delays.
Our goal is to grow or intrinsic value to 500 million with an immediate objective.
Realizing 120 plus million for four plus dollars per share in the near term.
Advancing all the known components of our business plan.
Those components are one M.C. use comstock deployment, which is starting this week.
Number two M.C. use Philippines deployment, which is starting next week.
Number three d. in Standalone resource estimate, which will actually occur under the new.
C C S. K 1300 regulations, which represent newly enhanced and modernize disclosure requirements for U.S. mining registry.
We may or we will likely represents one of the first if not the first U.S. publicly listed mining companies to actually disclose our resource estimates in our U.S. filings. So this is.
Long overdue.
I will talk about that a little bit more later.
For the <unk> updated independent resource estimate ultimately coming from tuna gold [laughter] number five Tony Gold's exploration and development work on Lucerne on the Occidental and on the other northern exploration targets that they put in the scope of their next development plan, which is very exciting.
Next Sears springs opportunities owned in the advancements there to including the sale of our non mining assets overall those assets that we are selling to the opportunity fund.
$10 million under contract, but our total.
Non mining assets are valued at 25 million and that's actually met of subtracting our $5 million a debt. So net 25 million of non mining assets.
And then royalty holdings and equity holdings on all of the above add more so ultimately we're driving towards the goal of 500 million realize value.
By implementing many more instances of these cash generating Mercury D gold and silver projects and expanding our existing gold and silver holdings.
The outreach that we're getting in regard to mercury remediation from other companies from governments from and Joes.
It is almost unbelievable.
We've recently reallocated some of our internal resources to more mercury and environmentally.
Expert resources subject matter experts for managing this growth. If you will so let me start by elaborating on M.C. you as you know we've partnered and launched M.C. you Mercury cleanup LLC, our clean Mercury remediation high growth venture.
With our first two projects now finally, becoming operational yesterday supporting equipment began arriving on site and we expect the core Mercury remediation system to start driving tomorrow. We've included pictures in our press release.
And as you can see out from those pictures the systems impressive its itself, it's not a toy a this is an incredibly sophisticated 20 foot hi, extensive ILUVIEN mining system with state of the yard.
Mercury, Oh centrifuges Mercury reactors some of the most precise spirals and separators and the industry [noise].
In all put together a remarkable remarkable oh system.
Amps. You has also worked very diligently me personally and the partners with M.C. you on the front line.
Enhancing our definitive joint venture agreement with our Philippine partner clean or solutions to to partner and lead in the cleanup of the Bock River in the Philippines with permits secured and now legally formed.
A new entity called M.C., you Philippines, Inc. So we've we formed the entity. We've provided initial funding we completed the first mercury control enhanced sand and gravel system.
That's being prepped as we speak for international shipments.
Ultimately Comstock long, 50% of this new entity M.C., you, Philippines, Inc. and 25% over all of the parent company M.C. you sticking to the model of us participating in 62.5% of the overall economics I'm skews overall economics certainly in.
The case of the Philippines.
We plan on having two systems deployed in the Philippines. This year and that is still subject to some potential covert delays that are still quarantines and other things and in effect that is making it difficult for us to get over there as timely as we want but ultimately we're going to ship very soon here are up to 70 ton per hour.
Mercury system that I, just mentioned and then and then I'm, sorry, 150 ton per hour Mercury system that I, just mentioned and then another 75 ton per hour Mercury system and each one of these systems is being custom designed in sized.
For the specific application that we're sending it over to perform.
When it comes to UBS you.
All of the models that we initially built you know were based on 1200 dollar plus gold. So again, we cannot think of a better time to begin deploying these systems to be in processing cleaning up these contaminated materials.
And extracting the gold.
You know, obviously now $700 higher than them. When we first started evaluating this process. So we certainly expect positive cash.
From this first Philippines system being deployed this year.
Let me turn now to date, and we're expanding dayton's economic resource, meaning that we're in the process of completing the geological interpretations and then ultimately the engineering for an expanded pit shell. So we have mentioned before that we retain buried Dolbeer you know to provide a standalone updated.
Technical report, but now we're discussing directly with them the project as a U.S. compliant S.K. dashed 1300 technical report.
That will include an updated resource estimate as an aside.
You know the U.S. government, meaning the FCC has come out now with modernized reporting requirements under S.K. Reg S.K. 1300.
This is long overdue most of the rest of the world, including Canada with the National instrument 43, one on one had taken the lead in ensuring.
That there is sound and strong guidelines for reporting a resource estimates and reserves and [noise].
Mining projects on the U.S. had always been deficient in this regard sort of falling back on the oil and gas Guy seven standard.
Now with the new as the new rules, which can be early adopted this year.
We will actually be able to not only update our technical reports, but an unprecedented for the United States include those technical details, including resource estimates in our filings our filings, meaning our 10-K's our 10-Q's.
Our as threes, you know all of our.
Required FCC filing. So this is a this is a massive market shift in my mind, and we look to be a leader to provide more substantive I'm more clearer and more transparent technical reporting through our filings as we go forward.
Even before the technical report updates and the updated resource estimate.
Based the current valuation of de in resource, which is what we're talking about here.
You know based on an economic show that was developed quite a few years ago using an 800 dollar a gold equivalent cut off we have not yet reengineered or expanded that pit shell. That's what we're in the progress of working on and working towards.
But we have shown that if we use a current gold prices.
