Comstock Mining Announces First Quarter 2014 Results
VIRGINIA CITY, Nev., April 29, 2014 /PRNewswire/ -- Comstock Mining Inc. (the "Company" or "we") (NYSE MKT: LODE) today announced selected unaudited financial results for the fiscal quarter ended March 31, 2014.
First Quarter 2014 Highlights
- Revenue from mining for the first quarter 2014 was approximately $5.6 million, a 53% increase as compared to the first quarter 2013, with average revenue of $1,251.39 per ounce of gold and $20.73 per ounce of silver.
- Shipments for the first quarter 2014, totaled 4,546 ounces of gold and 49,292 ounces of silver as compared to 2,261 ounces of gold and 15,599 ounces of silver in the first quarter of 2013, respectively, increases of over 100% and 215% year-over-year.
- Costs applicable to mining for the first quarter 2014, totaled $4.8 million, as compared to $3.8 million for the first quarter 2013. Although ounces shipped more than doubled, costs increased only 24% due to lower fixed operating expenses, lower labor-related expenses and higher productivity since the early stage of production.
- General and administrative expenses for the first quarter 2014, totaled $2.2 million as compared to $3.4 million for the first quarter 2013, a 35% decrease. The $1.2 million decrease resulted primarily from a decrease in compensation, legal and other administrative expenses.
- Net loss for the first quarter 2014, totaled $3.8 million, as compared to $5.8 million for the first quarter 2013. The decrease of $2.0 million, or 34%, was primarily the result of increased production coincident with cost efficiencies in mine planning, mining, crushing, maintenance, and certain administrative costs.
- Net cash used in operations was reduced to $2.4 million during the first quarter 2014, as compared to $5.6 million during the first quarter 2013. Our higher use of cash in the first quarter 2013, was primarily driven from operating losses associated with higher mining and hauling costs relative to revenue due to a relatively higher ratio of waste to mineralized material, somewhat offset by increased grade and less mineralized material crushed for the first quarter 2014.
- Net cash used in investing activities during the first quarter 2014, was $1.3 million, primarily from $1.1 million for purchases of mining vehicles.
- Net cash provided by financing activities during the first quarter 2014, was $3.9 million, including proceeds of $4.6 million from the revolving credit facility and payments of $0.8 million on other debt obligations.
- Cash and cash equivalents at March 31, 2014 were $2.6 million compared to $2.4 million at December 31, 2013.
Comstock's Chief Executive Officer, Corrado De Gasperis commented, "We are encouraged by the convergence of our results and mine plan. Higher grades combined with lower strip ratios expected in the second half of this year, support our overall 2014 business objectives. Cost reductions resulted in an increase in cash and cash equivalents from $2.6 million at March 31, 2014 to $2.8 million at April 29, 2014."
Exploration and Development
The Company has finalized its plans for near term, high priority targets, including The East Side, Dayton and Spring Valley exploration areas. The East Side Drill Program includes infill drilling, metallurgical testing, and geotechnical analysis to enhance the known mineralization on the East Side of State Route 342 for near term expansion.
In addition, the Company has designed a new phase of exploration drilling to include its highest-potential targets, including scoping studies of the Chute Zone in the Lucerne Resource area, and plans for expanded exploration and development drilling in the Dayton Resource area that will allow for mineralization assessment, resource expansion and mine plan development in the latter half of 2014. The Company anticipates that the drill program will include 100,000 feet of reverse circulation and 20,000 feet of core drilling, for both Lucerne and Dayton, requiring an estimated investment of approximately $7 million.
The Company completed a successful phase of exploration drilling in Spring Valley in 2012. The drilling in the northern portion of Spring Valley was in part designed to confirm mineralization by drilling specific magnetic geophysical anomalies that had similar magnetic signatures as defined by mineralized drill holes, drilled prior to the geophysical surface survey. The Company anticipates that the planned future drill program will include approximately 35,000 feet of reverse circulation and 5,000 feet of core drilling requiring an estimated investment of approximately $2 million.
The total 2014-2015, drilling programs, including Lucerne, Dayton and Spring Valley would represent approximately 135,000 feet of reverse circulation drilling, and approximately 25,000 feet of core drilling. The drilling would be planned to start in the latter half of 2014.
