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spk01: Ladies and gentlemen, welcome to Comstock's 2022 year-end business results webcast. Here is Comstock's executive chairman and CEO, Mr. Corrado De Gasparis.
spk02: Thanks, Zach. Good morning, everyone, and welcome to Comstock's 2022 full-year report. I'll provide a business update, including the information from today's press release and our recently filed annual report on Form 10-K. I appreciate the emails and the inquiries from many of you, and in response, we're being much more specific today about the nature and extent of our results and our 2023 outlook. In this afternoon's release, in our annual report, and on our Form 10-K, and on this call. we also made a real effort to define clearly and precisely how we define technological readiness levels or in our terminology trls so you can better understand and measure us because frankly this is how our partners our customers and even the government evaluates us trls are measured on a scale from one to nine with trl6 representing a critical Milestone for anyone serious about commercialization, and we're solidly on that now. 2021 and 2022 were about integration and technology development and its readiness. 2023 is all about commercialization. By certain relative measures, we've been fast, but not relative to the expectations that we have set. And we're correcting that by setting very specific and clear objectives. We will be transparent and accountable with these smart objectives with Fuels and GenMap already leading the way. If you don't have a copy of today's press release, you'll find a copy on our website at www.comstock.inc at 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 also via EDGAR on www.sec.gov. You may have noticed the expansion of the website to www.comstockfuels.com, with Fuels also launching their own social media sites as well. Please let me remind you that we will make forward-looking statements on this call, and that any statements relating to matters that are not historical facts may constitute forward-looking statements. Our statements are based on the most current expectations, and they're subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in previous reports filed by the company with the SEC and in our most recent press release, and all of these forward-looking statements made during this call are subject to the same and other risks that we can't identify. Once we complete our prepared remarks, Zach will accept and direct all questions. We'll also extend the Q&A. Based on input received from our last call, you can be sure that I'm listening to your input and looking forward to all of these questions. We can also be available for follow-up after the call. Let me briefly highlight for each one of our businesses the most salient achievements for 2022 and the SMART objectives that we set for 2023. I'll start with Comstock Fuels. The Fuels teams has now demonstrated technological and commercial readiness, that is, at least TRLs way with extraordinary yields now approaching 100 gasoline gallon equivalents of renewable fuels per triton of woody biomass we believe these levels are unprecedented and dramatically higher than what we acquired from this business less than just 18 months ago i can tell you when you're engaged with a globally recognized company and you're demonstrating trl6 or trl7 As in our recent experiences, you're engaging in months of real diligence, productive advancements, and that's what's happening with us right now in the fuels business. We've upgraded and commissioned our demonstration system in Wisconsin and commenced production and shipping of biointermediate product samples to exactly these type of prospective customers. And we're actively engaged in discussions with multiple of the renewable fuel producers towards the execution of new licensing agreements. We have recently hosted one such company in Wisconsin with great reception over two days as they could now see, touch, and feel our capabilities and test our samples. Our demonstration facility is integral to these commercialization efforts. We are now both actively commercializing what we have proven while also advancing additional fuel pathways. both within the award-winning DOE grant process, as well as multiple other enhancing pathways outside of the DOE grant process and positioning for the potential to even increase these leading yields well beyond 100 gallons per dry ton. In our opinion, this would extend an already significant market-leading performance. this year we will execute at least one commercial license agreement and to be clear each license agreement for one of our potential customers commercial production facilities will create at least 15 to 20 years of recurring royalty revenue for the company this is in addition to millions of dollars of upfront fees for design and engineering and support Just as an aside, when our technology is adopted by a customer like this, the likelihood of it being only for one facility within these global and national companies is pretty low. We will also complete in 2023 an independent lifecycle carbon analysis to prove the carbon emission reduction benefits from using the fuels produced with our patented processes. Our customers value and frankly demand that these leading decarbonizing activities are independently documented, and so do we. 2023 will also see continuous operation of the integrated buyer intermediate production process in Wisconsin for sufficient enough time to achieve and broadly demonstrate TRL 7. Now let me turn to GenMap. Who, as of yesterday and quite dramatically has come out of stealth mode in large part because they've announced the achievement of their first three major objectives and are now well on their way to the first commercial use of their breakthrough software solutions. i'm going to try to convey the profound importance of what they've already demonstrated, which is a successful creation and operation of a truly generative artificial intelligence. Just to repeat that, Gen Mat has now created and operates a proprietary generative AI that they've named Xeno. Xeno can simulate known and new materials in an exponentially