This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Good morning, everyone. This is Crowder DeGasparis, and welcome to our first quarter Zoom call. I'll provide a brief summary of the financial information included in our press release from this morning and from our quarterly report filed on Form 10-Q last night, including our progress on specific performance objectives, especially our silver and gold exploration and developments, MCU, our mercury remediation business that is now up and running in the Philippines, where we actually recorded our first revenues this week, and the good progress is on the lithium-ion battery recycling business, Lineco, whose scope is even expanding and some major, major achievements on our financial position. If you don't have a copy of today's press release, you'll find a copy on our website, www.comstockmining.com, by just clicking on the Press Releases tab on the main menu bar. Our Form 10-Q is also available via EDGAR on www.sec.gov. Please let me remind you that we may make forward-looking statements on this call, including our 2021 outlook and our plans for the next three years. Any statements relating to matters that are not historical facts may constitute forward-looking statements. Our 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 and the SEC and in this morning's press release. And all forward-looking statements made during the call are subject to those same and other risks that we can't identify. Once we complete the prepared remarks, Zach will direct all Zooming inquiries, which please use the raised hand function, and he will convey them to me and I'll happily answer them. If you're not using Zoom, you can follow up with us after the call directly via our website with any additional questions and inquiries that you may have. Sorry. If you guys can use the Q&A function rather than the raise hand function for Zach so that he will then direct all those questions to me and I can answer them. Okay, so in just three short months, we saw a dramatic leap in the strength of our balance sheet, where our assets increased from 43 million, just at 43 million at year end, to over 70 million by the end of the first quarter, with our debt also completely eliminated. We've made strategic investments. We've made strategic secured investments with MCU, Linaco, and PSI, all yielding and all with unique IP that will commercialize into growth, high growth sales, and cash generators for us. The huge asset increase was driven primarily by these five things. Increases in our investments from a little over 3 million to almost 10 million. driven primarily by Linaco and MCU in the Philippines, extinguishment of all of our debt obligations and an increase in cash to over $10 million. So debt is zero, gone. An increase in our secured monthly cash interest paying note receivable with Tonal Gold by over $1 million. And an increase in a new derivative asset, which relates to shares, the 3 million shares that were contributed to Lineco as part of our investment, the derivative asset is actually the economic value of those shares in excess of our commitment that comes back to Comstock that we've retained. So tremendous, tremendous improvement in the balance sheet. Turning to the P&L, Our operating costs were down dramatically in the quarter. They were driven by a couple of non-recurring but very positive items. We had one item, which is the accounting for a large reimbursement receivable, a new reimbursement receivable from Tonal Gold during the quarter of over $800,000. That was associated with an accelerated land payment that we had made during the quarter that we get reimbursed for. the reimbursement was actually added to the secured interest bearing note that Tono pays us cash interest on monthly. We also had to update our estimated reclamation liability. That update resulted in a decrease in the liability by almost a million dollars. Both those items benefited us positively during the quarter. We also recorded overall TAB, Mark McIntyre:" net income of over $8 million principally driven by the value of that increased derivative asset that I mentioned related to the investment liniko and our quarter ended with our total outstanding shares at March 31 of 42,455,515. That's the same exact number that we reported on our last quarterly call. And that includes the $4 million that was issued during the recent capital raise. And it includes the $3 million that was issued with the Linoco commitment. So that number is all in. As reported, again, our cash remains over $10 million. Plus, we have multiple current non-core asset sales that are in progress and waiting to be closed, including our industrial and commercial non-mining properties. totaling 13 million, all under contract for sale. We do expect those to close this year. We're seeing a tremendous now progress in the opportunity zone, not just progress in the fundraising capital, which it's doing very effectively at a very significantly higher valuation than last year. But we've been literally getting inquiries on a weekly basis for companies coming into the opportunity zone, for companies looking for land, for companies looking for buildings. And as of last month, our manufacturing facility owned by the Opportunity Fund is now fully leased with two brand new tenants. The airport is fully open and operational. And the $335,000 that Comstock has on its balance sheet, that $335,000 being part of our 70 million dollars of assets on our balance sheet is now valued just based on the most recent capital raised at over 12 12 million dollars as i mentioned fundraising money at a dollar eighty that puts our investment value at over 12 million dollars but when you look at the valuation of the assets held by the fund when you just do the range of land comps water right comps, sewer right comps that the fund owns, the value of those shares are closer to $3 to $6 a share, putting our investment at closer to $20 to $40 million. That's not a market validated assessment. The $12 million is. The $20 to $40 million is what we see the land, an underlying land value of that fund holding relative to our investment. So all in all, in any context, tremendous progress there. We still hold well over 11 million common shares of Tonal Gold. That's in addition to the 5.55 million secured note receivable that's due in the next 10 months. And so today, using today's value, both those assets represent over $7.5 million of combined value. When you