Comstock Mining Inc. (NYSE American: LODE) announced the closing of the sale of the Lucerne mine to Tonogold Resources Inc.
Comstock Mining LLC and Tonogold Closing
Comstock and Tonogold have closed the sale of the controlling interests of the entity that owns the Lucerne mine by consummating a transaction, originally agreed upon earlier this year, that values Lucerne at over $25 million ($11.5 million in cash, $5.8 million in stock and over $7.4 million in assumed liabilities), since Comstock also retains a 1.5% NSR royalty on Lucerne’s future production plus more than $2.2 million in subsidized, annualized savings.
The Company received $1.7 million in cash today plus $300k in convertible preferred stock bringing total 2019, cash and stock payments to $11.725 million. Tonogold now has a 50% membership interest in Comstock Mining LLC, the entity that owns the Lucerne mine assets. The remaining $5.575 million in cash owed represents a secured obligation of Tonogold with monthly payments starting in November 2019, through June 2020. Once paid, Tonogold will own 100% of Comstock Mining LLC, the owner and operator of the permitted Lucerne mine.
Comstock and Tonogold also executed a Lease-Option agreement to use the Company’s American Flat processing facilities for processing mineralized materials from the Lucerne mine. To maintain the option, Tonogold will reimburse the Company for all expenses related to owning and maintaining the facility. Once exercised, Tonogold will pay $1 million per year and $1 per ton for processing mineralized material, in addition to paying all operating and processing expenses. As announced on September 23rd 2019, Tonogold has also been granted a renewable 10-year lease with rights to explore, develop and mine the Company’s mineral claims in Storey County.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, “Closing on the sale of Lucerne is a major milestone representing years of meaningful diligence and development, and now allows Tonogold to focus on the drilling and development of the Lucerne mine and Storey County mineral claims while Comstock turns its attention to developing our expansive, 100% owned mineral claims, specifically, the Dayton and Spring Valley exploration and development targets. Our debt is now down to $4.7 million, and declining every month.”
The Dayton resource area is the Company’s top wholly-owned exploration and development target. The Company is developing a new geological interpretation for an updated resource estimate. The new geological interpretation also drives a phased drilling program with higher potential for additional mineral resources that will be reported in a new, stand-alone technical report with a preliminary economic assessment (PEA) in the fourth quarter 2020.
Mr. De Gasperis, concluded, “The Lucerne sale has more than halved our debt and annual operating expenses. We are progressing the Dayton exploration and development plans, permitting our mercury remediation efforts and facilitating the sale of our non-mining assets in a manner that eliminates our debt and funds our growth.”
About Comstock Mining Inc.
Comstock Mining Inc. is a Nevada-based, gold and silver mining company with extensive, contiguous property in the Comstock District and is an emerging leader in sustainable, responsible mining that is currently commercializing environment-enhancing, precious-metal-based technologies, products and processes for precious metal recovery. The Company began acquiring properties in the Comstock District in 2003. Since then, the Company has consolidated a significant portion of the Comstock District, amassed the single largest known repository of historical and current geological data on the Comstock region, secured permits, built an infrastructure and completed its first phase of production. The Company continues evaluating and acquiring properties inside and outside the district expanding its footprint and exploring all of our existing and prospective opportunities for further exploration, development and mining. The Company’s goal is to grow per-share value by commercializing environment-enhancing, precious-metal-based products and processes that generate predictable cash flow (throughput) and increase the long-term enterprise value of our northern Nevada based platform.
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