Good day, and welcome to the Comstock Mining Q3 Update Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Corrado De Gasperis. Please go ahead, sir.

Thank you, Nick, and good morning, everyone. This is Corrado, CEO of Comstock on the line with Zach Spencer, our Director of External Relations and our Treasurer and we welcome you to Comstock Mining’s third quarter 2020 conference call. I will provide a brief summary of the information included in our press release from this morning, including our progress on our strategic initiatives, especially with our mercury remediation business and the monetization of our non-mining assets, which has really picked up some incredible momentum. If you don’t have a copy of today’s release, you will find a copy on our new Web site at www.comstockmining.com by just click on the Press Releases link on the main menu bar. We’ve also filed our quarterly report on Form 10-Q last night, which is also available on the Web site as well as the EDGAR on www.sec.gov. Please also let me remind you that we will make forward-looking statements on this call, including an update on the remaining 2020 outlook and also looking forward into 2021 and beyond. Any statements relating to matters that are not historical fact may constitute forward-looking statements. These statements are based on current expectations and are also subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in previous reports filed by the company and with the SEC and in this morning’s press release, and all forward-looking statements made during this call are subject to those same and other risks that we can't identify. All right, let's jump right in. I tried to sort of shorten my prepared remarks, hopefully, allow a little bit more time for Q&A. But going into our update, with the closing of the sale of Lucerne, which we did complete in September,…

Thank you [Operator Instructions]. And our first question comes from Mark Reichman.

With respect to Dayton, and I know you're still kind of interpreting the geophysical results. But what would your expectation be in 2021 on the exploration program dollar spent? And what do you think is the timing to get to a full economic feasibility study for both Dayton and Spring Valley?

So I didn't say it as precisely. But I think that over the course of those performance objectives that I mentioned, there's probably three technical reports. Meaning in the publication of our made and resource estimate, which I think we're trying to get this work wrapped up this year, probably looking to see that published in the first quarter and the intent is as part of our 10-K filing as well. So we will be able to publish that report but also be able to incorporate it as part of the 10-K filing. Secondly, the drill program, we already have a very focused drilling program sort of pulled together from all the geological work that's been done this year. And I think the last step now is to refine that based on the geophysical data. And I know you say we're still looking at it. I mean we literally just got it. So it shouldn't be viewed as so much as a report, it is an extremely robust report but it really is just a mountain of geological and geophysical data, deep data. So our team will now look at our drill program. And my expectation, to answer your question more directly, is there will be probably some real refinements to drilling, I think they'll certainly be added targets from what we're seeing already, which is very exciting. But I really think that the first drill program will be modest. When I say modest, I mean, they're probably in the range of $1 million to $2 million. And the reason I say that is, because we have so much data that we've reassembled and re-calibrated and we have a very precise set of information gaps that we would like to fill in with this drilling program. It will strongly enhance…

And just one quick follow-up before I get back in the queue. So you've been very successful in paying off most of your debt, even prior to executing the sale of some of your noncore assets would still remain. So I guess the question is, in light of kind of a modest exploration budget in 2021. How do you think about how you might allocate the expected proceeds? Do you think it will still be dedicated to Dayton and MCU, or do you think there will be some portion maybe available for returning capital through a buyback or something like that?

So in terms of day in I mean, the economic potential, as we look at -- we just look at some of our preliminary economic shells, and we look at $1,400 gold, $1,600 gold, $1,900 gold. I mean, you have a range of 100 million to 150 million of economic value that to invest 1 million or 2 million to expand that number, the returns are exponential. I mean, they're very, very high. I mean if you could spend a million or two drilling to not only support and validate $100 million to $150 million of value in a more robust third party technical way. I mean, that's very high priority allocation for us. But if you could spend 1 million or 2 million and add 20 million, 25 million, 30 million, 50 million of value, that's an extremely high return for us as well. What we had said up until now is that we weren't -- and this is still true. We're not committing the capital until it's available. The difference is we have absolute clear sight to those funds becoming available. To your point, we have a clear view of it even before we close on the Silver Springs assets for over $10 million and now the Daney Ranch for 2.7 million. So we have a clear path to those funding sources with agreements. But even before that we have almost over 10 million of liquidity coming through Tono. So I think day in is going to be green lighted. As soon as the drill program is updated, expanded and reviewed with the board, we would look forward to moving on that. MCU's commitments are less than $2 million to go, and we also have clear sight. We obviously want to see the efficacy of the mercury remediation…

Thank you. Our next question comes from James [Dell]. Please go ahead.