take those assets, contracts to sell our properties at 13 million when you take the tonal gold securities and secure note values and you combine them to be over $20 million, combined with our existing cash representing 30 million in potential liquidity over the next 12 months. It also is in conjunction with us currently sitting with zero debt. So that's the balance sheet that's financial position, let me turn to our three lines of businesses and considering that gold and silver is up over 1820 today, let me start with those. With those gold and silver properties during the first quarter, we finally received the full airborne geophysical survey of the entire. Comstock District properties. We've published some of the high-level pictures associated with those. The survey includes both magnetic and proprietary electromagnetic surveys within almost 1,200 line kilometers surveyed with the data now finally fully received, fully incorporated, you know, into our database and full interpretation ongoing. I think I mentioned on the last call what's very remarkable about this data is the clarity of the three-dimensional images of our district's geological structures. But what's even more remarkable is that 3D clarity is at depth and often in excess of 1,200 feet below the surface. Our updated modeling on the Dayton is now well underway. We will publish a series of interpretations and developments once the data, the geophysical data itself is properly interpreted. But that'll be done even well before it's fully incorporated into our models and well before we publish our full technical report. We've engaged Barry Dobert. We've had a number of planning sessions with them, providing detailed overview of our geological cross sections, our level plans, and all the work that has been done on the Dayton to integrate that into a final updated resource model. Their work will include auditing the completion of the model, and the review and publication of all the technical data that will go in the report. I probably should have mentioned that we already have a previously published existing resource estimate for the Dayton. That estimate was almost a half a million gold equivalent ounces in measured and indicated and inferred resources. These are near surface oxide ore resources and we've even done some preliminary economic shelves where just 80,000 ounces of that gold and 800,000 ounces of that silver could produce nearly 100 million in cash over a very, very short mine life. Our work will continue to build and develop on those already existing resource estimates with the new technical report that will be standalone for the Dayton resource coming this year. For Occidental and Lucerne, Tono has finally made some very good progress on publishing drill results. And these are properties, all of these properties are where we hold significant numbers of NSR royalties, a portfolio of NSR royalties, if you will, on all those Northern mineral properties located in Story County, including Lucerne, including the entire length of the Occidental strike claims and including all the Gold Hill targets. Tono is now preparing a technical report with resource estimates that are already completed for Lucerne and are now developing and working towards the addition of a potential resource estimate for the southern part of the Occidental. Tonno has recently published the results of three new drill holes from the southern part of the Occidental, which I'd just like to overview with you for just a couple of minutes here. These are not deep hard rock drilling targets. These are very, very near surface oxide ores with all three holes hitting excellent lengths and grades of near surface mineralization. They reported hole number TC007, which included 70 feet of over a tenth of an ounce of gold, including about 25 feet of over a quarter of an ounce of gold per ton, all near surface. Each one of those reported results included nearly one ounce per ton of silver. I mean, that's literally 0.95 ounces per ton of silver concurrent with every ounce of gold. that was discovered. They also reported a hole TC006, which hit over 50 feet of over 0.05 ounces per ton of gold, including 15 feet of a tenth of an ounce per gold. And again, in that same scenario, almost an ounce of ton per silver. concurrent with the ounces of gold. Just to put that in contrast, gold grades of 0.03 ounces per ton, not a tenth of an ounce, not a quarter of an ounce, you know, but 0.03 are strongly economic, you know, in this environment, strongly economic. So Tony's finally ramping up the near surface drilling that, and they just recently announced that they're going to add another drill rig to the Southern Occidental in strong part because of these good results. Planning an additional 23 holes, an additional 7500 feet of near surface higher grade targets. They plan now. to fully complete, accelerate and fully complete that near surface Occidental drilling, hopefully come up with a resource estimate related to the southern part of the Occidental, adding that to the Lucerne resource estimate and putting out a technical report, you know, for sort of those combined multiple resources. Again, we have royalties on all these properties, but in overview, the tonal transaction has turned out extremely well for us. We have annual recurring reimbursements of over $2 million. We have a monthly cash income now that would be annualized at almost $700,000 on that 12% secured cash paying note. Remember that security is on the entirety of the Lucerne and this mineral resource package. We have 1.5% NSR royalties on all the properties, including Lucerne, including the Occidental. We have 2.5% on the higher grade, more prospective Northern Comstock load claims, and we have an option to take that up by an additional 3%. So 5.5% royalty on the most prospective parts of the load, which is just huge. Let me get more granular here for us, turning to the mercury remediation business. During the first quarter, we invested our full 25% of MCU. So we took that ownership plan and option right to fruition. Plus, of course, we own directly, in addition to that, 50% of the MCU Philippines joint venture, putting us at 62.5% of all of MCU's participation. Last week in the Philippines, we received our first order. for 300 cubic meters of clean sand and gravel. And the last truckload of it was picked up yesterday. This is for a contractor of a flood control project, just seven kilometers away from our operation. And