Good day, ladies and gentlemen. Welcome to the Comstock Mining Third Quarter 2016 Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a 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 sir.

Thank you, Ron, and good morning everyone. It’s Corrado here on the line, and welcome to our 2016 third quarter conference call. Last night we filed our 10-Q and I'll provide a brief summary of the information included both in the Q and our press release from this morning. We worked very hard to advance our projects and plans for growing the company. I know there has been very few updates since July but we had been very busy on the ground and we’ve got quite a bit to update you on and I look forward to providing more updates on all of this today. I’ll still keep my comments concise and be available for the Q&A during this one-hour call and for the rest of the day tomorrow - today and tomorrow for follow-up. I am certain I can address all the questions from all of you. 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. Please also let me remind you that in addition to the outlook I may make forward-looking statements on this call. Any statement relating to matters that are not historical facts can constitute forward-looking statements. The statements are based on current expectations and are subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are always detailed in the reports that we file by the company with the SEC and also in the press release that was filed this morning. I'm going to focus my prepared remarks on five areas. Our goal and the plans for achieving it; our cost structure production and our cost position about. I'm also going to speak a little bit about some innovation success that we've experienced…

[Operator Instructions]. And we’ll take our first question from Marco Rodriguez from Stonegate Capital.

Good morning, Corrado. Thanks for taking my questions.

Marco, nice to hear your voice. How are you?

Doing well. And you?

Thank you.

Good. So I just want to make sure I had some items first kind of clarified. Just on the asset sales and cash. So you guys are looking to sell net proceed of about $7 million worth of assets sometime in the next, I guess, few months for a lack of better word, but the balance sheet is showing about $9 million in total debt and obligations. So am I getting those numbers correct? And so after everything is said and done on the asset sales, you'll have roughly $2 million debt position?

Yes, so we - well, yes, so we have - I think with some of the prepaid amounts, the number is closer to just a little over $8 million, right. So there is liability number that you identify was accurate. We had some prepaid assets there that will attend to the some of those liabilities and bring it closer to $8 million. The asset sales looking to net about $7 million, I think is really a most conservative number. I mean there is a scenario where the Silver Springs property alone could net us almost $7 million with the valuation of over $10 million and about $3 million of debt associated with it, right. So I think that we are probably in a $7 million to $10 million range with $7 million being the low end of the range. And I'm confident that we'll be able to extinguish, if not all, substantially all of those liabilities and certainly all of the near-term ones.

Got you. That's very helpful. And then in terms of production or bringing the company back into a production phase. If I'm understanding you correctly that Dayton is taking the front seat, if you will. But that's looking like it's perhaps a mid to second half 2018 event. Is that fair?

Yes, I would say end 2018, right. It's a two-year exercise. The thing about the Dayton, it's really more risk decisions, right. So if we were basing it purely on the technical path to completion, Dayton is an absolutely straight march with the only uncertainty being how big we can grow the reserve. So we’re using that certainty to sort of dictate the sequence in the priority. Having said that, right, if we had some earlier success with the land sales or we had some accelerated progress sort of in that context, if you raise the two of them, Lucerne could be faster because it's already permitted. But based on our priorities and our capital, we want to get Dayton their first. And Dayton with its very low cost and very good grades could fund a lot of things for us, so that's really how we prioritize it. It is subject to acceleration. It is subject to reassessment of Lucerne and other things but we are trying to at least create a certain focused march to the next phase of production. If we have some positive surprises in the meantime, that's wonderful, but we want to at least solidify. I acknowledge that the Lucerne underground development not occurring on the original schedule created a lot of uncertainty, right. And so although we’re still confident about it, we are still keen on it, we want to eliminate the uncertainty by prioritizing Dayton and marching forward with our resources on Dayton. And then it will ultimately enable all the other things we want to do. It could maybe enable sooner through other means as we’ve talked. Is that helpful?

Absolutely. That's very helpful. So the Lucerne you will probably expect them to come online shortly after that Dayton, so maybe early 2019 event or how should we think about that?