On that economic show the old economic show and I'm not even suggesting.
Reengineering the economics of that show just literally taking the old show and putting a 1950 gold price on it which is you know where we are as we sit right now it shows a cash value of over $100 million. So.
A whole that you know thought with you with Deacon has I turned took the Lucerne as everyone knows on Lucerne, we partner with total gold.
Rework the Lucerne resource estimate I believe that they will and should fully report that under the Canadian standards, and I 43, one or one which is outstanding and they'll be updating.
Those standards as well you know based on the current environment, which which makes the Lucerne resource quite compelling.
There are also expanded some of the clean groupings east of Lucerne, so that the actual footprint of Lucerne.
Is bigger and they've also started very incredible good focus on some of the southern extensions of the accident load, which are adjacent to the Lucerne and of course, you know the other claims that have been leased you don't storey county. So you know tono has put together and credit.
Really well planned well conceived inexpensive drill program I think these are going to be very exciting you over the next few years and I think things are going to be very exciting.
Summer you know as as they get moving they've lined up the capital they've lined up some of the initial required permits they're working very effectively with our team and their team and the the community.
So its you know, it's just a matter of time before.
Rig start turning again here in the Comstock, we've actually had some deliveries of drilling surprise you know start to arrive last week. So things are getting active in their moving forward.
Of course, we're still owed or just under $5 million from tonal gold on Lucerne.
Who recently paid us about half a million dollars early.
In June we have also retained one and half percent NSR royalty.
Lucerne as as most people are aware and we also about $5 million worth of Tono preferred stock and over 6 million shares of their common stock. So at June 30.
Equity holdings of those toner instruments was valued at over $10 million and as far as I can perceive you know everything that's happening with Tono tone knows.
Work efforts told those liquidity totals.
Dan Smith, it's all positive it's all improving if we valued that stock.
Just to today's current share price it would be worse over $313 million not 10 million as we reported at June 30, So [noise].
From our perspective, its still fair very fair to say that with all the work that tone those lined up and plan to their exceeding expectation with much more to come from here.
If we summarize all of these resources you know we're layering in the value of Dean we're laying in potential values to us of Lucerne M.C. you the opportunity fund 10 or non mining assets.
Because you can see from information that we've published previously that delineates and adds up to quickly over $120 million. If we just realize half of that value in the market will get well over $2 a fair on our way to over $4 a share all of our efforts to date have been to better D.
So who we are better delineate what we think those values are.
And I think Oh, we're starting to see it slow it's painful, but we're starting to see some of that value.
Get unlocked in our share price, but from our perspective.
Once the Mercury systems are turning once our non mining assets begin to close on those sales once our debt is gone.
We'll start to see in it or next.
My opinion, you know an acceleration of that value recognition I can tell you from my perspective, and I'll repeat this I don't expect us to have our debenture.
At the end of this quarter.
And then I would ask you to Mark My words on that we're gonna get rid of that debt and and we're going to move these business projects forward. So having said that let me, let me turn nor financial position and outlook and then we could turn to QNX.
At June 30, we had total assets of almost 42 million, that's the highest that our balance sheets reflected that I can recall.
Clearly, we're trading well below our net book value as I, just mentioned which is ridiculous.
When you consider the gold and silver resources that we have in the ground and the $5 million about $5 million receivable from Tono are not even reflected on our balance sheet.
We also are going to show meaningful profit here in the second quarter, and that's driven primarily by a total of about $1.7 million and gains that's a realized during the quarter on our equity in Tono I'm, so when when when their share price improves.
The value of those instruments on our books get mark to market and <unk>.
It gets recorded in the piano. So we're going to show a profit the reason that we haven't finalized our financials for the quarter as of today is that we believed that we also have some additional gains on the note receivable that we formalized the tone of gold on March 20, yet.
So.
Where we're actually certain that we're gonna have additional gains and so the valuation experts in the auditors need to properly review and audit all of those estimates and those calculations, which is totally in progress.
You know if it if it ends up the way that's where we're calculating everything now we may actually even end up with a profit year to date or not just for the quarter.
Based on these gains, which I'm really are driven from the favorable conversion features that are embedded you know both in the equity and the receivable instruments from the equity instruments, we'd been accounting for it all along because they've been around for over a year, but this receivable was just formalized I'm at the end of March right. So it's a new thing for us.
And it'll get wrapped up in it'll all be positive for us I guess I'd just conclude on that point that [laughter], even as a former expert accounting this derivative accounting stuff, even even though it's favorable to US you know both economically and from accounting perspective.
It makes my head her and I wish it didn't have to think about it.
Our silver Springs asset sales are now I'm moving forward again, the fund silver Springs opportunity fund.
Spent most of the last three or four months working on local economic development, bringing in companies into the manufacturing facility.
Just had our first tenant at the Silver Springs Airport, a break ground building, a new hangar and bringing in a new business, which will be retrofitting.
King Jet Air you know a planes. So that's it's very exciting.
Tremendous amount of of non U.S. interest coming to the fund, which is not not wasn't intuitive in the beginning you know we've got interest from Canada was got interest from Mexico, We've got interest from Australia.
And there's there's just seems to be a big interest in non U.S.
Money coming back into the U.S. and that would be in addition to the huge inflows that we continue to see.
In both people and businesses coming in from California. So it feels like things are back in the saddle when things are moving forward, we got meaningful investors looking at the fund so hopefully.
