LODE - AMEX

Ladies and gentlemen, welcome to Comstock's Second Quarter 2024 Results and Business Update. This is Trevor Brucato with RB Milestone Group. Comstock's U.S. based Investor Relations firm. Comstock is listed on the NYSE American under the symbol, LODE. Joining us today is the company's Executive Chairman and CEO, Corrado De Gasperis; and it's COO William McCarthy. At the end of the prepared remarks, we'll be opening up to Q&A. We have received questions from registration most of which have been addressed by today's announcements. But if any new questions surface throughout the presentation please submit them in the

Thanks, Trevor and hello everyone. And welcome to our second quarter update. I'm sure you're going to like the substance of our update today, as we've made tremendous amount of progress in all three of our businesses and at corporate plus our strategic investments have really advanced their causes too. So there's quite a bit to update everybody on. We're going to ensure sufficient time for the Q&A session as well. So we have time to answer as many questions as possible. Let me start off by congratulating both Leon Farrant and the Green Li-ion team and Deep Prasad and the GenMat team for achieving the all-important milestone of commercial success in their respective companies. As you may have read, Green Li-ion commissioned its first commercial battery remanufacturing operation in Atoka Oklahoma, where I recently attended the ribbon-cutting along with Leon and a contingent of Oklahoma VIPs, including the governor Kevin Stitt as well as quite a few Green Li-ion's existing suppliers and potential customers. The Green Li-ion system makes Precursor Cathode Active Materials also known as pCAMs as well as lithium carbonate from fully recycled batteries. And we are certainly not aware of anyone doing that effectively in the market yet today. So the Atoka operation will prove Green Li-ion's full technical and economic feasibility and we understand that the resulting materials from their operations so far are showing extremely encouraging and very high battery-grade purities. So it does really seem to be coming all together for Green Li-ion. I'm very pleased with that. Turning to GenMat, as most of you already know, last year GenMat developed and deployed its proprietary imaging satellite the GENMAT-1 into orbit. In that process, they also had to develop encryption software for security and ultimately, they had to develop an entire mission control software system for managing their own operations. What GenMat learned during this process is that their entire that this entire space industry is so nice and so fragmented that they really had to develop a lot of the satellite and supporting systems by themselves, which by the way is also one of the reasons why everything is taken so much longer than originally anticipated. But remarkably, now, the industry is at is asking if it can leverage GenMat's proprietary infrastructure for their needs. Accordingly, I'm just generally thrilled to report that GenMat just announced its first commercial customer agreement -- it's very big, a very important milestone -- with Geometric Energy Corporation for managing the assembly launch deployment and the ongoing operations management of two new satellites in addition to their own what effectively will be a fully managed orbiting I guess constellation of satellites. These new customer satellites one is called, Ostentus-1 and the other is called, NOCLIP will also generate additional recurring revenues for GenMat, once they're successfully deployed and operating. GenMat now plans on adding more satellite customers to this emerging line of business and leveraging its proprietary mission control, proprietary remote sensing and proprietary material science technology and all the supporting expertise around all of those things to enable this rapidly growing segment of the space economy. So from my perspective it's a huge congratulations to both teams, and it's extremely gratifying for us here at Comstock to see these milestones achieved. And as importantly, what they imply for the future growth of these two companies and our investments in them. Starting up a NewCo especially one with brand-new tech is not easy. It's not easy at all. So we're going to give big kudos to Deep and Leon and their teams. Okay. So just considering the breadth of the press releases from both this morning and this afternoon, including the sale of our -- the announcement on the sale of our non-mining assets and the investments directly into our three businesses, I'm going to jump right into the overview of the entire $325 million that we announced this morning, while also updating you on each business as I go along. So let me start with the asset sales of $50 million. Then I'll move to and discuss the $275 million of direct investments into our three subs and the corporation. First, let me clarify that all the amounts that I'm referencing on this call are going to be in gross dollars. Even though the ultimate proceeds will be net of some transaction fees and we expect those to be about 3% or more depending on which tranche of capital we're talking about, speaking in that proceeds though, we do not expect any material tax leakage from any of these transactions primarily due to our existing NOLs and will always work as smart as possible as well as possible to optimize our tax assets. So again I'm referencing gross numbers just to keep it simple and clear as possible. I'm truly gratified to announce that we have secured a term sheet, working with a US based globally positioned private equity group led by SBC Commerce LLC. SBC represents significant capital that we have validated and it works and runs a global network of private equity professionals and funds. We worked very hard to diligence validate and structure this capital to ensure execution and minimize dilution, while maximizing the value for all of our shareholders. There's a number of ways we could have gone with this. But we spent a lot of time thinking about what unlocks the most value and what advanced the business in the most expedient way. And I'm absolutely thrilled with the progress and I'm absolutely dedicated to the outcome. SBC also has expertise across a number of industry sectors especially in oil and gas and biofuels. But all of this started over a year ago with discussions directly around our properties in Silver Springs and the Sierra Springs Opportunities-owned fund also known generally in our circles as SSOF with their main principle Lori Sosa and some of our associates at SBC's off-market real estate group. They truly have deep expertise in arranging the development of not-so-ordinary real estate and major real estate development projects, which is exactly what our properties and positions in Silver Springs represent. We've conducted extensive due diligence on SBC Commerce over the past several months. There are specific funding sources for SBC's investment in our business. I've met with the principals and directly engaged those funding sources and interacted with them directly and extensively during this whole process. I personally believe we have found a long-term capital partner that will transcend this transaction for many years to come. So accordingly this week we signed a term sheet for selling Comstock's non-mining land in Silver Springs. That's our 98 acres of industrial land, that's our 160 acres of commercial land plus certain associated water rights for $50 million. We expect to recognize a gain of about $40 million on this transaction alone. And again with our existing NOLs and some tax planning, expect that this gain will be well covered in terms of us not incurring, not paying any cash taxes. These proceeds