they already require another 4,000 cubic meters of two inch clean gravel, plus a whole ton of cobble rock. Our process cleans the mercury out of these soils, but it also cleans these higher, larger rocks. all of which we cleanly produce. We have two other sand and gravel buyers that are currently negotiating with us for more of the clean offtake. There seems to be monstrous demand for Grand and South sand and gravel, certainly in the Philippines with all the construction that's going on. Having said that, there is an even bigger sand and gravel scarcity, apparently globally, that we've been reading up on and understanding. So we're in a very, very good position there. The gold and mercury contents have been very, very low to begin with. That's as expected for the lower part of the river. Basically, we're starting in the lower part of the river and we're continuously moving ourself upriver. Later this week or next week, we'll publish some photographs of the operation operating, you know, in current situ and as it moves upriver. So you can get an appreciation for the scale of what we're doing. We're starting to see now more meaningful amounts of mercury content. And as we sample upriver, we see even more. So this is really honestly the first month. where we've had what I would call stable, continuously operating activities. You know, in March, we just got started with a lot of government oversight. In April, we had moved the facility twice as we get situated. And there was some flooding and, you know, with typhoon weather, all that settling in and May has been really great so far. So we look like this month is really the beginning of this thing moving forward. I want everybody to recall that we've earned our 50% equity, our additional 50% equity in the Philippine operation with a $2 million secured loan. And that $2 million secured loan has accelerated repayment provisions. So as the revenue starts generating, as the cash starts generating, we start getting repaid on that loan. We retain our 50% ownership in a project that has a potential lifespan of six to nine years. So paying very, very well, you know, beyond even the repayment and recapture of our investment. Moving on to Lineco, during the first quarter, as everyone knows, We acquired nearly half of Lineco in one fell swoop with the rights already committed and the resource already committed to owning over 64%. Critical to this acquisition was securing the previously permitted existing state-of-the-art battery metal recycling facility right here in the Tahoe Reno Industrial Center in Story County, just 10 minutes, 10, 15 minutes from our Silver Springs properties. The plant sits on 11 acres of prime industrial land, and could not be in a better position in the US directly across the street from the Gigafactory to move into this business. We assess the plant the building, the lab facilities, the water treatment facility, the air quality control equipment to be valued at well over $25 million. Linaco secured the acquisition of that facility for $14 million. Comstock has the security over that facility. And so it couldn't be more perfectly situated to receive crush separate battery materials into black mass. The first When we first secured the facility, then we committed $10.75 million for that 64% of Linoco, which puts it at a post-deal valuation of only about $17 million. As I mentioned, we feel like the facility is already worth that, but that's not what's exciting for us. What's exciting for us is to have a 20,000-ton battery metal recycling facility that can produce pure cathodes, And just last week, Linaco has selected the ECM, Renewable Process Solutions, in conjunction with another company called Plainsight Innovations, highly experienced designers and builders of large-scale renewable material manufacturing facilities to build our crushing and separating system that produces the valuable black mass, plus, of course, separating all the byproducts, copper, steel, et cetera. This will allow us now to finalize our permit submissions and enable the first major phase of our business plan while Green Lion and their associated engineers finalize their engineering design and construction for the phase two part of the operation, which is then to take that black mass all the way to pure cathode materials. We've had another development, though. Lineco's also engaged PSI and RPS to develop a second process for taking WAC masks to pure lithium carbonate, nickel, cobalt, magnesium, and graphite. We've always intended to have multiple product lines downstream, but we were so impressed with the work that RPS and PSI is doing on the crushing system and with the technology that they already have in-house for solvent extraction to allow us to develop our own IP that would produce the pure scarce commodity metals. So the business and markets are expanding from the very same source of the battery metal material. Let me conclude my prepared marks by emphasizing that we've established and published in last year's annual general meeting very, very specific performance objectives that's consistent with everything that I just updated you on and everything else that we're doing for the next three years. So that includes commercializing these high growth ESG compliant renewable businesses, It includes acquiring additional high growth cash generating ESG businesses, establishing, of course, and growing our existing mineral properties and monetizing the non-strategic assets to fund the growth of these new businesses. The bottom line is we're extremely focused on only the items and timeframes that we've published. And during this timeframe, we believe it'll become extremely clear, clearer than it is now for sure, but clearer than it even could be until we're communicating some of these businesses beyond MCU, beyond Lineco, that we're pretty hardcore, right, when it comes to these renewable climate smart manufacturing businesses. Our money's where our mouth is. The program was designed and directly links these strategic performance objectives with our goal of delivering half a billion in shareholder value, at least $12 a share, and then aligning all of our people with 100% performance-based, stock-based compensation. That program's been published since January. It's crystal clear. If we deliver, our shareholders are rewarded. If we don't deliver, we don't get anything. So I'll pause on that, Zach, and maybe turn to the Q&A through the Zoom Q&A mechanism.
