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Edited Transcript of LODE earnings conference call or presentation 15-Aug-19 3:00pm GMT

Q2 2019 Comstock Mining Inc Earnings Call

VIRGINIA CITY Sep 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Comstock Mining Inc earnings conference call or presentation Thursday, August 15, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Corrado F. De Gasperis

Comstock Mining Inc. - Executive Chairman & CEO

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Conference Call Participants

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* Carl E. Frankson

Merriman Capital, Inc. - MD

* David T. Brigham

Brigham Exploration Company, LLC - EVP of Land & Administration

* George Melas-Kyriazi

MKH Management Company, LLC - President

* Jeffrey D. Wright

Seaport Global Securities LLC, Research Division - Former MD and Senior Metals & Mining Analyst

* Lawrence Danny;Private Investor

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Comstock Mining Second Quarter Update Conference. Today's call is being recorded. At this time, I'd like to turn the call over to Corrado De Gasperis. Please go ahead.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [2]

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Thank you, April, and good morning, everyone. This is Corrado on the line. Welcome to our 2019 second quarter conference call.

Last night, we filed our second quarter report on Form 10-Q, including our customary quarterly review with Deloitte & Touche. We also released a press release announcing the precise plans for closing the sale of Tonogold, most likely within the next 3 to 4 weeks, and paying down an additional $4 million of debt and bringing our total debt to just about $2.5 million.

That all came through an amendment that was signed late last night, and we included it in the highlights that we published also this morning in our full quarter -- second quarter press release.

I'll provide a brief summary of the information included in our press release from this morning, including our progress on all of our strategic initiatives. If you don't have a copy of today's release, you can find a copy on our website at www.comstockmining.com under News/Press releases.

Please also let me remind you that in addition to the outlook, we may make forward-looking statements on this call. Any statement relating to matters that are not historical facts may constitute forward-looking statements. The statements are based on current expectations and are subject to the same risks and uncertainties that could cause actual results to materially differ. These risks and uncertainties are detailed in our previous reports filed by the company and the SEC and in this morning's press release, and all the forward-looking statements made during this call are subject to the same and other risks that we can't identify.

Let me first start with the financial highlights. Our net costs are down in total 20% period-over-period. That's for 6 months ended June 2019 versus the 6 months ended June 2018.

Despite an increase in our strategic activities, especially associated with the Tonogold transaction, the corporate realignment that we nicely graphically depicted in this morning's press release and the new Mercury joint venture and opportunities own fund formation activities and many related opportunities that are now in the hamper because of all those above. The lower quarterly expenses, despite the higher strategic and legal activities, were driven by lower environmental costs resulting from accelerated and completed reclamations and the direct benefits being realized by the monthly Tonogold reimbursements.

We're dedicating over 100% of our focus on these strategic activities, mainly Tono, the Mercury Clean Up remediation initiatives and the ozone's, and we're finally starting to see the fruits of our efforts in these areas. We did have slightly higher net G&A expenses net this quarter associated with some of the financial accounting and reporting and related assessments that occurred in this quarter but really reflected the Q1 reporting cycle that was delayed, and all that is now completely behind us. The governance work was complete, was costly and has already resulted in and will continue to result in improvements, most importantly and especially, faster and better external reporting and communications going forward, including getting back on track with our new website for dramatically enhanced internal and external communications.

That being said, we will now see a meaningful reduction in G&A expenses in Q3. Again, remember this is all in the context of net lower expenses overall, but we're going to see another meaningful reduction in G&A expenses in Q3 in the second half of this year by hundreds of thousands of dollars in savings.

In addition to the increased savings from the Tono transaction that we've mentioned and started realizing effective June 1, so we'll see the first full quarter impact from that results in Q3.

We continue to pay down our debt, bringing debenture to less than $6.5 million today with Tono payments this week bringing that number below $6 million to about $5.8 million, $5.9-ish million. And then with the closing under the just-signed amendment will bring that debt down to $2.5 million within the next month.

I'll discuss the Tono transaction more fully next. But let me first say financially that we received $3.1 million in nonrefundable cash deposits already this year towards the Lucerne sale, hence the $2 million in debt reduction so far this year. Plus, we've also received almost $4 million in nonrefundable stock payments towards that same sale that a third-party valuation specialist just valued at $5 million, and you'll see that number recorded right on the face of our balance sheet in the Q that was filed last night.

We'll also receive another $875,000 in cash in nonrefundable deposits in the next few days and almost $600,000 more in stock in this month. That'll bring the total value of the stock component of this transaction to almost $6 million. And I'm here to tell you that despite the delays and the amendments, this transaction is now most certainly going to close, possibly in the next 2 weeks as scheduled by the end of August but certainly in September.

We structured the amendments specifically to close the deal. We'll receive over $4 million in cash between now and the closing and receive another $4 million in cash in the next 9 months following the closing. Plus we're still being reimbursed as of June 1 at a rate of over $2 million per annum, as I mentioned earlier.

Now our market clearly doesn't reflect any of this because people just don't seem to believe it's going to close, and I understand that. But I've taken the position that focusing on closing it is the most important value that we can create and deliver with high certainty and we'll start marketing that now because we're just -- our values are too low, and the deal is just too close to being closed. There's nearly nothing much more for us to do.

In summary, for Tono, we've already received almost $8 million in cash in stock. We will receive -- we will have received over $7.5 million in total cash at the closing. We restructured the deal so that we will receive over $7.5 million in total cash at the closing, which is more than half of the $15 million initial price, which gives them more than half of the ownership in the entity that owns Lucerne Mine. Then they make the rest of the payments, and they earn up to 100%. They have already got the equity lined up to close on that basis, and they're getting more and more commitments every week, especially now with gold breaking through $1,500 so strongly. We also understand that Tono now is in a position to close the transaction without incurring any outside debt, enabled by this amendment, and that's a very big plus for all of us.

The Tono deal is really an incredible win for all of our shareholders, and now that it's going to close, we're very excited to move on to the other strategic initiatives. You see in the press release that we finished our corporate realignment that was done during the second quarter and certainly was facilitated by the Tono transaction because we're selling the membership interest in Comstock Mining LLC. As you can see on the graph, that entity owns only the Lucerne Mine properties. They're now wholly owned and controlled by that entity, and that the entity that Tono will ultimately acquire 100% and at least 50.3% at this closing.

