Earnings call: Comstock outlines growth and monetization strategies

Comstock (ticker: LODE) discussed its strategic plans and financial outlook during its First Quarter 2024 Results and Business Update call. CEO Corrado De Gasperis highlighted the company's investments in renewable fuel technologies and its progress in the EV recycling market. Comstock provided updates on the expansion of their mining operations, the commissioning of a solar panel recycling business, and their conservative growth projections, expecting over $125 million in annual revenue and $100 million in net profit within five years.

Key Takeaways

• Comstock has invested in RenFuel and GenMat, expanding its IP portfolio and advancing renewable fuel solutions.
• The company has seen success with Green Li-ion in the EV recycling market.
• Comstock is planning to monetize its mining and fuels businesses and is engaged in commercial adoption discussions globally.
• The first zero landfill solar panel recycling business has been commissioned, with plans for three more facilities.
• Comstock expects conservative growth, projecting significant annual revenue and net profit within five years.
• The company plans to sell non-core strategic investment assets in 2024.
• Comstock highlighted funding through USDA loans and Nevada industrial bonds, emphasizing operations' financial, natural, and social benefits.
• There are no plans for a reverse stock split as the company meets all listing requirements.

Company Outlook

• Comstock expects multiple commercial agreements this year for technology commercialization in the U.S., South America, Europe, and Asia.
• Plans to build three additional solar panel recycling facilities over the next four years, with each facility costing $12 million.
• The company is conservative in its growth projections but expects significant revenue and net profit growth within five years.

Bearish Highlights

• The company acknowledges the need for external capital infusion through subsidiary-level investments for its mining and fuels businesses.
• Comstock's monetization strategy includes selling non-core strategic investment assets and addressing dilution concerns.

Bullish Highlights

• The value of the Dayton Resource has nearly doubled from the previous year's analysis.
• Comstock's first zero landfill solar panel recycling business is now operational and producing saleable products.
• The company is confident in its self-funding nature and the financial, natural, and social benefits of its operations.

Misses

• Pricing for Comstock's services is not publicly disclosed, as it varies on a contract-by-contract basis.
• The company competes with landfills and must remain cost-competitive with hazardous waste landfill pricing.

Q&A Highlights

• CEO Corrado De Gasperis emphasized the importance of developing new technologies and partnerships.
• The company outlined near-term milestones, such as facility expansion, securing partnerships, and monetizing mining assets.
• Comstock aims to achieve cost parity with petroleum and has no plans for a reverse stock split.
• Investors were reminded to participate in the Q2 investor survey for additional insights into the company's performance.

InvestingPro Insights

Comstock's strategic initiatives and financial projections during the First Quarter 2024 Results and Business Update call have drawn attention to its potential in the renewable fuel technologies and EV recycling market. To provide a more comprehensive financial perspective, here are some key insights based on real-time data from InvestingPro:

InvestingPro Data:

• Revenue Growth (Quarterly): A staggering 1355.78% in Q1 2023, indicating a robust expansion in Comstock's business activities.

• Price / Book: With a ratio of 0.52 as of Q4 2023, the company's stock may be undervalued relative to its assets, which could be an attractive point for value investors.

• 1 Year Price Total Return: The stock has seen a decline of 51.66%, which may concern some investors, but also potentially sets up a scenario for a rebound if the company's strategic plans materialize effectively.

InvestingPro Tips:

1. Analysts anticipate sales growth in the current year, aligning with Comstock's own growth projections mentioned in the business update.

2. The company holds more cash than debt on its balance sheet, indicating a strong liquidity position that could support its ambitious expansion plans in renewable fuel technologies and EV recycling.

For investors looking to dive deeper into Comstock's financials, there are an additional 13 InvestingPro Tips available, which can be accessed through the InvestingPro platform. These tips provide valuable insights into the company's financial health and future outlook. To explore these insights, visit https://www.investing.com/pro/LODE and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Full transcript - Comstock Mining (LODE) Q1 2024:

Trevor Brucato: Good morning, ladies and gentlemen. Welcome to Comstock's First Quarter 2024 Results and Business Update. This is Trevor Brucato with RB Milestone Group. Comstock's U.S. based Investor Relations firm. I'd first like to thank everyone for joining at this earlier start time as we were trying to accommodate different time zones during this cycle. This presentation is being recorded today, April 30, 2024 and will be made available on the company's website at Comstock, Inc. shortly after today's event. Again, that's comstock.inc. Comstock trades on the New York Stock Exchange under the symbol LODE and joining us today is the company's Executive Chairman and CEO, Corrado De Gasperis, and its COO, William McCarthy. At the end of the prepared remarks, we will open up the call to questions that were submitted during the registration process and those that surface throughout this presentation. If you have any questions, you could submit them in the Zoom (NASDAQ:ZM) Q&A module. Please note that the investor surveying period for Comstock's Q2 stakeholder perception analysis report is now open. The survey can now be accessed on Comstock's website at the top of the Investors section. We recommend filling out the survey throughout this presentation while the information is still fresh and completing it after receiving the full update provided by Corrado and Billy. The final report will ultimately provide trends on Comstock's perceived strengths, weaknesses and milestones and will be published shortly after the end of the quarter like we've done previously. Your participation will be much appreciated as it will help strengthen Comstock's investor communications efforts and will help guide the focus of future events. Please note today's presentation may contain forward-looking statements that are subject to risks and uncertainties that may be out of the control of the company, in this case Comstock, Inc. And it should not be construed as a recommendation or solicitation to buy or sell any security. For Comstock's full disclaimer, please visit their website at comstock.inc. Lastly, RB Milestone is not a registered investment advisor or broker dealer. For more information on us, please visit rbmilestone.com. And now, it is my pleasure to introduce you to Comstock's Executive Chair and CEO, Corrado De Gasperis. Corrado, the stage is yours.