spk01: Yeah, that's great, Corrado. Not surprisingly, we received quite a few questions while you were making your presentation. And also, not surprisingly, you addressed a lot of those questions with your presentation. However, we do have a question that wants just a little more detail. The person's asking for a little more detail. What is the timing of the mineral resource estimate and preliminary economic assessment and feasibility
spk02: Great question. So we have a schedule now. It's precise. Mike Norred, who leads all of our resource engineering and resource estimated work, has taken the data that Larry Martin, our chief geologist, and Wyatt Cohen, our junior geologist, have spent, I'd say, almost a year pulling together. The schedule has about three months, right, to create the resource estimate, which is now fully underway. update the resource estimate and corroborate with Barry Dober for the review and publication of the report. The preliminary economic assessment, and so, you know, to be clear, the second report that would follow this one would include a certain amount of drilling that would occur in the Dayton That drill program has already been defined by our team. As we review it, we will incorporate it and publish it as part of the first technical report. The first technical report will discuss certain economic considerations, but it won't be technically a PEA. So what we intend to do is publish the resource estimate first, then do some amount of drilling some amount of development, some amount of economic profiling. And then the second report would include a preliminary economic assessment or a PEA. We wouldn't expect that report until 2022 because in between the first report and the second report, we have some really exciting drilling to do.
spk01: All right. And moving on to one of our other segments, you mentioned MCU revenue. What are your expectations for the remainder of the year?
spk02: Yeah, great question. So, you know, the system in the Philippines does about 150 tons per hour. It's actually a faster system than the mercury remediation system we have here in the Comstock, which is more of a pilot, a 25 ton per hour testing system. We're up and running, as I mentioned, with the sand and gravel. all of our profiles show that if we're running the system full and selling all the sand and gravel that we're making a profit without any mercury and gold content. So this was a huge de-risker for us. And to be, really blunt. We had no intentions of being a sand and gravel producer. We had intentions of remediating the soil, extracting the mercury, and then extracting the gold and being a gold producer and soil remediator. So in other words, the soils would have been going back you know into the environment clean the fact that they're saleable was uh was kind of a surprise you know it was a pleasant surprise for us so it's de-risked it so so we can we can guide to that right that we will we will be net positive uh we can see that now that's what we expected for sure that's not the goal the goal is to you know be able to remediate meaningful amounts of mercury and get meaningful amounts of gold that's what we expect We don't have enough data yet to be projecting grades of gold and revenues. But over the next month or two, we'll start to get more data. As I mentioned on the prior part of the call, the grades improve as we move up river. This is factual based on how the artisanal mining originated the waste material into the river. Most of it's at the top of the river. Much of it flows down, obviously, both because of the water flow and the gravity. But even having said that, most of it is trapped in the upper part of the river. The point will be as we're sampling, and by the way, as we're operating, we have like, you know, column advanced teams constantly sampling upriver. That's mostly to determine what the best and next location to move the remediation processes, but it also starts to give us intelligence on the higher mercury contents and the higher gold contents. as we go up the river so you know the answer is we don't know enough yet um i can say this that when we modeled the um when we modeled the original plan it gets meaningly profitable with just a tenth of a gram of gold per ton. A tenth of a gram is a very, very, very tiny number. We think of sort of the low end of the business model range as one gram, right, literally 10 times more. So it's in that range that we'll start to be talking about, you know, ranges of, you know, 0.15 to one grams per ton. know coming out of these uh mercury amalgams of course we're not limited to that they could be significantly higher but at those numbers we're going to be we're going to be very profitable so we're excited to see that develop we're excited that you know i mean literally for the last four days you know three four trucks a day we're leaving our site uh you know taking the sand and gravel that they purchased so the fact that we're operating stably on a daily basis we're shipping daily uh starting to generate good revenue um it's it's um it's a big milestone for us okay um our next question uh first a statement uh thank you for
spk01: providing additional information on Linaco in your presentation. As you know, this sector has its challenges, such as securing permits and supply agreements. Can you speak as much as you can to these two topics? Yeah, yeah.