The graphic also represents the other assets that we're holding for sale, Comstock Industrial, which holds our Silver Springs industrial lands, Comstock Real Estate, which owns our ranch and our hotel. And then clearly shows how we repositioned our subsidiaries for growth, with Comstock Processing representing the platform, the permitted platform with our crushing, milling, leaching and all the infrastructure associated with the mine processing.

I just noticed an error in that graph. Comstock Mercury and the Mercury cleanup joint venture comes from Comstock Processing, and that's the platform that we'll be using and that we've positioned for launching this new venture with Mercury cleanup.

So last month, we announced the Mercury cleanup joint venture. It's a globally oriented clean technology-based mercury remediation business for going after Mercury and other high-value, high-cash-generating precious metal activities based on this realignment, and we launched that venture with Oro Industries for the manufacture and global deployment of these mercury remediation systems.

It's exceptional because Oro Industries has been in the manufacturing of these large-scale mining systems for 4 decades. And their CEO, Paul Clift, has been an especially strong advocate of clean technology and especially around the remediation of mercury. So he's created these proprietary mechanical, hydro, electrochemical and oxidation processes, all of the above, and integrated them through these new spirals, these new centrifuges, organic solution that work within a mercury reactor that have already shown effectiveness in remediating over 90% of the mercury from these samples and these soils. And our objective and our designs are structured to get to 99.9%. That's what we're going to be piloting here on the Comstock. And we've applied for 4 patents, including these highly precise spirals, centrifuges, the mercury reactor and the chemical-free solutions for eradicating all these containments.

So as we sit here today, we feel that with Oro's technical expertise and 4 decades of mining expertise all over the world and with Comstock's expertise in putting together one of the most sophisticated and robust mercury remediation plans and executing on those plans in 2011, 2012, 2013 as we were going into mining, we put together essentially the highest global competency today in mercury remediation with what pertains to one of the largest, most significant issues in the mining industry today.

Just 2 years ago, the U.N. signed the Minamata accord, which 140 nations signed up and are committed to the eradication of mercury in industrial mining and industrial applications around the world.

Not surprisingly, well, I was a little surprised, we've been already approached on both domestic and international projects. But we're remaining very, very focused on getting this Comstock system up and running, starting to see the real results live on the ground, generating some revenue from it. And we're working very, very closely with both Nevada and U.S. regulators. As most of you know, we have a Nevada-based protocol, sampling analysis plan already in place, and the U.S. EPA approved long-term sampling and remediation plan. That's why we are the preferred address for moving into this new market.

Oro has already manufactured the spirals, and we're finalizing the delivery schedule for those first units on site here very shortly. The initial equipment will be set up as well the rest of it on our fully contained double-line pass at American Flat. The full system will not fully set up into later in the fourth quarter, but we're planning for material movement much sooner, where we can stock our material for processing, hopefully, now here in the third quarter or early fourth quarter of this year. There literally isn't a project and an opportunity that we could be more excited about. Both have proven track records, as I said, in this arena. We believe we already have established the highest standard for the technology, and we're ready to go out and show it to everybody.

Let me ramp up with just 2 more areas, our nonmining sales as well as the Dayton Resource. On nonmining sales, the region continues to boom in a way that's much more significantly than we predicted. Right now Google has a fleet of construction vehicles literally ripping down a mountain and in their development in the Tahoe Reno Industrial Center and the community of Fernley, which is adjacent to it just continues to announce 1,000-acre multi-tens of million dollar projects. More importantly, all these projects in the industrial center and in Fernley are continuing to migrate closer and closer to Silver Springs. It's sort of a manifest destiny the way the USA Parkway is laid out and the way the properties are laid out. And as everyone knows, we do have agreements for selling our Silver Springs properties for over $10 million that we're now currently enhancing and will have some real news that will follow. The enhancements will get us some more cash, but it will also retain more future value for the company. It's not done yet, but it's close to being done.

We're even in direct dialogue with some potential tenants moving in, to and adjacent to our property in Silver Springs, which is now quickening. So the value equation has not been realized, but it continues to enhance, it continues to solidify. And I know better than anyone on this phone call the frustration and pain that we endure from the delays in monetizing these assets, monetizing the nonmining assets, monetizing Lucerne with Tonogold and how it impacts liquidity, debt-reduction plans, speed, predictability and all of the above.

I have to say that we're on the frontline of doing this. It's what we're focused on every day, and this will all occur this year, next month, the month after and the month after that. So we're really, really seeing all these efforts progress. What does it mean? It means Lucerne brings in another $8 million in cash, $4 million immediately plus stock. It lowers our expenses and positions us for more profit in the future from that operation. The nonmining assets bring in $10 million plus a positive retain carry for the future just continuing to layer in future value but starting to bring it in the door. Mercury brings explosive growth, explosive global growth. I mean it's one of few items that we're really excited about, but right now, it's the most exciting for us.

Lastly, and I can't forget the Dayton because my technical staff would kill me if I did that. The company is now advancing and updating the Dayton assessment. Larry Martin specifically, our chief geologist, has completed his review and has revised detailed structure interpretations of all of the data that we have around the Dayton Resource, the old data, the new data, additional data, which provides the framework for new resource modeling.

So now all of that data is being compiled and put into a detailed new structural interpretation. So we've been very quiet outside, but we've been very busy inside, pulling all of that together, that gives us the foundation for a new updated technical resource. It also has identified an exceptional list of drilling targets for us. So the timing for us is very, very good, especially since we just recently won a most favorable and extensive ruling in the Nevada courts on our existing zoning for the Dayton Resource. So we could not be more pleased with that, and we really positioned that asset not only to grow but to move forward. Gold is at $1,500, silver is finally moving. All of it is positioned for us now as we get these transactions completed. We know we have to get them completed. It's the only thing that we're working on, and we're almost there.

So with that, April, let me stop and just turn to questions, please.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll first hear from David Brigham of Brigham Investments.

