Notwithstanding the above, Comstock Mining is perceived to be as a Company ALWAYS spending money, rarely cash flow positive, even when gold prices were higher. Can you please comment?
I appreciate that that perception is out there. The reality is that we consolidated a massive land position (100% owned or controlled), with little to no future royalties, rezoned it, successfully traversed significant environmental, social and operational obstacles, and sustainably re-positioned potentially one of the most prolific mining districts in the world back into operation. This was accomplished with a relatively small amount of capital considering the land we purchased, and the considerable logistical issues addressed. Now, we are positioned to commence development of two new mines. We hope to demonstrate solid growth in cash flow in one of the largest, high-grade properties in Nevada.
With less required explaining of the prior capital structure, and diminished funding concerns, what will you do with all of your free time?
We remain highly focused on drilling high-grade targets in Lucerne. We have positioned the mine to drill two high-grade targets and develop a drift and tunnel. We believe these two targets present the most immediate opportunity for stakeholders. We commenced an 800-foot drift development. We are targeting high-grade gold and silver structures with grades averaging 8x-10x that of what we’ve been mining. All of our painstaking work readies us to drill these targets with the objective of establishing a long-lived, profitable mining enterprise. The first phase of tunnel development began on September 5, 2015, and will continue for the next three months.
We are also drilling our Dayton area, a second deposit that we hope to be able to commence permitting on in 2016. Dayton is roughly a mile south of Lucerne.
Please comment on cost containment. Has there been a meaningful move in any parts of you cost profile?
These days, containing costs is synonymous with survival. We have dramatically streamlined and reduced mining, support and administrative costs. We have recently developed new partnerships with American Mining & Tunneling Inc. and American Drilling, moving a larger component of our cost structure from fixed to variable. This added flexibility should allow Comstock Mining Inc (NYSEMKT:LODE) to continue delivering lower costs from existing infrastructure.
Can you comment on Mr. Winfield’s willingness to enter into this broad restructuring? Why now? Who are your pro forma largest shareholders?
Mr. Winfield remains our largest, and most supportive shareholder. These changes are a tremendous vote of confidence by him, and other shareholders, in our operating model and goals moving forward. The timing was right from every perspective. We’ve built the right team, grown our land position and proven the operating model and key economic variables (such as grade, metallurgy, strip ratios and costs). We are proud to include Century Asset Management, U.S. Global Investors, Sun Valley Master Gold Funds, Gabelli Asset Management, Loews Corporation, Solus Asset Management, and of course, the Winfield Group, in our top ten list of shareholders. They all supported the restructuring.
Do you believe that existing and new institutional shareholders will take another look at Comstock Mining after the revision of the capital structure?
Great question. It’s already happening and I’m confident that will prove to be one of the most significant results of cleaning up our capital structure. It’s important to reiterate that we didn’t just eliminate the preferred stock and dividends, but permanently dispensed with tens of millions of dollars of future obligations and royalties. We have already spoken with dozens of funds that are more interested in investing, calling us for meetings. I’m dedicated to responding and proudly explaining the new Comstock Mining in coming months.