What kind of throughput are you getting on your mercury system, and the response per hour or anything like that, or if you…

So the US, just to compare and contrast, great questions, compare and contrast, the US system is really been designed to proof concept. And the proof of that concept is intended to show operating at a range of 2 up to 25 tons per hour. And so what we've been doing so far, Jim on US system is. And it's intended that 2 to 25 is not -- it's not a range of possibilities, it's the rate that we want to scale it up from. Like we want to be operating at 2 tons per hour, we’re going to be operating it three to four times per hour and we want to slowly but surely move that up to 25 tons per hour. The reason for that is we want to have absolute certainty that it's effective. And to us the definition of effective is that you know from whatever amount of mercury is being fed into the front end of the system, let's just use an example of 100 parts per million that we want to -- our goal obviously the ultimate would be to have zero parts per million come out the other side, but our goal is to try to get below 11 parts per million. 11 parts per million is the EPA standard for the -- if you have less than 11 parts per million mercury then the material could be used for any purpose, meaning it's defined as clean and not harmful at all. And so the goal here is to prove that as we scale it from 2 to 25, and then all of that data will be monitored and corroborated with third parties, that's why it's also -- it was very important for us. And it wasn't something we talked about a lot,…

You did. What I'm thinking of is, are you using leach pad material, right?

We started off using leach pad material just to run the system material flow wise, then we started taking from some tailings, some dumps that are in immediate proximity called the Baltimore dumps and we've identified a dozen top targets across the Comstock that we would bring in feed material up. So the US project is really to prove the concept across a variety of different materials, a variety of different contamination levels and frankly, different types of materials, like different soils, some rockier, some Sandy, it's kind of the full spectrum test.

And are you crushing the material before you feed it in?

We're not currently but we're trying to target material, we didn't with the leach material, we didn't with some of the other waste. We didn't with any of them so far. To the extent the material comes -- to extent we identify material that has, let's say, excessive sizing, like bigger rocks, if you will, I wouldn't imagine crushing but we would probably screen. So screen the material before we fed it into the system.

What's size screen are you using under one quarter?

We're not currently using sizing, but probably we would be looking to go below an inch or an inch and a quarter minus maybe smaller. The systems handle bigger components. I mean, it's just not effect -- it's not efficient use, it's the more granular the material is, the better it'll process. So it'll just be a question of optimizing besides heating to use some form of screener to do that which is very simple and easy to deploy. We haven't done that yet. We haven't confronted that yet [Multiple Speakers] we can choose the material that we prioritize.

What does the output consist of? Is it a slurry, a liquid, I guess more sand or what?

Yes, it’s like all of the above it. So obviously, we are separating and capturing the mercury. At this point in our process, we're capturing mercury, that's an amalgam. So we will literally have mercury with metal in it. And to the extent we have that, there would be subsequent processes that we have here for retorting and refining. We have slurry. We have all the sort of residual material other than the gold and the mercury that would be separated cleanly. In our case, those materials would just be put on the leach pad on a fully contained unit. And that's one of the beauties of our platform from doing this process is that everything is approved and everything is contained while we're running the test.

Are you finding -- I don't know if you've done any output on this or look into it, but are you finding any other valuable minerals besides the mercury, like more gold and silver…

Just gold and silver.

But you're finding some. Is there any way to spend this material through your mineral grow plan?

There would be a way to use some of the portions of that process, particularly the retort for sort of final stage refining. We're not planning to do that right now. Right now our goal is to prove that the efficacy of how much Mercury we can remove from the soil. Once that's proven to others like we're confident in what the system can do. But once that's proven to others, the validation is certified, that's really the goal of the system. And then the intention then would be to be deploying the system in larger scale mode to many, many, many other projects around the country in and around the world. So we never had a profit motive, even though we've modeled the residual goals, et cetera from the Comstock, the goal of the Comstock unit was to prove on equivocally how effective this is at removing the mercury from the soil, that's what we're going to do and we're doing it. And then scaling up bigger systems, that would be much, much, much more profitable and deploying them at the highest priority projects, highest priority being largest cleanup/metal extraction opportunity.

