Good day, ladies and gentlemen. Welcome to the Comstock Mining’s First Quarter 2015 Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a brief question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Corrado De Gasperis. Please go ahead.

Thank you, Michelle, and good morning, everyone. This is Corrado. And welcome to our 2015 first quarter conference call. I also have with me Judd Merrill, our CFO, who has led our team in an effort to improve the timeliness of our reporting results not to mention streamlining and reducing our costs over the past year. Last night we filed again our 10-Q on a 15-day foreclosing audit review and reporting cycle. We will provide a brief summary of the information included in our 10-Q filed last night and our press release from this morning. Also we are really looking forward to the Annual Meeting this year being held much earlier on May 7th may possible in part by these faster reporting cycles. If you don’t have a copy of today’s release you will find a copy on our website at www.comstockmining.com under news/press-releases. Speaking about the website, excuse me, we have also posted in webcomic version of our annual report and proxy statement on the Homepage and it’s got this neat, like user friendly electronic page turning feature. Please take a look at it when you can. I will also refer to the website on a couple of other occasions this morning, where we have been able to post some really remarkable pictures of the road move progress, the mining, the excavation activities and even just some spectacular pictures of capping the historic Silver Hill Shaft. We have also got some good pictures of the underground target that I am going to be speaking about. Although, those are a little bit more of a teaser and there is a lot more to come in the next few weeks on that front. Please also let me remind you that in addition to the outlook, we may make forward-looking statements on…

Thank you. [Operator Instructions] The first question comes from Heiko Ihle of Wainwright. Please go ahead.

Good morning.

Hey Heiko, how are you?

Hey Corrado, thanks so much for taking my question and call as well.

Very well. Thank you.

Congratulations on all the progress with the SR-342 road, as you know, I have driven on it quite a few times getting to your mine site. You mentioned in the press release that the cost for the road work will be about $3 million. Can you break out when that money will be spend between phase 1 and phase 2 ideally even quarter-by-quarter?

Yeah. So from the end of March to the -- let's say end of June, we’re talking about just a little over 1 million. So in fairness, we’d say 1 million in the second quarter. And I expect that not linearly but for the most part pretty close to linear, the other $2 million over the last two quarters. So roughly $1 million a quarter for Q2, Q3 and Q4.

Got it. Pretty bite size for that, I like it. Going through production outlook for the remainder of 2015, just help me and walk me through what we should look for with the changes in production compared with Q1? Where from the mine site are those increases coming from and should we expect any additional CapEx to be spent in order to get to this target places?

Yeah. For most all intensive purposes, we are mining on the flat, sort of floor of the Lucerne patents for most intensive purposes. To the extent that we are doing a lot of this excavation required for the road relocation. There are some amount of dump materials that we have been pre-approved by the Nevada Department of Environmental Protection to move out of there. Some of that material has some legacy contaminants associated with it, be it lead or mercury and some of that material has grade in it, which we haven’t been shy to talk about or report. So it’s all somewhat contained within that Lucerne area. So it’s actually quite stable as far as we can see for the next six to eight months and in that time, we will have more specifics about how we advance the mine from there but that’s stable from a capital expenditure standpoint, really nothing beyond the road other than spending just about quarter of a million dollars for an extended overland conveyor system. As we expand our heap leach pads, we effectively have to extend the conveyors and the grasshoppers that allow us to take that or to further portions of that pad position. So nominal, I say other than the road, which is the primary focus and I think with the pictures on the website, people can start to get an appreciation that moving the road and cleaning up the environment and recleaning certain aspects of the mine and the mining activity and extending it are sort of all synchronizing schedule into one project. Certainly, so far as we get to June then the road will be reopened with a permanent bypass and then we will resume our activities with some safe crossing of that road until the final Phase 2 work in all of the road construction till the southern part is completed and done.

Great. I know you always get a lot of questions on these call, so I will stop hogging the questions. I will just leave with a thank you. You guys are doing all the right things and Jake and I look are looking forward to seeing in three weeks out at the mine site.

Looking forward that too. Have a safe trip when you get out here. It will be informative.

Thank you.

Sure. Thanks.

Thank you. The next question comes from Marco Rodriguez from Stonegate Capital. Please go ahead.

Hey, Marco. How are you?

Doing well. How are you?

Thank you.

Let’s see -- so, I wanted to try to get a little bit more color here in regard to the mining in the quarter now. Obviously, I heard prepared comments that you had about three weeks of downtime for the road and for the heap leach. Can you kind of give us a sense as far as how much that kind of impacted the quarter from a production standpoint?