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David T. Brigham, Brigham Exploration Company, LLC - EVP of Land & Administration [2]

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Can you clarify, in my mind, you still have some mining assets, Dayton you referred to, is that correct? I think I read we're -- you're at the conclusion of this Tono transaction, you're going to lease all your Storey County resources. Is that -- can you clear that out for me?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [3]

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Yes. David, thank you for asking the question. Let me clear it up. First and foremost, we have a 10 square mile land position. It's literally just under 10,000 acres of public and private land that we own and/or control 100%. The Tono transaction is selling 1,200 of those almost 10,000 acres. So unequivocally, yes, we still have tremendous amount of land position, number one. Number two, in addition to selling the Tono and Lucerne Mine, we are entering into an option to lease them the use of the American Flat processing facility. So that's still our asset. It's the permitted platform where we're doing all of this clean technology, trials' testing, piloting and production. But that lease brings us $1 million per annum plus $1 per ton up to $15 million of revenue from Tonogold's mine plan with Lucerne. And then after that, a continued million dollars per annum and $0.50 per ton until we get up to $25 million of revenue. So we still have our mining assets our permitting platforms. It's a great posture for Tonogold because they have a permitted expedient path to production, and it's a great posture for us. We also retained 1.5% royalty. Now on the remaining Storey County mineral claims, which are north of Lucerne, think of them being in between us and Virginia City, including the Occidental Lode and the Gold Hill targets. Tono is leasing those for a 3% royalty. That's very exciting for us because these are properties we have not been able to invest, exploration and development into. And Tono will expediently, they already have drill plans to start developing those projects, which create value for us and our shareholders. Everything south of Lucerne, we retained, which is the Dayton Resource, which has over 0.5 million gold equivalent ounces in our last technical report for Dayton. And then another 2 miles of contiguous strike below Dayton all the way to Highway 50, almost to Carson City, if you want to think of it that way, of mineral strike that is referred to as our Spring Valley target area. So for all intents and purposes, we're retaining substantially all of our mining assets. We are realizing value for Lucerne. We are keeping future value from Lucerne and new other targets, and we're retaining all the value of our southern targets while retaining the platform to take these new clean technologies to the market. So was that helpful in clarifying or confusing? Hopefully, clarifying.

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David T. Brigham, Brigham Exploration Company, LLC - EVP of Land & Administration [4]

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Yes. That's helpful. So you're still a mining company. You're going to be crushing and drilling and leaching someday, but you don't have any firm plans for that?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [5]

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So the firm -- yes, so let's go to -- let's go through the list of the 3 firmest plans, right? So first and foremost, Tonogold moving Lucerne forward into production enables a revenue stream for us and a real great utilization of our existing platform. Secondly, they start exploring the northern targets, which is value creating for us. Thirdly, we start drilling and developing the Dayton Resource. And then fourthly, and maybe most immediately, the Mercury pilot will start moving material from our properties on the Comstock to American Flat for processing. And what we prove there is not just the ability to remove mercury, which is the absolute priority and goal, but the mercury traps gold and silver. And so that is fundamentally killing two birds with one stone. You're going to be cleaning up mercury and removing gold and silver trapped in that mercury in one shot, which we believe will be very feasible here on the Comstock. When we look around the world, it's staggering, the amount of countries that -- mercury has been illegal in mining in the United States till, I'm certain since like 1910, I think maybe a little earlier. But in the Third World nations, all over Ghana and Nicaragua, you wouldn't believe Turkey, Nigeria and you name them, they're still using mercury with very, very high-grade deposits. It's horrific. People are dying because of it, it's polluting, it's contaminating. When mercury gets into the soil, elemental mercury, it doesn't leave. And so some people get a false sense of security that it's buried in the dirt, and it's not bothering anybody, but then it works its way into the biosystem. So it's a very, very incredible opportunity not only to clean up but do it, we believe, ultimately quite profitably. And doing it profitably is the only way that it's going to get done, so we're very excited about it.

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David T. Brigham, Brigham Exploration Company, LLC - EVP of Land & Administration [6]

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One more thing. The real estate, the industrial real estate matter, that -- is something going to happen there before the end of the year do you think?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [7]

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Yes. So we've been watching the development in real estate activity grow. We've been watching it migrate towards Silver Springs. And let me be specific, right? Silver Springs was sort of an orphan child before USA Parkway was built about 1.5 years ago. USA Parkway connects it within -- with the direct artery into everything that's going on in northern Nevada. As we sit here today, Highway 50, which is all along Silver Springs is the state is expanding the 4 lanes and making it a major highway. So Silver Springs used to be sitting alongside the loneliest road in America, and now it's in the center of 2 4-lane crossroads with more logistics, more traffic than you could ever imagine. So this is a when if not if. But I love these properties, it's not a secret. So although, we have agreements to sell them and we're going to, we're trying to structure in a way where we can retain more future value, and we're almost done with that. And once that's done, and I'm talking about like in the next week or so, then I will be more directly involved in accelerating those transactions. And so we could expect, in my opinion, not $10 million but $11 million coming in from those transactions plus some retained value in the future because what's happening here, I've never seen before. I worked all over the country, I lived in Connecticut, New York, Tennessee, Massachusetts, Pennsylvania. I've seen enterprise zones, I've seen economic activity. But I mean we're witnessing the birth of almost like a second Silicon Valley. It's every -- yesterday, I heard about a industrial company that's coming here that just made me fall off my chair because I wasn't thinking -- I was thinking about the Google and the Amazon's, and I wasn't thinking about, I can't say the name, but it's a name that is much more established than longer standing than some of these recent technology companies.

So everybody is coming here. It's just unbelievable. And we've locked in -- Comstock, obviously, has locked in 2 choice properties, the 98 acres is right alongside the airport and Silver Springs right alongside the intersection that I just mentioned, and the 160 acres is literally the center of the downtown. Now the fund that we're working with isn't just looking at 2 wonderfully strategically situated pieces of properties. Those were critical. They're consolidating almost the whole community, and we're helping them. I don't want to make it sound like it's a complete unrelated thing. We are on the ground every day helping all come together. So the Opportunity Zone is a new thing. There's a lot of uncertainty around the guidelines and regulations, all that's been clarified. I can't believe how powerful it is in terms of investment capital and enhancements that will come from it, and it's perfectly situated for what's happening here in Northern Nevada because we're looking at 10 years of meaningful investments, meaningful. I mean if nobody else announced they were coming here -- we were just in a builder's forum yesterday for 2 hours. If nobody else announced that they were coming, we couldn't keep up with the demand for the next 4 years. So that's what we're looking at. It's remarkable. So the land is going to sell. It's going to sell in a way that immediately benefits us. I think everyone understands our net operating losses, our hidden assets. So these gains are protected from federal tax and so we get the maximum benefit, but then if we can retain some value going forward, it's a double win.