Let's switch gears a little bit. Any prognosis on when you're close on the Daney Ranch and the Silver Springs property?

So Daney is very precise. What we did was we signed a two year agreement where -- and it was with the drilling services company, it’s actually with the drilling services company that Tonogold is currently using and actively drilling with as we sit here and speak, and they're very good. So the owner of the company wanted to buy the ranch, so we agreed to sell ranch for $2.7 million. But the way we did it was we signed a lease, a two year lease, paying $9,000 a month in rent. And if he closes within the two years, the $9,000 a month would apply to the purchase price. And so we think that there's a high prospect of that happening, But there's an additional feature in the agreement that says we're able to use is drilling services, that was something one of our business guys negotiated, it wasn't something we necessarily were motivated or driven to do. But the end result of it is if we did $0.5 million or $1 million worth of drilling, it would be very liquidity friendly to us. In other words, they would drill those services for us. And then those services would apply to the purchase of the ranch. And if they did not close on the ranch in that time period, those dollars would be forfeited by them. So it's almost like the rent payment plus the drilling services become a non-refundable deposit on the sale. So when I first understood the terms from our guy, I was like that's nice to have. And I really wasn't thinking about it in any kind of excited way. But as we start to develop some plans here for the day in it could be a very strong win for us, it effectively accelerate…

Our next question comes from Carl Frankson.

Just a real quick aside kind of from what I feel, lithium is hot as a pistol and Nevada is, I guess a sensibly one of the centers of lithium deposits. Is lithium on the radar at all for any of your mining claims or any byproduct or anything like that?

So it's interesting, it's fascinating that you asked that question, Carl. So last month, we had two board meetings, because we've been so incredibly focused on our strategy. And if you look at the verbalization of our strategy, we want to commercialize high value cash generating precious metal based materials that are environmentally friendly, environmentally and socially responsible. Before I answer your question, let me say two things. One is the amount of investor interest that we're getting because of the mercury remediation is probably impossible to exaggerate. We went from last year having [sharkey] type capital, always looking to want to do short-term things, not interested in being long-term investors, which our responses have been no, no, no, no, no to ESG type investors, asking us how much capital we need. And it's a fun situation to be saying, we don't need the capital but we're very interested in enhancing our shareholder base. So switching -- before I answer your question again, our shareholder base we like. We know the people. They know what we're doing. And obviously, people want to start seeing huge value leaps and we think it's coming. But one way to do that is we need to enhance the top 30 base like in other words, we're not looking to subtract any investors, we like our investors but we'd like to see six months from now, eight months from now, 10 months from now, if I looked at the top 30, I'd see 15 new names. So maybe instead of looking at the top 30, we're now looking at the top 45. And we believe that’s a foundational driver to get us to $4 a share, to get us to $12 a share, as we look at our intermediate objective. Pivoting back to your question…

One other quick one. As far as the Dayton, wouldn't it be possible to speed up a little of that process? I got to be quite honest, I’m a little disappointed in how far out we're looking at this. Couldn't you explore this a little bit with some of these streamers, like the smaller ones like Maverix Metals, or Eli Gold, or something to finance it and maybe get it going a little earlier?

Well, I think so if you ask me that like six or nine months ago, we would debate a little bit. But I'll tell you, I think we're there now. Because with this contract to sell the day in, for lack of a better way to say it, we literally have $2.7 million in non-dilutive financing lined up. Theoretically, we could do $2.7 million of drilling with Luke's firm and it would be paid for. So my key for the day in was I didn't want to allocate the capital to it, not because it didn't qualify return wise but because we didn't have it. And so now we have the access to the capital. The only thing that I think we're waiting for is to finalize the drill program with the geophysical work that we just received incorporated into that thinking. Once we have it, we'll get moving faster. And even though there might be a two to three time line here, the economics and the economic appreciation of what we have there is going to grow immediately. Like as soon as we start publishing this technical data and these technical reports, which we're planning to do in months here, we should start seeing a recognition of that value. We could always consider additional funding sources beyond what we have now. But I'd rather do that with a published and known resource where we're not speculating and sort of losing value because we just don't have current data. So I think it is going to move faster. I think you'll be happy that we are going to start moving it faster, because I think the obstacles that we were waiting to remove, frankly, as of really right now are removed, it's just a little bit of internal work to finalize that drilling based on the latest geophysical survey.