shorter time than traditional R&D methods are capable of. This includes simulating and predicting crucial properties such as electrical conductivity, thermal conductivity, heat capacity, formation energies, band gap, magnetic properties and more all at the atomic level geno has been trained on solid state metal oxides and can simulate any metal oxide materials thermal conductivity for example to 99 percent accuracies in minutes we have seen it done with titanium dioxides and frankly we were all stunned for context this is the type of material research that takes many months and millions of dollars if it weren't happening, let's say, in the semiconductor or battery metal industries. GenMAT's already assembled a world-class team of material scientists and engineers, and they have also efficiently deployed a state-of-the-art remote, high-performance computing platform with the capacity to conduct high-throughput material simulations at workloads comparable to many conventional supercomputers. They've been quite busy. building this platform over the past two years and this means that today genmat scientists and engineers and ultimately their customers can access Xeno remotely for generating breakthrough material solutions Xeno operates similarly to the large language model generative AIs that are all the bugs today like chat GPT But instead of manipulating data, writing legal papers, or generating code, which is revolutionary, Zeno has instead harnessed math and science to manipulate matter at the atomic and quantum mechanical level, enhancing and discovering new materials and engineering material solutions in an exponentially shorter time than traditional methods allow. It's going to take a while for people to digest this. It's going to take a while for people to appreciate this. It's going to take a while for people to start embracing this, but it's going to happen. To put it in a little better perspective, new material discovery typically takes many years and millions of dollars, and GenMath AI can simulate thousands of unique materials in minutes and ultimately in seconds. in 2023 we expect genmat to rapidly elevate these new material simulations to trl6 by generating synthesizing and directing and directly testing many more simulated materials and continuing to confirm the precise and precision and accuracy of those simulations this positions the commercialization of their solutions with early adopter Enterprise clients The clients that they are already speaking with are the cutting edge, globally leading materials and minerals companies. There's also a remarkable crossover application in that Xeno's ability to create new materials also extends to an ability to identify and discover new minerals. If it recognizes material signatures at an atomic level, it'll also be able to identify known mineral signatures in the earth. And in our opinion, certainly better than any other known exploration method that we're aware of. This is still developing, but coming from the same base and the same generative AI capability. This is also the reason that GenMap's launching and making operational in 2023 an extremely powerful space-based hyperspectral imaging sensor for mineral discovery. mineral discovery applications with the comstock perfectly positioned as the base case speaking of the comstock in 2022 we reconsolidated our mining assets and now control over 12 square miles of primarily patented and unpatented mining claims covering six and a half miles of continuous mineralized strike within the entire district including full access now and productive use of our existing permitted crushing, processing, and refining infrastructure. We also significantly expanded our mineral resources. This was announced previously with the publication of two new SK 1300 technical reports. We now report total published mineral resources of over 600,000 ounces of measured and indicated gold and nearly 6 million ounces of measured and indicated silver. we also have additional inferred gold and silver resources that increase those numbers by nearly 50 percent with genmat we are now developing exploration plans that will leverage the hyperspectral imaging and ai enabled high precision mineral discovery analytics so that we can efficiently expand enhance and prove the value of these mineral resources I'm sure this is going to make some people on this call very happy, since our 2023 objectives now include advancing our exploration and development and publishing a pre-feasibility report, what the Canadians call a preliminary economic assessment, or a PEA in the industry, for both Lucerne and Dayton resource areas. We will also develop, with JanMass, a next generation geostatistical digital twin model of the Dayton resource using our extensive existing geologic and geophysical data and creating tremendous additional knowledge for expanding that resource. These 2023 efforts will certainly enhance our gold and silver resources while progressing toward ultimately publishing full economic feasibility reports. These reports would result in proven and probable reserves, although they would come after the pre-feasibility reports that we just discussed. Look, when the world is in chaos and we have runs on our banks, We love having 12 square miles of entitled permitted gold and silver mineral resources fully back in our portfolio. With gold at well over $1,900 today, and in our opinion, heading higher, that then represents billions of dollars in mineral revenues in the future. This has also, of course, increased outside increase and interest in these properties. Last and certainly not least, for Comstock Metals and our Linoco subsidiary, we have built and operated a pilot system validating our lithium ion recycling technologies for use in efficiently crushing, conditioning, and extracting high-purity black mass metal concentrates from these battery cells, elevating our technology to TRL5. We just need to operate the system more extensively to achieve TRL6, but we have certainly confirmed our ability to produce black mass and these metal concentrates. As I believe most of you know, we have both opportunistically and strategically monetized the option