Corrado De Gasperis: Thanks Trevor, and hello everyone, and welcome to our first quarter update. I'm going to allocate a little more time this morning to our strategic investments and innovations, then cover fuels, metals and mining. And after my comments, Billy's going to provide a deeper insight into our now operating solar panel recycling business, including our view of the markets, operations, tactics and importantly, provide real guidance on the robust amount of net cash flow that we now expect metals to generate in just a few years. After that, we'll turn to questions. Okay, let me start with the corporate update. Again, focusing on our strategic investments and how their own progress positively impacts both us and their own valuations before I then turn to our businesses. From a corporate perspective, financially, our first quarter itself was very stable, with spending in line with plan and prior periods. Although, the mix reflects a higher allocation to investments in R&D and particularly investments in our technology partners. Our commitment to higher R&D investments like RenFuel, GenMat and now certain others are all based directly on specific opportunities that we have identified and now secured that further extend our leadership in this massive energy transition. The investments were also structured such that we could experience returns beyond just the direct impact that they may have on our businesses. RenFuel is a great example. We have now executed both an exclusive license for their technology in the Americas and just last week, completed the investment agreement with RenFuel effectively combining the power of our IP portfolio with theirs and bringing this world-class technology and team tightly into our innovation network. This investment is senior secured. It was safely and intelligently structured to ensure our efficient access to RenFuel's critical IP. We've already physically deployed RenFuel's proprietary esterification process to refine our Bioleum Oil at our Wisconsin facility, and we are now producing our own samples for our own customers to test and ultimately use in their refineries for direct lending with their existing vegetable oil feedstocks. RenFuel's technology is incredibly complementary with ours and has already positively impacted our commercialization activities. However, we haven't stopped there nor can we. In fact, you're going to see in our disclosures that we've made and are making additional investments into new breakthrough technologies with new development partners that can dramatically advance the efficacy of our solutions. You might be wondering to what at. Well, our ultimate longer term goal and frankly, the goal of the whole renewable fuel industry is and should be what we internally refer to as the Holy Grail, which means to us achieving cost parity with petroleum. This notion was unrealistic just a few years ago. However, with the advancement in yields and costs that we've already established and the new pathways that we have now identified, we believe we have line of sight on breakthroughs for further increasing our fuel yields and further reducing our operating costs, all towards this ultimate objective of achieving cost parity with petroleum. I know and respect how huge of a statement this is. And we're tempering our excitement internally because there is still real work to do. However, our leading and now expanding IP, our pioneering innovation team and our expanding development network has brought this objective closer and into much plainer sight for us. We'll have more to say on this and the specific developments as they occur. But I can assure you, these new allocations have been extremely diligent and support our biggest goals in this energy transition. Our existing solutions are already changing the renewable fuel game, but to sustain and grow our technology leadership, our strategy must ensure that achieving our goal actually wins the day, and that is what these innovations are designed and intended to do. Let me move over to GenMat because our investment in GenMat is motivated by the same goal, accelerating these commercializations of these energy enabling breakthroughs. I'm thrilled to announce that we have realigned our investment in GenMat, taking something rather complex and simplifying it. We've invested $15 million over the past three years, and we now own 32% of GenMat, full stop and hopefully with no confusion. We also retained the rights for using GenMat's AI for both biofuels exclusively and mineral discovery and mining, positioning us to lead in these fields of use. This restructured investment puts our initial valuation at $47 million, and we believe this should already easily reflect at least a 10x return when compared to other comparable commercial-ready AI companies, although it's nearly impossible for us to find an AI company capable of what GenMat is currently demonstrating to the market, and they're proving it in the market as they are now in discussions with several early adopters, including globally recognized stakeholders in high value applications, starting with batteries and semiconductors that will leverage their physics-based AI for material development application. Remarkably, GenMat's also developed and deployed a fully operational and new proprietary mission control software for managing GENMAT-1, its low earth orbiting satellite and hyperspectral imaging system. GenMat's also now engaged with even more customers for their imaging and predictive mineral discovery algorithms of which, of course, Comstock's very interested in and also with customers signing up for satellite control system software. So, they built their own satellite. They deployed their own hyperspectral imager. They built encryption technology, programmed it themselves into the system and then developed an entire software control system to control the missions of the satellite. And other companies who are putting satellites into orbit are saying, we'd like to pay you for leveraging your system. Our restructuring positions GenMat for both their commercialization and monetization efforts in every single way and it was designed to support their ability to raise much more capital from third-party sources at much higher valuations, which we expect will occur later this year. This would both validate their technology with third-parties and their valuations. And ultimately, that would terminate our future funding obligations, which will reflect the powerful win-win-win all the way around. It should be clearer and hopefully, clearer and clearer that our innovation system, this extended innovation system, which includes GenMat, which includes RenFuel and now includes new partners is already world-leading for technologies that are enabling the energy transition. And amazingly, each and every one of them independently is commercializing. Green Li-ion is another example that we're proud to highlight. Green Li-ion just launched their first commercial scale facility in North America, and they have differentiated themselves in a very difficult EV recycling market with a very high-value product proposition. Their Oklahoma plant is now producing battery-grade precursor cathode active materials and we understand that they're receiving offers for more capital financing at even higher values. This is in line with our plans to monetize some or all of our Green Li-ion investment this summer. In fact, Green Li-ion and Sierra Springs Opportunity Fund were both very early-stage investments for us. We were literally in the seed round in both cases, and both have seen enormous appreciations in value over just the past three years, yet both are also directly supporting and/or have advanced specific aspects of our individual lines of businesses. Our initial Green Li-ion investment alone has grown over 10x and Sierra Springs values growth has been even higher. Some of you may not realize it, but Sierra Springs Opportunity Fund has the only large-scale manufacturing complex in Silver Springs, and Comstock Metals has secured this capacity for both its existing production and its next industry scale facility. Silver Springs with all of its new highways and infrastructure provides immediate access to California and to Las Vegas, which is perfectly suited for Comstock Metals. Our sale of 2,500 Peru last year and our ability to pivot so quickly to a new solar panel operation would not have been possible without the availability of this Nevada platform. Silver Spring's also just received and executed an LOI for the purchase of one of its properties that more than doubles the last known transaction value, and hence, correlates and doubles the underlying value of our most recent investment and represents another significant increase in the value of Comstock's original investment in this equity. These two advancements position us to monetize both our Green Li-ion investment and our directly owned real estate, Comstock's directly owned real estate in Silver Springs at over $60 million in cash proceeds. And again, to be clear, that $60 million does not include our equity investment in the Sierra Springs Opportunity Fund, but just the 250 acres of land that Comstock owns separately in Silver Springs. Also to be clear, the LOIs for lands owned by the Opportunity Fund, for one parcel of land adjacent to our Comstock properties there. Let me turn to our businesses and just give some brief updates. And as I mentioned, Billy will take you through a deeper dive with our metals recycling business. So let me start with mining and fuels and then I'll segue and wrap with metals. Our mining team has advanced our monetization plans for the northern part of the district, primarily our Storey County mineral estate, including the northern targets that are currently under lease, where we are experiencing current revenues and the possibility of even higher cash flows from expanding those transactions, again, just in the northern part of the district. More excitingly, internally, our mining teams have advanced our internal economic feasibility assessment for the southern part of the district during just the past few months. We've updated our mine plan for the Dayton Resource using current pricing assumptions. You should be thinking $2,300 gold, not $1,800 gold, $27 silver. Our published technical reports use a cutoff that was actually equal to gold prices of $1,800, where gold prices have now increased by $500 since then alone. So our internal assessments are showing nearly a doubling of value of the Dayton Resource, both on a net cash flow and a net present value basis from our analysis just over a year and a half ago. We've also advanced Dayton's expansion plan as we build a new model together with GenMat's geophysics team and prepare a new geologic baseline for the full imaging scans by GENMAT-1 of our districts, which we should be in a position to commence shortly. So, we build a base, we've expanded the base and then we're going to add that data to the base to ultimately come up with a whole new predictive ability to expand our mineral resources. So, in 2024, we're still looking to receive cash proceeds now well above $2 million that we originally predicted for the mineral leases in the northern part of the district and potentially entering into additional sales agreements, as I just mentioned, while we develop this Dayton Resource and expand the mine plan ultimately for production. Turning to fuels, which, by the way, has been keeping us by far the busiest of all of our businesses. As most of you know, last year, we validated industry-leading yields exceeding 100 gallons per dry tonne of wood, and we confirmed extremely low carbon intensity scores from our solution. We’re now engaged across the industry for both commercial adoption and monetization. We’re advancing multiple client discussions for monetization and deployment of our technology and very much expect multiple commercial agreements this year. We’re in active and advancing conversations in the United States, in South America, in Europe and now even in Asia. We expect multiple commercial adoptions with industry leaders this year. I know this is what people are very interested in and waiting for and I’m confident as our teams convey offers to our partners that will not only validate our leading technology, but also unlock tremendous value for Comstock. And let’s talk about that for a minute. Everyone’s very, very focused on the first revenue. The assumption being revenue will cover our costs. The assumption being revenues will minimize dilution. That’s all good, but we’re receiving and entertaining strategic interest by various partners for investing directly into Comstock Fuels, the subsidiary, and accelerating our deployments with these partners. This will have tremendous impact on our liquidity, on this notion of dilution, or rather accretion of value in exceptionally positive ways. These impacts will certainly be faster than when our technology starts pouring its first gallons, which will also be huge, but later than the monetization that I’m talking about and that we expect to consummate this year. This is all consistent with what we’ve been saying about commercialization and monetization with early adopting partners. We’re just getting very, very close and it’s all coming together. Let me conclude with Metals. Last and certainly not least, where we crossed the finish line with a successful commissioning of our first zero landfill solar panel recycling business. And it’s now producing three distinct, fully renewable and saleable products from those end-of-life panels. We had a little excitement last week with our senior senator from Nevada, Senator Catherine Cortez Masto visiting and touring our new facility. And to be crystal clear, we’re now receiving panels, processing panels, and effective this week, recording revenue on the completion of processing those panels. I mean, just in this quarter alone, we secured all the required operating permits and commenced production. We secured revenue generating contracts and began receiving large quantities of end-of-life panels. We commissioned and successfully tested every stage of production, producing 100% saleable materials from those materials that were coming in. We collected cash payments on receivables for substantially all of the panels that have been received to date. Remember, this is a tipping fee model. We get paid upfront and we’ve now selected the site in Silver Springs, the same site, the same complex for our industry scale production facility that’s going to represent up to 100,000 tons of annual production. And that’s not all we’ve prepared and already submitted permits for the first expanded industry scale storage site, and we’ve expanded our revenue generating contracts into California, into Arizona, into Texas, where we’re getting tremendous interest. Our metals team really rocked at this quarter, and I’m going to let Billy now take you into a deeper dive of our plans there, including what I feel is just a remarkable economic profile that we feel really, really good about executing on. Billy?