spk02: So I have to tell you, I have to tell you all that the lithium battery recycling business has been, for me, like the most engaged, the most fun, you know, over the last two months that I've had in quite a long time. There are complexities, there are meaningful complexities that we're thriving on right now, they seem to fall right into our wheelhouse, okay? So we think of it, think of the business in three major phases. And the first phase is, uh securing feedstock receipt and storage of materials you think that that would be the simplest part of the process it's actually by far the most complex part of the process because the the record rules the um the environmental laws associated with just the moving of battery material and the storing of battery material is incredibly complex it's especially complex if you don't have record permits, which pretty much none of the battery metal recyclers are pursuing because record permits, full record permits are equivalent to like NEPA permits. I mean, it's potentially half a decade, right, to achieve those. And that's not part of our business plan either. But what is part of our business plan? is not only to synchronize the receipt annually of 20,000 tons of batteries per year to our state-of-the-art facility, but also to have alternative sites for storage. This is where we think we have a big competitive advantage that we not only have an existing state-of-the-art facility, I mean, we have 10 square miles of real estate right in the same county on the Comstock properties, a number of them. which are perfectly situated for receipt of these types of materials. So we've got a sort of combined strategy of receipt and storage and partnering with the suppliers of this material. And then, of course, being at the highest end of producing black mass, the highest end of producing cathodes, pure cathodes, and then highest end of now incorporating a whole other line, which is to commodity materials. Having said that, right, to give you as much information as possible as requested, we have designed the platform We have assessed the regulatory footprint requirements. We see no major obstacles. And we're about two weeks away, you know, of implementation mode, of starting to reach out to the market, engage in, you know, material contracts, and then, you know, start the process, you know, of that supply chain coming to us. The second phase of the business is the crushing separating and producing a Black mass. And we've now designed a system, when I say we, obviously, the experts in the field and the experts in the industry that do this kind of thing, that we believe will be the most state of the art in terms of crushing and separating. And the outcome of that is the purest Black mass. To have the purest quality of Black mass and and so um so that second phase we're we're we're in the throes of that right now you know in a manner that'll allow us to finalize our permits you know and get that all in place the third phase which is um it's important to say that you know phase one in itself is hugely value creating if you think of phase one We're really not as much in the mind of just synchronizing 20,000 tons of materials through one facility. I guess we think like miners. So we think of these batteries as ore reserves. So we're of the mind of building reserves that are meaningfully greater. you know, than the capacity at which we'll be producing initially. You know, so there's huge value in building reserves. The second value is in having the capability to produce pure black mass, and that's saleable. Right, so if the world ended downstream for some reason which there's no reason, but if the if the world, we have a profitable business just just producing storing selling black mass. Okay, obviously that's not the goal, and then the third phase is to be able to produce the purest. of not only nickel, cobalt, lithium, magnesium, graphite, but also pure cathode materials, which have extremely high market value. And in all of those spectrums, what we love about this business, in all of those spectrums, the values are going up, right? So the business is growing exponentially in terms of volume and the values of the core materials are going up. So I couldn't be more exciting right now. There'll be more to share as we move forward in the permit filings, in the receipt of storage. We're also looking at some very, very interesting complements to that line of business that will dramatically enhance what we can do. And that some of that's tied to the regulatory restrictions. So, you know, containment, transportation, there's breakthroughs in the market for that stuff that we're direct talks with. So a lot of exciting things are going to come from Lineco.
spk01: Hal Hallstein, All right, well, we have a couple of questions about business here on the calm stock load. Hal Hallstein, To the extent possible, can you please comment on some of the management changes that come with gold and how it might affect. their exploration plans. And then Comstock also picked up two patented mining claims at the north end of the Occidental Tren. Can you comment on their significance?
spk02: Yes, so the So with with tonal management I don't want to only really speak to what's you know what's you know what's known what standard is that they made a management change. You know, you know, in terms of their their CEO, you know, Brian mensenheim. who is their chief geologist and an exceptional technical professional, has agreed to be the interim CEO. Brian, we know very well, we work very closely with, and he's been leading all of the drill program results. We always thought that a combined drilling program of going after some very, very deep exceptionally high grade targets on the northern part of the load combined with some near surface targets complementing with CERN at the southern part of the Occidental trend was the right strategy. They seem to go heavy on the deeper targets first but now it seems to be rebalancing to both targets, which we think we agree with and we think is the right strategy. I don't think that they're going to miss the beat with the Occidental because the Occidental is just easier to drill. You have near surface targets, I was surprised by the grades, I have to say. Like we knew there's gold and silver grades there near surface. We knew there were oxide ores. We were reasonably confident there. They were economic. But the grades that came out in those three holes, you know, and when you look at their press release and the profile of the proximity of the surface and the trend that you're drilling into, that's the Occidental. That's what we like. You know, I don't think I don't think people appreciate necessarily well that the Occidental, the southern part of the Occidental and the CERN are almost like twins. They're two near surface resources that are sitting right next to each other. So there's potential for remarkable value aggregation there. So yeah, I think Brian is interim CEO. So I guess that means they're probably considering another CEO. But when it comes to what the company is right now, it's an exploration drilling company. Brian's the exploration driller. So I think they're good there.
spk01: Randall Difuntorum, City of Boulder OSMP, All right, and then. Randall Difuntorum, City of Boulder OSMP, We have a question about the the dandy ramps at the other end. Randall Difuntorum, City of Boulder OSMP, yeah of the trend and they wanted to know this shareholder I want to know if we still retain the mineral rights to.