facility in the Tahoe Reno Industrial Center for gross proceeds of $27 million. This eliminated near-term liabilities of $12 million and generated immediate and near-immediate net cash proceeds of over $12.5 million. When Microsoft and other tech companies recently announced billions and billions of dollars in investments in this area, we capitalized on the opportunity and we sold the asset. We also had a facility massively bigger than any of our immediate needs, frankly, than any of our intermediate needs, plus new access to other properties more conveniently situated in our system. Frankly, we also see a longer horizon for LIB batteries, especially with the secondary and extended lives than most people seem to be acting against. Yet we do see other near-term opportunities for recycling other metals efficiently, profitably from other electronic devices. All of this allows us to non-dilutably fund and physically reposition our platform here in Northern Nevada and make better use of the already permitted facilities for both storage and metal processing. As you know, we've already expanded our technical and operational leadership for Comstock Metals with Fortunato here with us today as we complete the planning for this new metals recycling platform and a and broaden more immediately the addressable markets for commercializing of our business. We also continue to advance the technology readiness, including some technology that Fortunato is adding to the equation for broader material recycling like, for example, photovoltaics and fuel cells. We've already identified these broader feedstock opportunities, revenue potentials, and expanding high-growth markets, certainly including but well beyond just lithium-ion batteries. This is a shift. This is a reposition. We want to be very, very clear. We will finish this repositioning plan and share much more specific objectives here for 2023 in the near coming months. We'll also start hosting more frequent calls, highlighting a particular business each time so you can get better exposure to the rest of our leadership team. This will get kicked off in mass at our upcoming Investor Day, and then much more frequently thereafter. With major asset sales already delivering now more than 14 million in cash proceeds and an additional 20 million in pending and planned asset sales for this year, the company has alleviated the need for continued equity issuances at these levels. I know that's also going to make some people happy. Executing licenses for use of our biorefining technology is our number one priority for 2023. While our metals and generative AI solutions have and continue making incredible leaps forward with the goal of readiness first and then securing partner and customer agreements in 2023. Just to restate, before we take questions, 2021 and 2022 were about technology development and readiness. As you're hearing, in a pretty big way, 2023 is all about commercialization. Zach, let's stop there and turn to questions. Do we have our first question?
spk01: Yes, we do, Corrado. The first question is, what is the status of patents applied for in biofuels?
spk02: So I think we announced about half a year ago, you know, the filing of a very, very dramatic Patent hundreds of claims, you know, within the patent, we were internally referring to it as the umbrella patent. It's still relatively young in terms of the filing. But we believe that the extent of it, the depth of it gives us freedom to operate with our technology, which philosophically is what we're all about moving fast with our technology without any encumbrances.
spk01: Our next question is, why haven't insiders purchased any stock?
spk02: will they be purchasing stock in the near future thanks for the question yeah so look let me let's talk about that just for a bit you know we've got a very very strong senior team of people here that are deeply vested you know in the company i think um digging through each and every one of them their investment in the company represents a substantial majority of their net worth number one number two they've all committed for a very long term and to me that's not even that consequential because most of our team has dedicated their lives to the um you know to the um objectives that we just went through with you in addition to that a lot of our people came in when we originally valued these transactions and we originally acquired these companies um at a dollar equivalent of five dollars a share So when we think about alignment with our shareholders, when we think about our own investment, and we think about how vested we are in this equation, we think there's very, very strong alignment. Having said that, I don't want to dodge the question. If we have the opportunity, and frankly, we have the personal liquidity, we see this as an attractive step.
spk01: you know each person will make their own individual decision but we would look forward to some positive actions there okay next we have a statement from one of our listeners today first of all let me say congratulations for everything the company has accomplished up to this point And when will we be able to hear more about the collaborations that you have with the various entities that were listed on the DOE grant application?
spk02: Oh, thank you first for the congratulations. We've got a lot of wood to chop, literally, figuratively. The grant application was energizing to the company when we were awarded Frankly, it energized us even before we were awarded with the assembly of that world-class industry team. With the award, we're engaged with every one of those parties on a frequent basis and with the DOE to finalize all aspects of the grant, finalize the agreements, and kick it off. um as a matter of transparency and courtesy we're planning to post the full grant application which gives great detail to our technology and our processes and sort of indicates what the role you know of each one of our partners is so I think it's going very very strong and it's going very very fast. We're dealing with the government, but they've been actually remarkably responsive to all of our back and forth. And so I think we're in a good place.