William McCarthy: Thanks, Corrado. It’s very true. Our metals team has been quite busy this past quarter and it’s not going to slow down. So I’m going to share some slides and talk a bit today about where the business is going to go from here, and I’m going to provide some more precise forecasts for this business. Before we dive into that, though, I want to take a minute and talk – go back and talk about how we got here in this space of electrification product recycling. In 2021, Comstock acquired LINICO, which was a development stage lithium battery recycling company. And there’s some pictures here on the screen. That’s me at the 2022 Annual Meeting showing off our pilot system. And we showed a video of the system in operation recycling batteries and producing black mass. Now, in early 2022, battery metal commodity prices were at all-time highs. The market was really frothy and we were doing what we like to do, which is to try to de risk our process by looking for partners that could enhance our capabilities and de risk our plans. As Corrado and I made the rounds with our competitors, we’re sitting in the conference room of one of them in early 2022, and they were bragging about their market leading economics in their battery recycling process. Corrado and I looked at each other. I had to bite my tongue because they showed us a model that was based on expectations of commodity prices at all-time highs going up perpetually for decades to come. Now, you probably know the story and how it actually played out. Our competitors raced to build up capacity for battery – primary battery recycling, hoping the market was going to keep going up, hoping the supply of batteries was going to grow extremely quickly. And instead those commodity prices fell, the tsunami of supply didn’t materialize and pain became the norm throughout the industry. Many of these competitors have not relented, and they continue operating on the hope that the market’s going to perform to their models. We made the strategic decision to exit this market. We executed an opportunistic sale of our battery recycling facility in 2023, and we partially realized our investment in Green Li-ion. Now, as Corrado says, we believe Green Li-ion has a unique position in this market as a value-added operator downstream, but we still see future monetization of that position as well. Now, in 2023, we pivoted to solar panel recycling. The EIA is projecting a million tons per year of end-of-life solar panels available for recycling by just 2030. The first solar boom was really over 10y ears ago in the Southwestern United States. Solar panel manufacturers quote an average life of around 20 years. What we see in the market is that the reality is much shorter than that, and these panels are already starting to come into the recycling space. In early 2023, Dr. Villamagna joined us and came with a proven process to recycle these laminated systems, with prior success in other materials. We’ve been able to develop a first mover advantage, including an advantage in sales, with California being our primary source market, as well as building on top of an advantage in permitting an operation in Nevada, we have longstanding relationships with the Nevada Department of Environmental Protection that have allowed us to move very quickly on the permitting side. Today, in 2024, we’re operational. Our demonstration facility in Silver Springs, Nevada is processing panels today. We’re quickly filling up our existing storage capacity from customer contracts, and we’re getting recognition on the local and the national stage. As Corrado mentioned, Senator Cortez Masto visited last week to tour the facility and learn more about our process. Not only is Senator Cortez Masto our Senator from Nevada, she also sits on the very important Senate Energy and Natural Resources Committee that defines a lot of policy around this area. And her support has been very welcome. As we move forward from here, we’re planning to build at least three 100,000 ton per year facilities with an expected cost of $12 million each to get to operation. We’re going to bootstrap this with project level financing for each of these projects. And this is going to be publicly supported financing, including industrial development bonds, USDA Rural Development financing, and potentially 48C tax credits from the Inflation Reduction Act, of which a new program was announced this week for renewable energy projects. The best part about this business is it moves very quickly. We expect it to be self financing in just two to three years. We’re planning to stage our expansion over the next four years. Facility number one is our demo facility that’s operating today. That facility is going to scale to full capacity operating three shifts later this year. We’re using this demo facility to shake out our process and to ensure a rapid and successful scale up as we move to the larger facilities. You see here, the expected timelines for these projects are short, one year to go from funding to initial operations, and one year to go from that initial operation to operating at full capacity. We’re staging this out over several years, these are conservative projections. We think there’s a good chance that we can beat this schedule and move even quicker than this. As we think about our capacity build over the next several years, we’re looking at 75,000 tons of capacity by 2026, to 150,000 tons by 2027, and over 300,000 tons by 2029. The pace of this growth is going to be dictated by the demand. For each of these facilities, we’re establishing storage capacity in advance of the production capacity. We’re filling up that storage capacity with revenue producing inventory. This is an interesting industry because inventory is a source of cash, not a use. That inventory contributes to the funding of the build to these facilities. We’re not going to do what the battery guys did. We’re not going to build excess capacity. We’re going to manage our market risk, and we’re going to move at pace with the demand in the market. Again, we think these projections are conservative and we expect this market to grow much quicker than this. The projection results from this plan would produce over $125 million in top line annual revenue in just five years, with $100 million in net profit for an 80% operating margin. It’s a very capital efficient business, a very capital efficient growth program. And again, it becomes self funding in just three years, which sets us up for future growth to continue to pace growth in the market. Before I finish, I want to touch on one last point. I’m getting a lot of questions about how do we price our services? What does it cost to recycle a solar panel? And I mentioned last quarter that this is not information we’re planning to share publicly. There’s a few reasons why. First off, this is truly a service business, not a commodity business. Every contract is unique, every contract is negotiated, and our sales team is motivated to seek the highest price possible for our services. Secondly, our customers are really marking up our services. We’re acting as a destination. The solar installer who’s taking down old solar panels is also seeking for the largest price it can get for the removal and disposal of those old panels. And those customers expect that we’re going to keep our pricing confidential in order for them to have the best position in negotiations. Our competitors here today are really landfills. We’re cost competitive with hazardous waste landfill pricing, which is also generally a negotiated, non-public price. For this reason, we think it’s prudent to keep this information confidential and let our sales team operate to the best of their abilities. So I’m going to wrap up there and turn back to Corrado and look forward to any questions on this as we move.