spk02: Yeah, there's not, we don't, it's a good question, you know, but generally speaking, every time we do something, you know, we would want to retain the mineral rights, you know, just as a point of philosophy. Mayor Mrakas, The we don't you know we have the dainty we have the dainty patent which butts right up, you know to the dainty ranch that's actually. Mayor Mrakas, What the initial cause of us get acquiring the ranch was we we were acquiring 400 acres of mineral properties, including the dainty patent and the dainty. original mine works that bunch right up to the ranch. And we've certainly retained all of that. That's what we were acquiring in the first place. We don't really see meaningful mineral prospects beyond the patent, you know, into the ranch area. So, you know, we have a two-year lease option. They have the rights that they are leasing the facility now paying very good monthly rent to us. with the right to acquire it in September of next year. We suspect that they will acquire it. Um, you know, there's, there's, um, 90 plus percent chance that that's what would occur, uh, if they didn't, right. Which is, you know, not really a thought that's crossed our mind. Uh, we'd be happy, you know, it's, it's a, it's a, it's a phenomenal property and every property on highway 50, any property that abuts highway 50 goes up in value like every month. So, um, John Kane- You know they will get a good price they'll get a good property, but I don't think there's any mineral implications to really think about there.
spk01: John Kane- All right, and following up on that we have a question did this person understand that the drilling comes after the updated technical report.
spk02: Yeah, the first technical report will include a new resource estimate, will include the publication, the details of the drill program, and will have some senses of economics, but it won't be a PEA. The drilling would then follow or be concurrent with the publishing of that report. And then the sequence would be the results of that drilling would then be incorporated into a second technical report that would intend. It could the second technical report, I mean there could be three or four reports so just to be precise, the second technical report could simply be a meaningfully expanded resource estimate. as the results of the drilling. And then the third report could be preliminary economic assessment. And the reason for that is not any notion of delay or deferral. It's that if the resource expanded meaningfully, which is what we would intend with the drilling, then economic analysis would have to expand to correspond with what we now think the mine potential is. So there's a little bit of dynamic there. But yeah, the intention would be report, drill, report.
spk01: Okay. And then we have a shareholder who wants to drill down a little on the MCU Philippines. Yeah. They would like to know how that loan will be repaid. if it will be, what currency? Will it be dollars or the Philippine peso?
spk02: Yeah, yeah. So the way that it's structured, it's a secured loan, you know, and we get So there's a joint venture in the Philippines, and we have a great joint venture partner. Like I was saying the other day that if we could be operating in 15 countries, I would wish that our joint venture, and if we had to have joint venture partners, which you don't always have to for sure, if we had to have, you know, we'd want one that's just like theirs, the one that we have there. So the way that the structure works is that 75% of the profits that come out of the joint venture are prioritized to repaying us first. So that's how it works. We essentially operationally locally, obviously we have to work in local currency, but everything that comes out of there is US dollar based. So we're not taking any currency risk. You know it's all US dollar based in terms of what the loan is and it's all US dollar based in terms of what's being repaid. You know the local generation will be in local currency immediately converted to US dollars.
spk01: All right. And yeah, this is a very important topic for Comstock mining. And we have a question. Does zero debt mean that we no longer have an environmental obligation?
spk02: Good question. So if you look at the balance sheet, there's almost no liabilities left. You know, there's almost no current liabilities left. Right. I mean, you're in the hundreds of thousands. It's it's nothing. There's no debt obligation. Zero. We have one. only one meaningful liability which is about a six million dollar reclamated seven million dollar reclamation liability um and um and it's a long-lived liability that's that's um intended required to cover the ultimate reclamation of our leeching operations at american flats Okay, so so that liability is is estimated as if it's estimated as if. The company or the i'm sorry the EPA the Nevada environmental protection agency would have to assume responsibility and do the work for us, which which tends to mean that they put a ton of administrative costs on top, but a ton of project management costs on top of all. Meaning that you know, ultimately, the money that the company and have to spend over I don't know you know 1015 years. You know, would be a lot less, in my opinion, you know, then the liability that we're required to record on the balance sheet, the that liability doesn't even begin. until we're done with the mining and processing activities right so so it's um you know it's it's real it's it's ultimately a long-lived obligation but it doesn't have any current impact on our financial position liquidity or anything like that so so if we do have a reclamation liability it's required by law for all mining activities like ours It's great to point out like last year, we finished a small, not last year, but a few years ago, we finished a small reclamation on the Keystone Mine in Lucerne. And because we did it ourselves, we did it concurrently, it dropped our reclamation liability with the state by like half a million dollars. And that's an example that sort of corroborates how I think of this liability. When we do the work ourselves and we do it properly, like it's the estimates higher than reality. But in this case, most of those are to the leaching facility, which wouldn't even start until we were done mining. When you think that, you know, even in Tono's best case scenario, you wouldn't be thinking about mining CERN for a couple of years, right? And then how long would you mine? And then after that, you'd start doing remediation. So it's a long way off.
spk01: All right. This is good. You can tell that people do read our 10Qs and our 10K when we file those, as well as our press releases and they review our presentations. Quite a few people have similar questions on the call today. And here's one that several people have asked. Would you please summarize expected sources of cash and timing to be realized over the next 12 months associated with asset sales, sales of marketable securities and notes receivable?