spk01: Corrado, can you please update us on the investment in Green Lion?
spk02: Oh, yeah. So Green Lion, if you all recall, when Linoco was first formed and negotiating the contract for their downstream precursor cathode active material system we made an investment in green line the investment was about two million dollars and we got a little over 20 percent of the company maybe this question is being asked because green line just last week announced their third offering um valuing the company at about 150 million dollars we were ecstatic to see that um to say the least and um we understand that they have uh selected and are deploying their first system uh with another customer that was in part in at our request as well And we have a very, very strong relationship with Green Lion. The investment was initially marked to about $4.5 million on our balance sheet at December 30th, 2021, when we increased our ownership in Lineco. We no longer mark that investment to market, but given the recent offering, it's worth much, much more than that amount of money.
spk01: Can you provide an update on the mercury cleanup business as well as the equipment that's associated with it?
spk02: Yeah, happily. So we haven't spent almost any time in 2022 with mercury cleanup. We did recapture 100%. of the assets in that business some of you may recall we were a 25 owner we weren't actively managing that business we did recapture 100 of the assets of that business which means we have two physical systems one uh pilot system sitting here at the comstock one a fully operational system which is still currently in the philippines but we are making arrangements now that freight costs have dropped dramatically to ship that equipment and related mining equipment and related infrastructure back here those equipments can be used for alluvial mining i may have mentioned previously that Even though the systems have efficacy at removing mercury contamination from the materials, it doesn't need to have mercury contamination to process alluvium and separate gold. The spirals are highly precise. So we have the equipment. We have not prioritized that business. I think you can see why. The impact of fuels, the impact of GENMAT's work, the impact of metal recoveries are tremendous for us. But we will reevaluate what we do with those assets. In recapturing 100% of those assets, we also recaptured a little under a million dollars of cash back. So I currently don't have any asset recorded on our books. We wrote those down as part of this process, despite having taken 100% of the physical assets within our portfolio. So I wouldn't say, and as you heard from my comments here, it didn't show up on the 2023 objectives as a priority, but we will ultimately make a decision on what we do with either A, those assets, or B, the business.
spk01: The next question is, do we have any ongoing royalty income?
spk02: We do not have any ongoing royalty income. We do have royalties associated with our mining properties, but we have now recaptured and reconstituted all of our mining properties back into our portfolio. For total clarity, we own or control 100% of all of those assets, all of those patented and unpatented mining claims, properties, lands, et cetera. As we move forward in the fuels business, it is a licensing and royalty-based model, which we're extremely excited about, but we don't have any currently operating as we speak.
spk01: When do you expect the battery recycling to go into initial and then full production?
spk02: The battery metal recycling business is being repositioned. We made big profit, eight-figure profit in flipping this facility. we also have an unrecognized significant game sitting in the green line investment that we just talked about so you know if we're looking at a short scorecard financially we're sitting pretty happy with our position the negative implication of selling that building was the um the repositioning of the asset which will also require repositioning of the permits however As I mentioned, as we look at this market and we see the rate at which it's ramping up and we see some of the other markets and opportunities in front of us, we're reassessing how we're going to deploy the pilot, where we're going to deploy the pilot, there are various modifications that will occur associated with the permitting and we will come back later with a much more specific plan much more specific objectives much more specific timeline but i want to emphasize We're leveraging tremendously existing infrastructure. We're leveraging tremendously existing human resources that are knowledgeable and capable, adding Fortunato to that equation. We have a very efficient capital light repositioning of this business, yet not only would we not diminish the growth perspectives? We feel we've broadened the growth perspectives. And we'll talk to you about some of these other markets where we see some immediate ability to move into feedstocks and different abilities to process and recycle other metals. So more to come on that. I guess what I would commit to is when we give the next updates, we will try to accelerate and put metal recycling at the front of our updates.
spk01: Corrado, what are the company's plans to get the share price to catch up with the valuation? Thank you very much.