Corrado De Gasperis: Excellent, Billy. Thank you. That picture is of the smaller facility, about 7,000 square feet, sitting next to the industry scale facility, which is well over 100,000 square feet on that same campus. I just want to reemphasize, though, how strongly this achievement hits on our financial, natural and social objectives, foundation of how we plan and what we’re here to achieve. Financially, it’s a huge local market, way over 10x the capacity of one facility, we’re looking at this thing going to a million tons in a relatively short period of time. And as Billy said, we can adaptly, versatilely, quickly deploy capacity as we need it. But even a conservative plan against that million tons throws off nine figures of cash flow. I love businesses that have extremely low TVC, that is totally variable cost, that have fast cycles measured in hours not days, that’s what we define as throughput and that’s over 80% cash margins. And remembering that that’s all in a company that’s sitting on $250 million of net operating loss carryforwards, which will shelter a tremendous amount of profit from federal taxes. So metals makes this – metals alone would make Comstock succeed with the numbers that we just looked at. And it's self financing, because where it's located in a rural area and the nature of the business, we have access to USDA loans for rural development. We have access to Nevada industrial bonds, which are typically limited to about $10 million a project, except if they're for renewable or recycling activities. There isn't a limit. So from a natural perspective, we're literally the only zero landfill solution that's keeping toxic materials, a literal tsunami of these materials coming from California, out of Nevada landfills. And socially, we're creating a clean sustainable ecosystem in Silver Springs. We're bringing jobs and development to an opportunity zone that desperately needs it. So we don't just feel great about the achievements of the business, it's just remarkable what it's positioned to do. So Trevor, I think with that, we can turn it to questions.