Yeah. I think the impacts were probably about -- in terms of the ounces forward, maybe a 10% or 15% shortfall. We will have a little bit of that, sort of seeping into April, as well because of the heap cycles. But I think most of it was contained. In the first quarter, we expect to have a higher ore deliveries. In the second quarter, we expect to have lower strip ratios in the second quarter and we expect to have a full effect, a full quarter effect of our cost reductions in the second quarter. So higher ore, higher pullers, lower strip ratio, lower cost is sort of the directional summary.

Got it. Okay. And then with those expectations, are you looking at having the tons that are mined for the year, exceed what you guys did in ’14, or is it going to be a bit lower and just going to kind of make it up with the lower strip ratio when it comes to the force?

I think for the first three quarters, it will be a little bit lower in terms of ore. It will be a lot lower in terms of costs. So that’s why we came on being profitable here. And then we will have much more precise guidance in terms of the revenue line as we finalize the definition of these expansions and so very stable. In terms of ore flow very stable and reducing in terms of cost but positioning for growth, as we figure out the best way to proceed on these three further developments, expanding the surface mining Lucerne, developing the underground mining in Lucerne and then ultimately commissioning our second mine in Billie.

Got you. And then two other questions are kind of housekeeping items. On the G&A side, the $2.1 million in the quarter, which you had about $400,000 in one-time severance costs, excluding that we are still at about $1.7 million, $1.8 million for a quarter. Is that kind of a normalize run rate that we should be thinking about going through ’15?

That’s a normalized run rate and we’ve targeted an additional -- we've targeted additional million and a half of non-mining cost reductions of which not all of that is fully on the G&A line. But I would say certainly two-thirds of it would be normalized out of $7 million, looking to bringing that down by another point two quarter of a million per quarter as we progress forward.

Got you. And then last one. In terms of your guidance for being net income positive for fiscal ’15, if we were to exclude that $3.2 million non-cash, continue to see reversal, would the guidance still be net income positive?

So my view when I first guided was that we would have that each quarter. We did contemplate the non-recurring item for the first quarter but with the improved cost profile going forward, we will get there, let’s say with our own two feet.

Okay. Got it. Thanks.

Yeah. Even if you are saying for the full year excluded, we would expect a yes.

Okay. Even if you exclude that reversal that we continue to see.

In a full year. The precise guidance really was that we’d be there each quarter, including it. But by the time we end the year, it should be without it as well.

Got it. Thanks a lot.

Thank you.

Thank you. The next question comes from Chip Unsworth of Legend. Please go ahead.

Corrado, congratulations. Can you hear me?

Yeah. Inch by inch, we are making progress. Still some good stuff to do but we are starting to see some of it come through, which is nice.

Well, looks like you are standing on your own two feet now.

Yeah. We are just about. Yeah, I joked about the drama in the first quarter. It wasn’t really so much drama. There were just a lot of activity. So it was nice to see it get coordinated by our teams. It was more than reassuring to feel the coordination and support from the state and the county. Really it’s a team effort and it’s coming through.

Well, the dollars and cents start to make you look good on a piece of paper. A couple of questions for you on -- thanks for the pictures and the maps and I will try to keep this short. But now that we are seeing profitability, I think it starts to become kind of interesting where your share price is. The heap leach cell number 9, are you stacking on that now?

We just started to, yes. We just started.

Okay. So you haven’t seen any flow through there yet.

I mean, sometimes -- not really, not really.

Okay. I’m looking at the pictures. I’m not sure if they are in front of a machine but I’m looking at pictures of the road, I think the first picture I’m looking I would be looking up 342 towards Gold Hill.

Yeah. I’m just pointing it up as you speak. I have it. I had it up. Yeah. Yeah.

Okay. So when I’m scrolling down and I’m seeing the bulldozer, is that actually where the road is or is that still in the Lucerne hit?

No, it’s where the road is/was.

Okay. So you really have -- okay, so you’ve really got into it. When you are speaking about the 640,000 tons of this dumping material, is it there?

So in sixth, yes. Thank you for that clarification. So the 640,000 was an assessment of most ore in various regions but let me say that, almost 500,000 is in that general two mile stretch, yes. Most substantially, there is some others down by the ore and there is some others north. But that was the biggest concentration.

Okay. So under the asphalt, the biggest concentration is literally onto the road.

Well, yes, so technically about half of that, little more than half of that 500,000 was along side, both sides of the road and it was accessible even without the roads moving. It was -- and we were coordinating to do some environmental cleanup and ultimately move some of that material positively but when the roads gone, the number leaps up to almost 500. What’s key is this much more efficient to deal with it, you just keeping toeing around all the stuff.

Right.

It’s safer. It’s faster. It’s cheaper. It’s more efficient, right. And…

Okay. So there is no blasting.