No, we should think about Lucerne as having a minimum of a year, maximum of two years of development that's required, and we can't - not maximum of two years. Lucerne is an underground development, so once we start developing Lucerne, Lucerne has ongoing development, right. It will just be - we’ll always be developing it as we're mining it. So we should think of it as a minimum of a year, potentially year and a half or two years of development that once we started we will have actually a clearer path because we are already permitted, right. But so we really on hold for any approval there until we feel that we have the resources and the ability to address it fully. And then that announcement will start to clock but we don't have a clock going on it. The clock will be on Dayton as the priority. Lucerne as the second.

Okay, so if I'm understanding you correctly, then Lucerne could be a 2020 event?

Lucerne could as soon as 12 to 14-month away and as long as 24 to 30 months away. I think that's fair.

Okay, perfect.

We're going to control that decision, right. We will decide when we are ready, willing and able to do it safely.

Got you. Appreciate that. And then lastly, Corrado, I was wondering if maybe you could talk a little bit more in regard to these, I guess, alternatives you're talking about in your prepared remarks and also in your filing. Just trying to get a sense as far as how you're thinking about what sort of assets or deals you might be looking at, and then also just kind of given where your balance sheet is right now and where you might be after you sell all those assets, just how should we be thinking about the funding of particular deals as well as how we should be looking at just the cash flow aspects at Comstock as well?

So let me talk about practically and a little bit philosophically at the end. Practically speaking, we are keen on - and this is partly because of market, I don’t know the word to use, I want to say research, but it's really more collaboration and people have approached us and vice versa. Mostly people approaching us but there are - we prioritize Nevada-based projects because we've built an incredible network both socially, politically, regulatorily and commercially, so we have a great foundation there. We are not riding hard alongside the intermediates and the majors. We are targeting smaller deposits. So for us funding 350,000, 500,000, a million ounces it’s attractive but we like that. It has to have a technical resource at a minimum, so we are not interested in acquiring land for greenfield exploration. We are interested in projects that have technical resources, preferably pre-feasibilities that are just some [Technical Difficulty] for metallurgical, sometimes the blocks are financial, sometimes the blocks are managerial, but they are blocked and the projects are good. And so we might - one of our board members said we might be flying under the radar of projects that maybe aren't big enough to expand the resource but just the current scope and size could they produce 20,000, 30,000, 40,000, 50,000 ounces per annum? Yes, that’s sort of the target range. And so in our minds to have a company of, let's say, three, four, five mine operations, of which admittedly at least two from the Comstock or could be three. But in a framework where we are not creating variation at the corporate level, we are not creating variation at the regulatory level, we are not creating - we don’t want scalable corporate costs. We want fixed stable corporate costs that we can then leverage to grow the company. And in that regard, we see not being able be achieve the six-figure production level, but sustain it much, much longer. So I think as - and so I think that from a targeting perspective, that's a pretty good summary. From a financial perspective, I think the notion of having technical resource and maybe more preferably pre-assess talks about proximity to production. We want near or at production development. So in that regard, we would expect that the fuller spectrum of the capital structure would be available to us and particularly we could use non-equity sources or safer debt funding for those individual projects. And interestingly we've gotten great reaction on some of the pre-assessments that we've done and recently we've been able to do some debt financing safely too. So we have to let it play out, and I think it probably depends on each project has to stand-alone on its own feet and hence that will help determine the proper financing strategy but we would still want to remain of our core balance sheet for assets.

Got you. That’s very helpful, Corrado. Appreciate your time. I'll jump back in queue.

And we’ll take our next question from Heiko Ihle from Rodman & Renshaw. Please go ahead.

Heiko.

Hi, thanks for taking my question. Hi Corrado.

Good morning.

So you purchased lands of $3.2 million in Lyon County [Technical Difficulty] through a price differential?