A - Trevor Brucato: Perfect. Well, thank you gentlemen. If you have any questions, you may submit them in the Q&A module. If we don't get to all the questions today, we will be sure to review them internally and respond accordingly following today's event. Let's kick off with the first question here. So Corrado, Comstock has said it would sell its non-core strategic investment assets, namely the Sierra Springs real estate and Green Li-ion shares. Would you say your confidence level in selling these assets in 2024 is higher now compared to previous quarters? And if so, why?

Corrado De Gasperis: Great question. Thanks, Trevor. So let me start with Green Li-ion first. As I mentioned in the presentation, Green Li-ion was a seed investment for us. They had a remarkable idea that was complementary to our recycling process. That idea was to take black mass and go all the way to precursor cathode active materials, pulling themselves way up and above the commodity value chain. We love that. We still love that aspect of where they really positioned themselves in the market. But they were an idea, and then they were producing a prototype. But today – literally today, Green Li-ion just announced their first operational facility in Oklahoma, and they're producing precursor cathode active materials. And we understand that that was an important prerequisite for them to start the process of their next capital raise. And we understand that they're getting remarkable interest from infrastructure level and energy transition funds. And so we are more confident, we are highly confident, because their value has literally increased in every one of their four offerings almost by – almost in a textbook manner. And that the demand now is so large and so established, we're already getting secondary interest, interest in – from the secondary markets and our share. So we look to synchronize our monetization with those plans that are near-term this summer. So I feel very confident, especially since we were successful in doing a piece last year. Sierra Springs, a little bit different, right. Silver Springs itself was sort of the last bastion of development in Northern Nevada. Reno is exploding to this minute. The Tahoe Reno Industrial Center was the marquee location for heavy industrial businesses. And then that got complemented by distribution and then got complemented by data centers. Well, that explosion has now fully spilled over into Silver Springs, not only with the announcement last year of Microsoft (NASDAQ:MSFT) claiming their stake in the ground adjacent to our properties, but also this recent letter of intent, which is another hyperscale data center coming in and establishing a more than double valuation. And so the bad news is, because Silver Springs was sort of the last bastion, the last sort of frontier of industrial development, it's taken longer. The good news is property values have only gone up in that time period. And to have a direct comp that is adjacent to Comstock's properties there, right, gives us an active ability now to market negotiate and monetize those properties. So I think Green Li-ion is this summer, and then Silver Springs is going to be right on its tails.