There is no strip. Well, except for removing the asphalt, right.

Okay.

Technically, there is no strip and there is no blasting. There is no drilling at all.

And there is no reclamation.

Some of it, to be fair. Some of it, we don’t do even crushing, right. We just run the mine. So it’s just a win, win, win.

Okay. So, when I’m looking at these pictures and I’m looking down the road. I’m looking down the road. So, I would be looking kind of southeast, yes, down the road, is that correct? So off to my -- if I am looking down the road, off to my right is the Lucerne pit, correct?

Correct.

Okay. And that Lucerne pit is how much below where the former road was?

First picture, the very first picture where you see the ones pile on.

Yes.

You are looking north and the mine is on the left.

Got it. Okay. Get it.

Yes. The other picture is, you are right, okay.

Okay.

And then Steve ask your question again, I am sorry? Oh, so it’s about 40, 50 feet, it’s about 40 to 50 feet below.

Got it. Okay. So in essence, the mine that you are currently mining Lucerne is below what the stacked material that was under the road by 40 or 50 feet, that’s correct?

Yes. So say differently, the bedrock, the hard rock is 50 feet and is covered with, let’s call it loose mined up, loose fill and the mine, both the mining activity is sort of the more sturdy, harder rock, the high walls, very sturdy, hard rock, right. And so that’s why when your mine -- first of all, it’s safe and stable. But also when you are mining it, you do have some blasting, drilling and blasting, that’s required to make that material loose enough to miner way. That’s not the case with any of those loose fill.

So you are able to go from the hole in the ground that you have at Lucerne right into the material under the road and which is going to expose the hill to the east, correct?

That’s right. It actually stabilizes the hill, it makes the hill more sturdy, it puts us in further proximity, but it’s adjacent if that’s your question.

Yes. And so you could in theory kind of go into the hill therefore underground?

Exactly. And it’s much more. And here is there is two or three key variables, but the biggest one is that this whole hose drop type that we are targeting for the underground is oxide ore and means it leaches just the same, it’s the same rock types from Lucerne mine, but you can get it. You are looking right at, you are within the immediate proximity of it, but it’s hard hosted rock. So you go right underground. So you are going to ultimately have less overburdening, you are going to -- I mean in the best case scenario, you have no surface mining and you just be going underground around those high grade veins and big structures. So it really positions you, platforms you in the floor of the existing mine to efficiently go underground into those higher grade targets. That’s certainly where…

Okay. So when I am looking at the first page on the hyperlink that you had in your news release, it’s the first page, it’s pink, it’s blue, and there seems to be kind of a shaft, I don’t know if the shaft is kind of running parallel to what was or where the road was. Is that the concept of going underground?

Yes. So let me answer that question. So yes, exactly. So at the very bottom of the blue right, this is two dimensional, so it’s harder to impinge them.

Yeah.

But we at the very bottom of the blue, where its white is the northern floor of the Lucerne mine, right and then that 800-foot line that white road if you will…

Yeah.

… is a drift or shaft whatever word you would like to use that is into the bedrock, okay. You go right in. And then every 100-feet you have a little [indiscernible] sticking out, that’s a drill station, okay. And you could literally instead of drilling from a far, from a high above surface point and putting a pin into cushion right, you are literally staring at the structure and you are putting out an array of drill hose very, very efficiently that is going right into the heart of the structure and in our case…

And that is under the hill that we are talking about to the east, correct?

Exactly. The second picture which -- the first picture you are referring to and thank you for doing this is, it’s a two dimensional, call it a level plan, so it’s actually a level plan that’s flat from the surface. The next picture you’d call cross-section right. And it’s a great picture because, A, you see the same blue material right, you can’t see a full straight line of the road, but you see a white box right sort of the in the left.

Yes. What does that say -- what is it, I can’t read that, station?

That’s the shaft right. That’s 800-foot.

Or proposed drilled station, okay. I got you. All right.

That’s one of 100-feet [indiscernible] sticking out and then you see how you have 1, 2, 3, 4, 5 lines that spider out right into the heart of the hose drop that holes all that mineralization. And then just as an aside you see that yellow stuff at the top, they don’t material, that’s being cleared out, the loose fill material, that’s being cleared out, right.

Right.

So really you are going into the heart of the structure underground rather than continuing in the surface.

And who is the gentleman that sits on your Board that is, I guess he has incredible background in underground mining?

Bob Reseigh, yes, fantastic.

Okay. And so I assume he has been working with you on…

And coming out next week to review all of the progress and feasibilities in detail that we are doing very, very active, but one of the things that this also gives you the impression of real good contact is the size of the structure relative to the size of the let’s call initial mining. The initial mine, the Lucerne mine which on the third page of what you are looking at, you can see from the surface is, it’s small compared to the underground structure that we will be pursuing, I mean very small compared to the underground structure that we will pursuing, right.

