Good day, ladies and gentlemen, and welcome to the Comstock Mining 2014 yearend results and business update conference call. [Operator Instructions] It is now my pleasure to introduce your host, Mr. Corrado De Gasperis. Please go ahead, sir.

Thank you, Michelle, and good morning, everyone. This is Corrado. And welcome to the Comstock Mining 2014 fiscal year conference call. As a lot of you know, it's been a priority for us to improve the timeliness of our results and reduce cost. Last night, we filed our 10-K with a record shortened 28-day reporting cycle for the full year audited financial results. I am sincerely proud of our whole team, especially our small financial team, led by Judd Merrill. We are reporting in record time, with an unqualified opinion on our financial statements and on our stocks compliance system of internal controls. We've also reduced our audit fees by hundreds and thousands of dollars based on this improved cycle time. It's truly an exceptional achievement for us and we're very happy to provide all of this information so much faster. I will provide a brief summary of the information in the 10-K filed last night and our press release filed this morning. If you don't have a copy of today's release, you'll 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 related to matters that are not historical facts may 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 detailed in the reports filed by the company with the SEC and in this morning's release, and all forward-looking statements made during this call are subject to those same risks and uncertainties and other risks that we can identify. With that said, let me briefly overview some of the strategic, operational, and then financial…

[Operator Instructions] Our first question comes from Steven Shipman of Century Management.

I want to apologize in advance to both of you and the listeners, because I have some pretty detailed questions about the quarter. It comes from the fact that when you report on the yearend and the 10-K, it doesn't break out the quarter, so I apologize in advance to that. If I could start, it looks to me like your cost attributable to mining revenues for the quarter was in the vicinity of $4.5 million. Does that sound right?

That's right.

And inside that number is also the accumulated depreciation for the quarter?

That is correct.

Now, when we get to, and I know you broke this out, so again this might be confusing to some of the listeners, but you're breaking out cost and expenses on the 10-K that doesn't appear on the previous 10-Qs. But for the quarter, Corrado, it looks like your mine development reclamation and exploration expenses were about $1.5 million. Is that about right?

That's right.

Now, would you kindly, would you break out those components of that $1.5 million for the mine development, the reclamation and the exploration expenses?

So, you mean annually or quarterly?

No, for that quarter.

So I mentioned that we did break out and this is new and then maybe its worth repeating that we previously had, what I would say maybe, called exploration, development, environmental and reclamation all on one line. And even though that was in accordance with GAAP, we chose to break it out in much more detail. So let me just spend one second on each one.

That's okay. I mean I applaud you guys for doing that going forward on the quarter. The problem I'm having right now is just reconciling third quarter with the actual annual reporting of that process.

You wanted to break down the components of environmental and reclamation?

And mine development of that. So we just concluded that the mine development reclamation and environmental for the quarter was about $1.5 million. So if you have the components of that $1.5 million that would be great.

So I think probably I'll need to circle right back with you on just the components for the quarter, right. So I thought you meant for the year. I have them, but I just don't have them at my finger tips.

Yes. That's okay. I have them for the year too. Then finally G&A of course was about $1.19 million for the quarter. So if I do the math on that, Corrado, I look at your revenues of $6.64 million and I subtract out all those expenses, I come with a minus number on that non-GAAP accounting, but if I add back to depreciation, I actually get a positive number. And even if I subtract out, what looks to be about $800,000 of property, plant and equipment, it looks like from the numbers that we agreed upon on a non-GAAP basis you are actually creating positive cash flow after CapEx in the quarter.

That's correct.

So I applaud you on that, because I know though the ounces came up short. That was one of the objectives that the company had.

I think that from an ounces perspective we got closer, certainly within target shooting, it was disappointing not to hit it. From a cost perspective we did better and then that generated the positive cash, which is ultimately the bottomline objective. I think I would highlight that how well that positions us going forward to have achieve those operating costs. I won't even mention that we're going to try to reduce them further again, but it allows us -- I would say that even if we were doing 30,000 ounces or 32,000 ounces, which obviously we're trying to do much more than that, but even if we were doing that, we could achieve the profitability now that we would have achieved that 40,000 last year, right, so two ways to look at it.

Yes, and that's the way it comes out. Now, if I skip from that quarter going forward to your guidance, this is where I am a little confused. Does the $18 million in total operating expenses include environmental, mine development and exploration?

