Good day, ladies and gentleman. Welcome to the Comstock Mining announces Second Quarter 2012 Results and Business Update Conference Call. [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, Pamela. Good morning and afternoon, everyone and welcome to our second quarter conference call. I’ll provide a brief summary of the information included in this morning’s press release. If you don’t yet have the release, you will find a copy on our website at www.comstockmining.com under News/Press Releases. We’ve also posted a series of videos in the March to Production section of the website including last night, where you can see us stacking ore on the new heap leach pad for the first time last Friday. The videos now reflect hauling, crushing and stacking ore, effectively showing everyone the re-commencement of production on the Comstock. These videos can be accessed right from the home page of our website. Please also let me remind me you that I may make some forward-looking statements on this call. Any statement relating to matters that are not historical facts can constitute forward-looking statements. These statements are based on current expectations and those statements are subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed by the company with the SEC. These risks are also identified in this morning's press release, and all forward-looking statements made during this call are subject to the same risks and other risks that we cannot identify. On this call, I’ll review production, drilling and mine development, and I’ll wrap-up with a few corporate highlights before we move back to questions-and-answers. Regarding production, last week certainly concluded an incredibly productive seven months for us with the commencement of mining activities on the Comstock. In early July, we started mobilizing our drilling and blasting people, and we have since completed 6 blasts, all successfully and all very, very safe including one this morning at…

[Operator Instructions] Our first question comes from James Doug [ph] a private investor.

Should your case against the Bureau of Land Management as to the ownership of the disputed property over your haul-road go in your favor, is there any chance of recovering the extra costs that you’ve incurred because they asked you to go a different way?

Yes, I think there’s 2 opportunities there. Well you mentioned a possible third. There’s 2 opportunities that we are looking very much forward to. First and foremost, when we do permit the original haul-road with the new right-of-way, we're actually looking to permit a much more robust, much more expanded right-of-way. And we believe that, that pathway will allow us to do much more than 1 million tons per annum on the same 1 shift of operation that we have. So in terms of increasing throughput, its very likely that we would accelerate ahead of our original first year plan once we get that permit place, potentially doing up to 1.2 million, 1.3 million tons per annum. I mean, a 30% increase in tons processed with no change in operating expense. So that's one avenue for accelerating revenue. It wasn’t exactly your question, but I like to highlight that. The second one is, we have some activities in place, primarily through appeal processes, which could result in regaining access much, much sooner than 6 months, so that would be a positive to mitigate. In terms of recouping cost, if an independent party, let's say either an appeal body or the court decided that they were wrong, I certainly do believe there would be some avenue for recapturing damages that resulted from a bad decision. So that's always an option. We’re waiting to let some of these activities play out to see.

Okay. And one other question, when can we expect to see some new mineralization reporting from the Dayton area?

So I expect the next technical report to be in the fourth quarter. You're right to point out that won’t include Dayton. It will be Lucerne, but we think that will be very positive. We have about then -- we're just finishing up the drilling on the Lucerne area for this phase and we're moving to our reporting mode. We will next move to the Dayton. There is probably a meaningful schedule, I would tag it at 5 months worth of drilling, maybe a little bit more, and then we would move into mine plan and economic feasibility. So realistically we would look to the middle of next year, maybe a little bit earlier. But I’d like to highlight, we already believe internally there is economic feasibility on the Dayton. We don’t see any doubt about it. First and foremost, the ounces are nearer to the surface than they are in Lucerne. The strip ratios are equal to or better than the Lucerne. And the metallurgy, in terms of yield, has even proven better with the Dayton. So we see the Dayton as a win, not certainly in any way, shape or form an if. But we would like to get the full in-fill program, the full increase in the ounces and the full mine plan in the next technical report to make it most meaningful and that will also be what kicks off for us that permitting process. So let’s target the middle of next year, maybe a little earlier.

For starting of mining at Dayton?

That will give us mine plan, economic feasibility and engineering, which will then require a permitting process. The permitting process in that resource does not have any federal aspects to it and so it would be just county and state permitting, essentially replicating what we already have here in the Lucerne. So you’re probably talking the latter part of the 2014 for a production scheme.

Our next question comes from Jeffrey Wright from Global Hunter Securities.

Just a couple of questions on the initial, I guess, ore stacking just looking -- do you guys have any grade assays or how do your assays are getting ore coming out of the pit yet?

We do. The first 6 months mine plan reflects an average of about 0.03. The first 40,000 tons looked very, very good, just under 0.05. So I think we’re going to start with a very nice grade. It looks very good. The material is not cumbersome at all, and it’s just racing through the crusher. But I think that the 0.03-ish, or just under 0.03 looks to be the average for the next 6 months. There is variation because we've got some high grades embedded in there, but it should look to be reasonably steady after probably a good start.