So, on that third page that you are just pointing out to where the road is, so that road is now just going to go up on top of that hill?

Move to the east, right. Originally you’re talking about much more dramatic move east because of the context of significantly expanded surface mine. Now we are saying because it’s much more of an underground development, it doesn’t have to move thus far and so it’s positive in every regard.

Okay. Let me just cover two things. One I want to get to the HOPE Coin. And two I think I said this like 1 million times too you are in the gold business or gold and silver business, I mean the stock business and the stocks had a kind of a rough ride over the last five years that we have been involved, whereas we had actually seen incredible progress in your gold business and now your gold business is profitable. I hope there will be some realignment with the stock and I think profitability will do that. But that being said, the idea of you being profitable and be able to stand on your own two feet, I would assume that you are not looking to the market for any money, so we can actually feel comfortable that there would not be dilution in the near future, correct?

We are not interested in dilution. We are very internally focused right now to get all of these developments online and get our cost reduced. And just defining new opportunities to continue what we are doing.

Good. All right. So lastly -- and sorry if I have hogged so much time here. I just want to understand this HOPE Gold Coin. I think most people don’t understand Bitcoin at all. But I think there is -- it’s being compared here. So explain to me the -- you received 300,000 coins, what does that mean to you business-wise, am I able to just do the math and look at this as $10 each times 300,000, or is this for you to make a stamp on and send out to?

Let me explain. So thank you for the questions. It’s very important. And I can do a better job explaining this going forward. So first and foremost, the arrangement is very, very simple and it’s very non-encumbering to us. It doesn’t impact our business in anyway negatively. Say it a different way, there is a charitable trust, that thesis for philanthropy is selling these Hope coins. They are unique in three or four major ways. One is they have full -- they are fully insured in electronic wallets. They have anti-money laundering and know your customer and protocols, which are extreme and positive and they are backed and committed to ultimately be fully backed, to be backed each one by a 10th of a gram of gold, right. So that’s uncommon and it’s very positive. So they are safer, they are protected and they are backed, okay. Initially as they are starting up and getting going, they are leasing the gold from us. That means for every coin that they sell, they will pay us $0.12. So if they sold the full billion allotment okay, the 120 million we are not expecting that, certainly not in any near term. But even as they sold 50 million, 100 million it’s meaningful to us, okay, in terms of let’s call it lease revenue. If we were ever to mine the ounces, we would be released from the obligation, but we don’t foresee because we have so many ounces in our resource that that would even become the problem, but if it did we’re protected. Lastly, the payment that was made, really it doesn’t have let’s not call it a material financial implication to anything right now because the one major thing that they are doing is they are getting the coins into circulation and they are creating liquidity and creating the market, okay. So until that liquidity in that market is made, the value of the coin is really hard to support and so we’ve accepted a prepayment if you will to help that liquidity start happening. But in the ultimate sense, cryptocurrencies are without any doubt in my mind here to stay. I think the ones that are protected and safe and proper like this one will ultimately win in terms of the circulation. It’s stunning. Am I still there? Are you still there?

I think we were placed on hold by Mr. Unsworth.

That’s fine. I’ll just finish my thought, the prevalence of them is moving forward. This is the type its back with real value. And lastly, this isn’t a venture capital move by these people. This isn’t a profit move by these people. It could be very profitable to us certainly. But this is a charitable move by these folks. And so what they’re doing is integrating charitable trust around the world and trying to enable this electronic payment system. Just as a last I know, the most active thing that’s happening in this space is a massive atomization -- automation of payment systems and payment processing system that handle these digital currencies. So I think we’re on the frontier or something, what it ultimately means to us will be to see. But the potential is extremely high and the risk as far as I asses it is near zero. So we’re happy to support something positive charitable and potentially very profitable.

Thank you. The next question comes from Steven Shipman of Century Management. Please go ahead.

Yeah. Hello, Corrado and Judd.

Hey, Steve. How are you?

Good, good. Congratulations on the progress that’s being made and significant progress. Actually a little bit surprised, happily surprise by the outcomes of the first quarter given some of the challenges. So here to be well commented on that. Chip and others have asked good questions. I would like to focus on more micro levels, if I could for just a second. And Corrado, I’ll direct it to you, but if you want to turn it over to Judd, if Judd wants to hop in, that’s fine too. Like, Chip, we’re in the stock business, not in the mining business and we’re generalist. So I like to run to a couple of items on the quarter.

Please.

