Comstock Inc.

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.

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?

Yes, we do, Corrado. The first question is, what is the status of patents applied for in biofuels?