Comstock Inc.

Good morning, everyone, and welcome to our quarterly update. As you may have already seen, the annual report filed last night, our new website launched last week, and the shareholder letter published earlier this month reflect completely new content for our renewable energy businesses and our mission of enabling systemic decarbonization. In 2017, we began restructuring the company and monetizing certain non-productive assets, frankly, assets with value, but that just weren't doing or going to do the job for our shareholders. I'll provide a good substantive update on our recent tonal gold transaction and other non-strategic assets that we're monetizing on the call today. In 2020, with the restructuring completed and with the senior secure debt eliminated, we began to meaningfully shift our focus onto new investments in renewable technologies, where we would have meaningfully differentiated businesses that would enable rapid growth robust cash flows, all while persistently monetizing and realizing the value of our other non-strategic assets for our shareholders. 2021 proved to be a pivotal year in this regard, where three key acquisitions completely transformed us into a renewable energy company and repositioned us for rapid growth, starting now here in 2022. I'll provide an overview of these transactions, our resulting lines of businesses, our organization and our outlook for this growth, including the information in our press release from this morning and from our annual report filed on Form 10-K last night. If you don't have a copy of today's press release, you'll find a copy on our new website, www.comstock.inc, at either the bottom of the new homepage or the top of the investor page in the newsroom section. Our Form 10-K is also available on the website. on the investor page under SEC filings and, of course, also via EDGAR on www.sec.gov. Please let me remind you that we'll make forward-looking statements on this call, including the outlook for Comstock Fuels and Linaco and our progress on the monetization of the non-strategic assets. Please understand that any statements related to managers 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 the previous reports filed by the company with the SEC and in this morning's press release, and all forward-looking statements made during this call are subject to the same and other risks that we cannot identify. Once we complete the prepared remarks, Zach, who's with me here, will accept and direct all questions zooming in, and I will look forward to answering them. Let me briefly discuss our financial position. Our assets last year nearly tripled to $127 million from just $43 million the prior year. And the same is true with our net equity, growing to over $92 million, up from just over $30 million in 2020. We did all this while eliminating all of our secured debt, adding a state of the art 137,000 square foot battery metal recycling facility here in Nevada, a large scale prototype battery crushing and separating system and cellulose extracting system, all of those assets in Wisconsin, while building lithium extraction and biolum extraction prototypes in our innovation and research development facility. This book value is especially meaningful when we consider that our mineral assets and our investments in Sierra Springs are recorded at cost at a tiny fraction on our books as compared to their monetizable value. We also have an incredible portfolio of patents and intellectual property representing over 23 million in book value and really effectively the driver of billions of dollars in future value. We've also recorded revenue from engineering services for the first time in 2021 representing a first glance towards much more meaningful revenues expected here in 2022 and 2023 associated with our cellulosic technology and equipment sales there too. We currently, as of today, have 67.7 million shares outstanding, reflecting our decision to terminate the LPBio transaction and get the full 3.5 million shares in Comstock back returned to the company. While I'm at it, let me hit MCU. The MCU Philippine team is in place there and operating. The system is fully permitted and operational. We spent the last three months extensively testing the river. I'm sorry that we haven't had better news sooner. And although we are finding mercury and gold amalgam on literally every sample hole tested, the grades have been well below our expectation. We will complete the testing over the next few weeks, just in the next couple of weeks, and make a decision on how best to deploy the system based on the contamination and gold content that we now see. These results are just not sufficient for us to operate it profitably. So the hope is that we would discover much higher levels of mercury and gold amalgam, and so far that has not been the case. We have proved that if there was more gold, that operation would be profitable, but to date, we just have not found enough. Frankly, our biggest achievement in 2021 was the acquisition and integration of an exceptional senior management team and this portfolio of decarbonizing technologies that we are now commercializing. We are integrating into one organization, one system, Comstock Inc., with one goal, and that's to accelerate these high-growth, decarbonizing technologies while we're unlocking the value of the other assets by monetizing them. The acquisition of PlainSight Innovations, now Comstock Innovations, and Renewable Process Solutions, now Comstock Engineering, represent our newly established innovation and commercial development capabilities. where we can now commercialize our own IP, physically demonstrate our technology and rapidly prototype new products for our customers. We can also engineer and manufacture these solutions for ourselves and our customers. We have already designed and built breakthrough crushing and separating solutions for advanced pure, highly mineralized black mass from lithium ion batteries. And we are currently advancing our extraction technology for lithium, cellulosic sugar and biolium and more. Our core competency is literally natural resource extraction. When we realized last year that our extraction technology was producing a carbon neutral equivalent to petroleum, we immediately filed a trademark for that name, biolium, which we are now saying publicly today for the first time. All of our entire patent portfolio now resides in Comstock IP Holdings, Kevin Chrysler, our president, and Billy