spk02: Absolutely. That's a great question. So first and foremost, we have a total of over $13 million that's going to come from Sierra Springs Opportunity Fund for the sale. of the 98 acres, the 160 acres and some advances that we've made. That money, it's important to know that Sierra Springs Opportunity Fund has brought in meaningful capital over the last two years. Even more important to know that all of the prerequisite obligations that it had acquiring the airport, acquiring the manufacturing facility, paying for the option on a massive, you know, bulk purchase of land and water rights are all done now. Okay, so as all that capital was raising in, the fund was addressing its commitments timely, all the way through. Its very next commitment Rick Swann, Is to calm stock for closing on the 98 acres the 160 acres and some of the advances, so we expect you know 13 plus million dollars in the next three to four months tonal gold. We have over 11 million common shares. We would expect, you know, 5, 6, 7, 8 million dollars come in, not in a rush there, but if we could comfortably say over the next 12 months. Tonal Gold has a note receivable to us that's secured that pays us cash interest every month, almost $60,000 a month. But that's now due March 31st of 2022. So that's another $5.5 million. So, you know, those are the main sources from securities, notes receivable, asset sales, you know, totaling over $20 million. So that's the timeframe.
spk01: John Kane- All right, and we typically get this question every call and people just want to know about the current stock value they've seen a downward trend this month and we're just hoping you could just invite your your perspective on that.
spk02: Yes, I will. So obviously, there's been volatility. There's been a lot of interest. We've spent the last couple of months super dedicated on MCU getting up and running, super dedicated on Linoco's plans being fully scheduled. I'll tell you, it's been fun. We've been working 18 hours a day. Like we were so engaged in the Linaco development, the schedules, the plans, they're just outstanding. In addition to that, and I published this in the last press release and in my comments, we've been working on an additional transaction that is extremely complimentary to everything that we're talking about right now. It will, without question, undoubtedly, undoubtedly demonstrate how hardcore we are with the material science, with the manufacturing, with the revenue, and with the cash generating potential of our lines of businesses. We're going to have another line of business. And concurrent to that, and to answer your question, we've been building a tremendous target list of climate smart ESG savvy investor targets, you know, and we've started to have meetings, you know, just here at the end of April and the beginning of May, you know, just a trickle and in part because my capacity has been very low as we've been first and foremost getting the business plans solidified, completed, getting the transactions negotiated. You know, all that's been, it's just falling into place like, you know, bricks in a foundation. What we will do prospectively, and this is Zach's, you know, primary ownership of, you know, of all of our performance objectives. One of them is to increase our investor base by more than 50%. In other words, our top 30 investors six months from now, nine months from now, will not be 30, will be 45. In other words, we're not looking to lose any of our investors. We're looking to add brick by brick, ESG savvy people, investors who understand IP, who understand markets, and who are very interested in high growth, growth at a reasonable price, even value. So when you're in junior mining sector alone, it's nice to be environmentally responsible. It's nice to be at the highest end of the social order when it comes to how we treat nature and how we treat the environment. But that's a relatively smaller universe of investors. When you get into growth, when you get into growth at a reasonable price, when you get into value, The universe expands dramatically. And you've already seen that just from what happened since February. But some of that was strong reaction to good news, which we're very happy about. We're more interested in building the foundation brick by brick. Keen investor by keen investor. So we're off to a good start, but the work has barely just begun. When I say that, we've had two firms and Zach working tirelessly to build the task force. to build the target list, you know, and to prepare. We would like to get the next transaction announced because then we think we're in a different, we're a whole different sector. We're in a whole different level of credibility. And then we will attract much stronger this, you know, this expanded base of investors. So we love our existing base. uh we love what's happened over the last couple of three months but it's just the beginning of establishing a foundation for growth so we have a very calculated notion of getting to a half a billion dollar valuation and we have a very calculated notion of getting to well over a billion dollars once we get to that point um so but we want to be pedantic we want to be focused And so that's our intention there's a very specific plan for it and i'm excited about talking to new investors about new businesses about revenue about cash flow.
spk01: All right. We've had quite a few people on the conference today who have asked this question and would like an update and maybe just a little more detail. And I think this one summarizes it best. Congratulations on your success with MCU Philippines.
spk02: uh could you please provide us with an update on the MCU pilot plant on the com stop surely surely um so um I'll make a comment you know in advance of answering this question both about MCU and Linoco um in terms of our approach okay and you're going to see this consistently in everything that we do We are very focused on intellectual property that's different, that's differentiating, and we're very focused on commercializing it to cash flow, and we're very focused on protecting our capital as we do it. So in NCU's case, using secured loans to get equity it's not so common right um in in linico's case um you know ensuring that if if there was somehow a failure that you know we own assets that are more valuable than the capital that we invested in this case the state-of-the-art battery metal recycling business i don't i don't usually like to talk about you know, the downside protection because, you know, but I just want people to really understand how meticulous we're being in protecting our assets. You know, as supportive and excited we are about what Tonal Gold is doing, if they don't succeed, we have secured loans on all the assets. You know, that's how it works. So, and, and they're yielding, they're yielding Linaco pays us 8% on our series, a investment tonal pays us 12% on our secure debt. So that wasn't the question, but I just wanna make sure some people might be thinking about what's this three quarters of a million dollar, 12% bearing loan that you made to PSI. Well, plain sight in that innovations is the tickler for the next acquisition that we're doing. Okay. Right now, we've engaged them to engineer and design new tech for Linoco that's above and beyond what we're already talking about. But I'm working with these people daily to get this business up and running. Now, back to the question. What was the question, Zach? Seriously, I don't know.