That will all get done in the next 45 days and those asset sales to the fund will be completed.
That will be landmark for us because 10 million a proceeds obviously wipes out or debt and funds us in a very very strong way. So let me just summarize.
Six bullet points, you know for outlook very quickly and then just turned two questions. So number one we will monetize non mining assets. This quarter again, Mark My words extinguish our debenture.
That's that's happening and it's going to happen one way or another a number two M.C. you will land the Mercury remediation system. This week, we'll spend the next two weeks assembling training commencing test operations. This will be documented you know you know photographically from video perspective, as well into the extent you know appropriate will be.
Sharing it is as much as possible I'm. So people can see and feel what's happening number three M.C. you Philippines will ship it'll be the first unit or to go out internationally.
We look it to be operational this quarter, Oh, that's or you know.
Our second overall unit, our first unit to the Philippines, and we expect that unit to have positive cash flow you know in it before the years out over there. So that's very exciting for us and before toner has received drilling permits they they've got more in the queue everything's going very well there.
They're drilling and development plans for this quarter as I mentioned are exciting and they will commence in due course as everything comes together I don't see any negatives there lot of coordination.
A lot of planning and a lot of good things coming number five you know we may be the first public company to adopt pesky 1300, just to be precise. The requirement is it is not to have to adopt it for 2020, but to have to adopt it for 2021 or we may be in a position to would be the.
Early adopter in 2020, you know regarding or 100%, who didn't resource timings kinda perfect for US you know we were planning 43, when a one update but this will supplant that it'll be a better or equal to or better, but certainly better for us into the extent that.
You know were prohibited we were prohibited you as companies are prohibited from including any of those resource disclosures previously that will change now for people. Following escape 1300, so that in my mind will provide.
The highest level of disclosure the highest value of transparency to our investors and the community.
Number six or you know lastly, despite you know finally getting some.
Signs of our.
Proven in our stock this past quarter, which.
So we're we're take were not upset about its still ridiculously intermat undervalued by any measure that we can imagine we're going to drive towards this intermediate point of 120 million. That's over nine times, where we are now by compensating. The prior you know five objectives that I, just mentioned and being is clear.
Sure and concise about that we're focused we're focused on just realizing its value based on these activities.
And yeah, we look forward to filing the full 10-Q in August on time of course, as I mentioned as we finalize some of this derivative accounting stuff.
And I think that's it Casey I think I'll stop there and we can turn to questions [noise].
Okay.
Yes. Good question, you made press star, one and telephone keypad.
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Okay, We will take our first question from call, Thanks, and a private investor.
Hi, Carl <unk>, how are you doing good good good doing good yeah, I would like ask a question several weeks ago, there, where they see Edgar filing.
With lets just in resources in Triton funds.
There.
Would you please elaborate on that and it appears that it's your option to filled and stock.
Could you comment in terms of future dilution, you're talking about getting rid of the debt is it could be necessary.
For two draw down on these these funds and dilutive.
Yes. Thank you Carl for the question so.
There were two filings.
The first one was well the first one I'll mention was less than resources. This is a an equity facility that we've had and you know we've had a variations of the in place.
Over the last few years, we've we've hardly used the facility during 2020.
Which is very good very welcome change, but it's important for us to have the facility in place that was two and a half million dollars and it would only be our intention to use that facility as it was absolutely needed and it wasn't put in place.
For the purpose of I'm, drawing down to pay down debt I'm certainly would be available for that if if that was required but we don't see that that would be required. So that's number one so that's really that's in place.
We've always had in place, but I guess, we've always will have in place and hopefully the trend will continue.
At our reliance will go from you know are being heavy on those facilities. In you know 18, and 19 to be very very light in 20 to hopefully ultimately not being required at all so the trend is our friend I guess, but I'm always be that facility in place in terms of the other filings that was a direct placement.
That's not a facility that was a direct placement of $1.25 million with a fund.
That.
We use substantially all of those proceeds for funding the Mercury a business.
Ultimately you know, we had hoped or to have some or asset sales down a little bit sooner.
Coated kinda delayed that on us. Unfortunately, we're still driving very very hard on that but the Philippine opportunity frankly.
[noise] you know to double edged sword, you know that the government has been really driving us hard to get over there we could not.
Feels more support you know more alignment more.
Motivation with us to get those systems up there I think the Philippines will ultimately be recognized as a leader in sort of embracing the minimum out of convention and really working hard to to stop artist and no. One small scale mining use of Mercury. This is the U.N.
You know biggest push.
We didn't initially expect to be deploying you know our first project outside of the Comstock until at least a year. After we were operating the first system on the Comstock. So it was it was somewhat unplanned if you want to say it that way, it's a good problem, but that money.
From that fund was was a direct placement and that monies already going towards you know the Philippine unit that was already built you know some of those some of that building was done in advance of the funding, which we were grateful for 'cause it allowed us to to stay on track and the rest of it will go there.
Our as well so does that answer the question Carl Yes, So Triton, it's already done that's passed 10th.
It was done it was closed it was funded substantially all the money goes to the Philippine.
You know the unit first if you will which is completed so that when someone there kind of was advance funded and and then we put some be put the money in and then for the working capital to ship. The unit established the camp over there get some of the local equipment organized around.
It.
And get up and running and I think that unit is gonna be cash positive.
Within a couple of months of of it you know being set up and running the only the only.