That's just the cost of mining. So that number, the $18 million, would be comparable. Good. Thank you for clarifying this. So the $18 million is exactly comparable to the $19.1 million on the face of the P&L, plus adding back the silver credits, right, so $23 million. So the gross cost applicable to mining was $23 million for 2014 minus silver credits to get to you to $19.1 million. We're going to reduce that gross cost to $18 million, a $5 million reduction. So the silver credits might have confused that. Hopefully that's clarifying.

Then for the year going forward, where do you see the exploration and mine development costs.

So the mine cost and the environmental and reclamation cost we see to be about the same. The mine development cost and exploration is where we can absolutely hold the expenses where they are, but obviously that's where we do like to invest some money. And what we said is between the Lucerne, both phases and the Dayton both phases, we're looking at about $4 million. And it's one of the reasons I really wanted to break out exploration and mine development, because we see those as investments to grow rather than reclamation, which is like an operating expense.

I can see that.

So answering your question, the swing in terms of the model is how much of the $4 million -- so all other being equal, our cost will be $6.5 million lower than the profile you're seeing right now. But we would like to spend up to $4 million on drilling exploration development and expansion. And that's --

So this is where the confusing point is for me and your presentation. Mine claims and costs will be roughly the same at $3.75 million?

Yes.

And environmental is roughly the same at $1.1 million?

Yes.

And the biggest difference in G&A will be you won't have the non-cash cost of shares.

Yes, but we are also seeing -- I've identified $1.5 million reduction of actual spending?

So that would exclude the cost of the shares, okay?

Right. So basically $5 million reduction on cost applicable mining, $1.5 million reduction on G&A. That's static on the mine claims static and the environmental, but we would like to increase exploration.

Yes, I know, I got it. You ran out of cash flow. Now, what's latest, we've got all the cost down, but now there is no guidance on the production?

Right. So let me explain, that's very important. I knew someone would ask in, and I am glad you asked it right upfront. So what we are seeing in the first half of the year is great, right. And that doesn't mean that we are not seeing great for the second half of the year, let me explain. The first half of the year, we know we have everything production scheduled on. Typically we like to have three to four months, like detailed weekly production schedule. We actually have more than that. We have it from six to seven months, right, very detailed. And we're running at the rates that we ended last year. There is a couple of minor, we are trying to do some of the heap leach expansion and some of the at-grade crossing work with our own trucks. So we'll purposely redeploy some of those resources, but for most intensive purposes, we're going to be profitable and continue on what we build through the end of last year. Now, for the second half of the year, we could say the same thing for the surface of the Lucerne, but we are having some interesting additions with the mine dumps, we're having some exciting possible additions for the underground opportunity. And our guys are telling us in the next four to six weeks, we'll have a lot of that detailed out very, very well. So I don't want to be too specific until I have it nailed down a lot better, but we've turned profitable, we're going to sustain that and then we're going to have, I would say, a bigger, broader series of activities. And one way it's transitional going from starter mine to the west to an expanded mine and potentially three mining activity, but in another way it's progressive and growing, but it won't be liner, so I need to pin that down a little bit better.

I hear you, but for sake of conservatives, if we use 700, 750, weekly run rate on ounce of stack, that's a pretty conservative way to look at the revenue picture.

Yes. Most conservatively it would be low-to-high $30,000 run rate right, which is what you just said.

So just to circle back on the one thing, if I could get the information on the quarterly [multiple speakers] quarter as to the differences between mine development, reclamation and exploration, I'd appreciate it.

Absolutely. Well, thank you for that.

The next question comes from [ph] John Listarg, a Private Investor.

Thank you for all your hard work and dedication. And I know you're guy are laying the foundation for something great I believe. I am a private investor who has been watching Comstock Mining, remember GoldSpring for about seven years now. And it seems like every -- I can't believe the progress you guys are making it's really remarkable. And again, I thank you for that. Just a couple of things I want point out and then I have a couple of questions. I go to the website and it seems to be outdated. There is a lot of information stuck in the 2013 timeframe and not a lot of updated news. So as an outside investor, someone who is looking to buy into the company, that's kind of could make a difference I think.

Yes.

And also, I don't see a lot of pictures of yours, of like the sliver and gold you guys mine.

Yes.

Could you mind posting that on your website or something that would be really cool to see, exit the stuff that you guys are throwing out of the ground that would be really neat?

