Comstock Mining Announces First Quarter 2013 Results Exceeds Planned Production Run Rates Ahead of Schedule
VIRGINIA CITY, Nev., May 8, 2013 /PRNewswire/ -- Comstock Mining Inc. (the "Company" or "we") (NYSE MKT: LODE) today announced selected unaudited financial results for the quarter ended March 31, 2013, and a production update through April 27, 2013, reporting over six weeks of sustained throughput averaging in excess of 425 gold equivalent ounces poured per week.
2013 First Quarter Highlights
- The Company shipped approximately 2,261 ounces of gold and 15,599 ounces of silver, resulting in revenue of approximately $3.7 million, realizing an average price of $1,626.74 per ounce of gold and a $31.44 average sales price per ounce of silver.
- On February 13, 2013, the Bureau of Land Management (BLM) allowed use of the Company's existing haul road, providing a much more efficient connection to the Company's processing facility in American Flat. This breakthrough allowed for accelerated implementation of production and expansion plans.
- For the six-week period ended April 27, 2013, we averaged in excess of 425 gold-equivalent ounces poured per week. In April 2013, we crushed and stacked over 30% more material as compared to March 2013. The Company is continuously adjusting its operations to improve grade, maximize yields and increase tons crushed and stacked.
- During the quarter, the Company published its fourth NI 43-101 technical report, validating over 3.2 million gold-equivalent ounces in all categories and identifying a concentrated "Chute Zone" of higher-grade mineralized material.
- Net loss for Q1 2013 was $5.8 million, as compared to $7.3 million for Q1 2012. The improvement results from lower exploration expenses as we transitioned into and prioritized gold and silver production and production ramp up during the quarter.
- Operating expenses for Q1 2013 were $9.5 million, versus $7.8 million in Q1 2012. The increase of $1.7 million resulted primarily from an increase of $3.8 million for costs associated with mining revenue and an increase of $0.6 million, net, from general and administrative costs, primarily from a loss on the transfer of equipment, offset by a $2.7 million decrease in mine development costs, including required soil sampling, permitting, and drilling activities.
- Net cash used by operating activities in Q1 2013 was $5.6 million, versus $4.5 million in Q1 2012. The $1.1 million increased use resulted primarily from an increase in mining revenue of $3.8 million, offset by $2.0 million of gold produced and used to repay debt obligations, increased operating expenses, net, of $1.7 million and $1.2 million for increased use of cash for inventory.
- Net cash provided by investing activities in Q1 2013 was $0.02 million, versus $2.5 million net cash used in investing activities in Q1 2012. The decrease resulted from the completion of the expansion projects in preparation for mining in 2012.
- Net cash provided by financing activities in Q1 of 2013 was $9.2 million. During the quarter, the Company raised $9.7 million in net proceeds through a public offering of 5,000,000 shares of common stock, partially offset by cash payments of $0.5 million for the repayment of debt obligations.
- Cash and cash equivalents at March 31, 2013 were $9.59 million compared to $5.97 million at December 31, 2012.
- Total debt and other long-term liabilities decreased $3.5 million during the quarter, from $14.4 million to $10.9 million at March 31, 2013. From March 31, 2013, through April 30, 2013, the company has repaid an additional $1.1 million in principal payments on debt obligations.
Comstock's Chief Executive Officer, Corrado De Gasperis commented, "We have well exceeded our targeted production rate of 400 ounces per week, averaging over 425 ounces per week during April, and continue improving the stability and throughput of the system. We will operate above these levels for the rest of 2013, and now anticipate achieving a full 20,000 gold equivalent ounces this year and paying off our secured Auramet Debt Facility ahead of schedule."
Exploration and Development
During the first quarter of 2013, the Company published its fourth National Instrument 43-101 (NI 43-101) technical report (the "Report") authored by Behre Dolbear & Company (USA), Inc. The Report declared a mineral resource estimate of Measured and Indicated Resources containing 1,824,000 ounces of gold and 17,100,000 ounces of silver, for a total of 2,150,000 gold equivalent ounces1, and an Inferred Resource containing an additional 870,000 gold equivalent ounces. These estimates include the newly identified Chute Zone, a wedge-like, structurally bounded zone that hosts significant gold and silver.