will extinguish all of our debt, as well as certain other obligations and mostly be available to ensure that we're funded for all of our corporate development activities without having to sell more stock. The agreement contemplates a $5 million nonrefundable deposit on the land and that's expected within two weeks or sooner. And we look to close that transaction within 60 to 75 days. Before turning to the businesses, let me just address the liquidity and dilution head-on. As I just said we pinned in how we structure these transactions. We were being lobbied to do leverage buyouts and we weren't interested in that. We were interested in doing what maximized the value, what maximizes the speed of the creation of new value and what minimized the dilution. Between certain other minor asset sales and the $3 million in equity by SBC directly into the corporation, our cash position is stable but it's about to become very robust. While our outstanding shares are now over 175 million, the SBC equity placement will bring that number to about 183 million. And depending on where the converts end up, we're likely to finish right around or a little bit over 200 million shares. Frankly our business plans have always supported the goal of creating multibillions of dollars in value and now we're starting to get a little bit of a sneak peek of the reality of that and I'll break it down by business for each one of them in just a few minutes. But a 200 million share flow starting with about $0.5 billion of valuation is a solid starting capital base for us and supports our efforts for attracting more institutional investors and providing and ensuring liquidity for those require it. Let me turn to the other $275 million now in investments. And again, one of the most meaningful aspects of this work, of these commitments, of what we were able to negotiate and agree on were the business valuations. Pre-money valuation is negotiated for just our three businesses alone, totaled just under $0.5 billion. And I must say, represents, a very strong outcome because it recognizes real value for our existing investors today in the form of cash, and capitalizes our ability to deliver and exponentially grow that value so that we can deliver remarkable future returns for all of our existing and new shareholders. Let's, break the numbers down one at a time. Let's start, with Comstock Metals. And as I said, I'm going to give you a little update for each business. There's a lot of update here. So metals, mining, fuels. Starting with metals. This is our recycling business, where we just proved we can recover and reuse 100% of the solar panel materials recycled including, surprisingly joyfully very high grades of silver. We've agreed to issue 20% of the equity from our recycling subsidiary, Comstock Metals Corporation to SBC for $22 million. This reflects a pre-money valuation of $88 million or $110 million post-money. That commitment alone enables us to accelerate the site selection and deployment of three industry scale facilities, right along the California and Arizona borders, and ensures that we fortify our early-mover advantage and positions ourselves to capture the majority of these projected end-of-life panels, over the next five years. Each one of our facilities can handle 100,000 tons of primarily industrial use panels. And these panels, unlike the smaller ones used in residential applications, tend to weigh about 60 pounds each. That means that 100,000 tons per year one facility alone, can handle 3.3 million panels per year in a market projecting to be 10 times that size by 2030. This recycling system was designed for scale. This is fortunato's baby, designed for scale. And I really don't believe there's anything like it, in the market today. Our system is designed to process one panel in less than eight seconds. That's over seven panels, a minute. And with almost 450,000 minutes, in a 300-day year, that's over 3.3 million panels, a year. And remarkably, as big as that number is, that only equates to about 20 trucks a day. So logistically, it's easily manageable for such a big machine, with room for even more capacity. And that's why we keep referring to these things, as industry scale. We don't see anybody else out there, that has the ability to ramp up the way that we're about to. As the end-of-life waste materializes and makes this new market, we can add even more capacity to the existing network of facilities. The plan on funding metals is really going to be in two tranches with the first $10 million planned this month. That will allow us to initiate all the remaining activities around the build-out of our first industry scale facility, and the remaining $12 million within 90 days, which will fund the acceleration of site selections, permits and build-outs of facility number two, and facility number three. Look, we discussed the metals business plan and financial model many months ago. But just to repeat it, we see annual revenues increasing to $150 million within four years cash profit margins of more than 80%, and an NPV of about $0.25 billion and that's just three facilities. That's just three sites. That's a minority market share, less than 30% based on where we see the market going. And no perpetuity assumptions. In other words, we just cut it off and said how much money can we make? It's truly robust and will most certainly do better, but it's a remarkable thing that we've established here. And I guess it's also important to add, that we did record revenue this quarter. And we did as of last week -- no as of this week, ship our first reusable materials out the door. I posted the pictures on Twitter today. So both revenue on the front end and revenue on the back end, which is truly outstanding and it's all happening today. GenMat announces its first customer, Green Li-ion commissions its first machine and it's producing high purity materials no less, and our very owned recycling business is now receiving and shipping from an entirely new supply chain. All right. So let me move on to mining, and then I'm going to cover fuels. For mining, we have separately advanced our monetization plans for the northern part of the district primarily in Storey County, including those northern targets that are currently under lease. To be clear, we've been trying to sell those assets because the southern part of the district has emerged as a much more production-ready gold and silver resource. And with an updated mine plan at $2,300 gold, I know we're at like 24 25 today, up $40 today. But at $2,300 gold, our day in resource presents almost $0.25 billion of pre-tax net cash flow over a six-year mine life, and that discounts to over $100 million in net present value. And people are wondering how I was able to get these capital commitments. It's the substance of the business plan that we've been working our asses off to pull together. These updated plans and yes, with a little friendly help from the gold and silver prices in this case, enabled us to secure $50 million in commitments for 40% of these mining interests. That will allow us to expand the resource, acquire some incremental lands in and around the property, finalize the mine plan, deploy infrastructure, and within four years, deliver an incredibly valuable, as I said, six-year mine life that generates about 25,000 in net cash flows. And that net cash flows, after all the investment CapEx, et cetera, to build out that mine and get it up and running. And it also presents an opportunity to design a reclamation and restoration plan that could lead the community in Comstock with an incredibly valuable series of sustainable property developments. We still have more work to do on this part. It wasn't even relevant to getting the capital