spk02: I appreciate the way the question was postured. When you look at the achievements that have occurred in 2022, and I want to be clear, we wanted to do more. We had outlined in many cases that we would do some more. But when we look back at what was achieved, and and when we acknowledge with discipline the technology Readinesses that we've advanced we really have an incredible value in creation has it been realized by the markets obviously not right but we um we feel we've created it we feel it's positioned us for tremendous growth going forward now what are we going to do to unlock that value? First and foremost, we're going to communicate on a much clearer basis. We're going to make sure that you understand where we truly are transparently, technologically, how ready we are. I'm excited about how ready we are. I'm excited about these engagements with new customers. I'm excited about the proximity that GenMAT and these other battles businesses have with new business. Now, In addition to advancing the plans that we just outlined, we are communicating more broadly. I mentioned that Fuels has just set up their own website. We've gone a step further. We've dedicated a team, right, to start communicating and marketing the activities. We already have dedicated sales and business development. We will be in full attendance and keynote speakers next week at the Advanced Biofuel Conference. we will be targeting investors that have expressed a keen interest in these segments of the market there are long-minded institutional investors that see now the position that we brought the company forward to see the readiness of the solutions that we're bringing to market Interestingly, even some of the customers that we're talking to have referred us to investment capital. So we are positioned to better target, better communicate, better market, and start to realize a much, much bigger percentage of the value that we believe has already been internally created and unlock it for the investors. And second to that, just continuing to forge forward on meeting these 2023 objectives.
spk01: Well, that's a good segue. Corrado, what do you expect your 2023 R&D expenses to be compared to the 2022 R&D expenses?
spk02: Yeah, it's a great question because I think you'll see that we went from about half a million dollars in R&D expenses in 2021, the year that we acquired these businesses, to over $7 million in 2022. That was the best money that we spent, that money went into the piloting and now the continuous operation in Wisconsin, the not only ability to create cellulosic sugar and biolium, but to be able to provide stable, repetitive, high quality samples to our prospective customers. the design engineering and building of the crushing conditioning and separating system to prove that we could produce these high quality black masses. I can tell you that right now we're spending at a lower rate than we did last year. However, we want to turn that around. Right. Because we now have the ability to advance some of these opportunities even faster. So I would say our current plan, our current look just on the R&D side would be comparable. Right. We want to replicate and enhance the advances that we've just done. What you don't see, what you don't see is that we've invested seven and a half million dollars into Genmax. And that is doubling the development efforts and look at the results that we're getting from it. When we look at companies that are generating AI that are truly bringing to market something that works to the level of accuracy that GenMats created for the amount of money that's been invested, I would say, honestly, I would say it's not dilutive at all. It's been a tremendously accretive deployment of capital, both in the research, the development, and the teams that are surrounding and advancing all of these activities every day. I'm frustrated by the share price, but not in any way dismayed by it in the sense that we know what we've created, we know how we can communicate it, and the credibility that will come with these validations will continue to evolve and expand and grow our capital base. It's inevitable. It's inevitable.
spk01: Corrado, please provide us with an update on the Sierra Springs Opportunity Fund.
spk02: Oh, surely. So Sierra Springs has had some great activity over the last few months. I alluded to it earlier on the call, but Microsoft acquired a major piece of property right across the street from the entire Sierra Springs Opportunity Fund land position. They then announced even further investments in Northern Nevada, right up the road from that investment in Silver Spring. Tesla announced $3.6 billion investment, including the production of electric semi-trucks right here in Northern Nevada. Just when it started to seem like Texas was getting the substantial majority of their plant expansions, there was a strong about phase where they announced not only these semi-trucks, but also a new battery plant right next to and integrated with the existing battery plant. so because of those things the activity and the interest in in silver springs has gone up dramatically i mean i think the microsoft investment was almost like the tesla effect of you know eight years ago where people now see that blue chip companies that have been pouring into northern nevada for the last 10 years are expanding into Fernley and expanding in to Silver Springs. So we are ecstatic about that. I have at least a handful of investors that are not only looking to invest in Silver Springs, but actually looking to come in and acquire property the way that Microsoft did from us. so um we're you know the the real estate market um has gone um through a bump you know it got punched in the nose frankly with the fed rate increases cap rates have gone up valuations have come down and so that slowed a bit of the process but it has not slowed the quantity of activity and the quantity of interest coming in so from my perspective um had we not moved into a sort of a down real estate cycle we would have been done it's not an excuse it's it's the reality that we're facing yet we still hear see repeated repeated and increased interest of inflow of businesses into this area i mean almost unbelievable levels and so again i just think it's a matter of time before we close that we're looking at a minimum cash proceeds uh to to comstock of 15 million dollars with the potential of it being up to 20 million dollars so we're very excited about you know getting that done and um and and supplementing to the now cash position we have from closing the 2500 Peru
spk01: Corrado, what is the estimated value for Lowe's position in Green Lion? And can you provide an update on Green Lion?