Yes, I can. I think one of the - two points, Heiko. I think one of the things that is important is that the options on purchasing of those properties, the negotiations started years ago. And so they predated the announcement of USA Parkway. We ultimately transferred the option to us after the Parkway announcement but it was negotiated well advanced to that. The real stickler - well there is two drivers, right. The property values have moved up dramatically since the USA Parkway announcement and we are now seeing tremendous amount of developer purchasing land all around us. We are literally at the cross intersection of where the USA Parkway crosses Highway 50. In addition the Silver Springs Airport fits right at that intersection. We were one of the main speakers and proponents at the master plan in like a few weeks ago, where the Lyon County commissioners are moving to expand the airport. So our property borders the airport and it's one step removed from bordering both of those highways. But the land values are going up dramatically from the original option price that we got. In fact the range and if we sub-parcel it, which we are now proceeding to do now that the zoning has been approved, we are looking at square footages, a cost per square foot of about $1.50 which is not high. We've seen comps higher than that and that would give us about $7.5 million to $8 million value on just the land. The remarkable thing is that we got about 257 acre feet of the most senior priority water rights as part of that acquisition. We had to re-certificate those water rights from agricultural to industrial. That took some effort, but we did it. And so today those water rights are - we are valuing them well over $2.5 million alone. I would not be surprised if we could ultimately sell the water rights were what we paid for everything over $3 million [ph]. So that's where it's coming from. We already got - we actually got an offer a couple of months after to buy the whole thing, which would have been a meaningful profit but very low relative to the market values I just mentioned. And then we got a pretty decent offer on buying 100 acres fees of the water rights for about $8,000 an acre foot but we are valuing them at a minimum of $10,000. So the market is there but you're going to see an exponential curve as we go from October 2016 to August 2017 when the USA Parkway breaks through and connects. So we like the timing and we like the position very well.

Got it. Okay. Do you expect to see any mining revenue at all from residual leaching in Q1? I mean, you’re going to leaching process still some pouring out here in Q4, but I mean are we really going from 700 grand in revenue to zero?

We are getting close to that to the breakeven cut-off, right, like I'll be very specific on this. We are still pouring like 50 ounces-plus a week. There is a cut-off level of about 30 ounces, where it’s a breakeven. And our guys just did another streamlining of cost that moved that number down to like 21 or 22 ounces, but the point is that even though there is a theoretical declination of ounces, it gets to a point where it hits a breakeven where we’ll just stop it, right. So the answer is technically we could pour all the way to March but we wouldn't be even covering our variable cost and labor if we did that. So we'll stop it before then and our current plan is to stop it by Christmas.

Got it.

So I don’t expect to have any revenue in the first quarter but I have to caveat that to say that all of our declining curves even have all been - have all turned out to be too conservative. So if it keeps pouring well above 30 ounce level, for example, then of course we'll keep pouring but our current plan is shut it down by Christmas.

Got it. Okay. And then building on an earlier question on the call here, how do you plan on funding yourselves in 2017 and through 2018 before Dayton re-enters the production stage?

I think that the sort of this one prerequisite is we want to sell some of these properties. I think that if you look at our assets and our liabilities, that would result in like with American Mining and Tunneling and we do have sort of that equity line, but we are resistant even now to use them because we are just being - we’re being safe but we are also being very careful with the equity and I think people are appreciating that. There is certainly a frustration about the delays but I think that that we’re just - the focus on the balance sheet, the focus on the cost and the focus on the equity has been extreme, right, and so we are coming out of it. There is some - there are some alternatives but I think the best ones are for us to sell some of this land and get some of our own cash in. And then we have some other avenues. When you're that close to production, when you really have a definitive timeframe to production, it opens up some flexibility. So we are assessing those right now. We're going to be very careful. We're going to be very cautious but we are going to get it done.

Fair enough. Cool. I'll get back in queue. Thanks a lot.

Thank you very much.

And we'll take our next question from Chip Unsworth from Legend.

Hey Chip, you there?

Hey Corrado, how are you? Yes, just picking up. So once upon a time we were kind of in the same spot as we are right now, kind of staring out there looking for gold and we did a recap, raised a pretty good chunk of change back in 2010, but kind of what was the probably premiers thing that we raise the money off of was the 43-101 at that time.

Right.

I might be mistaken but was that the last time we had 43-101 was 2010?

No, it was - the first one was in May of 2010. That is correct. And then the last one was January of 2013. The first one was the Lucerne deposit and then the last one expanded the Lucerne deposit and included the Dayton deposit. So there were actually four reports between May 2010 and January ‘13 because the real point is that's when we were drilling very, very steadily, like through that whole time period we were drilling.

Right. And I remember the measured and indicated and inferred number of 3.2 million. Is that number correct?

Measured, indicated and inferred of - yes, just over 3 million that’s gold equivalent ounces, right, so that includes gold and silver.