During the first quarter of 2013, we completed the ramp up and stabilization activities of the production system, including improvements to the hauling, crushing and metal extraction processes. Metal sales in the first quarter of 2013 totaled $4.2 million, with gold revenues of $3.7 million. We also produced $0.5 million of silver. Silver is accounted for as a by-product credit in costs applicable to mining revenue for financial reporting purposes. During the first quarter of 2013, the Company crushed and stacked over 234,000 dry tons of mineralized materials and shipped 2,261 ounces of gold and 15,599 ounces of silver. Material placed on the heap leach pad remains under solution until recovery rates are optimized.
The Company continues ramping up its production and exceeded its targeted production rate of 400 ounces per week, initially targeted for the end of April, and has averaged over 425 gold-equivalent ounces for six weeks through the end of April 27, 2013. The Company is continuously adjusting its operations to improve grade, maximize yields and increase tons crushed and stacked.
Throughout the quarter ended March 31, 2013, the Company realized an average price of $1,626.74 price per ounce of gold and a $31.44 average sales price per ounce of silver. In comparison, commodity market prices in the first quarter of 2013 averaged $1,630.47 per ounce of gold and $30.08 per ounce of silver.
During the first quarter of 2013, modifications and optimizations have been engineered into the Company's mine planning, hauling, crushing and recovery systems. Lucerne Mine operating expenses were approximately $4.3 million, $3.8 million net of silver credits. Cost applicable to mining revenue include mining and processing labor, maintenance, blasting and assaying costs associated with higher production rates and higher absorbed inventory costing associated with costs incurred in advance of achieving the targeted production rate. Other costs applicable to mining revenue include higher hauling costs, including inefficiencies associated with using smaller, temporary haul trucks on a temporary alternative haul route until access to our main haul road was allowed in February.
The Company's current financial analysis for the Lucerne Mine anticipates annual operating expenses, including all mining and processing costs of approximately $15.9 million per annum, excluding approximately $1 million of additional haulage costs, with an anticipated production schedule currently processing at the rate of one million tons per annum, but also including plans for ramping up to a 1.5 million tons per annum run rate. Mine administration costs are anticipated to be approximately $1.5 million. The Company currently anticipates production rates staying above the 400 gold-equivalent ounces per week in the second half of the year with a current expectation of producing 20,000 gold-equivalent ounces in 2013.
For additional information regarding our recent production increases, including photos, please see the CEO Blog on our website: http://www.comstockmining.com/corporate/ceo-blog
The Company had total current assets of $17.8 million at March 31, 2013. Cash and cash equivalents on hand at March 31, 2013 totaled $9.6 million. Inventories, mineralized material on leach pad, and stockpiles totaled $6.1 million, including $1.3 million of in-process and finished goods. In March 2013, the Company raised $10 million in gross proceeds (approximately $9.7 million, net of issuance costs) through an underwritten public offering of 5,000,000 shares of our common stock at a price of $2.00 per share.
Total debt and other long-term liabilities were $10.9 million at March 31, 2013, a decrease of $3.5 million during the quarter, from $14.4 million. We will also pay down an additional $6 million in debt obligations, including the full repayment of the Auramet Facility. The Auramet Facility is scheduled for repayment from February 2013 through the end of July 2013. Through April 30, 2013, the Company has delivered its first six installments, or 1,860 ounces. Due to a recent decline in gold prices, the Company has prioritized the repayment of ounces on this facility and has opportunistically purchased some of the remaining ounces of gold to be delivered under the Auramet Facility from the market while prioritizing shipments from production toward the remaining ounces due on the Auramet Facility. We now expect to complete the repayment of the Auramet Facility earlier than originally scheduled. Once repaid, the security interest in our assets will be released and we believe that this enhances our liquidity and flexibility.
For the next twelve months, we plan on spending $3 to $4 million in capital expenditures, primarily to expand our heap leaching and related production capacity.
Comstock's Chief Executive Officer, Corrado De Gasperis concluded, "The first quarter of 2013 brought our mining and processing systems into stability, putting us squarely on track for achieving our first full year production goal of 20,000 gold equivalent ounces, enabling us to invest in future production and resource growth and accelerate the complete repayment of our secured debt facility. Our mining costs were in line with the ramp up with significant reductions and stabilizations already occurring that will benefit the second and third quarter performance."