spk02: Well, I said it a little bit less specifically earlier. You know, at the level that they just did their recent secondary offering, you know, it would put our existing share position at over. 20 million dollars okay it's not a public company so we don't have you know any kind of immediate way you know to monetize that but if there is an interest to doing that we certainly would be open to it for us what is strategic about green lion is the contractual relationship and the access that we already have at very very founding level prices for their system that's intact that's not changing the investment frankly the investment was done to enable that contract the investment was done to get a favored nation position on the technology with that being in place the investment is discretionary so it certainly could be one of the assets that we monetize
spk01: Grotto, what is Comstock's ownership stake in GenMAT and remaining financial obligations? Yeah, so good question.
spk02: So we had committed originally up to $50 million for up to 50%. Okay, that's the simplest way to think about our commitment. It was phased with three major components. The first component was a $15 million commitment requiring GMAT to achieve certain objectives. They're well on their way to achieving those objectives, and we have committed in cash to date just under $9 million of those $15 million. so basically if we fulfilled the full 50 million we would own about 50 of genmat right genmat is now starting to get as you probably wouldn't be surprised to hear interest from venture capitalists and many other sources of capital we think there's positives to that kind of situation right now we're the only investor we're the only funder we have three of the seven board seats i chaired the board And our relationship with that incredible management team and that incredible multidisciplinary science team is at the highest level. So where do we end up? Look, we're going to get to phase one. We're going to fund $15 million. We're going to see what's commercializing, what the values look like. We think they're going to be extraordinary. And then we'll make forward decisions from there, right? So where do we end up with GenMAT, you know? somewhere between 30 and 50%, depending on how far we go with our capital resources. We have demands on our capital too, right? And the fuels business is really ready to fly. So it's a good situation that we're in. I mean, I can't think of a better situation, you know, relative to the businesses and capital allocation decisions that we have in front of us.
spk01: Pivoting back to mining, what is the lead up to the preliminary economic assessment for each property that is drilling, et cetera? Great. Yeah, yeah.
spk02: Look, there's really three major levels to these technical reports. First level that's meaningful is resource estimate. We have a resource estimate for Dayton. We have a resource estimate for Lucerne. The next level is to do these preliminary or pre-feasibility assessments. What does it entail? It entails some engineering. It entails some analysis of the permitting. It entails analysis of the cost. Preliminary because you haven't engineered a full mine plan, but you've engineered economic shelves. You've engineered certain concepts. You've looked at certain processing costs. Well, now let's reflect on what I just said relative to Comstock. wow, we already have our permits. We already have operated the Lusser mine for over four years. We have a very strong view of what those preliminary economic processing costs, capital costs, et cetera, would be. So we believe that we can now commit to applying all of that existing knowledge and a little bit more work and a little bit more engineering to both the Lucerne and Dayton property and update, publish updated technical reports that represent pre-feasibility studies. We've already planned this out with our lead engineering and geological team, and it is fully part of our plan to achieve that level this year. Once that level is achieved, okay, we could then go directly to a full feasibility, full feasibility. Full feasibility is what gets you full engineering, full economic analyses, full net present values of what we think that asset could deliver and proven improbable reserves however there's a decision point there right do we believe that we've quantified the magnitude of the resource that we want to move into proven improbable or do we want to think about growing the magnitude of that resource and then going into proving problems so set a different way we'll get to pre-feasibility this year Then we'll look at, can we expand that footprint or move it to full feasibility? Here's the wild card that we're very excited about. The analytics, the probability-based assessments, The value that Gen Mat's team can add when coupled with our team and all of the existing data that we have today can enhance dramatically not only the resource, but the prospect of expanding the resource much more efficiently. So look, you know, a customer, GenMac, could be the largest mining companies in the world. They can say, hey, we want you to scan our properties and we want you to analyze those data. But they'll also likely say, and it's what we're hearing them say, we have a lot of data already. Can we use your AI engine to analyze the data that we already have? Can it help us see things that we can't see? In some cases, it's just the sheer magnitude of data. You literally could put a small team of geologists on something that might take them three or four years just to sift through. The AI will do it in minutes. This is where the revolution is coming in mining. the good news we're progressing no matter what and we're likely going to enhance dramatically um with what genmatt's already created for for for the the global mineral exploration industry but we're at the front of the line with using the technology
spk01: What is the total addressable market of the combination of markets that the company is pursuing? So you lost the fuels, AI, metals, mining technology.