Trevor Brucato: Thank you, Corrado. Could you please comment on Comstock's plans to address dilution during times of rapid operational growth?

Corrado De Gasperis: Yes. I know that this is a point of angst. And let me first say that we are highly sensitive to the use of our capital and to the use of our currency. We're also highly sensitive to the acceleration of the business opportunities that we face. We've positioned ourselves remarkably well. And this is why I emphasize our strategic investments. If you look at the use of our capital and how large of a percentage of that capital is going to direct developments for direct expansions of our IP portfolios for immediate commercialization on all fronts, you see that it's just important for us in no shape, in no way to slow that down. So we've generally had a capital light mindset. We've been thinly capitalized, lightly capitalized. That's because of our sensitivity, right, to issuing shares. We also, by the way, issued almost 7 million shares in April that we're with strategic partners that were restricted, that we will retain the future value of while we add two large shareholders to our capital base. So we're being thoughtful about it. Now let me tell you how we manage to – how we plan to manage it, and it really relates to what we just talked about. I have my eyes squarely on the prize of monetizing these assets. This $40 million, $50 million, $60 million of cash, I have my eyes squarely on that prize, okay. We have always chosen to advance the business. We have never intentionally slowed the business down. And in fairness, depending on the timing of some of these transactions, like RenFuel, like GenMat, et cetera. We've had to deploy more capital and use more of our currency than people might have preferred or expected. But we do that with high value, like the markets that we're addressing, the values that we're looking to unlock are tremendous. Now, in addition to the eye on the prize of those asset sales, the maturity of these commercializations has now gotten to the point where we're engaged with strategic partners daily, right. And the conversations are incredibly collaborative. Like, we have very common goals here in commercializing this technology for low carbon fuels, as an example, right. And so the ability to access capital to invite and solicit capital into the subsidiary levels is prominent. It may be imminent, right. So I think we have such a value foundation, such a – now demonstrable value equation that we have multiple sources of capital at multiple layers of the enterprise that should allow us to frankly minimize the dilution. Now, I want to say it very clearly. I'm not saying we won't issue shares. I'm saying that we will leverage the value of this platform to do it in a way that maximizes the future value, maximizes the future returns, and always in a way that ensures the enterprise is safe, right. There's too much value here to do anything. That's Maverick, right. And so we’re – I think, Trevor, frankly, there's a little bit of a balancing act. But what I like is we have many, many variables here, right. That ensures our success. It ensures our wherewithal to move forward.

Trevor Brucato: So let's dig a little deeper into that. Here's a multi part question. How much capital has been committed to each business segment and how much future investment is needed for each? Where will these funds come from? So, Corrado, I think it might make sense to perhaps kick off with the monetization strategy around your metals business.