Relating to the cost of mining, so if I’m to do the calculation of the cost of mining that you had and the goal equivalent ounces that you poured and I divide that, I would come up with what generally might be called the cash cost of production, which comes out to just under $680 an ounce, is that fair?

You are using the $3.7 million of…

Yeah.

… gold, yeah.

Yeah. Yeah. Okay. So but -- and this is the real essence of my question. But you stacked the hell of a lot more than that. You stacked 700 or 6,000, almost 7,700 ounces, and if I divided that into the cost of production, it would be about $484, almost $200 less per ounce, fair enough?

Yeah.

And so most companies kind of pour what they stack if you will or pour what they produce? As an emerging company you have a little bit of a gap there. So my question, I’m trying to understand the direction, the ultimate direction of cost is, how much more does it cost to pour the ounce after you’ve already stacked it? Because if you’re stacking cost are way this low, if we could understand what that dimension of cost is between stacking and pouring than we could get an idea of how really low your cost appear to be directed.

Yeah. So it's good -- all good question. Let me comment on the few things.

Sure.

Thank you for highlighting. We did stack despite not stacking for three weeks. We certainly stacked more ounces in the quarter than we poured, which is positive, in terms of the asset and leach pad, of course. We actually -- I will double check my numbers, but our average cost per ounce stacked at the end of the quarter was the lowest that we’ve had life of mine. I think that estimating processing and related cost, you’re certainly staying below $700 and in the $600. And I think that, I have to double check, but as I think to, at least our variable cost and our labor component in the later part of the process, both are much lower. In other words, crushing, well, I’m sorry, leaching and processing and refining is probably 25% of what mining and crushing has historically been.

Okay.

Having said that, right, mining cost have come down materially with the strip ratio, right. So that as a percentage of the total that number is moving a little bit. I’m knowledgeably estimating it might be 35% of the cost…

Well, even if it is 355, I mean you’re still at like the 6 low -- mid 600 range or something like that.

Together in my mind…

Yeah. Okay.

Although, I’m doing double checking and follow back up with you afterwards, if you don’t mind also.

No problem. Since the ounce is poured determine the revenue stream and if I look at last year’s quarter you did about 6,000 ounces stacked and that translated to about 5,500 ounces poured this year, which is about 90% of the stack? Should we as investors look at a similar percentage for next year’s pouring that if its 90% of 7,700 ounces stacked or can you guys turn on and off the spigot on what you want to pour versus what is stacked? I mean, given some level of time, of course, for the leaching process?

So what -- those are great -- they are all great questions and I can answer. So generally speaking, leaching processes in terms of lifecycle and we’re talking now literally shutting off a cell, right, okay, 180, 190 days have gone by and shut off a cell.

Right.

Meaning, if we feel it’s exhausted and that means, that doesn’t necessarily mean there isn’t still gold that would be coming out, but it’s so little that the variable cost of processing it wouldn’t justify it, okay.

Okay.

But more relevant to your point, we originally saw leaching cycle for the substantial majority of the ounces. Let say 90% at like 55, 60 days rather than let’s say 90, so full life of everything could be 180 days. Substantial life you call that greater than 90% took 90 days. We’re seeing it faster -- we’re seeing it faster. And I’ll make some caveat to that. When you have a brand new fresh pad and you’re literally putting material on the over liner, you have a fast cycle. When you’re at the top of the pad 105-feet up, that gold and silver has a longer joy ride…

Right, right.

That they travel through, pass by all of its old neighbors and make its way through. But having said all of that, we’re seeing a faster cycle. We’re seeing a 45 to maybe 60 day, rather than a 90 day, right. So it is fair to assume that 90% of -- and then there is variation to that meaning. You get to a point where we can only have certain square footage under leach. So if we put in a fresh pad on, we’ll put that under leach and then we may activate in all pad which may -- could be reactivated later, so there is some variation. It’s not typically linear curve but the base assumption that -- we’ll get 90% of what will affect the prior quarter. It is a directional concept. It’s a directional guidance that could work. It could be better than that though. Like if we’re stacking higher grade, if we’re stacking more ore, you’ll see some of that coming through same quarter -- depending on when it will stack.

Yeah. Well, I asked it because its considerably I mean, the increase in four, year-to-year is okay, I mean, 3% but nothing to write home about. But the increase of stacking is 25% and that is more in compliance with the guidelines that you guys have laid out before in terms of the directional nature of your mining and the grades and the stripping ratios and all that kind of stuff.

And then there is offsetting litigators. Like as I said, the new pad will give you a little bit faster cycle but we’re already -- we’ve done some column test on the new material and some of that dump material also, that’s leaching a little slower. So net-net I think everything you said is rationale.

Okay, okay.

It’s just variation factors and that could be effective but in grand scheme of things, I think it’s pretty astute observation.