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David T. Brigham, Brigham Exploration Company, LLC - EVP of Land & Administration [8]

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Sounds exciting.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [9]

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Yes. It's -- and I don't want to be too blunt about it. But if you look at our equity market cap, it's just absolutely disconnected from that. And there's 2, in my opinion, strong reasons for that. One is credibility, right? People want to see the transaction get closed, and we totally respect that. That's why we're spending 110% of our time on nothing other than closing them. Having said that, and we spent 110% of your time on something you can't spend time in doing much else. So we haven't been communicating it strongly or marketing it strongly outside of our existing base of investors, meaning we haven't been going out to new investors in part because up until a few months ago, gold was still lower in the equation, and these deals were not -- there wasn't an absolute clear path to get to the finish line. Now we have an absolute clear path to get to the finish line. We worked very hard on amending the transaction to ensure that, and gold is over $1,500 and robust. So I feel great about our story. Now I can't wait till September to get out and tell everybody about it. But it took a lot of fixing on the ground to get to this point. So we understand why the share price is not higher but it's ridiculous, right? So it has to get moving, these transactions will force the discussion.

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Operator [10]

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Next we'll hear from Carl Frankson.

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Carl E. Frankson, Merriman Capital, Inc. - MD [11]

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You covered most of the things I wanted to talk about. The Storey County lease and whatnot, the Silver Standard. So just a couple quick questions. During the quarter, I remember last call, you said we wouldn't need any more dilution but you did issue another 10 million shares. Why and who bought them?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [12]

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So I think I said and I hope I said, if we can get these transactions closed so -- we get $4 million from Tono now, originally we were hoping to get more upfront. If we get $4 million from Tono now, we get $10 million and maybe $11 million in from the land sales, that's when the conversation there finally finishes. And we've been not desperately -- impatiently trying to bridge to that point, we're almost there. So wanting -- so one answer is half of those shares were to bring in capital to bridge us to these activities, although some of that money was going to deposits on land and some of that money was going to MCU for the new investment and the new business. I'm very happy that at least in that regard fully half of those shares of 4.5 million were for the MCU investment. If you recall, we're going to make a $2 million investment over time with $850,000 of that worth of stock, restricted stock that can't be touched for 6 months going in MCU. And the value -- if the value of that stock goes over $850,000. So in other words, if that stock doubles or triples between now and 6 months, then the excess gets rolled out. It doesn't -- what I mean it's like we wouldn't lose the value for that. So we're trying to be very judicious with that. $4.5 million was for a really strategic investment, $4.5 million was for bridging us to getting to this point and getting these transactions closed. And we're going to continue to be judicious but until we close these transactions, it's our only source of capital to get there. We're very stable. There's absolutely no risk -- well there's always risk. There's no concern regarding our liquidity and our posture. We've always been very diligent, very astute about that. We don't like to issue our shares, and we're going to try to do less of it until these 2 transactions are closed, right, because so for all this cash that's been coming in from Tono has almost gone directly to pay down debt. Good news, our debt is almost gone. Bad news is we don't get to use that money to avoid the dilution until the debt is completely gone. So we're almost there, we're almost there.

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Carl E. Frankson, Merriman Capital, Inc. - MD [13]

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Okay. And just quickly, as I mentioned, you answered a lot of my questions so far. Going forward as far as being a gold mining company, is it just Dayton? I mean is that it? Is it -- are we now a one trick pony? Or are there other projects that could be developed after Dayton? And number two, you mentioned 0.5 million ounces at Dayton. I think that was from the previous...

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [14]

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43-101.

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Carl E. Frankson, Merriman Capital, Inc. - MD [15]

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Yes, 43-101, within 5, 6, 7 years ago or something? And how would you -- I know you always take a fraction of -- for evaluation purposes. How do you evaluate that?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [16]

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So the best way to do it -- so first, let me answer your first question. So we have Dayton, we have Spring Valley. So in Dayton and Spring Valley, we're -- we want to be a gold and silver mining company unequivocally. In MCU, we're going to be mining gold and silver with that mercury. And I'm -- it's premature but if you were to ask me that's going to be the biggest business of them all and probably by far. The market is just huge, and we have a technology and experience advantage.

In Lucerne, we become a gold royalty company. In American Flat, we become a mining service company. We're providing, I don't like -- nobody likes the word coal processing, it's not the right way to use it because Tono will be operating that facility, but they're paying us revenue and per ton to use that facility in addition to the royalty. And then in the northern targets, which I answered your question, let me expand on the answer. If Tono acquired any additional adjacent claims, and they are in a very nice conversation right now with one sort of last remaining miner on the Comstock to pull in and tuck in all those claims, they automatically get subjected to our royalty in the same way because we gave them the right to do that. So from our perspective, we see the global mining industry in a net depletion mode. This is the highest level of our strategic thinking. And resources are depleting and reserves are depleting, maybe better said reserves are depleting, and resources are not growing. Replacement, replenishment is not growing. What is growing is reclamation piles, old leach pads and old mercury domes and old pavings that no one's paid any attention to. And so to have technology to reprocess, re-mine, we think is the growth market. Now we're not regulating ourselves where we've got the full spectrum covered, exploration development, mining of our own assets, royalties and others and developments and others. And so once we turn this corner, I can't wait to be talking in October, we've got no debt, we've got cash. We're not in a dilution mode. Our balance sheet is strong, but we're on the front-end of this growth profile. And we're sitting on a little mountain of net operating loss assets to maximize the cash returns from those endeavors. So that's the picture. Three hard years to get us back to this point. I'm -- I couldn't be more persistent with getting -- or proud of the people who have stuck with it, but now they have to see returns, and I think they're going to be meaningful. So we're trying to be very pedantic. We're trying not to promote, right? We're just trying to do it, get it done and deliver it. But pretty soon, it will get away from us. I mean when this mercury thing gets recognized by anyone, we're going to be bombarded, we're going to be bombarded. I mean Paul was bombarded. That's where 8, 9 years ago he started doing this because he was being bombarded by all of his international clients. How do we deal with this? Like we're destroying our landscapes, we're destroying our communities, and he got set to work on it. And if it wasn't for our Carson River Mercury Superfund stewardship, if we didn't really take the lead in creating a mercury remediation platform in the United States with district 9 EPA at San Francisco supporting it, he wouldn't have found us. And so by him coming to us, we have a very unique partnership here. It's very -- it's going to -- it's not going to take long. It's not going to take long.