Absolutely, absolutely. Let me comment, just to say that we have actually put in some meaningful effort to update across the spectrum. The timing for us feels very good right now, especially in the technical area. I think we're going to start to see a lot more geological insight, not just drill holes that are coming, but in the technical area we have a lot of cross-sections, we have a lot of three dimensional pictures that are being either final or being finalized. We also have expanded, we included it in our 10-K, but we'll get it all posted now on the website, you know expanded land position, which is significantly bigger.

Like an updated map of your land holdings, would you guys post that?

It's in there already, but we'll get it on to the website. And then there is actually a whole activity right now of documenting the accessing of this underground portal and the building of the at-grade crossing, and actually building of a platform that will allow us safe and permanent access to the underground. So all of that sort of photographic process, we'll start to post as well. And I very much appreciate that constructive input, because picture for us is worth a thousand words. And when we first started out in 2013, we got tremendous input from as we show pictures of the stacking the fresh material and the heap leach pad, I think that some people will be stunned to see the differences now. So we'll get those going.

That will be great to see that unlike your front of the website, shown stack silver and stack gold that would be really remarkable to see. Hopefully you guys do that soon. One more question I have, as you said 3.2 million ounces of gold resources, is that correct?

Yes. That's gold equivalent, which is measured, indicated, and in for both in the Lucerne area and the Dayton area, is over 3 million.

So that's only like what 10% of your land holdings?

Yes. It's about --

So you've been seeing a lot more than that 3.2 million, right?

It's a very small fraction of the surface of the land holdings, but I would add not to exaggerate it, that's not what I mean to, but if you consider depth, right the old timers mine to depths of 3,000 to 3,500 feet in underground mine, you've drilled on average to about 600, 700 feet. Our deepest hole is about 1,300 feet, right. So when you think about depths in addition, I mean it's in even smaller fraction than 10%. So we really feel, I've said this before that in so many different ways we're just scratching the surface. We do believe that it's a historic world-class mining district that we've consolidated all of. The last couple of years, to your earlier point, we've really got foundational in building for the future. Obviously, some of the progress in production and some of the ramp up could have gone smoother, but in terms of the intrinsic value of the foundational asset, not just the ownership of it, but the efficacy. I mean, we are now zoned to mine it. We are now permitted to mine it, which is lagging days from where we were. That progress in and itself is important to highlight, but what's even more exciting is we were encumbered with that for a couple of years. I mean encumbered, I mean we couldn't do anything else. Now, we're breakeven and starting to drill again, right, and that's what a lot of our investors see as a big driver to the value equation is growing that resource and growing those ounces, right. So we're not pleased, we're never satisfied, but we really do believe that we're setting our foundation for something much bigger going forward.

So you mentioned the all timers, you were able to dig about 3,000 feet into depth. What is the deepest you guys can potential go?

In an underground format, there is no reason we couldn't go as deeper, deeper. In a surface mining perspective --

How many feet deep do you think?

3,000, 4,000. I mean the geology supports that. From a surface perspective, we've only been mining a couple of 300 feet, right. So it's a combination of the two.

So the recap, basically 3.2 million gold equivalent ounces out of 10% of the explored land holdings, is that close to --

10% of surface area.

The surface area [multiple speakers] on to the underground.

That's right. That's what I was trying to explain. So right now, we've delineated geology, something less than a mile of strike. And we consolidated over six miles of contiguous strike, right. But that's surface focus and we go deeper.

That is absolutely amazing. I am looking forward to the progress you guys are making in the future. Too much answers of my a questions. Thank you for your time. And please post picture of gold and silver stocking.

We will do.

The next question comes from [ph Sam Bulls, Private Investor.

I was really intrigued by the news of the HOPE Gold Coin. So how is that going to work? If I understand it correctly, you have leased or plan to lease 5 metric tons of gold and that's about the entire total of what you have now [indiscernible]. Just explain how the --

