In speaking with contacts and analysts, some believe that Comstock’s growth profile is limited, perhaps due to city boundaries?
The perception that we are limited is a dated one. Our contiguous land position is massive and last October we received unanimous approval from local regulators to expand our permit boundaries by almost tenfold. Our progress is only constrained by the rate at which we can develop these higher-grade targets. I should add we have drilled on less than 1 mile of our 6-mile strike, and if one considers depth, we’ve probably drilled on less than 2-3%.
Presumably, you believe that being in production is a world apart from, “in production soon…” Please comment on possible lessons learned?
Production is MORE than a world apart from a stage of, “advanced development” or “in production soon.” Lead times for obtaining permits, funding and building infrastructure are measured in years not months. There’s also a huge difference between commencing production and working out the slew of unexpected issues resulting in a ramp up period much longer than management and investors expect. We have three years of continuously improving production. We continue to improve but with the majority of our growing pains behind us. We are pouring gold and silver every week, while maintaining a low-cost profile, despite operating at a small percentage of our capacity.
More importantly, our Lucerne resource area is fully permitted. This achievement is invaluable as we transition to drilling multiple, higher-grade targets with the objective over time of developing long-lived mines. Our flexibility and experience should allow for faster exploration and permitting, possibly culminating in a faster development cycle. This knowledge will be incredibly useful as we start planning activities in the Dayton and Spring Valley drill targets.
Lessons learned? It is critically important to focus on one development at a time, prudently dedicating resources through completion of each objective. For example, ensuring the lowest possible operating costs at Lucerne and maintaining a strong balance sheet. As we see other Nevada mines failing, it appears that they have taken shortcuts, under-appreciated ongoing risks and contingencies, while working with inflexible project schedules. No surprise, but attacking low-grade opportunities with higher costs, bloated overhead, excessive debt or multi-tasking projects doesn’t work well with gold at $1,100/oz!
Is Comstock a Takeout Candidate?
We believe we have built a platform for Nevada-based growth. We have the management, district and network to lead that growth, both organically and through Nevada-based acquisitions. We are attractive to investors and I’m sure once they understand what has been built, land owned, obstacles cleared, absence of royalties and most importantly, the extent of the known geology. As suitors better understand our known and blue-sky potential, we expect they will certainly take notice. Some already have.
Why invest in Comstock now instead of waiting for a higher price of gold & silver?
There are a small number of junior, mid-tier and major producers demonstrating low cash costs (critical in a downturn). Low capital and all-in sustaining costs (critical longer term) and clean balance sheets. These will be the winners, representing companies that investors should consider investing in. Waiting means possibly paying more as many risks have been mitigated. For those of us emerging safely through this downturn, there will be far fewer names to choose from. Comstock Mining will certainly be one of them.
I believe our position among surviving Nevada-based companies will continue to improve as we execute on our underground portal in the Lucerne mine and develop Dayton, our second target. We will be drilling and hopefully developing even higher-grade targets. The winners are those of us that have continued advancing, slashed costs and increased operating flexibility.