commitment, but this part could actually double the value of everything we're doing, especially when we think about what's happening with property values all across Northern Nevada. So look, we've always been bullish on gold and silver, and we're absolutely thrilled that these commitments can enable our plans now. The 40% represents a $75 million pre-money valuation and $125 million post-money valuation. So an incredible deal indeed for all of our shareholders. Last and certainly not least, possibly most, let's wrap up my prepared remarks before we go to Q&A with our fuels business. We've advanced our discussion with strategic partners and our ongoing due diligence and our ongoing trials and our resulting oil samples that we've been sending out to our customers. They've been shipped, they're being analyzed and it's really to great effect. Great effect in terms of what our customers are appreciating and how far they're advancing their work and what they get and what they see and what they like. But also in terms of our extended trials, our extended work ended up resulting in much, much higher yields than we even originally communicated as 100 gasoline gallon equivalents. This was our hope all along, of course, but it's always great when you can get that validation and get that outcome. But we finalized the full business and financial plan based on 100 gasoline gallon equivalents. And that plan includes building a profitable commercial scale demonstration facility. It's going to be sized for 50,000 dry tons of woody biomass per year. That only produced about 5 million gasoline gallon equivalents per year, but then that enables us, just like we did with metals, to move forward and build three more industry scale facilities and finance those facilities. A big part of lining up a capital partner wasn't $325 million. It was ensuring that we had the capital resources behind us when we're deploying industry-scale facilities. And industry-scale facilities in this case is up to one million dry tons of woody mass per year. That's over 100-plus million gasoline gallon equivalent of fuel per year from one facility. The $200 million commitment is the direct subsidiary, the direct subsidiary that is Comstock Fuels Corporation, for 40% of that entity represents a $300 million pre-money valuation and a $500 million post-money valuation. You can imagine the amount of work that we've been enthralled in over the last three or four months. Our financial models are robust here. That's how we got the approvals. That's how we got the commitments, but it still assumes we're only producing 100 GGEs per ton. And in that model from just these three industry field facilities alone, we generate an NPV of nearly $1 billion -- three facilities. Somebody asked me, well, how many facilities could the U.S. market handle? 16 billion gallons of advanced renewable fuels, that's 160 of these facilities. We're talking about building three to start with nearly a $1 billion NPV. If we throw in our plans for licensing more facilities, which we absolutely want to do, the NPV quickly jumps over $1.5 billion on its way to $2 billion. It's an incredibly robust plan. $150 million of that $200 million investment is dedicated to the deployment of that first facility. That includes site selection, final engineering, permitting, construction and operating the first facility. We already have multiple sites in our crosshairs. We have multiple feedstock contracts in our crosshairs, and we've got offtake contracts in our crosshairs. We're pulling it all together. As you read in our press release, we've now validated higher yields, not 100 GGEs, but 125 GGEs from a ton of wood. That's done; signed, sealed, delivered. All that testing was done with our strategic partner in Oklahoma in Tulsa, and we couldn't be happier. But we're also in the final stages of securing what some are calling a bolt-on technology, something very different than our core tech, our core IP. It's a gas to liquids technology, but they've perfected the ability TRL 9 to capture our own carbon dioxide emissions from our own facilities convert that gas to liquid, convert that liquid into directly sustainable aviation fuel, pushing our yields up another 25 GGEs to 150 GGEs per ton and ultimately lowering our CI score. So at 100 GGEs, we were found of highlighting to most of the people that we're engaged in the industry and it was very effective that we're double our next competitor at 100 GGEs. Think about it. A 150 GGEs a 50% increase from an already profitable model and an already commanding lead but we're not stopping there. There's another $50 million of capital that we dedicated to the development by our own innovations team that will increase our yields even further lower our cost dramatically, lower our CapEx and improve already leading CI scores with the ultimate goal, as you heard me say before, of achieving cost parity with petroleum. We didn't need that to finance the business. We didn't need that to finance the first facility. We're already past what we needed to do that and we're going for more. Look, we understand that cost parity with petroleum is a real stretch goal. But the plans to get there have already been developed. It's going to require real innovations. It can't be done today but we've designed the experiments for those innovations already. And we didn't do it alone. We're doing it with extraordinary partners. And if successful, positions us to truly practically and sustainably, effectively decarbonized mobility. We'll share more about those innovation plans and our partners once all the agreements and the communications are finalized amongst all the relevant parties. Those things are happening in parallel now. By getting the committed financing, we can start moving forward on facility number one, but those other development activities are far advanced in terms of their design and their approvals. So as we sit here today, we're already as a company in a whole new state of reality. And I'm not obsessed or upset if people believe it or not. We're not here to like promote and we're not here to persuade. We're here to communicate effectively and then we're here to deliver substance. Cash comes in the bank projects get started people monitor our success. We gain a strong following. Our goal is precise. We're accelerating the commercialization of these technologies. These are hard impacting technologies. These are huge and sophisticated markets. None of this work is easy or is it a lay-up but we're starting to form a track record. None of these outcomes are luck. They're all hard planned, hard work, sustainably engineered. And our shareholders and broader pool now of investors are going to start seeing a powerful trend coming from this whole ecosystem, from this whole innovation process, from the Comstock system. And what we're working on is one of the most meaningful challenges facing the world and in many ways we're just getting started to tackle it. I also appreciate that all of this update was dense with a lot of information. I hopefully came across concise and I came across clear. And I'm sure you can all imagine, we've been heads down and focused. I'm personally thrilled with the commitments that we've secured and what's in store for us tomorrow next week, next month, next year. And our teams are just as dedicated and just as focused. When I'm off securing capital, they're off securing feedstock. David was in -- well, I'm not going to tell you where he was. He was in multiple states over the last six weeks and we're thrilled at what we're able to see and what we to secure. So anyway, I'm going to pause there. I hope that was a good overview. With that, Trevor, I know we've got a lot of questions. We're very keen to jump in.

