LA JOLLA, Calif., April 10, 2018 /PRNewswire/ -- TONOGOLD RESOURCES INC. (OTC:TNGL) ("Tonogold") is pleased to announce that it has entered into the second phase of its option agreement with Comstock Mining Inc. ("Comstock") and last week paid the scheduled $2 million to Comstock, pursuant to the agreement dated October 3rd 2017 (the "Agreement"), which was announced to the market by Tonogold on October 5th 2017.
The Agreement provides Tonogold an exclusive right to earn a 51% controlling interest in 1,162 acres of mining claims in the highly prospective Comstock Lode region in Virginia City, Nevada, which includes the Lucerne gold-silver Deposit, located in Storey and Lyon Counties, Nevada.
The decision by Tonogold, follows a detailed 6-month technical and economic assessment of the Lucerne deposit by Tonogold's technical consultants, Mine Development Associates ("MDA"), of Reno, Nevada, which included the development of a new resource model.
At this time the resource and preliminary economic pit design work completed by MDA has provided Tonogold with confirmation that the resource at Lucerne is likely to support a technically and economically viable mining operation, although further data validation and verification will be required before MDA are able to provide Resource and Reserve estimates suitable for production planning and public reporting.
As foreshadowed in our October 5th 2017 announcement, the work over the past 6-months has confirmed that the Resource estimate for Lucerne is likely to be significantly lower than previously estimated by Comstock, mainly the result of (i) the cut-off grade of the previous estimate (at 0.007 ounces of gold per ton) being too low, (ii) high grade zones having overstated grade and tons within the overall resource grade and (iii) that a significant part of the official resource is at a depth below which economic extraction is contemplated.
Tonogold emphasizes again that it is the quality of the resource that is far more important than the quantity and is confident that the changes from the previous resource estimate should deliver an economically feasible, and ultimately profitable mine plan, with significantly enhanced performance when compared to the mining that occurred between 2012 and 2015. The new resource modeling work by MDA, through explicitly modeling each mineralized zone, ensures that the possibility for grade smearing is effectively eliminated.
The work program covering the next 12-month period will include MDA completing the validation work required to provide a Resource estimate, undertaking a Reserve estimate, and producing an economic assessment, all suitable for reporting under Canadian NI 43-101.
At this time, Tonogold is targeting future operations that would provide annual gold production (on a 100% basis) of between 75,000 to 100,000 ounces of gold per year, plus 600,000 ounces of silver with cash operating costs targeted to be under $800 per ounce.
Under the original Agreement, Tonogold has the right (option) to acquire a 51% interest in the plant, equipment and related infrastructure ("Processing Facility") for $25 million prior to recommencing production. Tonogold and Comstock today entered into a supplementary agreement which provides Tonogold commercially attractive toll treatment terms as an alternative. In summary, if Tonogold elected the toll treatment alternative, Comstock will retain 100% ownership of and Tonogold shall rent and operate the Process Facility, paying Comstock a usage fee of $1 million per annum plus $1 per ton processed.
As set out in our October 2017 announcement, in order for Tonogold to earn a 51% interest in the Lucerne deposit, it will be required to invest a total of $20 million over a 42-month period (which commenced in October 2017) on work programs developed and managed by Tonogold, on the Lucerne Properties; the objective being to produce a commercially and technically robust mine plan and feasibility study to enable profitable mining on the properties to commence. It should be noted, that the $20 million expenditure threshold is not a commitment, but a requirement to earn the 51% interest in the Lucerne Properties. In this regard, approximately $1 million has been invested by Tonogold to date.
NEW BOARD APPOINTMENT
The Company also announces that it has appointed Mr. Robert Kopple to the Board of Directors. Mr. Kopple is an experienced investor, businessman and lawyer. He is involved in a broad range of corporate financing activities with public companies. Mr. Kopple is a senior partner in a law firm based in Los Angeles specializing in estate planning, tax law and business transactions. His investments include diverse interests in real estate and in several operating companies in mining, health care and technology. Mr. Kopple is a significant investor in Tonogold Resources, Inc.
Tonogold's CEO, Mark Ashley said, "Although there is still much to complete prior to having a comprehensive and robust operating plan to justify a production decision, it has been pleasing to see our early operating concepts that have been developed over the past few years for the Lucerne deposit being validated by the detailed technical assessments undertaken to date. The relationship developed between Tonogold and Comstock has strengthened over this initial 6-month period and bodes well for a positive and constructive partnership in the successful pursuit of our mutual objectives."
He added, "The support we have received from our shareholders and the investment community generally has been outstanding and we look forward to being able to continue to build accretive shareholder value driven by fundamentally based decisions using realistic assumptions and focused on the success of medium to longer-term growth objectives."
Mr. Corrado De Gasperis, Executive Chairman and CEO of Comstock said, "We are pleased with the geological analysis and advancement, to date, on the Lucerne resource and the diligence of our mining partner and their advisors." He added, "This venture has diligently focused on developing a sustainably profitable mine. We feel the potential of Lucerne depends on this type of technical collaboration, with the right partner and capital to enable it. Ultimately, Tonogold plans to invest over $20 million for 51% of the Lucerne Mine. Their methodical, technically diligent and credible advancement through the first phase, meeting all commitments and milestones, speaks for itself."
This press release and any related calls or discussions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Tonogold. Forward-looking statements are statements that are not historical facts. 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 and timing and accounting for restructuring charges, gains or losses on debt extinguishment, derivative liabilities and the impact thereof; productivity, production slowdowns, suspension or termination, business process, rationalization and other operational initiatives; investments, acquisitions, joint ventures, strategic alliances, business combinations, asset sales; 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; including a redemption of the debenture, and future working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, earnings and growth.
The words "believe," "expect," "anticipate," "target," "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 discussed in Item 1A, "Risk Factors" of our annual report on Form 10-K. 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 other securities of the Company.
SOURCE Tonogold Resources Inc.