The only thing about that is you know we need our team you know to get over there you know we ship it let's say we ship it next week or the week after within the next two weeks.
It's gonna take three or four weeks to get over their landed released through customs at that point, we need to be on the ground. There you know setting up in training and operating and you know Philippines like you know like Nevada still has to be quarantined you. When you fly in Manila, We can't go over there and get stuck in Manila for two weeks we have to.
Actually get to Deval and get the team now we have local partners. There that are doing a lot of the supporting Burke you know a with the JV, but ultimately paulk lift has to be there himself to set up the equipment train the team and get it up and running fully so no. It's.
It you know I'm sounding kinda monotone, but it's one of the most exciting things I've been involved in in a long long time and you know it seems your t. now like every other night I have 70 E. P. M calls you know with the Philippines and it's the next day you know not just be the whole M.C. you team.
You know, we're we're you know both our attorneys are partners.
Ah you know everyone over there just working together and everyone feels behind schedule because of the government's you know real motivation to make this happened so very very good positive.
That sounds like the I'm just concerned about the when they get stock. They are they getting 144 stock or are they getting free markets.
So.
He answered these two announcements.
Hammered pretty good from a dollar five down to about 60 cents any kind of coincided with these two announcement.
And they all get.
You know they kinda listed discount.
You know weighted average and stopping.
HM.
Certainly not casting that's versions I don't know either no no no socal, so let's just comment.
Yeah, let's just comment I mean, the they benefited from a lower stock price it would get more shares and.
Yeah, no. So so in both cases, the we direct the pricing in other words, we do not we won't do a deal if we don't know what the prices, we won't we won't subject ourselves to that and we didn't in both those cases number one number two.
It seems like any time, you know we file a pro something I understand this there's there is a negative reaction, but I feel like both counterparties or you know people that we vetted you know and that we you know certainly 11 since case, we know very very well.
And you know and Triton's case, you know there scheduling to come out and bring some of their investors to towards the site et cetera. So you know are feeling always is that we want to build.
The stronger base of of capital that stays here, but when we file a pro sup its its registered stock Carl it's not restricted stock.
To answer that question.
Okay. So you don't you don't you don't know for sure, but you know we do our best to you know to be positive. It was again I'm not asking aspersions brick wall Street, Yeah. I know you know so if you can make up yeah I.
Yeah, you are presented acquire on that one I'm with you 100%. So we're just trying to be as careful as delusion possible. Our goal you know our goal you know not not through registration statements or stock sales, but our goal through our investor initiatives are that you know when we look at our top 20 shareholders, we like what we see.
Okay.
But it they're necessary there, they're committed with us, but they're not sufficient so what we would like to see a four months from now six months from now is additions to that top 20 by people really believing in in the 120 that were getting immediately driving two and then the bigger number that we.
We will continue to pursue after that and that we just slowly, but surely hopefully faster add more and more shareholders to the base rate and hopefully those shareholders. You know who are you know have their arms wrapped around $22 million value will have their arms wrapped around 120 million 220 million 320.
And it would just keep growing if there, but we need a stronger base.
So.
So there's a lot of short money on it somehow you know migrates around certain industries, and we're doing everything in our power to avoid it.
It's a very good uptake I appreciate it. Thank you thanks, Carl I appreciate it too.
Thank you.
Your next question from Investor Harvey not Mark that.
Morning Harvey.
Across the area.
Very good how are you.
Yes, I can can you hear me.
I can't thank you.
Okay. Good have you copyrighted that'd be copyrighted the term environmental minor.
[noise] I love that term I'm, writing it down [laughter].
That's a great term.
Maybe a good place for us to be using considering what we're doing that.
Yeah I.
It's funny like I've never heard the term before but I feel that's who we are.
I'm not not go not because of and see you by the way right. You know we've gotten three the top you know steep.
Nevada, you know county, and Federal Government Awards for Environmental Excellence, I mean top of the food chain I believe that those activities.
Not only a attracted the M.C. you team to us, but also the Nevada Department of EPA, who we worked very closely with on the Carson River Mercury Super fun.
You know directing people to US you know almost like a like a partner theater.
Because we are environmental minded.
Yes, its copyright well I would certainly jump on it right away.
Yeah, It's a great idea, let me let me also say to you.
That weve been reached out to.
When I say, we I want to see M.C. you, we've been reached out to by.
The United States, You know environmental Protection Agency policy group in Washington, We've been had full conversations with the state department and them about what we're doing in Mercury remediation.
And the conversations could not be more positive I'm you know the U.N. adopted the minimum Arctic convention in 20 late 2017 with an objective of removing mercury from and this is an important term that we'll hear more and more artist snow and small scale mining the acronym is either a ass.
Or E S C N, depending on who you talk to.
And the World you know through the U.N. has has rallied around eliminating mercury certainly overall, but but in particular from artists no one small scale mining our system.
It's not only fully designed to do that it's not only paulk lift.
And Oro industries core competency building. These these smaller scale mining systems, and they're not small they're not toys, but you know, but but but but there's not a lot of people. We don't know anybody that could both clean up the environment.
With our systems.
Like we're doing on the Comstock like we're gonna do and then the Bock River, but actually then the systems can on a go forward basis.
Mine chemical free.
Without the use of Mercury and so this is what raise the eyebrows of not the regulators.