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Carl E. Frankson, Merriman Capital, Inc. - MD [17]

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Just along those lines you had mentioned, is there patent protection on this? And you'd mentioned, I think, you filed for 4, 5, 6 or 7 new (inaudible) more?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [18]

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Four. So 3 pieces are equipment like, I mean, these centrifuges are amazing. And by the way, the equipment is beautiful, not that aesthetics normally matters in mining but the designs, they're so elegant. It's like the centrifuges are like turbochargers on a Ferrari, okay? Then it's got these spirals. I mean, in the industry everybody has spirals, everybody. They're just -- they are things that turn and they sort and filter but usually get 60%, 65% of mercury. Paul's getting 90%, and he's refined them to get 99.9%. No one has ever seen anything like it. So those designs are being patented, there's a double helix, and then there's this whole chemical-free organic solution, which is the trade secret. It's confidential, but we're still thinking if that's the fourth patent to file because it is important to us. But -- so that's part of it, the experience and credibility of having cleaned up a Mercury Superfund. I don't think that many people know this, but when we mined for 3 years, we moved 3 million tons of ore. We had 176 pound flask for mercury storage, which was half full, okay? The natural recurring mercury from the Comstock is very well. When the road cracked and we stepped into fix it for the community, we moved 300,000 tons of loose mine dump and fill in the waterway alongside the -- underneath the road that, in our opinion, is a road never should have been built on, and we got over 2,000 pounds of mercury. So 1/10th of the material -- we went from, what, 40 pounds to 2,400 pounds. And then we rebuilt the road. We don't talk about this that much, the road cost us $3 million. The mining excavation hauling, sorting of all the crap that was in there out, processing, leaching cost us $6 million. We got $9 million of gold and silver out of it. So better lucky even good, right? But when visitors come and ask us, what do you know about environmental remediation, what do you know about reclamation, and what do you know about mercury removal? Bing, bing, bing, we're #1, right, in all 3 categories. We've got plaques on the wall to prove it. That's not why we do it, but I'm -- I didn't do all that because I saw a huge global opportunity in mercury. I did all that because I thought it was the right thing to do. But man, we're positioned to kick some ass here, Carl.

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Carl E. Frankson, Merriman Capital, Inc. - MD [19]

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Great. Thanks, Corrado. What can I say, it's just share.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [20]

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It's hard to believe. No one can give us a lot of credit for it until we start announcing contracts, and then people are going to be like holy (expletive).

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Operator [21]

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Next we'll hear from [Rick Hicks].

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Unidentified Analyst, [22]

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Does your mercury extraction technology work within the other products such as arsenic, number one. And then could you give the detail on your common stock financing? What it costs and how long you think that's going to continue? Because it seems to have a detrimental effect on your shareholders but be very much for the benefit of those buying a stock.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [23]

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Yes. For sure, thank you. Rick. So right now we have a facility, we filed the prospectus for $2.4 million. We used about $1.2 million of it, so half. We have more capacity than that but we filed only for $2.4 million. The agreement was up to $5 million. And it's solely in place to put equity forward with known counterparties -- through 1 counterparty that we know very well, that is an investor. There is -- I would say their intermediate investors, they're not necessarily the longest term of investors, that's not what the structure is designed to do, and we place it at a 10% discount to the then current (inaudible) at our discretion. So if we needed to a raise little bit of capital just to bridge us, then we would place it with them. That's why we're in such a stable liquidity perspective and we don't have to go out and search for investors, the agreement actually allows us to put it to them. Based on at a 10% discount. We paid a 5% fee upfront but the facility is expendable up to $5 million without additional fees. So that the arrangement, it's very, very simple.

I know people think of it in context of an ATM and there's aspects to it that are similar but it's really not the same. And so we believe it's safer, it gives us the need and stability.

Frankly, we wouldn't have been able to negotiate a lot of the transactions that we did if we didn't have that stability behind us. And so that's it in a nutshell. We'll try to minimize what we do between now and September, October. We see that as a relevant timeframe to getting the rest of these things done.

On the mercury, the system is designed in particular with the mercury reactor -- in particular with the mercury reactor to get all the mercury out. So we know that as we take it through our process like, for example, in our case we have a full industrial mercury-permitted retort oven that is the second to the last step before refining and pouring gold and silver. And we know that when we get to the end of those processes, we capture the other elements and we've eliminated anything that's unsafe. I don't know honestly the efficacy of, let's say, getting copper, getting lead. Certainly, it would get some of those elements, even arsenic, arsenic-lead and mercury being the 3 relevant ones in the site. But I don't know the efficacy, it's designed to get all the mercury, and I'm sure it gets a substantial amount of some of the others but I'd have to follow-up on that. And probably, I won't know for sure until we run through the first series of process tests with the new equipment. But this equipment has been tested and used already internationally, let's say, the last generation was used and tested in Nicaragua with incredible results, right? So we're taking it with Paul's enhanced designs, we've enhanced the engineering. And this next last generation of equipment here is going to take us to the finish line.

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Operator [24]

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Next we'll hear from George Melas of MKH management.

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George Melas-Kyriazi, MKH Management Company, LLC - President [25]

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Just back on the mercury processing. Try to give us a, sort of, a very basic time line over the next, let's say, 12 months and what sort of the hurdles are along the way.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [26]

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Yes. Very good. So 12 months is a great timeframe. So we signed the agreement end of June, and Paul started manufacturing the spirals, they are complete, he's just putting some finishing touches on it. We met last night for 2 hours here on the Comstock. He's here in Carson City right now because we are meeting with NDEP this afternoon at 1:30. So we're very live on this. The meeting with NDEP is to confirm any tweaks or modifications that we might make on our existing platform, the beauty of it is we are fully permitted with a double-lined controlled system. So we'll make some tweaks. We'll need to maybe demonstrate some engineering design change et cetera. We're also going to prospect with them on what permitting mobile units in the future would entail. And so we're not only thinking about immediate but then how does the thing roll out as we prove it on site.

The full system is on schedule to be delivered and landed on site by December. And so if we consider some of the specifics of the schedule, it may be prudent to think that, that system would start running on operating in January. That means processing material through the system, extracting mercury, baking it, refining it, getting -- capturing 100% of mercury, getting gold, getting silver. But we -- probably and intend, we're planning to start identifying. We've already identified the spots but to start planning for moving material from those areas up to the mining site in advance of December. If it was my choice, we'd be doing it next month, September, October, November, December. So that once the equipment is landed, we have stockpiles of material that we can start piloting and testing through. Then you would have a series of ramp ups from January, I think I would say, the full 12 months. But from January to August, January to September, January to October, going from -- running 2 tons per hour to 4 tons per hour to 8 tons per hour, ultimately up to 25 tons per hour because in Paul's experience, if we prove that, that's considered a pilot scale. But when you get to 25 ton per hour, you have sufficient operational and statistical representation. And with his knowledge of his equipment to then prove that as scalable. So in other words, if we prove it right up to 25 tons per hour, an important aspect of that is that the regulators are with us every step of the way. Because if the Nevada and the U.S. EPA truly see the efficacy of the solution and understand it, then the stamp is there for us to go anywhere that we want.