So 0.03 ounces per ton just to clarify right?

Yes.

Okay. Secondly, what type of recoveries are you guys anticipating say the first 6 months?

I think that there is a little bit of a mix with the material types, but it oddly falls very close to the average. We tested all rock types at about 72%, 73%. We’re looking at a range, I mean, I don’t know the exact total range, but the average of the range is like 68% to 72%. So we’re starting off sort of pretty square in the middle.

Our next question comes from Jon Ingram from Wedbush Securities.

Who is Resource Income Fund? That’s an interesting arrangement you have with those guys?

We’ve been working with Auramet, which is a pretty well established, very long established gold and silver precious metal trading firm on the East Coast. They actually facilitate a lot of the gold sales for many of the Nevada miners, and they are part of the resource investment fund. But basically, Auramet facilitates a group of keen investors to do those kinds of arrangements on an as needed basis. We got very comfortable working with their whole team over the last 3 or 4 months, and the opportunity, presented it ourselves, to put a revolver in place and to start advancing some of this activity. So that’s essentially who they are, it’s facilitated and represented through Auramet as an agent and essentially some keen, resource-savvy, resource investors.

Okay. So what’s the connection between Resource Income Fund and Auramet?

Auramet is a part of the investor in RIF. And Auramet is the agent that arranges diligences and polices the loans for RIF.

Okay. That's interesting. So if I understand this correctly -- so you owe them 3,720 ounces and your costs per ounce you’re projecting at what -- I can’t remember, $600 an ounce, perhaps?

Yes. Our cost per ounce is a little over that number starting at the 20,000 ounce rate, about $640, $650. And then when we step it up to 30,000 ounces, it goes below $500.

So you owe them 3,720 ounces, let’s say your cost is $650. I mean I’m just trying -- is my math off on this?

Effectively, what we did, depending on your perspective, is we borrowed $5 million at a relatively short period, about 18 months, through a revolving credit facility with a cost of capital that’s a little over 18%. But we did that in conjunction with arranging the Caterpillar facilities. In fact both firms worked very closely together, using the same firm to diligence our project and our model. So we felt very good about the 2 of them partnering up and coming together with the $10 million. So obviously the RIF part of the arrangement had a higher cost of capital. We effectively monetized those ounces that you referred to at a $1,600 forward sales price with the cost of capital embedded in there. So, you can either think of it as the interest cost on that borrowing or you could think of it as a discount to the gold price, but it’s not both.

Yes, I guess I’m looking at it as you borrowed $5 million and you paid back $2.4 million. I mean, your cost is $2.4 million at $650 an ounce, right?

No, it’s one -- it’s about 950,000 cost of capital, right. The opportunity to sell gold at $1,600 presents itself either way, so the money is fungible.

I see, okay. And then this is off balance sheet stuff? Why is that?

No, no.

So, this doesn’t show up?

No, it will -- it’s a working capital revolver, it’s a loan. It will be on balance sheet. We didn’t conclude the deal until July 30. So in this 10-Q you’ll see it as a subsequent event, but it will be on the balance sheet for the third quarter.

Yes. No, it’s very straightforward. Frankly from a strategic standpoint, both of these enterprises, Caterpillar and Auramet, benefit greatly from our business growing. So we like to be aligned with those kinds of partners in terms of financing alternatives.

[Operator Instructions] Our next question comes from Clay Mitchell from Crown Point Holdings.

Corrado, I was just wondering, with this new financing facility, it is revolving which means theoretically you could pay it off early and would that reduce the cost of funds?

The fixed return of the $900,000-plus that I mentioned would not be reduced with an early payoff. However, there would be no prepayment penalties. And as you pointed out, if we drew down, it is a full effective revolver and it would allow for us to redraw on it if necessary. Ultimately our goal is to -- we only have allotments for 2 types of indebtedness and it’s very, very small. We’re allowed to do equipment financing, which was the primary structure for the Caterpillar component and we’re allowed to do a $5 million revolving working capital facility. That’s all we’re allowed to do in our capital structure. So we were designed not to have any material indebtedness and that’s really frankly the way that we like it. Having said all that, pre-production and then the first 6 to 8 months of productions are where I would be most careful about having proper liquidity. So we thought it was important not only to do the financing, but to have it revolving and available over the next 18 months, as we work through the normal start up issues. Having said that, the start-up so far, which obviously we’re in day 4 or 5, looks great. The hauling and tons are moving. The crusher is crushing, in a few weeks we’ll fire up to Merrill Crowe, but what I look to is statistical predictability for cash flow, and we look to have that sooner or later. But if we start pouring in September, it will probably be late October, November where we have good statistical representation from the daily cash and that’s when we’ll start to feel very, very, very good. We’re feeling great now. I don’t think the start up, especially with the BLM bumping us on to the State Route,…

Sure. Well and it definitely makes good sense to have that flexibility through this period. As kind of a follow-up question, I know that some people were surprised by that financing and yet I remember -- as if it was not planned or was not planned for. And yet I remember at the shareholder meeting several months ago, you had mentioned that, that was kind of part of the -- can you just clarify kind of what we've...