We worked very well with the U.S.C.P.A. District nine district, <unk>, you know in Nevada, EPA regulators there they're good people, we were partners, but the policymakers, saying that you know the goal is to implement minimum auto and you know where we believe were.
Well, we believe were the best solution for sure, but we're not even sure we see anybody else doing it. So this is going to get very exciting we hired an archaeologist who worked who worked for many many years with abandon mines in in Nevada, The federal government BLM abandon mines group.
There are literally thousands of abandon mines in Nevada of which a very large percentage of than I have mercury contamination. So the mark I can't even get my head around the size of the market you know, it's it's just global.
So we're very very excited about what's happening we're working our asses off I shouldn't swear we were working our butts off because we're having a hard time keeping up with it all and that's why we're where we're not we're not adding cost actually to our system. We're redeploying.
Some of the cost we're reallocating so we've hired to do environmental managers, whose run mine sites. We've hired the archaeologist who's looking at the markets for Mercury and of course, the the M.C. you team is working 24 seven to get these systems Bill and deployed.
Okay.
As Mark Reichman from noble capital on this call.
So I think Zak with no I don't I I would suspect the answer is yes, but assume he is and say what you're going to say and then I'll convey the message if he wasn't [laughter].
I've been reading over the research reports that the noble put out and they've got a market prices for a $4 in 50 cents or yeah is that is that to be understood to be within a year.
[noise] [noise].
I don't have the report in front of me typically there's 12 month targets, but I don't I don't know if if if that's what Mark man I got to be honest I have to double check that and get back because you what we know that did weird.
What does your card.
Yeah, Mike My my feeling is you know we're going after the 120 million that weve delineated as fast as possible and and it's not going to be linear right. I think what's going to happen is you know when we pay off or debt, you're going to see a step up.
When we the first unit is operating and people can see videos at operating you're going to see a step up when the first unit generates cash people are gonna start to project totally shut like what if we have 20 of these units deployed you know so so I would say within a year.
Yep.
Okay. What is the what does your role with the opportunity fund Silver Springs opportunity.
So I have a huge ROE right. So a win win a year and a half ago. You know the board of Comstock approved me to coordinate the the facilitation of setting up the fund the facilitation of you know building governance team around it and then management team.
And and I was working very very hard to do that and one of the one of the things that became evident is that and <unk> that was driven almost singularly by Comstock wanting to monetize it silver springs assets at the highest possible value so that that was.
Why I was commissioned to that.
But what became obvious I I knew but became much more obvious was that you know there there wasn't a lot of interest in the investors in just buying one piece of property frankly, or even buying two pieces of property. You know you had some real estate developers. They showed some interest but you know the project is on.
Bigger scale, and there's positives and negatives to that the positive is.
You know, there's so much flowing into northern Nevada, it's hard to exaggerate. The negative is silver springs require some infrastructure you know and you know and if you were going to do one project you might not be inclined you know to build roads and build sewer systems. You know you couldn't it'd be hard to justify with just one project and so.
As we were forming the fund and bringing in some really good people I mean, the people that invested in the fund our World class you know as far as I'm concerned and and so the thesis expanded to you know, let's not just acquire a couple of really good real estate development projects lets consolidate the deal.
District.
And you know in a way we're carrying a page out of what we did here at the Comstock you know consolidate the whole district instead of consolidating around you know one of them most historic silver discoveries on the planet we're consolidating around.
Massive state infrastructure, you know in terms of you know USA Parkway Highway 50.
And much much more so so then I just I was into met with all that so I started negotiating on behalf of the fund you know and then ultimately we formed the fund with me you know I had to go back to the board of course, you know taking a leadership role you know in the fund. So we have management we have aboard.
Yeah. Its independent Comstock will benefit you know not just in getting very very great premium value for property, but also retained ownership. So we ultimately expect that we'll have about 9% of the fund and you know that funds potentially could be worth you know a couple of billion dollars with with what's being pulled.
The other here so.
You know both in my role that Comstock in my role in the fund you know it's to create maximum value for shareholders and I think that's what we're doing so the answer your question I'm running the fund I'm not running the businesses underneath it right. So I responsible for pulling together the consolidation and helping to raise the capital.
You know to fund.
If if that's clear and what will be you know it's it's the the fund by the way is exempt from registration under what's called regulation D.. So it will raise up to $50 million you know privately but its the only funds that I'm aware of opportunities on fund I mean.
That that has committed to registering the stock and listing publicly so so if there's anybody anyone interested in investing in that fund you know you could reach out to me directly that's not a solicitation or anything like that it's just an expression of information [laughter] good on the on Mercury.
Cleanup worries, but you get a 1.7 billion cash and stock. So we're going through five oh, but with cash what was the value of the stuff.
No. So yeah. So let me answer that question very very carefully and clearly so the first agreement which was done in June of 2019.
[noise] committed it committed $2 million, okay, and that $2 million, a Harvey gets us 15%.
The mother company and see you.
Right and the right to 50%.
The first U.S. joint venture.
Which most likely would be formed with the equipment. That's landing here. This week, okay. So now of that $2 million commitment.
We put in so far you know has been monetized $1.7 million of cash has gone into a M.C. you the holding the parent company and they're holding 625000 shares of L.D.E.
<unk>.
That where that are restricted okay that restriction will lift in November and their their goal will be to monitor monetize an additional $250000 from that 625, obviously, given today's share price that 625, well well like.
Seed.