spk02: The total addressable markets are astronomical. So if you think about, let me be pedantic and be careful, okay? The amount of transportation burn in the United States alone is 150 billion gallons today renewable fuels represent a couple of billion of those gallons ethanol is 15 billion true renewable drop in fuels like renewable diesel et cetera two billion three billion Max okay so so that market is monstrous and barely touched so that's what we love about the fuels business and we're just talking about the United States and that's per year per year we're just talking about the United States per year okay immediate revenue immediate capability for the customers that are adopting this Tech why did we move to a licensing technology because you have companies like Marathon right that are already the largest renewable fuel producers in the country looking, already allocating hundreds of millions, billions of dollars of capital to expand their renewable footprint. Why can't they go faster? There's feedstock constraints. Vegetable oils are not sufficient, right, to feed the growth. to to support the carbon neutral targets that everybody's already laid out for themselves by 2030 by 2050. so if you've got a carbon Target for 2030 and you run out of feedstock in 2027 what are you going to do I'm telling you what they're doing is they're looking for alternatives and we believe we're best positioned to unblock that bottleneck so that market just the United States alone just the United States alone right is massive for us we would be billions in revenue and certainly valuation so so Canada's twice as big in terms of its feedstock sources in the United States with Woody biomass we're talking with international players that have feedstock sources now in North and South America so so That's the fuels. Metals, you heard me say it. I almost want to say the opposite for the moment. The EV industry, the electrification industry is obviously growing. I have a view of this. I believe electrification is a part of the solution. I am not on this bandwagon that the world's going to electrify cars 100%. It's not possible. There is nowhere near the virgin minerals required to do that. Now, could it be 10%? Could it be 15%? Yeah. Could it be concentrated in metro areas where emissions are really choking people off? Yeah. but you know why are you going to electrify Wyoming it doesn't make sense to us first of all so we believe in the growth we believe it's meaningful we also believe it's critical to recycle having said that how quickly are these batteries coming out of production well it's extending is it six years is it eight years could it be 10 years when they come out of production what do they do with them well a lot of people are starting to repurpose them for stationary uses avoid okay so so that curve is going up but we don't see it going up as fast is it critical right to perfect your technology and its readiness yes is it critical to be able to produce battery grade metals yes okay but but we need to think about the pace that we deploy capital and for what purpose so we love the idea of having a trl6 trl7 operating system producing saleable metals from all sources that are profitable and then letting that business grow we think it'll be very big business someday total addressable market today is much smaller now when you start talking about genmat it's ubiquitous there's i can't you know if you want you're talking about addressable market Right. What is it? You know, all of the materials, the R&D budgets of all of the largest material science companies in the world. You could look at it from a number of different ways, but it's ubiquitous. I mean, it touches almost everything, you know, so we don't we haven't quantified it in total, but we have quantified the markets. that have the biggest bottlenecks the biggest constraints and are struggling like silicon chips okay they they need more power they're about you know Moore's law is going to become Moore's wall they're going to smash into a constraint and so how do you enhance thermal conductivity how do you enhance electrical conductivity how do you modify the band gap for a different uh result genmat knows how to do that the difference is it doesn't take them years right for an incremental improvement they can do it in day they can do it in minutes so if if someone you know if if you take any one of these silicon chip companies they got a 20 billion dollar r d budget you can imagine how they're spending that money we can make dramatic improvements with them for them with these kind of solutions so there's just so many ways you can go with it but what we want to do what's very important for us to communicate in 2023 is having an earlier doctor permit for material simulation have an earlier doctor for mineral exploration and discovery You have two world-class companies using a world-class technology, and then it gets very exciting from there.
spk01: Corrado for Comstock Incorporated, can you give us a timeline on revenue streams?
spk02: We're trying to do that with this call. 2023, at least one license with a major fuel company. When that happens, this game has changed completely. Because you will have, remember, millions of dollars of upfront fees for engineering support. That's a validation. You will have a known royalty percentage. We can very easily project, based on the size of the customer's facility, what that will translate into dollars. But then you'll be able to extrapolate. What once you have a known number you'll be able to extrapolate it'll be responsible for us to do that until we have that. And then we'll be able to extrapolate obviously we have models, we have projections they're very exciting they won't be credible until we get that first one it's coming this year.
spk01: Okay, one of our listeners hasn't been able to read the entire 10K yet. Understandable. Yeah, they're asking this question. The pilot plant in Wisconsin, is it still on target to be acquired 100% in 2024?