We certainly do. And thank you, Corrado, exciting update there. We will now open it up to questions submitted in the Q&A module and those submitted during the registration. Since there were a lot of important updates to absorb across the businesses, I'll try to keep the questions categorized by topic. And we'll probably kick-off here with SBC. So could you provide some more background on SBC? And why you guys ended up going with them?

Yes. So look, we were - a year ago, we were focused on just monetizing the assets, right, Silver Springs in particular. And we engaged a couple of brokers and agents -- not SBC others, and we were getting a lot of traffic and a lot of interest. But Silver Springs was a developing pioneering area, right? We had just done the transaction -- or I'm sorry, Silver Springs had just done the transaction with Microsoft. And so, a lot of awareness sort of shot up. But these are the kinds of developments that require infrastructure. They require roads. They require water systems. They require power. And so these -- so SBC has an off-market real estate practice. I mean they've facilitated the construction of major hotels on private islands. That kind of really unusual thing. And what comes with that kind of unusual thing is major capital sources, major sophisticated real estate capital sources. And so we started to engage in and around Silver Springs. But one thing led to another, right? And it's hard to be talking about data centers and clean energy and not somehow move the conversation to low carbon fuel or solar panel. So, long story short, the capital sources were very keen and interested and we ended up broadening it. And it wasn't ever my intention right to come out with the motherload of commitments all at once right? It was -- we were trying to knock these things down one step at a time. But we're thrilled with the way it came together. And as I said earlier, the people -- it's a global network. We've got investment bankers in Austria. We've got investment bankers in Hawaii. We've got invested bankers in Florida. We've got -- we've had already a number of referrals and engagements with SAF producers and fuel producers in Asia, Thailand, et cetera. So, the relationship actually transcends just the capital source, but that's how it happened, right? It wasn't necessarily by intelligent design. We didn't go knock on Goldman Sachs' door, right? But we got -- we found people who had real expertise right in the areas that directly benefited us. So, I'm thrilled.

Thanks Corrado. Could you walk through the steps to closing this transaction? And if you can reiterate the anticipated closing date? I think you said at 60 to 75 days, right?

Yes. So, that's in a nutshell. I have to say that the substantial majority of the due diligence around the businesses, around the business risk factors, around the financial models, et cetera is complete, okay? So, really now it's just a question of some of the things I've been referring to making sure that our structures, our funds flow, our tax, profiles that we don't do anything that's negative right, that's not intended. We don't want any unintended consequences. And then we'll start sequencing. I think the real estate, the recycling, and the corporate stuff will go quickest and then the mining and fuels will probably follow behind that. I think 60 to 75 days for the first tranche is right. But I think the rest of it is like 75 to 90 days, right? It should be in the next two to three months. And that's all I'm spending my time on. So, I'm really -- I'm excited about what I've got to do tomorrow on this. It's real-time.

Got it. And do you anticipate updates along the way for shareholders to understand that everything is going in the right direction? Any sort of updates that they can track?

Every meaningful step. If we close on the three million tranche -- or obviously, we announced it. If we get the $5 million deposit, sooner rather than later, we announced it. We'll just -- we'll be totally transparent. And I think after the first two people's perception and sense of achievement will rise and the credibility will rise and it will be very nice. So, we don't have any concerns about it. It's just we're just trying to finish it all up.

Do you anticipate SBCC partnering up with Comstock on GenMat?

We haven't talked about it. It's something that an interest has been expressed but GenMat is much more complex, right? And so, GenMat already has engagement with a lot of capital sources that have AI and physics-based iWrite in their crosshairs. I think the realization that they sort of backed into an entire business model -- and I say that like not negatively -- everything that GenMat put in place had a different purpose to it, right? Then to look backwards and say shoot we can do all of this right now and the market is asking us to I think it's actually going to facilitate their capital raising because there's a clearly fully integrated business model with customers. And its novel like they can do in a fully integrated way with but we don't really see anybody else able to do in the industry. It can be done of course but it's all fragmented. So, I think not -- probably the answer is not on any near-term in that context. But some of the other things that we're working on like additional refineries for the fuel business and/or some of the other innovations that are coming down the pipeline they absolutely would be there for that. And that's one of their interests like investing more into a platform with other opportunities.