The 250000, you know sort of remaining requirement, if you will see and that money either would come back to us or we would put it towards the commitment that we've made to the Philippines. Okay. So so that's number one number two.
We <unk> second secondarily committed up to $3 million.
In M.C., you and M.C. you Philippines.
That will that will give us an additional 10% interest in the parent company. So we will end up with 25% interest in M.C., you and 50% interest directly.
In the joint venture in the Philippines. So so the way this was structured.
Was that we would have we would end up with 25%.
Of of M.C., you, which is the parent.
And then and it's our choice, but then ultimately the right to invest in directly into 50% of any project. So you know, that's that's where I come up with the 62.5% of the economics. If you if it plays out the way we intended to well.
50% of the project as a joint venture and then we will have 25% or the other 50% through M.C., you, which is 62.5% if that's the way it plays out which is our expectation we would actually consolidate enfuse results into Comstock results, which I think is correct. It's the way it should be based on our X.
Comic interesting what we're planning to do now.
Let me say one other things in the Philippines case, right, we've committed up to 3 million in in in equity and debt.
To ensure that two units get deployed in the Philippines, two operations are up and running in the Philippines and that they turn cash positive based on our models, where we used I'm trying to recall, but I think I'm going to say 1400, Gold's baby Fourteenfifty gold, but we use the number like that.
You know our payback is about 16 months on that $3 million, but more exciting not not not just the fact that we get paid back you know that quickly that means it's generating that level of cash generating that level of cash the intention would be to deploy unit three deployed.
For <unk> deploy unit five from cash flow. Okay. So so this this this you know this is the model that we want to pursue once these first two projects are up and running test positive I mean, we can grow.
Taking them Com you know that's the idea. So weve left we have 'em, we have the rights to pick up 50% of every one of the projects.
Correct, that's right, where the freighter first refusal on each project, we have the right of first refusal on any capital that comes into the entity and I got to tell you. The people that we're working with a Paul Cliff the owner of Oro, Tom Manse, Brad you Berger I mean, there world class.
Ah people in my opinion in terms of they're they're they're competency Pauls Paul might be one of the the last breeds of truly expert.
ILUVIEN slash surface mining people, but but the fact that he built all of his equipment himself you know and I was joking with and the other day I go you know you don't build chevy's, you Bill Cadillacs and I found it up.
Yeah, he's like to rebuild Montserrat East you know and we see the for system, you'll you'll you'll know what do you mean to it so precise and and so specific you know in and and let me just say besides the engineering and then the equipment.
It's customer Internet you know like Paul's whole life is getting to know who is customer is and build exactly what they need then go camp out with them until it works the way it's supposed to and so I. Just think were were and we all like each other which is kind of unusual [laughter] in business. So.
I'm, having a lot of fun with it but that's how it's structured RV and its great. If it's I'm, telling you it's gets it it'll be as big as.
As we let it is my opinion, you know I was talking to earn all the other day and he was like how big can it get and I couldn't answer the question.
No because there's just there's just everywhere, we turn there's there's mercury contamination.
Okay I'm going to go to the end of the Cuban kit, let other people ask if there's a more time I'll get back on.
Thanks Harvey.
Thank you Greg.
Thank you Sir.
Well take the next question Daniel eight in private Investor.
So Jeremy.
I'm not sure. If its question was addressed I just wanted to know on the real estate sales you know the current potential buyers seemed like they've been on table for a long time, if you feel that their capital to step to the plate or if it's something that should be considered another potential buyer.
Yeah. So no. So they you know it's the fund you know that some that's buying the assets. The fund you know raised over $11 million last year owns 150000 square foot manufacturing facility owns and operates the silver spring.
It's airport has no debt.
And has a lot of investment interest in this thesis of consolidating this northern Nevada, you know enterprise zone, if you want call it that.
So I I truly believe that you know the covert thing.
Sort of paralyze the markets you know, there's there's a positive and negative there you know the big Big drop in March which was a big sell off a you know paralyzed everybody.
But it also triggered a lot of capital gains a then the market rebounded, which was kind of shocking but.
So there's a lot of people now that are feeling more stable in terms of their portfolios, but they've got capital gains that they need to deal with and they also are concerned about the go forward. So so the conversations are very positive you know the fund the fund is qualified as not piece.
Meaning if you have a U.S. source capital gain and you put the money in the fund its automatically deferred for up to five years and then if you keep your money in there you know for the full a duration, which is 10 years than any new appreciation is tax free so there's a trump.
And this amount of interest you know in investing in this kind of thesis now the negative is typically that they are in pretty tough areas right like by definition the zones, where were poor census tracts meeting economic development, So silver springs, 100% qualifies as that.
Except.
So with all the new highways that has been built and expanded around it is become literally grand central station of northern Nevada as economic activity.
You know that's a little bit of an exaggeration Reno really is the grand Central station and the truck Tahoe Reno Industrial Center is really the Grand Central station or you know, but where the very first stop.
You know off of that and so.
No I don't there's no question in my mind, they're going to raise you know tens and tens of millions of dollars.
And but but it's important to know also that the fund has massive access to economic development dollars private activity bonds, a U.S. the loans new market credits and so far. The fund is is debt free you know in is only raised equity. So it has operating assets its debt free.
Very strong financial position, it's looking to bring in one more round of equity.
Before it starts accessing you know those very inexpensive.
Yeah economic dollars, if you will.