Now if somewhere along that continuum, when we're certain at 25-ton-per-hour run rate, that it's effective meaning getting all the mercury, effective meaning economically extracting the gold and silver from the mercury, we will commence construction on an optimal size system for the Comstock, which we're preliminarily scoping at 100 tons per hour. So 100-ton-per-hour system, we would literally have 2 systems: one, somewhat -- they're both portable technically, okay? But 1 very mobile, 1 less mobile and doing up to 125 tons per hour.

We run some very, very, very preliminary models at 125 tons per hour with low grades and low yields. And the cash that it generates monthly is a lot.

I can't say what it is yet because they're still too many assumptions in the variable but we approach this thing very, very conservatively. Like if we know it can operate already at a certain efficacy, if we know the grades that preexist in those tailings and if we know the general cost to operate this equipment, what does it look like at these parameters, and by the way one of those parameters that we use was $1,200 gold. So we're very excited about what this has potentially. We are looking at -- the Comstock has grades of 1 to 2 grams per ton and we like this very well in that range.

But we know of bad contaminated areas around the world that have 5, 8, 10 grams per ton. So this equation is, and I don't -- there's no shame and there's no concern about talking about the profitability of it, but it doesn't work without 2 prerequisites: We have to be able to get all the mercury and truly clean it and it has to be economically feasible. And so that's what we're focused on.

So I think that to answer your question, you will see real movement October, November, December. You will see pictures of real equipment. It's not small. You will see operations right in the new year. We will be communicating with our regulators, and I guess I wouldn't understand why we wouldn't be communicating with everyone. As the results are occurring, as long as there are no one uncertain and I think, this part is speculative, I think we're going to be visited by a lot of people who desperately need this solution. California has got major issues with this, more than Nevada. And there, California is a peanut compared to some of the countries around the world. So I think in the next 12 months is going to have a lot of information flowing out to us. Is that helpful?

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George Melas-Kyriazi, MKH Management Company, LLC - President [27]

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Yes. That's very helpful. Just as a follow up on that, Corrado. Roughly how much is that going to cost you guys to, basically, over the next 12 or maybe a little bit more 18 months, to start to try improve that system up to 25 tons per hour?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [28]

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So very specific answer for you. So we've committed $2 million in the first phase of which $850,000 was the stock that I mentioned to Carl that we've already put forward and is restricted for 6 months, okay? And then we have installment payments. We've done about $350,000 so far to get all this equipment started installment payments over the course to get the pilot up and running.

We've protected that very, very strongly in 3 ways: One, we have liquidation preference if it's a total failure. And I want to make a very precise point here. This equipment is 100% valid effective and valuable mining equipment. What we're testing is the mercury enhancements, right? So if it didn't work, which is to me, not really a question. But like we have to consider the possibility. Then we get the liquidation, 100% and our money-back from the equipment.

We have a choice to keep it and use it or liquidated ours. Even if it doesn't work, we have an acceleration of the return to our investment. So instead of the 50-50 sharing, we get 75% until the $2 million is recaptured, okay? And then we have the Right of First Refusal to arrange capital for the 100-ton unit. The 100-ton unit will only be ranged if 25-ton unit worked, and we can fully finance it with equipment financing. For that, right? For the $2 million protected and accelerated back to us, and for the $3 million of equipment financing that we would arrange. We get 25% of Mercury Clean Up LLC, and we have the first right of every new business venture of that entity, 50-50. So to say it in a different way, we get 50% directly in any business activity that generates cash flow, and then we get 25% of the other 50% through MCU and that means 62.5%, okay? So I suspect our accountants are going to make us consolidate it as a subsidiary because it's at that level.

Now having said that, if MCU, which I would be on the Board of, there's 4 board members. If MCU wants to go into a crazy place, where they don't like Americans. We could say no, and we still get 25% of the profit, right? But we would most likely prefer to say yes and do 50-50 ventures. Although every transaction if it's in a different jurisdiction it could be structured a little bit differently, but really positioned with a relatively low capital investment, a high social and experiential value that we bring to the table and their technology to really, really, really do well here for everybody.

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George Melas-Kyriazi, MKH Management Company, LLC - President [29]

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Okay, will take me some time to absorb all that.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [30]

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Yes. It's -- there's little complexity but it's really set forth to be protective.

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Operator [31]

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[Jeff Wanamika].

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Unidentified Analyst, [32]

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Thanks Corrado for your expanded discussions. I have a couple of questions. First, let's start with events subsequent to June 30, if we may. The last bullet point that you have here under your executive summary selected highlights, I was thrilled to read it because it implies that you're able to sell the preferred stock for $863 a share. Would expand on that concept?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [33]

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Yes. So the preferred stock a couple of points there. The preferred stock is in addition to when I had explained to Rick earlier just for precise clarification. We sold preferred stock 1,274 shares for $1.83 million cash net. So $191,000 fee associated with that. But the $191,000 fee was related to potentially $5 million worth of stock, we decided we didn't want to do $5 million, we just needed to $1.274 million, and its convertible in the future to common. And so the idea here is we saw ourselves closer to the finish line. We didn't prefer to be selling stock at these low values, we never do. And there was a notion that if we could place the preferred stock today, we wouldn't have as much dilution. And that if we get to the finish line here in the next couple of months, and I'm only saying this if and when it did actually convert out, it would be much, much higher values and be much less dilutive. So it's preferred not common but it converts to underlying common and so I'm not sure I answered your question but at least that's a starting point.

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Unidentified Analyst, [34]

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And I'm focusing into that underlying dilution, can you take that and run with it?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [35]

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Yes. So the preferred stock converts with a floor, or -- I'm sorry, a ceiling of $0.75 per share and a floor of $0.075 per share. Obviously, our hope is that most of the stocks would ultimately convert at a much higher price and minimize the dilution. So there is a range possibility there that probably ranges somewhere from 2 million shares to 15 million shares. If it ultimately converted at the highest price or the lowest prices, it would most likely convert somewhere in the middle. So we won't know what the ultimate effect of that dilution will be until we're done. Although, there's a floor on it. So we thought it was a faster, safer way, to bring in the capital we needed to bridge yourself, and we'll see how it plays out. It’s with a known counterparty. So we continue to try to do things as stable as possible but the key here is what I said earlier. The only thing that matters is closing the Tono deal and closing the asset sales so we could stop having to do these kinds of things.