Yes. Really since February, the point that I've made is that the only financing that we were planning or working with was some equipment financing and working capital revolver. Often, maybe not every time, I pointed out that those are really the only 2 types of indebtedness that we're allowed. And I think our capital structure has been very, very well thought out, not necessarily only by me for sure but well thought out by our Board and our Chairman to be conservative. There is a view here of multi-billion dollars of value, right. There is no evidence that indicates anything but meaningfully more ounces to be discovered. There is nothing other than growth of production right in front of us. And so we may at times see us more conservative than the peer group in terms of financings or in terms of capital structure, and frankly we think that's smarter. It amounts to a little bit of inefficiency in terms of lending costs to preserve, and frankly not just preserve, but accelerate and grow a tremendous amount of equity value. So, that’s really how we feel about it. I think that we always wanted to be ahead of the markets. We always want to be looking on a very detailed basis 6 to 12 months out, in terms of cash flow. We’re always accessing the risks of it being less than optimal or insufficient, and that’s our job. As fiduciaries, we have to ensure that we have a good, strong, stable position. And we don’t like the idea of our cash position being below $7.5 million, $8 million. We just -- we don’t think that’s the right place to be in this industry and certainly not in this market.

Our next question comes from James Teck [ph], who is a Private Investor.

When I am listening to you and you’re going on into couple of more years for another portion or another mine being opened, how long do you anticipate that Comstock will continue as a mining firm?

Let me tell you that -- and you give me chance to sort of summarize something here. We’re looking to start up this mine here at 1 million ton rate, 20,000 ounce annual rate. Next year, with some of this unblocking, we can move that up to the 30,000 ounce rate. We really got to unblock those 2 permits, just so we can optimize the mine. That is still talking about a 1-shift operation. There isn’t anything that precludes us, when we get those permits unblocked, to increase it and that could occur during 2013. As you point out, we bring the Dayton online in 2014, and the Dayton, we don’t have a mine plan yet, but the notion of 60,000 ounces to 100,000 ounces per annum even with today’s resource would give us 8 to 10 year mine life. That’s a very, very nice addition. We think that number is going to explode and grow dramatically when we do the rest of our drilling. So that’s just preliminary. Then in 2015, we could have expanded permitting for the Lucerne, right, and for sure I can take your 30 to 50, 60, which you’re talking about right now up to 100,000 ounces, but the Lucerne has already validated over 2.4 million, 2.5 million gold equivalent ounces. So again, we don’t have the final mine plan, we don’t have the engineering, but I also don’t think we’ve come anywhere close to defining the total resource in Lucerne, right, 3 million, 4 million, we don’t know. So -- but you’ve got to be talking about 20, 25 years, in terms of the ultimate potential of the Lucerne. Now those are 2 of our 7 target areas, okay. And obviously, some of the other areas and including those 2 will almost assuredly end up going underground, which is what the Comstock was famous for. So right now, we’re sort of taking advantage in an extremely responsible way from small, near surface, immediately economically beneficial items. But it not only gives us the chance to reclaim and restore the land properly, but define a much, much bigger resource. Anyway, long story short, we believe we’re becoming a permanent part of this community in all of the right way. So this is a very long-tailed equation from our perspective.

Well, that’s wonderful. My theory of 20 to 25 years, we’ll haunt my shoulder, not me. Do you ever anticipate a dividend from our stocks or just a stock increase value?

Yes. Let me give you my personal view, caveat it for the Board who I think or like-minded, I think the best investment on the planet right now, the best investment on the planet right now, is a cash-producing company that has precious metals in the ground that pays a dividend. Okay? And you could only do it slightly better by paying the dividend in gold and silver. That’s the kind of company I invest in, I would want to invest in. So we have to get statistical control on cash. We have to get clear sustainability on that cash. Once we have that, I don’t know why we wouldn’t be discussing that at the Board level.

Our next question comes from Jack Albright [ph] from Albright LLC.

Jack, great to hear from you again; it was great seeing you in June.

I enjoyed that so much, my wife and I both did.

Thank you for coming and paying attention to all the meetings the way you did.