Yeah.
So yeah I have no doubt yep. Thank you and just had one more question there actually I'm.
Sure Central buyer any like.
He skin in the game years, holding a nonrefundable deposit any kind of like.
Oh, all skin, yes, so non nonrefundable deposit Hum is correct, but all of the all of the board and the management of the fund our direct investors.
So you know not not only or we holding nonrefundable deposits, but all of the money has come from you know the the people that are either represented in management or by the board.
Got it hundred anytime skin in the game Yep. Thank you.
Thank you.
We will take our next question from Gamma Harrison <unk> Investor.
But.
I think we just talked to Jeremy.
No.
<unk> is another Jeremy.
Oh, sorry, [laughter] insight I, just got me to Germany, [laughter] [laughter] I'll keep it shortens I know, it's running pretty long I'm sure as far as fund any clear.
The last week noticed is 11 million was raised initially or you can see the others, there that 18 million filing.
I.
Think about couple of months ago.
Yep. It can you clarify where you know any other money been raised unsecured or is it still waiting on commitments.
Yeah, So Super Bowl 50 Yep.
Yep. So so we've only got and you know so so in terms of like hard numbers, it's only a few hundred thousand but we're literally talking.
Two three we didn't dusters right now who combined to make up you know more than 18 million. So that's sort of a hybrid answer which is you know hard commitments no not really but like hard.
Serious interest you know and I, so everything's going to happen is you know there there were about 20 investors in the first raised at 11 million, we like that very well right like it was very strong a group of people, who I can't think of any one of them that doesn't want to be there. The whole time, so that was a great star.
Our in this case I think we're talking about you know it could be 20, it could be five right like that and then and then the base would be so strong we believe that we will accelerate the listing.
You know and the registration and then the third raise will probably be a public offering which we would go out you know to the broad masses of people. So it's coming together very nicely in that context, it's frustrating.
But you know last three or four months you know just it was just very very hard to get traction. We anyone we reach out to was interested but we got deferred you no no no one's saying no [laughter], but we just you know just couldn't get the meetings in the attention because there's so many other things that they were having to deal with.
Gotcha Okay.
No not but now we're now we're getting the meetings like now where again like I want to be clear. We got meetings. This week, we got meetings I mean, so people are doing the work. So it's it feels like where you know again, we're back in the saddle.
Okay.
As far as.
The 4.1 million debt.
That's not think everybody's main concern is there a backup plan for that if if this does you know stretch out did stretch out is there a back you know can that be a <unk>.
Delayed I notice do not believe January Yep, Yep Yep, we've had and we've had conversations we have I would say at least three backup plans and I prefer not to talk about them right now, but I think you'll you'll hear very soon you'll hear very has gotten yeah. There's no scenario, where did that gets us in trouble.
Gotcha will do and then Oh, okay as far as.
The Philippines. The first you it's going in and that's the sand and gravel unit correct.
Yes, so I'm just to just to elaborate on that a little bit right. We had plans you know each unit is different you know and typically design purely for Mercury remediation.
But you know there's it's 27 kilometers river you know of which you know most of the Mercury contamination sits at the top part of the River you know its its upper up upriver you know it in out you know in elevation up decide to the mountain.
But but the government was was pushing is very hard to deploy you ended at the bottom of the river and we were like you know that doesn't really make a lot of sense. You know we want to clean it from the top down because otherwise how do you sustain you know the clean activity and they're like well, what about you know sand and gravel and and it took us a little while to get.
Her head around what they were saying.
But we finally got it you know like that there was a huge demand for sand and gravel, there's probably less mercury contamination, Oh, well certainly to the extent that we sampled it seems like there's less risky contamination down lower parts of the river. We don't know that for certain that we know there's mercury contamination pretty much everywhere.
But but more at the top less at the bottom, but when when you factor in that you could actually have a salable product with sand and gravel you know the amount of mercury and by default the amount of gold in the Mercury becomes less important because you have a base load. So what we did was we took us you pretty pretty sophisticated.
Sophisticated, but a pretty you know high quality has all Paul's equipment is sand and gravel unit and we retrofit it it with the Mercury centrifuges and controls.
And so it's actually not something we originally thinking we would be doing but we're very excited to do it so that one's going first it's actually a simpler system overall right. It's something that you know if you didn't have any mercury. It would it would kick, but you know in terms of sand and gravel processing and so it you know in a way.
Both are very conventional business that will generate a base load a profit in revenue for us to get set up and running but it will also you know if there's mercury in their it'll get it you know and and then it'll be even more exciting so.
Yep, that's how we're doing it.
Okay and does it recovered the amount of gold is the other units or or no.
It should you know you you know it's good it's kept the same type of centrifuges.
Every every every situation is different right. So we'll have to see you know the efficacy of it but we're pretty confident it will get it you know clean enough you know with the controls that are in place that it needs to be so we'll see how much we'll see how it does but but in all cases. These these things will perform at very high levels.
Gotcha.
India the Comstock.
That one still it's 25 tons per hour correct.
Yeah, which is important to highlight you know that the Comstock unit was designed more than anything to you know two to I want to say perfect. The process right like we know that there's we've gotten high levels of of clean up high level of.
They can see.
You know coming from units that had one centrifuge.
So this unit and coming to Comstock is like it is the Montserrat because it's got three centrifuges. It has a full mercury reactor. In addition to the centrifuges. No. This is this is something that we'll be fine you know we're in the process of patenting you know and then it also has.