Let me it say this way, 5 metric tons actually translates to about 170,000 ounces, 50 metric tons would be about 1.7 million ounces. 100 metric tons would be more than our reserves over 3 million, 3.4 million. So in context, it's the starting, we were approached by what I believe is just an incredible organization, the HOPE charitable trust, which was established as a not-profit and their main funding, their main business model is, they've launched the cryptocurrency called the HOPE gold coin. And basically they want to back the coin with gold. So I don't know anybody that has a cryptocurrency or any currency for that matter today, in the world [indiscernible] with gold backing. They will do it permanently over time and they also are the only company that I know that is not for profit in this arena. And also they have insured the processes around their currency, both with insurance companies and with extreme diligence in terms of the protocols for money processing, it's exceptional. So in that regard, I couldn't have a prouder partner in this regard. They're also very socially responsible and their first notion was that they would back the coin by leasing gold and ultimately by permanently backing it. So we think that's fantastic. So they approached us and I am proud to say for two reasons, well I guess three: we have the resources identified, number one; number two, the Comstock is known for innovations in mining and in money; and three, that we're socially responsible and so their first notion was that they lease our metal rather than buy it and have an option to buy it later at the current market prices. And so we originally had some reservations, because we are miners not leasers. And so we have no encumbrances, there is no scenario, if we're ready to mine an ounce for profit that we wouldn't be able to. So for us it translates into an extra potential revenue source with no restrictions possible on our normal business model and our normal operations. And for them they have a socially responsible partner that they're proud to have back their coin and the impermanent ultimately it will be permanent. They've programmed a billion coins and they've already started selling them. So we have a little trickle of revenue from it. I don't have any plans in any of our outlook, if any of our estimates or if any of our revenue models for $1 of it. But if it should take off, it would be a remarkable supplement to our revenue. So I would fit it in a very reserve context, but in a very positive one.

What you actually could do is like an apartment building you can lease the rooms or the apartments. And if the lessor doesn't make the payments, then you can take the possession of the gold back.

Let me be very specific in our case. So 5 metric tons is a 170,000 ounces, to the extent that we have 3 million ounces of resource, it's hard to tell them that we would ever not be able to allocate them that amount. So that's the first point. So I see no risk in ever fighting into those allegations. Having said that, if we ever did, we would be released of our obligation, with no refund. And from a financial perspective, there isn't a risk to us. From an outside perspective, there is an opportunity that we thought was worth engaging.

Yes, you are right. There are no cryptocurrencies that are backed by gold. They are all just imaginary money.

If you look into what they are you doing, it's for charitable, it's an established proper trust, all independently managed, backed by precious metal, insured in terms of your electronic wallet, full protocols for anti-money laundering, know your customer. I don't think there is anybody that even comes close to what they are doing and they are just starting the marketing now.

That's very good, because cryptocurrency is getting hammered because all of the money laundering and this a legitimate way?

They've done it in a way that, not only are they not for profit, so there is not a profit motive for them even to begin with. But they've done it in a way, where they've been able to address all of the, call it, in-proprieties or startup roles that, let's say, something like Bitcoin has gone through. But having said that, the crypto monitory processes are going viral all over the world. I mean every major institution is evaluating it, startups are coming up left and right. And who knows it's something that's real in up here? Will this get traction? We'll have to see.

The next question is from Paul Renken of VSA Capital.

If I understood you correctly, you though you'd have the Lucerne underground potentially accessible until or by the end of the year. Did I hear that right?

So the first step is that we are going to access this existing adit and do a tremendous amount of sampling. One of my geologist commented last week that if I authorized 60 holes of drilling for over $1 million, like he wouldn't be able to get the data that he's going to be able to get by accessing it from within. So that's the very first step. It's amazing in its placement, and I feel just lucky, because we have the whole Woodville Bonanza geological structure fully cross-section, level planned and developed, ready for an underground mine plan. We have the extensions to that down to the Silver City fall and into the, what we call, the shoot zone extension, right. And then there is a gap in between, right. Structurally, we know the structure continues, but from a grade and a ton and a metallurgy perspective, we have a gap in between. This adit is going to potentially provide us. If we didn't know this adit was coming, we would have already started drilling into these sections, because we know where the gaps are and I think with high probability of results being grade. But now we're going to be able to access it. It literally connect the two structures and finish out the mine plan, and then finish the feasibility about opening up a portal. And even the portal, which won't be this existing adit that we're accessing for data, it will be more closer to the actual Woodville Bonanza former workings. But it will be a portal that partially leverages existing workings, but maturely drops a new shaft down. And yes, it could be by the end of this year without question, because we have so much data we just need to fill in a couple of blanks and finish the feasibility study. And the feasibility study is substantially complete. And always that's not complete is the gaps in this geology. So it's a remarkable acceleration from whatever paradigm I had starting here, because I was still thinking that underground might have been four or five years away. To be able to hybrid it in and be to the surface and underground together is -- I mean if we get this done, it's going to be great.