Yes.

And then resource…

So in this particular spot that we’re at right now, Lucerne and the Dayton, is there - as part of the program is there to - there is a ridiculous echo on this phone by the way. Is there a part of the plan to build out a drilling program to show a number that has hopefully gone up from 3.2 million measured, indicated and inferred number to a four or five or hopefully something greater than that. Is that part of the plan?

That must be - let's break it down. If you don’t mind, let's breaking down between Dayton and Lucerne. Okay? So of the ounces that you described, gold equivalents, Dayton was about 0.5 million and how that broke down was about 250,000 of measured and indicated and about 250,000 of inferred. And so the Dayton had 0.5 million and in the Dayton's case we've already carved out of those measured indicated ounces something like 80,000 to 100,000 ounces of - internally we haven't published it but internally economic show that would translate into proven and probable reserves. And what we’d like to do and we feel very confident about doing is like a drill program that would more than double, if not, triple the reserves. So that puts you at like 240,000, 250,000 of proven and probable reserves and go into production. And then - but as you're converting 0.5 million of resource into, let's say, quarter of a million of proved and probable reserves, you’re also increasing the resource as you step out and drill more, right. So that's the profile for the Dayton. It's very, very solid. We would be able to publish all of these ability with reserves, or more importantly, a production schedule and the economic cost to produce, which again for the Dayton is potentially under $600 an ounce given the grades and the metallurgies that we already know we have there. With Lucerne, it was the bigger of the two. I think the measured indicated gold alone was like 1.59 million. We had a lot of inferred and then we had a lot of silver. Now we mined a small portion of that to the west, so there would be some subtraction that would occur with the mining. Our original mine plan there with…

I guess my question is, can we lead ourselves to believe something more than what we are just talking about in words with the...

Yes. Let's say this. The Dayton, we are looking to double and triple the ounces, and I could almost say that in every category be it a resource or a reserve. In Lucerne, we are looking to grow, I would say, from the 325,000 ounce base, a much bigger underground mine plan and reserve. And then with Spring Valley and in the Occidental, I think I said it on the last call, the potential for million ounces per and then to your point, going from that original thought of three to four to five. Absolutely. That's the bigger potential of the district that the Spring Valley alone is 7,500, 8,000 feet of strike length and the Occidental is right behind it, about 7,500 - 7,000, 7,500, tremendous potential for adding ounces, tremendous. They are not - those ounces aren’t as near-term for production although Spring Valley could be, because in a sense, Spring Valley could be just added onto the Dayton but they are there, right, and the potential is there. We are very excited about that. I mean it's the power of the whole district really.

All right. Thank you.

Thanks Chip.

And our next question comes from James Dale [ph], a private investor. Please go ahead.

James, how are you?

How are you doing, Corrado? Hey listen, I want to extend the thinking of your previous caller here. We've got this world class mining district. I mean, just potentially everything else like that. Just scratched the surface as far as exploration and we have something like 3,000,000 ounces identified, I don't think it - and maybe you can correct me on this to think that the total potential should exceed somewhere north of $20 million in the whole area. So my follow is just like the valuation of our [indiscernible] not reflecting that potential. And thinking that, okay, if you got $20 million and let's say 500 million - $500 an ounce, you're talking about a $10 billion asset pile that you know are selling for $0.31, $0.32, $0.33 a share right now and that's not like the $50 a share it’s potential worth. Can you built on this a little for me?

Yes I can. So I think that you're hitting the right points, right. What's our value? We fundamentally consolidate and own an entire geological district. We've established resources in two of the seven target areas.

And you own the world class.

Yes, with high grades, epithermal district with historical high grades, okay. We've rezoned. We've permitted and we've been producing for four or five years. We haven't been drilling since 2012 to Chip’s point, right. So we haven't been adding ounces. We've really been stress testing the platform, and that only strengthens what I would say - what I would call, the future prospect and the future minability. We had one major come in and look at everything that we are doing and they were shaking their heads, and I was like why you're shaking your head? And they are like in every project that we look at and we like that, that has this kind of exploration potential is like seven to 10 years away from any notion of production. And with all the risks associated - in other words, they still have to get their permits. They still have to develop their geology. Frankly they haven't even tested their metallurgy. You guys have eliminated all of those risks and you're less than two years away from production. And I was like, that's right, nothing to shake your head about. They were just sort of bewildered at the derisking. The reality though is that we've set some harder expectations for the continuity of the production and it was disappointing, and so we've extended ourselves a little bit at the beginning of last year to the point where people lowered it. So my answer to this is although it's taken a little bit longer, having a strong balance sheet is critical. Doubling and tripling the reserves and publishing a full feasibility on the Dayton is critical, that will start to grow the ounces. And then we can start accelerating that growth, to your and Chip’s point, by stepping out the drilling…