I do want to cover the other questions related to the other businesses. So ,a lot to discuss here in the time that we all have together. But just to wrap-up a little bit more on the SBCC. Can you elaborate if possible on the sources of capital that SBC Commerce has access to? And any sort of clarity on the type of fee players involved?

We've primarily been engaged right with a couple of very, very large non-US private equity funds directly, okay? And their interest in their background as I said earlier, both fuels, mining interest as well as real estate. So as I said, I dealt directly with the principles. We've cleared investment committees, stakeholder's committees. It's advanced. But that's all I think we need to say.

It sounds like a good start to a potentially good long-term relationship.

Absolutely.

So let's move on to metals here. These questions are related to the maintenance of your solar panel recycling facility. There are three questions that I'll split up here. So the first one is are you finding it difficult to keep the process operating due to breakdowns?

Billy, do you want to -- you want to jump in on this?

Absolutely. Short answer is no we're not finding it difficult. We built this demonstration system certainly to generate revenue and to start processing panels for a number of reasons. One of them is really to vet out our system and make sure everything does operate according to plan. And to date it's been very effective. There's certainly a maintenance cycle on our equipment. And to date, we've been seeing things operate as expected and pretty happy with the progress we've seen.

You kind of just answered this a little bit, but what is holding you back from going to three shifts right away?

Well, again, I don't think it's controlling us back. We've got a plan there. We're operating to plan as well there. And just to give a little color on what's happening, we've got a crew now who is fully trained and operational in the facility and our staffing process is underway. We're bringing in new people pretty much every week or two. And we've got a very, very active training process going on. So as soon as all the pieces are in place we should see that happen and it's happening on the schedule we expected it to.

Any chance you can use your own Bioleum fuel to power your facility?

That's an interesting question. I think as you hear we talk about gasoline gallon equivalents, but there's a lot of work being done focused on aviation fuel coming out of Comstock fuels. Now we're going to keep Comstock Metals firmly on the ground. So it's not going to help us there. What I do think the facility the way it's been designed is very efficient. We've got a couple of different designs with the ability to switch from natural gas to electricity, as a primary fuel source which should give us some good optionality both for the cleanliness greenness of the power as well as cost efficiency. What's interesting about that question is that in addition to aviation fuel, obviously there's a lot of work on the biofuel market for renewable, diesel fuel to power trucks. There's a large logistics component to the overall supply chain that metals exist in and we think there'll be some synergies there down the line on the trucking side.

Yeah. I agree. I'd just like to interject though because it's just one of the most remarkable parts of that business is that as Billy said we use natural gas and electricity. Those are really the only two variable costs so like meaningful variable costs and they're very, very, very low, right? So there's less of an opportunity other than the logistics that Billy mentioned, right, which is sort of extemporary. But I just love how low the variable costs in this business. And the fact that we get paid up front at least on the panel side of the equation for the majority of the revenue, substantial majority of the revenue. I mean the throughput model is just -- I mean it ranks number one of any that I've been involved in. It's just extraordinary. We can't wait to get more facilities up and running and really be in the best position when these panels start coming out. They're coming out now, right? And we're in a position to take them. So it's great.

Can you talk about the silver you're recovering from the end-of-life solar panels?

Billy?

Sure, Corrado. Do you want to -- pretty exciting news here. We're seeing grades of silver come out these that the panel process that were much higher than we were expecting.

Yeah. I mean we first started planning this business. Billy and I would like to be there and then we say we're not going to model any revenues for the residuals. The model is so robust with the tipping fee equation. Let's not model residual revenue until we know we're going to get it, right? Well, the biggest revelation in the last eight to 10 weeks has been that we're recovering 100% of the aluminum, 100% of the glass and then 100% of the silver-rich fines, right? We didn't know -- we knew there'd be residual value. We didn't know how much. But now instead of just contemplating selling those renewable products right aluminum to recycle in other materials like cans, glass to recycle in other materials like bottles. And in selling these fines, which have good value because of the mineral content, we're evaluating hey right down the road can we refine that silver and maximize the value out. And the grades are basically screaming at us to do it, right? If it was marginal it wouldn't be worst expanding the refinery or rejuvenating the process but the grades are high.

Perfect. Go head.

More to come on that. Like our mining team they're acting like kids in a candy store right now. They're running around doing bottle roll tests, shake tests, cyanide shakes. They're running around extracting silver from ore essentially right that they haven't done in a few years. So it's pretty cool.

And I'll just add -- there's commercial customers out there that want to buy that from us that want to buy that mineralogical or component of the solar panel recycling. But as Corrado says we've got deep expertise in this field in-house and we're spending a lot of time there too.

Yes. Yes. So good point Billy like we've got at least the MoU level and now starting to finalize offtake agreements on -- again we didn't model that in our initial plans at all like the residuals. So now there's actually agreements promulgated for each line of product. And fortune was locking all those down. And we definitely are people interested in those fines, right? But -- and we'll sell some. We'll do that just to establish the supply chain. In the meantime our guys are evaluating the best possible way to maximize the silver value for ourselves.

You guys are almost like an urban mining company as one might say. We talked about that a little bit on our last interview, but it's interesting what you guys are seeing on that front. And I'm sure shareholders would be interested in understanding the quantum per panel so more to come.

We'll be able to up that guidance as we go forward, right? We already have robust models, right? But once we start getting those agreements finalized, once we start quantifying the impact on revenue we'll be able to give really good guidance especially leading into the industry scale facility.