Okay. Great. Well, thank you for that. And I’m just going to ask one more question and let others hop on and might come back for a couple of more if you have the time. But the next question I have is regarding the purchase, the strategic land purchases. You touched on it just a little bit and I think everyone kind of understands the need and necessity of having lands that are immediately adjacent to the heap leach pads or the crushing facility or whatever to expedite hauling and crushing. But these things tend to pop up opportunistically and erratically. Outside of anything that actually affects more immediate production, Corrado, by that I mean within the next year to three years. Is there a company wide philosophy or company wide game planned as to how that capital gets allocated into land purchases? Because I think many would argue that their case would argue that there is better uses of that money than just buying land.

There is -- and I appreciate the question. First, I could be specific to, first, I would say that.

Yeah.

What occurred in the last five months, there was some less material items in the fourth quarter. There were some less material items in the first quarter and there was one pretty material item in the first quarter. Those were opportunistic and I think driven by our expanded permit, in other words, not only did our expanded permit put those lands squarely in the target of something that could be used more immediately for mining and for processing. But frankly on the psychological flip side of that, I think that there were some folks that were probably monitoring the situation and saying are these guys around, are these guys going to be around to stay forever or is this going to be another pie in the sky kind of thing to close on, right. And I think that people realize we are here to stay, and we are more willing to -- much more willing to move on and in all cases, it was positive for the people that sold and it was positive for us. Having said that, right, we’ve committed to a couple of 100 acres that are not immediate, south of our leach pad. We’ve hard commitment. We’ve committed to about 400 acres in Lyon County. We have an option on 1500 acres in Lyon County. And there is one more -- and we are paying off the ownership with the Dayton properties overtime. And there is not going to be anymore paid -- opportunistic big purchase like from a chessboard perspective or for a strategic land position perspective, it’s all secured. And we now have -- and we didn’t have it. There is two -- there were two items specifically in the first quarter where we frankly had no flexibility in timing. To my annoyance but it is what it was and we had to deal with it. I don’t foresee that. We’ve not historically ever had that and I don’t foresee that going forward and they’ll all be -- it’s secured. It’s for the company’s benefit and it’ll all be paid properly and overtime without big lumps and things like that so.

Got you.

I appreciate the question. It hasn’t -- some of it had to be opportunistic and frankly in a -- you have one shot at it kind of notion as well. So we don’t -- we just felt we couldn’t do anything other than nail it down.

Great. Thank you. Thank you Corrado very much.

Thank you.

Thank you. The next question comes from Zach Zolnierz of Solus. Please go ahead.

Hey Zack how are you?

Hey Corrado, how is it going?

Good sir.

Couple of questions, I guess. The first on the cash flow statement, there was a big use of cash and accrued expenses, just wondering, I guess what that was, what caused it?

Yeah, set easy ones, Zack, it was so -- the elimination of the liability of 3.2 million reflected as other income. So it’s in the net income line at the top and it’s just a -- it’s a back out at the bottom. So to say it better, it’s a non-cash income at the top and we backed it out as a non-cash use at the bottom. So it’s just that reversal of the tax liability. So it’s really not and -- we didn’t write a check for that amount, right. It was more of an accounting in and out, I guess, to the right net cash number.

Makes sense. And then the second one, just going back to the guidance, I think earlier you had talked to the net income guidance but I am more focused on the cash flow part of it where I believe it says operating cash flow and investing cash flow will be positive?

Yeah.

I just want to clarify is that, is that like a full year 2015 number which includes Q1’s performance or is that just a go-forward guidance?

Well, it was intended when it was first stated and when it was restated, it’s intended to be a full number. The two material items that accelerated on us with the -- certainly the land purchase that we just talked about and then also the initiation of some of the road work earlier than expected. But we are looking forward to, I guess, I wouldn’t include land purchases in the guidance if we are talking about cash flow from operations and capital expenditure which is the -- it should be the entire investing section, but, I guess, I wouldn’t include land.

Yeah. That’s what I was trying to clarify because I am just thinking on a go-forward basis what -- and let’s say we exclude land purchases, like what are the assumptions behind ounces poured for the rest of the year, what type of margin you are making per ounce and then I guess what’s the CapEx budget for the rest of the year?