The Spyros separators de watering you know filtration units et cetera et cetera. So you know it this is where we sort of perfect. The ultimate process get the highest remediation get the cleanest material out and then scale that up you know subsequently.
You know the Philippines sort of leap frog vessel little bit to be honest straight we were planning to do the Comstock thing first but they're both work.
Okay.
I think that's it or the answers my questions I believe.
Oh right sort of like.
Are you still plan on doing a blog on the.
Just a bond coming up yes, yes, yes, there's actually a lot of that there's been a lot of activity going on and so I just right just trying to get some more things done before but we'll give more well give more transparency and more updates on that as we go forward for sure Jeremy and also think hockey mentoring in the Philippines would be.
Great why your while you're doing that.
Got it yeah, we [laughter] yeah, no we've already been approached by a couple of of folks you know you know like the discovery channel type folks about that okay. So yeah, we'll see how that plays out there will be something I imagine for sure.
Antacid karate right up gate.
Yeah look for just a everything shakes out.
Thanks, Jeremy have a great day, thank you to say like.
Right.
Thank you Sir well take our last question, it's entirely patent an investor.
Hi, Charlie I can you remember it.
I can.
Yeah and my question was just regarding and it was mentioned on previous calls, but not so much recently I think there was a P. Eight commitments and mentioned to get completed and the third quarter I think.
Well, yes, any more information on that.
Yes, so so sort of two to two points on that so.
On the D. and resource our intention is to publish an updated resource estimate I mentioned earlier, we're gonna go under S.K. 1300 guidelines for that and although it won't.
It won't get to the level of a preliminary economic assessment, there will be economic dialogue in that report or around the resource estimate so it'll be it'll be more than a resource estimate but less than a P.A. The intention is then that we.
Would have one more or an intermediate drill program.
Yeah. The biggest to be we've had is do we drill before or after we published a report.
I think you know I think the way, we're going we're probably going to.
Before.
The report will lay out.
All the new geological interpretation of the lay out the the intentions for the drill program.
And then and then subsequent to that next round of drilling and updated engineering, then we could be very close if not on a preliminary economic assessment for the day and so that's the answer number one number two which may have been what you were referring to.
You know the Tono team has done a tremendous amount of work on updating the resource estimate you know for Lucerne and I know that they've done similar to what I. Just mentioned you know some amount of of preliminary assessment on the economics for sure it's almost required to do that.
Now with the new Canadian and U.S. standards frankly.
I don't know for certain you know if or when they publish that a resource estimate if it will reach the level of P.A. or it'll be close but there will also be economics, there too. So I don't want to speak for them, but I know that's the intention right updated resource estimate.
Either in conjunction with or followed by preliminary economic assessment, so either way, we're getting a lot of good technical updates.
Very soon.
And that's you know that's very important to and this is a good. This is a good question to close off on you know as we talk about the market recognizing US you know getting to $120 million of value.
Delineating it clearly describing it you know having third parties you know like Mark Reichman, you know provide some objective view of it is all very very very important right and the more we have we can do that and the clear we can be the better but ultimately.
The technical reports that you know validate the geology that validate the economic assessments.
Our huge are huge prerequisite huge engine to getting to those higher values. So.
Absolutely.
That's our intention that's what is in the pipeline and that we're moving towards you know with M.C. you, you'll have less technical report and more cash flow right. So.
You know you know cash flows the best thing in the absence of cash flow someone else a pining and with the cash flow should be is the second best thing that's what the P.A. and ultimately a prefeasibility. It ultimately full feasibilities give you. So we're being very disciplined on that approach I think tone.
It was very disciplined on that approach you know less promotional more substance and Finland and win win and I think this is a very big thing and I don't think anyone appreciates how big it is yet.
I don't think you know the Canadian investors, even care right because they've already got their platform, but you know, but the Canadian capital markets are pimple on the half of the U.S. capital markets. Okay. So when do you asked modernizes, it's disclosure requirements for miners and we can start disclosing.
And our 10-K 10-Q's S ones 8-K.
Resource estimates.
You're not going to have the interest of an exponentially greater capital market base, you know and some people can say yeah bounced down so true Canadians can invest in U.S.U.S. Americans can invest in Canada.
Yeah, you can say that but it's not correct right. There's a reason that Toronto has the largest share of of mining stocks are registered there and it's because they're disclosure requirements are better and that's about to change. So I don't know maybe it maybe it won't make.
The impact on the barrier to newmont, so the world, but it sure is how we'll make impacts on junior miners. So I think we're standing to benefit here greatly from you know better local disclosure.
You know and the or that we were going to be we're gonna take lead on that.
And so you still expect to really some numbers regarding the resource estimates this quarter, where you think it might be like no I think it will be this year it'll be this year, you know I think where we're not far off right, but I think with the with the S.K. 1300 rules being new.
You know we're already started dialogue with buried you'll bear on exactly how they're going to do it right. They haven't done it yet right. So I think that we'll have an impact a little bit on our timing.
But but we'll be out you know hopefully sooner rather than later, but you know certainly you know before the end of this year.
Okay. Thank throughout all right.
Thank you.
Casey I think that's it gray call great facilitation, I guess, we could wrap it up.
Thank you ladies and gentlemen, this concludes todays presentation you may now disconnect.
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Oh no.
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