Appreciate that. Given the speed stated for panels processing, why is the revenue figure low for metals for the last quarter?

Sure. I think the numbers Corrado quoted were for the planned industry scale facility the scaled up facility not for the current facility that we're operating. That might be the confusion.

Right.

Yes, I think you're right there.

And the number is 100,000 tons of facility I don't know $50 million of revenue a facility three facilities $150 million in revenue, right? 80% margins staggering $120 million of profit. And I think we're going to do better because of these residuals. But that's good as it is, right? Let's capture the market first. Let's put our facilities in a position where we're putting a moat around the supply chain for all intents and purposes, right? Once we secure those supply chains it will be hard for people to step in. We think it's going to be hard for people to step in and do a panel every seven seconds, okay? But logistically it's also very competitive to be as close to those panels as possible. Site selection is going to align the Nevada border, the Nevada California border, the Nevada Arizona border. And we're going to be really -- we want a corner to the Southwest region. That's what we want as much as we can get.

Just sifting through here.

We had a lot of people say, look if you were just Comstock Metals you'd be an incredibly valuable company. We take that well right? It's a matter of time before these revenues, these financial metrics, these supply agreements, these offtake agreements are known. They're known to us now. To Billy's point we're doing it on demonstration scale like we're running all different types of panels through the furnace right? We're statistically monitoring the variations of the different materials but we're getting 100% recoveries each time, right? So that allowed us to finalize the engineering for the large scale. We're going to start ordering the kit and we needed to get the capital committed. Right now we start ordering the equipment. We're going to accelerate it with more capital. And this is what you're going to see in the mining business and this is what you're going to see in the fuels business and not directly within our total control you're already seeing it in the green line in GenMat businesses. It's really remarkable.

Let's move on to fuels. Good amount of questions here. Let's start with this quick one. Does the fuel business produce any additional byproducts?

Billy?

It's a good question. So our core process is taking biomass lignocellulosic biomass, which could be a woody biomass, it could be crop residues, it could be a coal matter of plant matter. And as we've talked about many times before but for anyone new what we really do in our process is we separate that wood into two component parts: the lignin component which is what we was made into our Bioleum and then the cellulose which traditionally is used to make paper. In our case we're using it and converting it into sugar, converting it into ethanol and ultimately with the ability to convert that ethanol into advanced biofuels like sustainable aviation fuel if that's the desire in a particular application. Ethanol is also cellulosic ethanol like we produce is a highly valued fuel additive for gasoline today with very, very high credits coming from the government for it. So all these products come out of that the component we don't make Bioleum out of still makes fuel. Now Corrado mentioned earlier, the one residual product that we really do produce is carbon dioxide in certain quantities. And what the team is really focused on today is capturing that carbon dioxide and making additional fuel from the carbon in that carbon dioxide emissions coming off. And that's what's going to allow us to really leapfrog step function increase the yields coming out of our process. So our hope is to end up, we talk about cost parity that you can think of that synonymously with really no wasted carbon anywhere in our process and all of it being converted to fuel.

Exactly. I mean we look at the carbon in the wood and we say, what's the theoretical maximum carbon that we can convert into energy into liquid fuels and/or chemicals that are green. And 100 was a monster milestone, but it wasn't – we weren't yet close to the theoretical max. 125 incredible. We've got other developments going on to increase further. But when the guys came to us and said "Hey we've got a tech that can capture the carbon dioxide convertible liquid to gas. It's actually a pretty mature tech." I'm like "How mature? "TRL 9." "What?" Like "Come on what's the capital requirement?" Relatively small. "Come on." So we're at the final stage. We already have the agreements and principal. We're just at the final stages of executing those agreements and locking in that technology just like we did with RenFuel, right? We bring it into the portfolio and then our solution is the most robust

Appreciate that fellows. A little bit similar here. The investor states I understand 100 gallons of fuel can be obtained per ton from your extraction process. And that currently lignin is a byproduct of forestry manufacturing and utilized by the mills as a fuel for their process. Their question is after Comstock extracts or converts the lignin for making diesel aviation fuel or gasoline, et cetera, can the remaining waste be used also as a fuel for the same purpose as it is currently being used for?

Yes. So maybe Billy let me try that differently. So I think we addressed that actually. I mean we're sucking the carbon life blood out of that there, right and we're turning into fuel. But let's use an example of a pulp and paper mill, right? That exact example that I think they're alluding to. So a pulp and paper mill takes cellulose makes paper, right? Then they typically depending on the mill will either dispose of that lignin or more common they'll burn it in a recovery boiler, right? And that recovery boiler is necessary for them to recover some of the materials used in the pulping process. And by burning the wood they get power, right? Remarkably, the recovery boiler in most of these pulp and paper mills is a bottleneck. It's fully utilized. And we have the ability to take a meaningful part of that lignin stream, I don't know 25%, 30% – you talk to David, he pushes it even to a higher percentage – and convert it into a by-product fuel stream for that enterprise. And we are engaged deeply with a number of customers for that type of solution. So I think you're going to hear us talk about building our pilot – sorry, our demonstration facility commercially profitable, demonstration facility but you're going to hear some other projects too, where we're building and/or licensing technology for partners like that, okay? So the bottom line is we take all the wood, we take all the carbon and we want to maximize the amount of fuel from that carbon. Now could we take that carbon and make other things like bio-plastics and things? Theoretically, yes, but we're not focused on that because fuel is the highest throughput. We want the most throughput, the most profit from that wood and that's the fuel

Thanks, Corrado. Let's move along here. For those still on here I just want to make it clear. The – at the end of the call, I'll have Corrado give a little bit of an overview of each of the businesses for some clarity. So let's just wrap up a little bit more on the mining space. So some questions here. What is the status of the gold reserves?