So the capital plan for the rest of the year, really only includes major maintenance and with overland conveyer system that I mentioned. So if you are talking about $0.5 million between just -- what I would think of is routine major maintenance, be it crusher and or the fleet and this overland conveyer system, which is a part of quarter of a million dollars. So when we talk about spending $3.5 million, we are talking about $3 million for the road and $0.5 million for those kinds of things and that’s really it. We don’t -- we could accelerate some leach expansion. We don’t currently have that in the plan. So we’ll just gage that as it goes. So from a guidance perspective, we are really looking at obviously being higher than this quarter. But for the next two quarters, we are in this. And I’ll give you a broader range, but 20,000, 28,000 sort of range on a run rate basis. And then we are looking to ramp that up with the expansion opportunities that we’ve laid out. And I really feel -- I feel that we are very, very close with the drilling and the geological work that we’ve done has given us tremendous advancement in being able to see what’s coming. But that’s -- it's still not sufficient for fully nailing it down and being able to modify, let’s say end of third quarter, beginning of fourth quarter guidance associated with it. And so I can’t be more specific for the entirety of it until we have those pieces in place. Having said that, we have a very clear view of the next few quarters at the current rates and we are not just full of mining. So there’s a little bit of a restriction there. We are mining and we are rerouting the road and we are doing some reclamation. But having said that, with a much lower cost infrastructure, we are able to handle all of that and some more. So, 22 to 28 is sort of a rate range. For the revenue line cost coming lower, I think we’ve been precise on that and that will generate the cash we need to not only be profitable but to cover these outlays that we’ve talked about. And really there’s only one big one, which is the road and it’s paramount. It’s always been paramount to the future of what we wanted to do. So in many ways, it’s a higher expenditure sooner but it’s behind us faster, so we could move forward.

So the 22 to 28 that’s gold equivalent ounce annual run rate?

In that range of 6,000 to 7,000 ounces as Steven was talking about.

And then on the CapEx number, you mentioned $0.5 million and then $250,000?

No, I meant $0.5 million in total, so about $250,000 for the overland conveying system and about $250,000 for -- let’s just call it major maintenance.

And that’s for the rest of the year but that includes everything with the road.

Yeah. And then $3 million for the road, $1 million per quarter.

Got it. So, $3.5 million?

Right.

And there’s nothing in that budget then from the underground standpoint? I mean…

No, we haven’t. We’ll wait until it’s defined and so far the only definition that we have is a little over $1 million to establish the drilling from an underground perspective.

Net $3.5 million?

We’ve been very methodic on that front.

Is excluding, what’s the exploration budget for the rest of the year?

So the exploration intense for the rest of the year is about $1.5 million associated with Lucerne in terms of $1 million for the underground component and about $0.5 million for the core surface component. We are defining about a $3 million, maybe a little over $3 million program for the Dayton.

And the $3 million for date and that’s -- that could extend into 2016?

Yeah.

That’s not this year.

Yeah. And we haven’t, except for some real efficient sort of near surface drilling that we started just recently. It’s literally taking the blast rigs that we use in the mine and to the extent we are not -- we are not needing to drill and blast for some of the activities that’s going on right now. We redeploy that rig and get some real good surface definition. What that ultimately does for us, similar to the Succor-Holman results, it not only gives us really tight definition up to about 100 feet but then it allows us to preclude more expensive deeper drilling into those same structural areas. So, we haven’t initiated the spend on Dayton and we are going to finish -- we are going to finish the more detailed drill programs based on some of this near surface. We are going to review it locally and with the community and then we are going to -- and then we are going to really launch it with a release that will lay out the actual drilling, lay out the actual timeframe and lay out the cost. But the cost won’t vary from what we’ve talked about.

Okay. I appreciate it. We can follow-up after so.

Great.

Thanks.

Thanks, Zack.

Thank you. The next question comes from Barry Pasikov of Hazelton Capital Partners. Please go ahead.

Hi Barry. How are you?

Hey. I am doing well, Corrado. How are you?

Good to talk to you.

Hey. Can you do me a favor? Just clarify in Q4, you stacked about 8,800 ounces. This quarter, you mentioned you headed some downtime with your mining and you stacked 7,600 ounces. Can you just give me an idea what you are looking for as a run rates for the end of the year?

Yeah. So, I certainly see in the next two quarters, stacking at a rate of -- I could even broaden the range thinking -- just thinking about the grade variation 6,000 to 8,000. I don’t -- the fourth quarter I don’t have as much visibility on, although it doesn’t -- it’d be surprising if it was less than that, right. We know the areas. We want to go to. We just haven’t nailed down the final components of the mine plan.

Okay. In a recent blog, you guys talked about this kind of duck tailed what Mr. Shipman was talking about. In a recent blog, you mentioned, your all-in costs for 2014 was about 1,243 and you’ve guided sub 1,000 for 2015. Is that accurate?

That’s right.

And so to go even further, did you see that like below 1,000, do you have a more specific number you have in mind?