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Unidentified Analyst, [36]

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Well, you'll probably agree that cash is king but I'm still not clear in how a buyer would purchase for $863 a share, the preferred stock.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [37]

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So they purchase it for -- yes, so technically it's $1,000 a share less the fee. We could set the price of the preferred stock at any, I guess, at any stated value that we wanted to the -- under the real value of that instrument and I guess in my opinion sits in the underlying right to converted it to a more liquid instrument, which would be our common stock. So...

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Unidentified Analyst, [38]

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So when it's converted, does it create common shares?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [39]

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Yes. Yes. That's what I'm trying to say.

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Unidentified Analyst, [40]

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And will those common shares be dilutive?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [41]

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Yes.

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Unidentified Analyst, [42]

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Very well. Next question, are you still working with Itronics?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [43]

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Yes. And so I'm glad you asked that question because, in so many ways, the mercury technology parallels in concept with the Itronics' technology. It's completely different and not overlapping, very important point. It's completely complementary and additive, very important point. But whereas the mercury takes tailings, the mercury technology takes tailings and processes, and I keep using plaster mining examples because that's similar to what we're going to be doing here, the equipment is more like a plaster mining system. It's not -- the mercury solution is not restricted to plaster, it could hard rock, it could plaster, so we've got a lot of flexibility there. But whereas it cleans up contaminated mercury tailings and soils, our #1 joy that comes from the collaboration with Dr. Whitney is that, that reprocesses or at least our objectives together is to reprocess formally leached material, some people called those tailings. We think of them a little bit differently, formally leached materials within an exceptional efficacy on silver. And so that model for us is just as exciting as the mercury opportunity, quite frankly.

It fits right into the strategy of as mine deplete their ore, their tailings and their leach pads grow. The reclamation liabilities grow and half the silver is trapped in those pads to be reprocessed. And the reprocessing not only gets the silver similar to the golden discussion in the mercury but it detoxifies the cyanide-wide complex. It takes contaminated materials, it makes them organic and captures the precious metals to profit and sustain that kind of operation.

So the mercury is #1 on our list. It moved ahead of Dr. Whitney temporarily. But now that the deal is done and we're moving forward, and we're bringing a little extra help to do this because these things are really getting robust. Itronics has moved back up into the pole position for lack of a better word. And I can't wait to get back into the discussion and in many ways, the agreement that we forged with MCU and mercury is there -- I mean, personally, I think it's a perfect template for working the same or similar way with Dr. Whitney and Itronics. So we're going to pursue that's high on our list. We think it's high on his list, and we are only about a win-win. So we're highly confident that that's going to work out.

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Unidentified Analyst, [44]

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I understand that you are hoping to reach an agreement with Dr. Whitney of Itronics.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [45]

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100%. That is my hope. 100%.

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Unidentified Analyst, [46]

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Very well. The material that you would move for the mercury extraction, what is -- where is that currently residing?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [47]

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So we have some interesting maps that we can show but basically the Nevada Department of Environmental Protection showed a hyper logical profile of where all the old historical mills on the Comstock were and how any residual mercury used by some, not all of those mills, that would have been all the mills prior to 1907, 1908, were mercury amalgamators. How that material would have been sort of left residual and then ultimately float down 6-mile, 7-mile canyon towards the Carson River. So it's literally, primarily, Jeff, in the waterways from Virginia City down to the Carson River but it's more than that. It's everywhere -- where there was a mill that used it, it's sort of left behind. And so there's a map that almost looks like a broken heart of the flow that in context to us, there's a stream that goes right through American Flat, sort of, from I would say, northwest to southeast. And then there's a stream that goes literally north to south from Virginia City right through Lucerne. It follows State Route 342 because State Route 342 follows the waterway. So right from Virginia City down to State Route 342 all the way to 50. So it's literally anywhere between, let's say, a half or a foot deep to like 6- or 7- or 8-foot deep to bedrock.

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Unidentified Analyst, [48]

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Where would you first begin digging out the material to process for mercury extraction?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [49]

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So if you picture the Lucerne Mine, some of that area where we rebuild the road in the waterway, we would just continue down from there through Devils Gate, Frank Pedlar by [Grizzly] Hill there under the consolidated mill right down in the Spring Valley. And then to the north as well. Up by Gold Hill and into Virginia City on our properties, right? Where some of them, you'll see old tailing docks, right? And they're recognizable on the Comstock. Some of them you would never know it's just normal flat earth where testing 2, 4, 6 feet down showed exceedances of mercury residual.

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Unidentified Analyst, [50]

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You intend to do the processing on American Flat?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [51]

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Has to be on the double-lined permitted footprint there with full containment, yes. That's the fastest way to get up and running because it's already permitted for that purpose

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Unidentified Analyst, [52]

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How would you physically move the material from its source where it currently is to American Flat?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [53]

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In small trucks. Small meaning not mining-scaled dump trucks but...

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Unidentified Analyst, [54]

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Along the roadway?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [55]

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To some degree, yes. Yes.

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Unidentified Analyst, [56]

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You would use Highway 342?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [57]

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Yes. Well, it depends where we are. As I'm picturing some of it. We wouldn't have to do that at all. We'd have to make sure that we have the right permissions and protocols. We have the full protocol though, fully and already defined on how to extract, remediate, haul, cover and transport the material. So that's all been fully defined and that's the protocol that we use when we're moving the road. It isn't commonly known but if we hadn't already built those protocols with the government in 2012 and 2013, we never would have been able to fix that road the way we did. So it was some people say better lucky than good but we were prepared when the opportunity hit.

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Jeffrey D. Wright, Seaport Global Securities LLC, Research Division - Former MD and Senior Metals & Mining Analyst [58]

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I must be not understanding you because I remember Highway 342 to be transiting Silver City and Lyon County, and you've done most of your work with permitting in Storey County. And the gentleman and ladies of Silver City are not really happy. They've been quiet for a long time, I grant you. How would you expect to be able to transfer that material through Silver City?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [59]

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It depends. So it depends where the material is, right? So there's -- I've got to think of a dozen scenarios where we would be off the road, right? I can think of a dozen scenarios but I could also think of somewhere to be on the road but I guess I have to change the visual. We're not talking about yellow old metals. When you're not talking about Caterpillar haul trucks. So -- and we're not talking about thousands of tons of material. So it's a completely different profile of transport. So some of it will be fully off-road, some of it may need the road. I can't -- I don't know of specific instances that on my head that we'll need the road. So as we define it, modify it, but we're only going to do what's proper and what's allowed. And I don't see any issues with that. Frankly, we're not -- the trucks drive by and drive through there all the time. 18-wheelers, all sorts of trucks. I mean that's -- we're talking street legal activity. And we're talking about cleaning up a Mercury Superfund.