Corrado De Gasperis: Yes. Well, I'll do that. So, in metals case, and metals is just such a great business, right, the cash projections, which I concur wholeheartedly with Billy. I mean, sometimes I feel like biting my tongue. We are being conservative. We're being practically conservative. We're looking at the real risks of commercializing two, three, four facilities that are new, right, that are pioneering. But we already understand the capital profile, we understand the locations that they're in. And as I mentioned, we've already tapped into the availability of USDA loans, the availability of Nevada industrial bonds, and we didn't model the point that Billy made, right. We didn't model that working capital here is a source of cash, not a use of cash, right. So we're being very conservative in our approach. I think it's a self funding business, right. I think it's a self funding business where we can bring the capital without dilution to Comstock metals. And before we know it, it'll become a source of cash for the corporation. First, initially to continue to fund its growth. Remember, if you talk about three facilities, that's 300,000 tons. That's beautiful. Look at that cash profile. But there's a million ton market staring us in the face. With mining, maybe it's a quickie and a simple one. We don't spend $2 million a year in our mining resources. We have excellent technical resources. We have an amazing land position, mineral estate. And we right now have revenue that just about matches that number, right. So mining is sort of covered. We have not approved future funding and future development of the mineral assets. We've been developing the models and expanding the resources, either through our existing fixed cost or through the GenMat effort. When we monetize the assets, we will then trigger, right, the advancement of those mine assets into production. And the same can be said for fuels. Now, fuels takes a larger amount of our capital, you could assign easily $6 million to $8 million of spend relating to fuels. What I love about the fuels profile though, is most of that spend is innovation, engineering, research developmentand business development and commercialization. It's fun. We have almost no administrative cost in there. It's all moving the business to the finish line. And so we need to keep that funding. There are things that we would want to advance faster, like, the demonstration facilities in Wisconsin. I mean, if we had the wherewithal, we would build a larger demonstration facility ourselves. The good news is we're not going to have to do that. We've got at least two customers who want to do that and build the first few production facilities. I believe that capital will come right into the subsidiary and it'll unlock value, because if you invest directly into the Comstock fuel subsidiary, then we have to value that subsidiary. And the value of that subsidiary will have zero correlation to the current value of the enterprise. However, once we value that subsidiary and that capital comes into that subsidiary, it will and should directly correlate to an increased value of the enterprise. Hopefully, that's coming across sensical. And what I want to just throw out is that if you start thinking about our investments, GenMat's in the exact same position as fuels. GenMat is commercializing with industry scale partners, GenMat will be soliciting capital from sophisticated third-parties and GenMat will set a valuation in the same way that fuels will set a valuation at their level. And then people will know we own a third of that value. But if you want to talk real dollars, we’ve committed another $4 million to GenMat for the rest of this year. We’ve committed another $1 million or $1 million in total, actually, for RenFuel, $1 million a year for three years. And we’ve committed about $ 2 million, maybe $3 million for these new partners that are bringing new breakthroughs that are enhancements to our existing platform. So it’s not new in the sense of left field, it’s new in the sense of home base. And that’s where we’re expecting to really take our lead and move it to a whole other level. So I’m not sure if that covers the question fully.

Trevor Brucato: No, it does Corrado. And perhaps just high level. What are generally the monetization strategies? I mean, can we look at – there’s capital being brought in on the corporate level, there’s capital being brought in on the project level from strategics. It’s owning perhaps a smaller piece of something much bigger. These projects, there’s many projects that we’re all looking to roll out here over the next several years, big picture, again. So perhaps you can just elaborate on the different types of strategies that you guys have in mind.

Corrado De Gasperis: Yes. I think a simple summary of it would be, to date, right, the readiness has been such that we’ve had to fund the businesses from the corporation. And as you see, that requires and has required the issuances of equity and some amount of debt to do that. Now we’re seeing that they’re getting to the point of maturity where they can self-finance. Billy summarized it very well for metals. It’s right there for us. They’ve crossed the finish line. We now have empirical data. We can show revenue, we can show costs, we can show projections. That’s all we need, right, to start bringing that capital in. Fuels and GenMat, all we need is the commercial validations, right? They’re happening already with industry scale and sophisticated early adopting customers. And so that is all we need in addition to the business plans, which are fully now developed, right, internally, to start bringing that capital in at the subsidiary level. So that’s what’s going to happen. The beautiful complement will be if we could get some asset sales done a little more timely here, it relieves all the pressure on everybody’s minds, but it’s coming.

Trevor Brucato: Thank you, guys.

William McCarthy: Trevor, let me just add, we talked it last quarter when we did UPLODE24 about our commercialization process, right? It’s a four stage process. We innovate, we develop, we engineer, we activate. Activate is where these things come into play, right? And as Corrado said, there’s a lot of different ways to do it, but it’s all about bringing outside capital, bringing outside partners into this business. Developing and engineering is about getting things ready for that, making them attractive, filling in all the pieces, especially in fuels today, a lot of these partnerships, these deals we’re doing with other third-parties, right, significantly accelerate our ability to get to that point. So every single one of them is like a leap forward in what we could do otherwise on our own. And it’s really putting us into a tremendous position in the market with a lot of connectivity.

Corrado De Gasperis: That we’re activating and activation often is synonymous with monetization.

Trevor Brucato: And shareholders keep on hearing about the progress with metals. And it’s great, Billy, that you showed a picture of the facility. There’s a little bit more of a tangible look at what you guys are embarking on. So, I mean, do you anticipate maybe videos, more pictures as the operations develop, at least at metals?

William McCarthy: Yes, absolutely. Our marketing team was out at metals last week filming a video, so could expect that coming here in the – I’m not exactly sure the date, but let’s say in the next few months.

Corrado De Gasperis: Coming soon, yes, coming soon.

Trevor Brucato: That’s great. Okay, let’s see what else we have here. Are you able to elaborate on the march for securities purchase agreement with a R&D company?