And our final question comes from Lawrence Danny.

Thanks for all the hard work. I like the way it's moving forward. My question is regarding the mercury remediation. So if you can give me a quick abbreviated version of, do you sell the machinery, hypothetically, you sell it to another gold mining company, do you then go help implement it and install it and consult. Is that the whole picture? Or I'll let you take that one…

So first, let me give you a couple of the givens. So first, MCU, which is the company that we're invested in and we have the right of first refusal to participate 50-50 in every project right alongside MCU. So the way this is structured, we end up with 25% of MCU and then we have the right to do 50% of each project alongside them. So in theory, we could end up with 62.5% of the economics of each project as a structural context, which we like. Now to answer your question, how can MCU deploy these systems so the idea -- first of all, we're not restricted in any way. It's up to MCU. We can decide how we want to deploy the systems. And we haven't necessarily ruled any model out as a point of matter effect, number one. MCU has the exclusive right to the intellectual property and the global right, global exclusive right to deploy these systems. How would we do it? So our first preference is really coming from the mining perspective, we would like to secure the material that's contaminated. And we would like to process that material. We would like to be the ones cleaning at all. And we would like to keep all of the profitability that comes from the gold extraction from that material. So if you use the Philippines as an example, the Philippines does not allow for 100% foreign ownership. So in the Philippines example, our local partner literally owns or controls the mine claims. And so we have a 60-40 venture, they being 60% we being 40%, where we come in and we clean it up and we share the profits. However, we have an accelerator on all of the profits until our original capital is recaptured,…

Interesting. That's great, sounds good.

So you can look at us a couple of years from now as a major miner with a dozen mining projects all around the world. The only difference is we're cleaning up the environment rather than impairing the environment as we're making that money and as we're making that progress. That's how I like to think about it. But there's no [Technical Difficulty] I mean, even the government -- what if the EPA came in and said, hey, we want to want to pay clean up. I mean there's no -- we could do that, too. Just take a fee for doing the work. You know what I mean, there's no prohibition.

Plus the new administration is going to be more pro environmental?

So I'll tell you something that there's no question about that, but we're starting from a point where the UN pass the Minimata convention, and the Minimata convention targeted 2020 to start eliminating mercury from industrial mining, especially artisanal and small-scale miners around the world. This is the year. We've already been engaged with Washington policy group out of the EPA. We've already been engaged with the state department. We've been engaged with district 9. We've been engaged with district 8, EPA. They are all mandated to accelerate and implement Minimata not just in the US but around the world. And so they're monitoring our progress very closely because they see us as, as I said earlier, one of the few if only think ones that they've seen that can only clean the environment but actually provide a sustainable ongoing solution. So we already have -- feel like we already have huge federal support I think you can only get better, to your point, right, it can only get better.

Right. It sounds interesting. I like the flexibility. Sounds good.

Yes. It's a real company. It's a real business. And it's a huge market. Our our challenge will be the speed at which we can deploy systems and making sure we just have the organization around it. So far in the Philippines has been fantastic. Not only do we have the CEO of the company, has family in the Philippines and is resident there as well as California, but our local partner is just exceptional. So they mean their company Clean Ore Solutions so everybody is really on the same page to set a new standard here for how they'll be bringing. If we show the efficacy on the comps, which is more technical and then we show the international success of a paradigm shift in one of the riches -- I mean Davao D'Oro, which is where we're helping to clean up the river and the mountain is one of the richest precious metal districts in Asia. If we can show a paradigm shift in that ecosystem added to the technical aspects that we're doing here. I mean we're literally the global leader overnight. And overnight is like after eight years of hard water…

Right, but I see the potential for sure. Very interesting. Thank you.

Thank you. We have no additional questions at this time.

Well, I'd like to just thank everybody for your interest and your attention. We have our annual meeting tomorrow, which will just be an emphasis on the things we've talked about today. I hope everyone keeps their family safe during COVID. It's encouraging to hear about the vaccines, but we've got to suck it up until April. But we here are -- other than some of the Philippine delays have not really been affected business-wise, and we're just marching forward. So thank you all.

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.