Metal sales in the first quarter of 2014 totaled $6.6 million, with gold revenues of $5.6 million. We also sold $1.0 million of silver. Silver is accounted for as a by-product credit in costs applicable to mining revenue for financial reporting purposes. For the first quarter of 2014, the Company poured 4,546 ounces of gold and 49,292 ounces of silver. The Company mined approximately 950,000 tons of material (mineralized material and waste) as it continued transitioning into higher-grade segments of the mine plan while expeditiously moving through areas of the mine with higher stripping ratios.
Total mineralized material delivered to the leach pad was 205,686 tons and represented some of the highest gold and silver grades crushed to date. The weighted average grade for the entire quarter was .024 ounces per ton gold and .345 ounces per ton silver. The average for the month of March alone was over .034 ounces of gold per ton and over .50 ounces of silver per ton.
Throughout the first three months of 2014, the Company realized an average price of $1,251.39 per ounce of gold and a $20.73 average sales price per ounce of silver. In comparison, commodity market prices in the first three months of 2014 averaged $1,293.67 per ounce of gold and $20.49 per ounce of silver. The Company has priced over 2,800 ounces of gold scheduled for future delivery in May at an average price of approximately $1,310 per ounce.
During the first three months of 2014, actual Lucerne Mine costs applicable to mining revenue were approximately $5.8 million, $4.8 million net of silver credits. Costs applicable to mining include mining and processing labor, maintenance, drilling, blasting and assaying costs. Although ounces poured doubled from the first quarter of 2013, to the first quarter of 2014, costs increased only 24%, resulting from production stabilization efforts throughout 2013 continuing into 2014, and cost reductions.
During the first quarter, the Company continued reducing costs applicable to mining, targeting over $6 million in reductions for 2014, as compared to 2013. The Company has already realized annual savings of approximately $1 million from reduced staffing in crushing, related maintenance, mining and administrative cost reductions with further opportunities in drilling, blasting, logistics and administration. Costs applicable to mining have been reduced over the past five quarters, with first quarter 2014 costs of sales, on a cost per ounce basis, at the lowest since inception, at slightly over $1,000 per ounce.
The Company has also identified $3.5 million of cost reductions in all other non-mining activities, including general, administrative and environmental expenses.
The Company had total current assets of $7.5 million at March 31, 2014. Cash and cash equivalents on hand at March 31, 2014 totaled $2.6 million. Cash and cash equivalents on hand at April 29, 2014, is expected to be approximately $2.8 million. Inventories, stockpiles, and mineralized material on leach pads totaled $2.0 million, including $0.2 million in finished goods.
Net cash used in operations was reduced to $2.4 million during the first quarter 2014, as compared to $5.6 million during the first quarter 2013. Our 2014 use of cash, was reduced due to higher revenues, somewhat offset by losses associated with higher mining and hauling costs relative to revenue due to a relatively higher ratio of waste to mineralized material.
In February 2014, the Company entered into a $5 million revolving credit facility (the "Revolving Credit Facility") with Auramet International, LLC, pursuant to which the Company may borrow up to $5 million outstanding at any one time. The Company also reduced its operating costs by entering into two low cost financing agreements with Caterpillar in the amount of $1.3 million for the purchase of mining equipment and eliminating higher rental costs.
For the remainder of 2014, we are planning capital expenditures of approximately $3.5 million, primarily to accelerate the expansion of the Lucerne Mine, including targeted drilling on the East side of the Lucerne Resource area. We will also pay down an additional $6 million in debt obligations, including about $4 million of the Auramet Facility.
Under our mine plan, we anticipate doubling the rate of ounces produced when compared to 2013, for both gold and silver, targeting a production rate of 40,000 gold equivalent ounces in 2014. These increases come with lower costs applicable to mining due to focused cost reduction efforts, as well as lower non-mining operating expenses. Once stabilized at the 40,000 ounce per annum run rate, the operating expenses per ounce mined will be significantly lower. The Company expects costs per ounce of gold mined of less than $750 per ounce. The Company anticipates annual operating expenses, including all mining and processing costs, of less than $25 million per annum, a more than a $6 million reduction from fiscal year 2013.
Comstock's Chief Executive Officer, Corrado De Gasperis concluded, "April was a positive cash month for us and we look forward to generating positive cash flow in the future, mining higher grades, with lower strip ratios and at overall lower costs. Our efforts are solely focused on lowering costs and expanding both our production and our resource base, and it is happening, every day."
As previously announced, the Company will host a conference call, today, April 29, 2014 at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to report First Quarter 2014 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
SOURCE Comstock Mining Inc.