Corrado De Gasperis: Yes, good question. So, look, this is – and I want to give people a little bit of feel for how we work. Okay? We’re extremely focused. If people come into my office with an acquisition idea or a diversification idea, I’m grumpy. I don’t want to hear it, right? We’re focused. We’re commercializing fuels, we’re commercializing metals. GenMat is rocking. We’re really, really focused. Now, when a breakthrough occurs, when something happens in the market, when a white paper is published or a technology is surfaced that has direct and potentially immediate impact on what we’re doing, we can’t ignore it. We can’t ignore it, right? And so to give a little bit of color, our innovation team probably spent five or six months researching, analyzing, assessing. What is the implication of this? Is it bullshit? Is it something that is going to have a marginal or slightly incremental impact? Is it a game changer? Is it potentially a game changer that we cannot ignore? And even if – let’s just say even if all of those gates were answered positively, in the sense of we should do this, is it $20 million? Is it $50 million? Then it’s a non-starter for us. We don’t have the capacity. So everything we think about, everything we do is correlated to our finite capacity. If for a $1 million or $2 million, we could advance something to TRL 3 to TRL 5 to TRL 6, that will dramatically change the profile of what we’re bringing forward, then we do it, right? And so it’s not something we could talk specifically about and I want to just send a clear message. It’s not something that’s certain, okay? But it’s something that we would be literally fooled not to allocate $1 million or $2 million, if it truly brings us to the Holy Grail, right, if it brings us to this possibility of cost parity with petroleum, we need to be on the front line of it. And I’m proud, I got to say, even if this didn’t work out, I’m proud of the competency of our team. It’s world class. We’re talking to world class people. We’re talking to world class institutions. RenFuel is an example of that. People are going to know very, very soon. That GenMat is an example of that too. But in the fuels and esterification, catalytic esterification process discussions, RenFuel’s name is always at the top of the list. We couldn’t be prouder to be partnered with them. So I hope that’s helpful.

William McCarthy: Yes. Let’s just add procedurally, like we talked again last quarter, and if you want more color, rewatch the video with Kevin Kreisler, our Chief Technology Officer, right, we really have an innovation network we’re working with. Before we get to the point of making this kind of investment in something, there’s a tremendous amount of work that our team is doing collaborating with these other groups, looking for solutions, looking for ideas, looking for things we can really bring to market someday soon. RenFuel is another good example of that. We were working with RenFuel for over a year before anybody here really heard of them, before we started talking about them. There’s a lot of deep work going into these things, probing, finding synergies and in this case, as is disclosed in the filing, developing new technology. Our team contributing to some of the stuff this group was working on, really proving out the thesis early on before we commit any capital to it.

Corrado De Gasperis: And I also add to that our bias is not to be stealth. Like, certainly my bias is not to be stealth, right, but it doesn’t serve any purpose to discuss things that aren’t going to be tangible and aren’t going to be relevant to our shareholders. And even within our own organization, we compartmentalize it, right? We don’t want David Winsness and the commercialization team distracted by things that aren’t right in front of us right now. But when we can discuss it, we absolutely will. And we want to.

Trevor Brucato: Coming up on the hour here, so let’s look at just one more question and then I’ll pass it over to you for summary comments. Any thoughts on a stock split, I think it’s a little premature to talk about that. But I’ll put the ball in your court to just address any sort of reverse stock split, I should say.

Corrado De Gasperis: Yes. No, no, we don’t have any notions of that. There’s five listing requirements of indirect stock exchange and we meet all five of them, right? The easiest one to meet is typically the price and the other four are really substantive. So there’s no issues with delisting and there’s no concept of stock split, reverse stock split in our mind at all as we sit here and speak. So, no, we love our listing and we love our liquidity and we expect it just to get better.

Trevor Brucato: So Corrado could you please provide a summary of Comstock’s near-term milestones that investors can look forward to.

Corrado De Gasperis: Yes, no thanks Trevor, for all of that. We appreciate all those questions. And as he said earlier, if we didn’t get to some of your questions, we’ll follow up and look forward to answering them all. But just to wrap up, let me summarize what I would call our highest objectives. I guess in reverse order, starting with metals. We’re going to run this facility up to three shifts by this summer, while initiating the expansion in Silver Springs at the existing manufacturing complex. We’ve already filed permits for the storage expansion and we’re preparing the permits for the facility scale expansion. So it’s just grow, grow, grow. From a fuels perspective, we’re going to secure and announce the adoption of our technology with industry leading partners and customers, possibly on every continent, starting with the Americas and including a highly valuable monetization of Comstock fuels. As I said, GenMat’s going to do the same exact thing, commercializing with industry leading partners and customers and monetizing its value through third-party capital. For mining, we will monetize, transact and generate cash in the north and develop and publish a highly economic and valuable mine plan for ultimate production in the south. We’re going to continue innovating towards this Holy Grail cost parity with petroleum while and by expanding our network of innovation partners and they and the technology will be world leading. Lastly, eye on the prize, monetize the $60 million in assets. Put this balance sheet discussion to bed. We appreciate everyone’s interest and we look forward to many updates in between now and our next call in July. Thanks Trevor.

Trevor Brucato: Thanks Corrado and Billy, and thanks everyone for joining Comstock’s first quarter business update and outlook. As a reminder, please keep an eye out for Comstock’s brief Q2 investor survey. If you have not already filled it out, this will be generated and completed and announced and posted on the company’s investors section shortly after the end of the Q2 quarter. Again, a link for that is at the top of the investors section. Also, today’s recording is going to be present on that page as well. If you have any additional questions that have not been addressed today, please feel free to email us at ir@comstockinc.com. And management and I will do our best effort to get back to you guys. Again that’s ir@comstockinc.com. Thanks again. That concludes today’s presentation. We look forward to keeping you all posted on Comstock’s developments throughout the rest of the year. Have a great day.

Corrado De Gasperis: Thanks, everyone.

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