spk02: oh yeah so we um look we we act as if we completely own and control you know the Wisconsin facility there's two payments 1.75 million each which we will very comfortably make one in 2023 one 2024 so the answer is 100 yeah okay and another listener is uh drilling down on the hyperspatial sensors
spk01: um what is the use case what are the sensors connected to is it constantly analyzing a stream of data or only when specific materials are recognized yeah so um I'll explain uh very straightforwardly what I understand okay so hyper I I was just at the
spk02: Prospectors and Developers Association of Canada, the PDAC conference in Toronto two weeks ago. Genmat was there in full force. Comstock was there in full force. My biggest takeaway from that conference, which by the way, was 30,000 people strong for the first time since pre-COVID. Last time I was there was pre-COVID and I was blown away by the number of peoples and companies. Some of the largest companies in the world, including Rio Tinto, a keynote speaker, spent their entire keynote on advanced technologies, including data analytics, remote accessing and hyperspectral information. Hyperspectral was everywhere. So what's happening in the mining industry? Finding new minerals is becoming increasingly more and more difficult. Finding new minerals is becoming increasingly more and more expensive. There is no sustainable solution, even for the majors, to continue on the same path. So for us, having a much, much more powerful, we believe the hyperspectral imager that GenMAT's going to put into orbit is one of the most powerful, if not the most powerful known that's out there. Okay, but that's only part A of the equation. Part B then is using Xena to analyze, sift through, see rapidly what's in that data, what it will result in. is much more precise drill targets, much more focused exploration programs, discerning existence of mineral signatures that are maybe impossible to discern today without that kind of processing and computing, not just power, but predictive math. So, you know, getting more data with more powerful imagers is a part of the equation but how you analyze process and draw predictions and conclusions from data to me is the secret sauce so set a different way we can service Comstock when I say we I'm saying genmat can service Comstock today because of the mountain of data that we have They can service large companies. At the PDAC conference, they were talking basically only to the platinum sponsors, the big companies. Because these are the companies that have sophisticated data analytics. These are the companies that have sophisticated resource expansion resources internally. The juniors aren't doing it. so I think that um let me one more theme on this um we you know you could scan mining districts specifically you you would answer that question uh a customer would say like for example Comstock would say I want you to scan my 12 square miles I want a hyperspectral scan of the entire district right you charge them for that um um that bandwidth you charge them for that compute and then you charge them for the value of your interpretations so that's that's how we would think about one way of approaching it but you could do that for agricultural resources you could do that for government resources I mean it doesn't just apply to mineral identification so again it's ubiquitous I mean what they're putting in position is remarkable now other people have and can put hyperspectral imagers in space okay um genmac can acquire their own data genmac could acquire data from others so so that although it's powerful although it's focused it's less critical than the actual you know engine the ai engine that can generate you know the mineral targets and generate the mineral discoveries i hope that's helpful
spk01: Gerardo, you mentioned the PDAC conference recently held in Toronto, and they estimated the attendance at about 30,000 people. And there were a lot of mining companies there between juniors and majors. Felt like 30,000. Are you marketing your mineral resources to potential buyers? We were there in force.
spk02: We were all over the conference. We decided that we wanted to be engaging with technical companies, technical suppliers. We wanted to be observing what other companies are doing. I'm saying that in the context of GenMap first. We wanted to, and they did approach the majors with an introduction to their capabilities. From the Comstock side, we were engaging other companies. Other companies were engaging us. We were very happy to have current SK 1300 reports in our pocket to be able to speak to. And there was a lot of interest, you know, there was a lot of interest. I mean, I wouldn't say we went there with a predetermined notion of trying to monetize the assets, but we are very engaged on a number of fronts with that kind of interest. Yes.
spk01: Gerardo, that does it for our questions. I want to thank everyone who submitted a question and turn it back over to you. Thanks everyone for your time.
spk02: I do hope you feel and hear a difference in how we are approaching each business's objectives, the transparency, the specificity, uh the measurability um the relevance you know of what we're trying to talk about um i i know that probably as we explain our readiness to you um there may be some disappointment gosh i thought this was more ready than that that's why we did it we want to make sure that our investors are well understanding where we are we want to make sure they're well understanding the value of the money that we're spending We want to make sure that they're well understanding the impacts of what's already been created and the impacts of what is in front of us to create. And we wanted to take the time to go through all of these questions. Having said that, we're available. If there's follow-up, once you do get a chance to read through the 10-K, Once you do get a chance to read through the press release, which I think is a really excellent, more detailed overview, both of past and future, please follow up. Give us a call. Ping Zach, and then we'd be happy to talk to you. Thank you, everyone.
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