McCarthy, our chief operating officer, have and continue to lead the organization daily to this end. We've also established Comstock Fuels, which I just mentioned a bit earlier, our 100% owned cellulosic fuels business, representing one of our two renewable energy businesses. The acquisition of Linneco, initially as a minority in early 2021 and now owning over 90%, is led by our newly appointed president, Leo Riera, and represents our other renewable energy business. Both of these businesses renew carbon neutral materials that fuel transportation. Our leadership team, including Kevin, including Billy, including Leo and David Winsness, our chief technology officer, and Raul Babili, our chief engineer, will be on hand at this year's annual meeting on May 26 in Reno. Please do register and attend where you can speak, meet and discuss our capabilities with the entire senior team firsthand. Let me dive a little bit deeper into renewable fuels. We believe that renewable fuels provide the most critical real-world mechanism for decarbonization. However, today, most current form of these renewable fuels draw from the same pool of conventional feedstocks like corn oil, like vegetable oil, without any truly meaningful carbon benefits. That entire corn and vegetable universe only represents a tiny fraction of the global transportation burn, so they can barely make a dent. Any serious plan to meaningfully decarbonize using renewable fuels must involve abundant and available feedstocks that no one else is using today. Comstock Fuels owns a portfolio of technologies that resolve these feedstock limitations by efficiently converting waste that is widely available and rapidly replenishable waste in the form of woody biomass into these advanced cellulosic fuels. We can do this today under existing regulations, incredibly profitable, and the federal government is now making sweeping changes to enable even more, which we recently publicly commented on. When we say waste, we mean sawdust, mill residuals, slash, that no one is using for fuels and that work perfectly in our process. We can now unlock vast quantities of these historically unused and underutilized feedstocks with enough renewable carbon to permanently offset billions of tons of fossil fuel emissions. This is real world decarbonization and it's credibly responsible, it's incredibly profitable. We understand that there's upwards to a billion tons per year of this waste biomass currently generated in the US alone. That's enough to produce 1.7 billion barrels, again, per year of carbon neutral fuels with our technologies, or more than a third of the US transportation demand. This doesn't address the potential of underutilized forest lands. I'm just talking about the waste, the residuals, the sawdust, the slash. These underused life force lands could be restored and used to sustainably grow, harvest, and replant billions of tons of fast-growing energy crops for conversion into billions more barrels of renewable fuels, again, with our technologies. The combined output could exceed 50% of America's current output on fossil crude, and it's 100% renewable. Shockingly, Canada has even more. The impact here is massive. It's truly the equivalent of an oil well that could never run dry and our technologies are effectively the drill that unlocks the natural resource. So our plan will be to rapidly build, deploy, own and operate a fleet of advanced carbon neutral extraction and refining facilities. Our goal is to safely generate 16 plus billion in revenue on an annual basis by 2030. We plan to design Bill retrofit and existing facility first and commence produce producing and selling cellulosic ethanol and diesel and we're already assessing the sites for the next 10 facilities targeted the first one targeted the second one and we're assessing the sites for the next 10. that's how we'll achieve rapid scale by capping into and leveraging the existing infrastructure We're talking about leveraging the existing infrastructure. We're not talking about building a new infrastructure. Our expanded team has extensive experience doing just that in this industry, having designed and built over 20 large scale industrial renewable fuel facilities. Meeting that objective alone would offset more than 234 million barrels per year of fossil fuel, which is about 6% of the U.S. transportation burden, yet only requiring about 80% of this available U.S. biomass residuals. What I'm saying is that we'll convert this untapped woody biomass into cellulosic drop in fuels like diesel, like sustainable aviation fuel, like marine fuel, gasoline, and cellulosic ethanol. These fuels work in the existing infrastructure. Then diesel goes into existing trucks. This aviation pool goes into existing planes. It works with existing depots, fueling stations, et cetera. And just one of our bio refineries, just one can produce over a hundred million gallons of biofuel per year. would represent about 70 million gallons of cellulosic ethanol and 30 million gallons of renewable diesel again per year from just one million metric tons of woody biomass this is how we enable global decarbonization by burning less fossil fuels burning smarter with more renewable fuels and burning cleaner by recycling emissions into more feedstock I can stop there, but there's more, because as we know, electrification is also playing a meaningful role in reducing our reliance on fossil fuels. Although, frankly, the notion that it's the sole solution is factually and literally nonsense. But our second decarbonization initiative is our electrification products business, which results from our 90% ownership of Linneco. We are pleased to announce that we have onboarded our new Linoco president, as I just mentioned, Leo Riera. Leo has extensive background in building this type of renewable business. He's the founder of EnviroPower Renewable Inc. that develop waste to energy solutions, both domestically and internationally. He has extensive domestic and international M&A experience, exceptionally strong financial project and transactional management experience. We're not only excited to have Leo fully on board, he's here in Nevada as we speak at the Linoco facility. EVA registrations, of course, are exploding more than doubled in 2021 and meeting even the most conservative estimates for these increases in EV demand will likely result in about five times more lithium carbonate than the entire mining industry produces today. The conventional recycling