As previously announced, the Company will host a conference call on Thursday, May 9, 2013 at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to report First Quarter 2013 results and business update.
The live call will include a moderated Q&A, after the prepared remarks. The dial-in telephone numbers for the live audio are as follows:
North American Toll Free: 1-866-544-4625
Canada Local / International: 416-849-2726
The audio will be available, usually within 24 hours of the call, and for 30 days thereafter, at http://www.comstockmining.com/investors/investor-library
About Comstock Mining Inc.
Comstock Mining Inc. is a producing, Nevada-based, gold and silver mining company with extensive, contiguous property in the Comstock District. The Company began acquiring properties in the Comstock District in 2003. Since then, the Company has consolidated a significant portion of the Comstock District, amassed the single largest known repository of historical and current geological data on the Comstock region, secured permits, built an infrastructure and commenced production in 2012. The Company continues acquiring additional properties in the district, expanding its footprint and creating opportunities for further exploration and mining. The near term goal of our business plan is to deliver stockholder value by validating qualified resources (measured and indicated) and reserves (proven and probable) of at least 3,250,000 gold equivalent ounces from our first two resource areas, Lucerne and Dayton, achieve initial commercial mining and processing operations in the Lucerne Mine with annual production rates of approximately 20,000 gold equivalent ounces and significantly grow production through the commercial development and expansions of both the Lucerne and Dayton Mine plans.
This press release and any related calls or discussions may contain forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements include statements about matters such as: future prices and sales of and demand for our products; future industry market conditions; future changes in our exploration activities, production capacity and operations; future exploration, production, operating and overhead costs; operational and management restructuring activities (including implementation of methodologies and changes in the board of directors); future employment and contributions of personnel; tax and interest rates; capital expenditures and their impact on us; nature, timing and accounting for restructuring charges, gains or losses on debt extinguishment, derivative liabilities and the impact thereof; productivity, business process, rationalization, restructuring, investment, acquisition, consulting, operational, tax, financial and capital projects and initiatives; contingencies; environmental compliance and changes in the regulatory environment; offerings, sales and other actions regarding debt or equity securities; and future working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, earnings and growth.
The words "believe," "expect," "anticipate," "estimate," "project," "plan," "should," "intend," "may," "will," "would," "potential" and similar expressions identify forward-looking statements, but are not the exclusive means of doing so. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in our SEC filings and the following: the current global economic and capital market uncertainties; the speculative nature of gold or mineral exploration, including risks of diminishing quantities or grades of qualified resources and reserves; operational or technical difficulties in connection with exploration or mining activities; contests over our title to properties; potential dilution to our stockholders from our recapitalization and balance sheet restructuring activities; potential inability to continue to comply with government regulations; adoption of or changes in legislation or regulations adversely affecting our businesses; business opportunities that may be presented to or pursued by us; changes in the United States or other monetary or fiscal policies or regulations; interruptions in our production capabilities due to unexpected equipment failures; fluctuation of prices for gold or certain other commodities (such as silver, copper, diesel fuel, and electricity); changes in generally accepted accounting principles; geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues organically; potential inability to attract and retain key personnel; interruptions in delivery of critical supplies and equipment raw materials due to credit or other limitations imposed by vendors; assertion of claims, lawsuits and proceedings against us; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the SEC; potential inability to list our securities on any securities exchange or market; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. We undertake no obligation to publicly update or revise any forward-looking statement.
Neither this press release nor any related calls or discussions constitutes an offer to sell or the solicitation of an offer to buy any securities.
Contact information for Comstock Mining Inc.:
PO Box 1118
Virginia City, NV 89440
Corrado De Gasperis
President & CEO
Manager of Investor Relations
Tel (775) 847-4755
Tel (775) 847-0545
1 Gold equivalent ounces were calculated using January 31, 2013 London PM prices of $1,664.75 per ounce of gold and $32.03 per ounce of silver, as published by kitco.com. This resulted in a ratio of 51.97 ounces of silver per equivalent ounce of gold, without taking into consideration the relative recoveries of gold and silver. The Company's current estimates for heap leach recovery are 70% for gold and 45% for silver.
SOURCE Comstock Mining Inc.