spk01: Yeah, so the question was, Tell people about the different types of metals that have been extracted during the pilot. Oh, yeah, the pilot. Sorry, sorry, sorry, sorry. And also. Yeah, sorry. Outstanding sand and gravel.
spk02: Outstanding. So, yeah. So, so on the sand and gravel. So, so I feel like a dumbass. So. All right. So. On the Mercury work here and on the Comstock, we're doing a tremendous amount of work. Let me say that there is a constraint with the CEO, Paul Clift. He's the designer deployer of these systems, and he is in the Philippines working around the clock. Let me preface this answer too by saying none of these businesses are a layup. None of these businesses are any Tom, Dick, and Harry can just jump in the business run. There is complexity. But let me use a Philippine example. The sand and gravel demand, know now that we're ready to produce all of a sudden it's like overwhelming oh oh my god we got like four people that want sand and gravel tomorrow so so paul needed like to acquire two grizzlies you know to be able to properly separate and and um prepare the materials um there's not nothing to be found so paul acquired the the metal Paul acquired the materials and he's welding and building the Grizzlies right now. Now, that sounds a little weird, but no, that's what Paul does. He builds sophisticated mining equipment and systems, right? But he's literally doing it himself on site in the Philippines. So my point I wanted to make before answering the question on the Comstock system is that we're committed to every single one of these businesses, but our engineers and our engineering teams actually thrive when there's a hiccup. They thrive when there's an obstacle. They solve it, right? So there will be bumps. There will be bumps in Linaco's development. There'll be bumps in the storage solution. There'll be bumps in how do we deliver sand and gravel. But we're going to commit to getting over every single one of those things to the solution. Now, in the Comstock, because Paul's in the Philippines, we're not running the system live right now. And we've got two major activities that are going on here. The first one is we are sampling the heck. out of all sorts of different types of materials when we ran the pilot in october november december we learned a tremendous amount about what it liked about certain materials and what it didn't like about certain materials we learned a tremendous amount about the efficacy of the mercury reactor we learned about the efficacy of the centrifuges right so we have like we have two things going on right now we're sampling the hack out of materials across the spectrum and we're finding a lot of very very good mercury amalgams that when we restart the system uh should be like ideal for for you know for extracting the gold these these the gold grades in these mercury amalgams are high you know we're tens and tens and thousands of tons of materials or identifying that are like prime for what we're doing we've reopened our lab on site our our labs uh you know mcu has a lab right next to a facility we've reopened our lab you know the the the metallurgical lab on the comstock properties uh to expand the capacity and we're testing and sampling these materials uh through our centrifuges and through alternative You know, activities. So we're working very, very hard to perfect the system. And that's what that's what the pilot on the Comstock is really intended to be. It doesn't have it. It can make money at 25 tons per hour, especially with some of the grades we're seeing in some of these samples. But, but it was never designed to do that right, it was designed to get to a point where we're putting in a diverse series of mercury contaminant materials amalgams sometimes reprocess cyanide tailings etc and ensuring. That the what comes out the other side, you know and i'm saying materials that are way more complex metallurgically than what we're processing in the Philippines in the Philippines, we have a system capable of handling that current environment. The Comstock system is really designed that we can handle any mercury opportunity around the world because the Comstock has 150 years of different types of mining experience. It's almost a perfect lab, you know, if you will, to do this, right? So we also just got approval from Nevada Department of Environmental Protection to allow us to disperse the water and soils coming out right onto our leach pack. You would think that that would have been something that we'd already had, but the system is designed to be self-contained and it was important for us to test the system with its own water recycling, with its own process handling capabilities. Now we've expanded it so that we could actually do that as well as discharge onto the comstock bleach pad which gives us more flexibility on how we process you know various types of different soils uh you know one system will work in one environment another system will work in another environment so it's really um it's really great it's very very active like paul has essentially a total philippine team in the philippines and then the rest of his team in the us is here you know working on the comstock you know brad tom and the rest of the people
spk01: Excellent. Well, we're right at the top of the hour. That does it for the questions. Definitely want to thank everyone who joined us today and turn it back to you, Corrado, for your closing comments.
spk02: So I just want to say that we appreciate everyone's inquiries. If there are more, please reach out to us directly. As a very high important note, our annual meeting is on June 3rd. We've got a lot of people participating. We're going to have a little showcase aspect to it where, you know, there'll be a Comstock geology booth, if you will. There'll be an MCU booth, if you will. There'll be a Linoco booth, if you will, you know, and hopefully a lot more news coming for the developments across all of these lines of businesses. Thank you all very much.
Disclaimer