processes that we're seeing deployed suffer from extremely high, if not total loss of lithium. Our technology meets the realities of these demands and this demand shortfall by extracting lithium early and profitably. We will extract lithium immediately after crushing and separating in a manner that maximizes the lithium recovery for reuse in batteries. These market leading yields and additional revenues allows us to be profitable at very low levels of production very low production levels by putting lithium first. We are also partnered with developing technologies for cleanly processing and producing other metals like nickel, cobalt, manganese, as well as technologies that can recycle our highly pure black mass and produce 99% pure precursor cathode active materials. Collectively, these technologies give Illinico great scalability, including the ability to process up to 100,000 tons of spent batteries per year, with broad differentiating advantages up and down the supply chain and up and down our novel processes. This breadth gives our platform a much larger addressable market, and there's no spoke or hub. Just a well-designed, well-engineered and fully integrated system with higher yields, faster throughput that operates at a fraction of the industry's current costs. Our first commercial prototype, six ton per day crushing and separating system is being assembled and commissioned right now as we speak. Once our Nevada permits are secured this summer, it will be located at our state of the art facility right here in Nevada where we expect production this year. This positions our recycling business to contribute billions of dollars to our enterprise value just from Winneco, just based on existing valuations of comparable companies and our perceived advantages in that industry against those companies. Let me just conclude the prepared remarks with the monetization of our non-core assets. If it hasn't been obvious, we've been working hard to monetize our non-performable mineral and real estate assets. For us, performing means generating socially responsible revenue, robust throughput, and impacting decarbonization. We are pleased to announce that we just completed a transaction where Tonal Gold pays us $1.75 million this week as a prerequisite for us exchanging the $6.65 million due this month for an option to repurchase the Lucerne mine by the end of this year for just under $8 million. This does technically mean that we took back the ownership of the Lissard mine, at least temporarily in lieu of the cash payments and a higher value due later this year. For us, this is just one example of extraordinarily effective monetization of these assets. Tono is also separately paying us annually for the leasing of all of our other mining, our northern mining claims that they're planning to drill and develop with their capital. where we retain royalties on all of those properties. They have committed to us in writing tens of millions of dollars to this end, and this is another example of monetization. Tona will still reimburse us an additional $2 million per year for the cost of maintaining the mining platform and certain mining property payments. This is yet another example of monetization. They have now completed their draft SK-1300 that we have reviewed and we expect that Tono will announce shortly a very meaningful restructuring and realignment that resets their financial position and funds their development plans. We will also publish our own SK 1300 compliant technical report on the southern part of the district with the Dayton and Spring Valley and OST territories within reasonable proximity of Tono publishing theirs. Tono is on the northern part of the district. We're on the southern part of the district. Both these reports will have mineral resource estimates and the combined reports represent substantially all the Comstock Mineral District and positions us to maximize another round of monetization. Of course, as of today, we own all the assets, including Lucerne. With gold hovering around $1,900 an ounce, the publication of these two reports is timely for meeting our monetization objectives. In closing, let me say we've already made remarkable process on our operating businesses. We are currently building commercial pilot scale cellulosic fuels in LIB facilities, and we are preparing to deploy the LIB recycling facilities in Nevada later this year, as I just mentioned. The monetization of our non-strategic assets will support funding of our new operating businesses while limiting substantially all of our focus, substantially all of our focus to cellulosic fuels, lithium battery recycling, and the intelligent monetization of these other assets to unlock the highest value for our shareholders. I'm excited to take all your questions. Zach, please let's stop here and let's go right into the Q&A.

Thanks, Corrado. We've had quite a few questions submitted during your presentation, and I know you have addressed all of these different lines of business. So the first one is with respect to GenMAT and to the extent possible, can you provide some further details about GenMAT? And also there was an NDA discussed a few months ago. When does that end? They want to know if it's a timetable or if it's based on the completion of some sort of milestone. Thank you, Zach.

So, yes, we appreciate the question very well. So I think as we evolve here and as we are making it clear, you know, where our priorities are, especially our mission of enabling systemic decarbonization, it's going to become clearer and clearer to everyone how GenMAT is aligned with our goals. Having said that, right, having said that, and you know that GenMAT's core business objective is to generate new materials, new materials, where for us we're prioritizing carbon capture, decarbonization of the energy infrastructure and as well as batteries and battery science. So GenMans working on those objectives. As a policy, as a rule, we won't talk about the research and development activities until the achievements are made and are communicated to everyone at the same time. So I'd like to leave it by saying that the schedule of GMAT work spans the next 18 to 24 months. That's the timeframe where they're going to be dedicated to the generative material science work that they're doing. And as those results come out, Not only will they be meaningful, but you'll see clearly how they're aligned with everything else that Comstock Inc. is now focusing on as a priority.