So okay, good. So we have gold and silver resources in the ground, right? We have as they're called SK 1300 formal third-party technical reports, quantifying the amount of gold and the amount of silver that we have in the ground. We're focused on Dayton. The Dayton resource has something like 300,000 we'll use the term gold equivalent ounces, right? Just like gasoline gallon equivalent gold equivalent ounces. If you took all the gold and silver and converted it to gold in value. That's a remarkable deposit, that our mine engineers have now gone the extra step and engineered a mine that we can extract that gold and silver from. So this capital that's coming in will allow us to finish the prerequisite work required to mine it. What's the prerequisite work? There's an additional amount of infill drilling. There's geotechnical drilling. There's hydrological validations. That allows us to engineer a mine plan that's safe, that's sturdy, that's executable. It also then tells us the exact amount of ore and the best amount of gold and silver estimate that comes out. But when we ran that model recently, $2,300 gold and we didn't -- we changed the price but we didn't expand the pit. We were still at about a $250 million net cash flow over a six-year period. We have it. We have it. If you want to talk about the next report that would then have bankable proven and probable reserves as opposed to measured and indicated resources, we've internally done a significant amount of that work. This capital will allow us to do the rest of the work, publish that report going to the mine like start mining right? Hope that answers it.

Yeah. I'll just add that the strategic plan around that, the mine plan preliminary work is being done. The strategic plan is being finalized as capital is going to unlock at all. And there's going to be a lot of activity and a lot of developments coming out of that business over the next 18 months as we advance this project.

And by the way, our mine plan, our cash flows are mine lives assume that we find no more gold and silver in that drilling process, right? When we do that drilling even for infill and maybe just a little step out, the likelihood is that the ounces will grow. We haven't modeled that, right? But we have to do that work.

The additional questions here are kind of all over the place. A little bit on GenMat, Green Li-ion back to metals and some other components related to the transaction. So the -- let's start with this. The SBCC -- go ahead Corrado?

I was going to say, can I make a brief comment on Green Li-ion because I didn't mention it. Green Li-ion is finishing up some bridge financing that will allow them to run the Atoka system for six months. They've gotten a lot of interest from the capital markets of that interest is tied to. We'd love to see this thing run for four or five, six months. Now we're already seeing battery-grade materials come out. So we're excited about them actually going ahead and doing that. But it most likely means the monetization of that asset is probably delayed four or five months. I mean, looking at the end of this year maybe the beginning of next year when they'll be in a position to do their next real capital raise and then we would participate in secondaries to hopefully sell that position. So we're happy about it though because the progress is good, the interest is good, the results so far are good. So with these other capital commitments we have, it's less urgent frankly. But that's an update to our guidance as well.

And for shareholders and to new investors can you reiterate the ownership that Comstock has in Green Li-ion?

Yeah, apologies. So we have a 13 -- just a little under 13.5% of the company. That's about 35,000 preferred shares and it's currently recorded on our books at about a 30% discount to their last offering and about $19 million. So if we did -- if we sold it at a discount to their last offering, we'd be pretty happy to get $19 million for an original investment that was less than $2 million.

So transitioning here the SPCC transaction makes it easier to put a value on metals, fuels and mining. You already commented on the value related to Green Li-ion at that discounted percentage. But would you be able to comment on the value on GenMat and SSOF?

Yeah. So GenMat -- yeah, thank you for that. So GenMat we did a restructuring, we announced it. It was an MOU, but we'll probably wrap that up formally and implement it here in the third quarter. Frankly we're already operating under the new parameters and those parameters were that we own 32% of GenMat and that will grow a bit as we continue to fund them going forward. But they're going to be out looking for third-party capital. Right now we made our initial investment commitment of $15 million. It was completed a couple of months ago. And it's on our books for just something less than that, right? Pretty much the cost of what the investment at, it wouldn't be mark-to-market until that GenMat actually goes out and raises money with the sort of arm's length third-party capital firm, which they're looking to do and we're pretty excited about them doing that. Sierra Springs, we didn't talk about Sierra Springs. So Sierra Springs, a lot of interesting things going on there. First of all, we own 17.5% of that entity. Second of all, nothing that we've talked about today in terms of the $325 million commitment relates to Sierra Springs. We're selling a couple of Comstock real estate that Comstock owns directly happens to be in Silver Springs. So we own 17.5% of Sierra Springs, and that's on our books at about $18 million. It's valued at about $18 million, $19 million or something like that. The value we believe is much higher than that. Recently people are aware that Microsoft came into Silver Springs. There was incredible announcement in June, monster hyperscale data center company called Tract, T-R-A-C-T acquired 8,000 acres in the Tahoe-Reno Industrial Center. They wrestled it out of someone that had already bought acres there that was going to develop paid a lot of money for it. But what was staggering is that the CEO went on Nevada Newsmakers, which is the local political and business talk show and said that, they were going to invest $100 billion over the next 10 years. This is like, 12 minutes from all of our Silver Springs properties. And then last Monday night, at the Silver Springs Advisory Board meeting, there was an announcement that they're wanting to establish a Silver Springs technical part. So this hyperscale data center wave is not a wave. It's a tsunami, and we couldn't be more excited about the implications of that that had direct implications of our ability to secure $50 million for our real estate there. And it's also having direct implications on transactions with Sierra Springs, which we're not at liberty to discuss right now, but let's stay tuned for that coming hopefully soon.