When we think about the components, right, if we are looking at 750 for all-in cost, all-in cost of mining, the 150 for the -- in general administrative cost and you really -- once the infrastructure for the road is build, I mean you have a scenario where you will be sub-100, I mean in some cases 50 to 75 for maintenance capital. So that sort of how it breaks out. We are certainly not precluding better mine plan, lower cost, better great profile. And the underground could have a meaningful impact positively. So on the performance, we just don’t know yet enough. Our view of the underground is that, if we can find ourselves in the scenario where we’re moving less tons of much higher grade for the same end or the better revenue results than it’s a breakthrough. And that’s really what we are trying to see. Can we get a breakthrough here with just more intelligent engineering and more intelligent mining, and quiet frankly safer and more environmental friendly to the extent you are in the underground? So we just don’t have i's doted and t’s crossed, but from a geological structure, from a known mineralization, from a proximity to the ore, from ore type meaning oxides, it looks good. It looks good. So we just need a little bit more time. I’m certain in the next two or two and half months we’re going to have it all nailed down. That’s really going to translate to a lot of information flowing in terms of the geology and in terms of the planning. And then it will culminate I think certainly by the next call, hopefully before the end of the quarter with updated guidance that does speak to what it means to us for the rest of the year and beyond.

Understood. And one final point, can you talk a little bit about your current drill program in the sense of -- do you see this drill -- obviously, you’ve had a lot of success that you’ve reported so far, but do you see this drill program in terms of ounces under reserve coming in what you’ve seen in the previous program?

Yes. And so it’s very niche and there is three forms in drilling, two really predominantly like reverse circulation and core. Core is more defensive. Reverse circulation is faster and more efficient. And then we have this notion of using our blast rigs to be near surface drilling. It’s not so common. So my point would be that we’ve done a lot of that efficient near surface rig drilling. The results have been better than expected. From a grade perspective, I think really better than expected, but we’re only to depths of the 100 feet, right. So it’s telling us the tremendous amount, it’s indicating something very meaningful, but we got to get those bigger rigs going 500, 600, 700, 900 feet below the surface. And then we get structural definition and then we get resource estimation and we can actually engineer something out of it. So indication wise it couldn’t be better, frankly. I couldn’t imagine it being better than what we’ve got so far, but it nascent. We are 5% to 8% into getting it all done. And it hasn’t cost us very much at all. It’s been a great directing ride for us, because it will save us tremendously on when those bigger rigs get deployed because we’ll be much more precise. From a underground perspective, it’s everything that I just said to another scale, because if you’re going -- if you’re drilling underground, typically you’re drilling very, very deeply. And you could literally have 1200 foot hole, which only the last 200 feet means anything to you, right. So you can appreciate how inefficient that would be, plus when you get pass 500 feet, the cost per foot goes up dramatically. So to be able to get underneath and start plugging into the structure in almost…

And your timeframe for finishing up the drill program is still the same?

Yes. I think that we’re on schedule. Even though the deployment of the bigger rigs is later than originally planned, it will be much more focused. So by the end of this year, well, I would say yes, in the sense that we expect that by the end of this year we’d be done with Lucerne, certainly that would be true for Lucerne surface and meaningfully true for the defined phases of the underground. It will be done for the phases we want to get accomplished. For the Dayton, we expect it will be done. It will be on the scale that we thought and the duration that we thought. I don’t think we’ll get the Spring Valley this year, but we still could. We still could. But I don’t think that we’ll. The geology in Dayton, we’re doing the same exact cross-sectional work at the same exact level plan that seem. The geological controls over the structures will be posting some 3-D looks at that similarly, not quiet right away because we still have some work to do, but once it’s done we’ll and we have, but it shows a lot of drilling. It shows a lot of opportunity which those two terms are synonymous. So I don’t think we’ll get. On that context, I don’t think we’ll get to the Spring Valley in 2015.

So that hold up your announcing new reserves then until you do the Spring Valley or would you go with just the Dayton and Lucerne?

Well, of course, we would just go with the Dayton and Lucerne and that’s really been what we have had so far. We could even go with just Lucerne and then go with just Dayton. The structures are independent enough that we could report as we go. So we’ll just see how that develops.

Understood. Okay. Thanks a lot.

We appreciate it very much.

Thank you. Ladies and gentlemen, the time allotted for questions and answers has come to a close. I would like to turn the call back to Mr. De Gasperis for closing remarks.

Thank you, Michelle. I appreciate everyone’s time again. We got some input to try to make the calls more concise. There is a lot to cover here so I apologies. But I think we’ve taken good steps forward in that regard. And as always, if there is a follow-up questions or the other questions that weren’t able to have gotten in, please don’t hesitate to call and reach out to us directly. And we look forward to talk in to you all again very soon and hopefully seeing you at the May 7th meeting. Thank you.

Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line and have a great day.