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Unidentified Analyst, [60]

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Can you expand on what is happening to any of your properties in Gold Hill?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [61]

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Yes. So you mean the mining properties, the mineral properties? Or do you mean a...

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Unidentified Analyst, [62]

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Negative. The real estate properties.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [63]

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Yes. So the Gold Hill is really just the one crown jewel of the hotel. It is still for sale. It is not really in the central conversation of any material on mining asset sales. It is running very wonderfully right now, and it's profitable for us. So we have low motivation to push that one. Again, it's small relative to the total $15 million when you look at the Silver Springs properties and the ranch. And we're going to host the annual meeting there and if I can pin that down, maybe we will be doing a Nevada day of this year, which would be October 31. We're going to figure that out this week and announce it very soon but Dr. Whitney will be there, Paul Clift will be there, Tono will be there and all of these things will be at full stride. So I'm really looking forward to it.

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Unidentified Analyst, [64]

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I would like an invitation to that meeting. I'd also like to ask you about what's happening with the Daney Ranch.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [65]

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The ranch is still listed for sale. We are in a specific conversation right now with the party that has a specific intended use for it and has arranged what looks like pretty exceptional financing. We don't have an agreement yet, but I think it's probably the best prospect that we've had so far. So we have agreement to sell the industrial and commercial land in Silver Springs. We're in discussions on the ranch. No motivation/interest on the hotel. I think those are competing points.

We're not getting audiences but we just listed them in any way. We really love the hotel especially because it's only one of those properties that's cash positive.

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Unidentified Analyst, [66]

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Does this create any additional opportunities with respect to the Opportunity Zone, opportunities for Comstock Mining expansion or are the Opportunity Zones basically fixed at this time?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [67]

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No. So it does create opportunity for us. We -- it hasn't been the highest priority for every reason we've discussed so far but we are working on it in parallel. All of Storey County is in the Opportunity Zone. So obviously the industrial center is getting most of that attention with the blockchain guys, and all of those guys and Google and everybody but we're -- we haven't launched inside Virginia City, Virginia City's squarely in the zone as is the hotel, number 1. Number 2, we are working very, very closely, I will almost want to say, intimately, with the opportunity on formation. I think when I say intimately, we are like to engage fully with making it happen, and we had a few misstarts in part because of evolving guidelines and regulations, into some real confusion into the structuring. We like to do things based on knowledge. So it took us a little bit more time with the partners to figure out what the best structures were. There seems to be solid and total alignment on that now. So we're moving forward in terms of getting capital into those funds, and we're going to -- it's not certain yet but I could say pretty confidently, we're going to retain an interest, and that is not going to be 3%. The current agreement have like 3% kicker on just the properties were selling. We'd be interested in having a more meaningful interest both economically, of course, but also a directively because we are the most intimate on what's happening here in northern Nevada. We feel we can add a lot of value, I personally feel, I could add a lot of value. I think Comstock as a company could add value, and so that will create pretty -- maybe it's a smaller percentage, a lot higher than 3% but lower than 20% or maybe 10%. Something like that. But it could be 10% of the really, really, really big opportunity, not just the assets were selling. So that's where we're heading with it. We'll have it known soon here.

For me, Tono is taking a lot of calories week I think they've been calories to productive. And were not at the end yet so it's a little frustrating but we're getting there. I don't know if I mentioned earlier, but as an aside, Tono is getting a lot of traction themselves. They're getting new commitments every week they've got enough commitments in their book to close and that's why we modified the deal the way we did because want to close it. We want to move forward positively but they're getting more interest and more interest and I think they're getting real traction, and I think it's because they are just putting something that's good together for their investors too. So Opportunity Zone will be more on the forefront of conversation in the next cycle of discussions, Jeff. And it is going to be, I think, very positive.

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Unidentified Analyst, [68]

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I understand and try to difficulties you've had with the time required for Tonogold. I have sent you several articles on the Opportunity Zone potential, which is I think controlled by the State of Nevada. You've never responded to an article. I have 2 requests of you first to have Zach Spencer call me at the conclusion of this call. And secondly, would you move the microphone of your speakerphone closer to you as you do your wrap up.

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Operator [69]

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Next we'll hear from Lawrence Danny.

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Lawrence Danny;Private Investor, [70]

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Thanks for doing such a good job and working so hard I have just a couple of quick questions. One is the timeframe for getting around to drilling the data, do you have any rough time frame?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [71]

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Yes. I mean if it was up to my technical PMA, it would be yesterday. I could tell you that if it was up to a couple of our board members yesterday also. But I really think that the honest answer to that is once these transactions are close and we have discretionary funds in treasury we know exactly where we want to drill. And so I'd love to say fourth quarter because that would mean we get these transactions done and we have sufficiency of time to plan but we're also going to have mercury gearing up and landing et cetera so what I'd like to do is publish the drill count plan by then. I'd be very precise on what we're planning to do and really get some of that stuff started in '19 in a very exciting way -- I'm sorry, '20 in a very exciting way, which isn't that far away.

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Lawrence Danny;Private Investor, [72]

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No, this is -- this year is zooming by. The other thing -- the other question was you had explained the mercury percentages. Is there an overall percentage that Comstock owns at this newly created partnership?

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [73]

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Yes. There's 2 answers to that, right? One is we own 25%. That's the simple straight and immediate answers. However, we have the right in the agreement to be 50-50 on any joint venture of that entity for new business, okay? So in theory we could get 50% directly and then 25% of 50% indirectly of the economics at our choice.

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Unidentified Analyst, [74]

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Great. No, that sounds great. All of it sounds positive.

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Operator [75]

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And there are no further question at this time. I'll turn the call back over to our moderator for any additional or closing comments.

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Corrado F. De Gasperis, Comstock Mining Inc. - Executive Chairman & CEO [76]

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Thank you, April. I just want to thank everybody. We've made a concerted effort based on specific requests of a number of investors that we take all the calls this time so we ran a little over. I apologize for that but I think it was well worth it and we really look forward to keeping you updated much more frequently as we move forward here certainly in September. So we look forward to talking soon and thank you for your time. Thanks, April.

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Operator [77]

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That does conclude today's conference. Thank you all for your participation. You may now disconnect.