On GenMat, any thoughts on timing related to satellite pictures data coming into Comstock as it relates to your mining assets? Anything along those lines?

Yes. Let me maybe just repeat, Trevor, you and I talked about on the last perception report real quick, right? So our teams are fully engaged in building our mine plans and they're fully engaged with GenMat's geophysics teams on creating essentially a digital twin of those mine plans like a machine-learned geophysical AI-based model that can then become predictive, not just replicating value, but then become predictive. And then the hyper spectral imaging from GenMat-1 will add to that model, right? And then, they will provide input and it's going to be very timely for us now. It's not going to scan the district and say, we found a bonanza. Okay. I don't know, if that's what people think but that's not reality. What it's going to do is it's going to predict additional targets. Then we're going to corroborate that with our geotechnical teams our mine engineer our geologists. And then as we just mentioned some of that drilling step-out drilling target drilling that we're going to do to finalize the day mine plan will be enhanced. And if we prove their predictions then we've created a whole another capability of mineral discovery. That's the goal right? Now, will it help us find more gold and silver on the contract? Yeah, we hope so. We believe so. It's wonderful. But that's secondary to the capability that in -- in itself is developing. There's a couple of companies out there that are using probabilistic predictive algorithms and their valuations are ridiculous okay? We're doing it from the ground up. If we prove this capability we and GenMat will have something very special. But I don't -- I'd like to demotivate people's notion that there's a silver bullet that's going to come out of a scan, right? It's going to be corroborative, it's going to be predictive, it's going to be additive. And -- but then if it proves out, it will be remarkable. But that's what we're going for.

Thanks, Corrado. Coming up on time here. Guys, any other questions that have not been addressed that have been submitted or any other topics that you'd like to cover before we end off with Corrado providing a little overview. No? All good?

No, I think we should wrap it there Trevor.

All right. Perfect. All right. Corrado stage is yours for a quick recap and final comments here.

Yeah. Look, I want to thank everybody for the time. We appreciate all the questions. And I've never been sort of more energized like more motivated to get up and tackle all this work that's coming together for us. It's truly substantive. So just maybe a little bit of an outlook for each business right quickly. For fuels right, we're going to facilitate the closing on this $200 million investment. We're already commencing site selection. We're going to nail down the site. We've got multiple customers willing to secure offtake. David's all over the feedstocks. And those variables together, will be what decides where we pick our first site, right? And it may also decide where our second and third and fourth are, but we're really only focused on that first site. And some of these customers some of these offtake agreements, they've expressed and we've been talking to them about investing directly into fuels to do that. Now, we might be a little crowded now, that we've already got this commitment. We'll have to see how we manage that. The second outlook item is, expanding our innovation network. We're going to announce agreements as I already mentioned, that are going to add 25 GGEs and license some incredible technology from incredible sophisticated fuels partners. And then, we're going to announce other agreements with development partners, that are equally as regarded and equally as sophisticated to give us that path to further yields, further cost reductions, further improvements. We're very excited about that. It's coming very soon. For metals, obviously, closed on the first tranche $10 million of the $22 million, finalize the engineering, ordered the equipment, get that first full-scale industry facility moving forward, submit all the permits and then jump forward and find those next two sites, find those next two sites. Get the stakes in the ground, start the permitting process as everybody knows. Once we're able to get initial permits, we can start receiving materials for storage and then we take it from there. Billy mentioned, we're moving to three shifts. That's on schedule. It should be by the end of this quarter. And then we'll start announcing these offtake agreements, with all three products to new customers and longer term agreements to get bigger supply contracts. We haven't had any issue with the amount of panels that are available. Quite frankly, we've been – assume, we're wrestling with just making sure our storage is sufficient. That's all in place now. With mining, same point, facilitate closing on the investment. I mentioned earlier, metals will probably be first. Real estate will probably be first, and then metal mining and fuels will come right behind it. We're always talking of a 60- to 75- to 90-day range. We're going to then kick off the finalizing of the mine plan. We are still working to monetize the northern part of that district. And lastly, the team is analyzing the silver-rich materials hopefully, to come up with a solution that allows us to maximize those silver recoveries, potentially right at our own existing processing facility. I mentioned the delay in monetizing Green Li-ion, but it's in a very positive context for us. Their plans are moving forward. I think those are the big ones Travis, for the next four to five months. It's going to be chockfull, of activity though.

Lot to absorb, a lot of excitement going on. I appreciate Corrado and Billy, and those for submitting questions and for sticking in there. We will be wrapping up the recording sending that around. It will be on the company's website in the Investors section. We will also as a reminder be sending the Q3 perception analysis report. We do appreciate your comments your feedback good, bad, the ugly doesn't matter. We will absorb them, and we will respond accordingly. As for the -- an updated presentation, I know some people have been asking about that. We are working on that, and we look forward to wrapping everything up and consolidating that for you guys. So with that being said, again, thank you all. If you have any other questions, please submit any questions either through the website at Comstock.inc. And then, there's also [email protected]. Again, that's [email protected]. Thank you all for connecting and we look forward to keeping you posted on the steps forward here. You are free to disconnect.

Thank you.