Okay. There is sort of like - obviously when you look at how we financed the Civil War with Comstock and all that and those guys were just mining with picks and shovels and wheel barrows to point out that. I mean, just almost nothing compared to the sophistication that we have in this day and age and yet they took hundreds of millions of ounces and whatever else out of there.

Yes.

And it sounds like just reworking some of the old structures, they bypassed a lot of what they considered low grade stuff or the private stuff and that low grade stuff is - it’s a very high grade in this day and age. So I’m just wondering should we be looking to either market our mineral rights and properties and everything else to a major company so as to realize a really good shareholder value or at least take on a strategic partner so they could provide some financing.

We have - okay, so let me make a couple of points to what you just said. First of all, the old-timers mined almost 200,000,000 ounces of silver and over 8,000,000 ounces of gold with those picks and shovels primarily in the two-mile strike underneath within the city and just south of it. So we know where all those mine workings are. They went to depths of 3600 feet. They left a lot of gaps in between what they mined and what they didn’t mine in some cases because of land claims and conflicts that just they couldn't get the rights figured out. Other cases, there was doing about some things that didn't get done. We've only drilled on average to about 600 feet. I think our deepest hole is 1400 feet, right. So the exciting part about the Lucerne development is not just that we have this near surface corridor that then dips down into sheath zone but that we’re wide open at that. We’re wide open at that, right, so the notion of getting a mine established and then developing it on and on and then when you drill from underground, you could drill a lot deeper a lot cheaper, right. So it's really logical that all that is there and will continue. We don't see any evidence that it wouldn't. And so we will continue that. In terms of strategic partners, we've gotten looks and the looks are always very favorable, right. When we sign out a confidentiality agreement, we opened the Kamona [ph], they liked what they see and we've got more than one offer of people to joint venture with us and develop our projects. And we, as a board, always consider those things very, very seriously. That's lower end of the market right now and so sometimes the value equation isn't exactly what we like, and we work it. But in terms of options in front of us, we have a lot, right. What we want to do is maximize the value for you and our shareholders. And sometimes we have to go a little slower, sometimes we have to go a little bit more deliberately, but I think 2017 is going to be very active and it's going to be in the way that Chip discussed, in the way that Heiko discussed, in the way that you're discussing. We are going to start building value and in a way where the market is going to have to recognize it. We'll eliminate these concerns. Concerns about the ounces not growing will be eliminated, concerns about our liquidity will be eliminated and it's already becoming obvious to people. So we are looking forward to it.

I’m sure like given the history of the whole thing, it’s almost like a done deal that the ounces are going to grow significantly.

Right. So it's a question of growing them and getting the value recognized in our share price and that's what we're working on. And I’ve been getting those - the Dayton feasibility and the Dayton reserves will open our eyes, both in terms of the amount of ounces and the grades, very attractive.

The gold cores of the new mines and the people that are looking for big projects, particularly in Nevada, I’m sure that at some point particularly if the gold breaks out of it’s kind of doldrums, is it going to be impounding on your door soon.

It’s already has.

Okay. Thanks Corrado.

Thank you, sir.

Thank you, ladies and gentlemen. Time allotted for questions and answers has come to a close. I’d now like to turn the call back over to Mr. De Gasperis.

Thank you. I appreciate sticking to the hour. I appreciate the excellent line of questioning. I also appreciate that not everyone always gets to ask the question on the call, so I really committed myself. So if you have any follow-up questions, please don't hesitate to reach out. I have a couple of calls scheduled already and then we'll just go from there and look forward to finishing the year strong and really building this company. Thank you all.

And that will conclude today's conference. We appreciate your participation. You may now disconnect.