Yes, I missed a couple of them. Anyway hopefully we will be back next year for the next Board meeting.

Yes, we look forward to that.

Still be in June?

It will be in June, almost certainly. And we haven’t talked about it yet, but now that the trucks are hauling and the ore is being crushed and stacked, we need to get our butts in gear and plan a little celebration around the first pour, which I guess we're talking -- I don't know if it will be the real first pour. We might pour once or twice just to get the groove, but into September, early October would be very exciting to get a big group of people here to celebrate what I would call economically meaningful, but historically very significant.

I have a question. According to your local newspapers, the BLM is giving back or might be giving back land.

Yes.

To the people. Would that also include lot number 51 that you guys have?

Yes. So that's a good question. Congressman Mark Amodei who is, I think, one of the best junior Congressman in Washington right now, has been extremely active on land bills, especially for Nevada. And he has already supported and sponsored a land bill for Nevada Copper out of Yerington, in Lyon County, and he's sponsored some bills up in Carlin, up in the counties up to the North to accelerate mine development. He also has sponsored a bill to cap federal permitting at 30 months to put some real predictability into this federal permitting process. And lastly, as you just referred to, he sponsored a bill for Storey County, it's called Restore Storey County, where most of the town law conflicts were included so that people with -- real people with real homes could get clear title to their land. And he was actually on Nevada NewsMakers this Sunday talking about a few of those activities and what he said was that when you're talking about the Federal Government selling land back for real economic activities, creating real jobs, that have real high salaries, they're paying for the land. It's costing the Federal Government nothing, why wouldn't we do it? Why wouldn't the government who keeps saying jobs is #1, support and follow through with these activities? And we couldn't agree more, and he also went on record saying if there's any other land bills that make sense, he's all for them. So we are not included in the Restore Storey County land bills. That's because it was primarily for residential town lots, not for mining activities. We actually wish we were included, quite frankly. We've had some discussions with a lot of the Nevada delegation and this could be something that is in our future. But frankly, we're moving just as fast to permit those lands. So we're not resting our hat on that possibility, but it is a very real possibility.

Good. We hope so, anyway.

Yes, we couldn't be more -- I don't think we could have a more supportive political delegation, frankly on both sides of the aisle. But Amodei has been very, very busy trying to advance and accelerate economic development of mining.

The Comstock Residents Association, are they mellowing down any or are they still full blast?

No. Listen our view -- there's 2 handfuls of very, very good folks, let me say, that speak very vocally against what we're doing. I just think that these people that we're referring to will continue to speak. But the point that I would make here is that a lot of what said initially, the company's a sham, the company's a corporate shell, that's fallen away. Then subsequently they talked about the fact that we didn't have real management team, we didn't have real people. That's fallen away. Then they talked about we polluted the environment, et cetera, et cetera. With all the great work we did on soil sampling and clearing of the mercury issue, that's fallen away. So I think that in the grand scheme of things, these people have really heightened, really heightened all of Nevada's let's call it awareness of what we're doing. We've told people consistently, don't judge us by what we say, don't judge us by what they say, judge us by what you see, and it's been tremendously successful. We built a huge support network, frankly, to be honest beyond what I ever imagined we would build at this point in our evolution, because of that, let's call it publicity. So as long as we dot our i's, cross our t's, and have the most ethical, the most environmental responsible, and the most sustainable approach to mining we'll become an example to others, and that's really, frankly, the tone that comes down to us from the Board, and that's the sort of DNA that we look for in the people that we hire. So we built a team that I think cares about the territory, cares and loves the Comstock. I don't know if you saw our last blog. Because most of the pictures came from employees here and employees there, I mean our people are in love this territory and obviously they love mining, but we're building a special team with people who care. And I think that the more familiar the people that are outspoken become with who we are the more at ease they will be, the more accepting, ultimately maybe supporting, some will, some won't, but we'll continue to march forward.

It actually sounds like they're helping you more than hindering you.

I think that's better, we can give them [indiscernible] credit for that.

Now they were asking for donation, I don't know, about month or so ago. And if anybody listening from the Comstock Residents Association, my advice to you is to go by stock in the Comstock mine.

We're going to end up in a very, very good place Jack, so I very much appreciate all of your support and your comment. Thank you.

Thank you. There are no further questions at this time sir. Please go ahead.

All right. Well I just want to thank everybody for their support. We are here at the mine. We'll be here all month. And we're looking very much forward to the revenue cycle kicking in. And we look forward to giving you an updated report on our drilling activities and we look forward to giving you literally weekly updates all the way through and including the celebration of our first pour. Thank you very much.

Ladies and gentlemen this concludes the conference call for today. We thank you very much for your participation. You may now disconnect your line. And have a great day.