And then I was wondering, what the drilling and where you do have the drilling information, what the indicative average grades are that you're trying to fill the gap in?

I have already looked at some preliminary, not third-party, but internal. And the grades are well in access. They're well in access of what we were averaging in the surface mine to the west. I mean literally 0.03 and 0.04 is heading up to 0.15s and 0.2s, right. So there is no context in that, so be careful, right. But it's very, very good and that's near-surface. That's within a 100 feet.

The next question comes from [ph] Michael Kizer of Indian Creek Mining.

Just had a few I guess operations questions. I was impressed by your increase in recovery on the heaps. And I was wondering if you could maybe comment shortly on how you achieve that?

So 2013 was our first full year of mining, and we had in the aggregate for the Lucerne mine plan that we started with an expectation of about 68% recovery. And in fairness, there were portions of the Lucerne mine like the Hartford area that had lower estimated dollars for recoveries, like in the low-60s. There were some in the high-50s. In other parts where like the Justice and the Lucerne, we were in the mid-70s, in some cases, we even had some 80s. But on average, putting it all together into one pot, it was suppose to be about 60% to 70%. So when we first started up, we were starting on metallurgical reconciliations and trying to stabilize our process, ad you have a handful of variables that are relevant. And I feel like the company over the course of the first 18 months did a very, very good job, stabilizing those variables, be it how much cement we're using for agglomerating the amount of cyanide that's going through the process, all of that. Initially, we had some issues with tail grades slipping through. We got good control over that. So I think that a part of the improvement has come from thought process, variable stabilities and just improving the process. Frankly, probably a bigger part of that is that the Lucerne portion of the mine plan really had some of the better recoveries like in the low-80s or high-70s. And so I think what you're seeing is real good stable process control, but also improving ores types, right, that we would expect higher yields. Having said all that, to average 81% for the full year, it's just higher than we would have expected from all of our testing in advance. So I think it's those two reasons.

I seem to recall from some of your past press releases that some of the grades underground might be quite high maybe even bonanza grade. In your feasibility studies, are you looking at installing a conventional mill?

So that would be part of the underground feasibility, yes. But there is a second answer to that. So I think eventually when you're talking about grades of 0.25, 0.3 and above, right, and getting to the bonanza grade levels 0.5 and above, certainly the mill would be the preferred solution. In our case, it wouldn't be a large mill, right. It would be a nice sized, relatively smaller mill. And you're going to get high-90% yields with those kind of grades for both gold and the sliver. Initially, what we're seeing here in near surface, and Paul was asking me about some of the initial grades, when you're talking about 0.08, 0.1, 0.15, those are amazingly good grades for surface mining. As long as we have oxide ores, there isn't a reason that we couldn't be leaching that material. In fact, we've already quantified that just in the backfill of the Woodville Bonanza workings, there's about 125,000 tons to 150,000 tons grading 0.08, right. So what I would expect to see and this could be very nice, if it plays out this way. As we're doing underground development, right, and we're doing sampling and testing and we start moving material out of those shafts, we actually could leach those materials at very, very good grade, like fantastic grades relative to anything we've done so far. That's very profitability. And then as we're getting into that, ultimately we'll get into higher grades, and then eventually into sulfides. So the first one, you want to mill; the second one, you have to mill, right. So I think it will be an evolution over the next few years.

Just a couple of other small things. Your grade crossing is that going to require a traffic signal?

No, we will have probably a flagger, who will ensure that we don't disrupt. We've committed not to disrupt traffic. And a haul truck crossing is about a six or seven second event, right. So we don't see any real disruptions and we won't need a traffic signal to do it.

Just a couple of quick things. In the past years you have had days, where you've done shareholder tours and kind of just to get acquaintance and I haven't been able to attend those. You plan to have any in the future?

It's a good question. Thank you for asking me. The Annual Meeting has typically been in June. Now, a big reason for that is that the proxy materials for the Annual Meeting feed off of the 10-K filing. So if you're filing your 10-K in March, you're having your annual meetings in late May or early June. We haven't tend to be down yet, but we will probably be looking at later April or early May. And frankly, we will probably make the decision based on whether more than how quickly it could be done. We could probably do it even sooner. So we'll nail that down and we'll get that out. But having said that, we're seeing increasing flow of visitation to the mine and we've set up a process for literally weekly touring. So if you wanted to visit separately from an event, just reach out to us, and we'll get you right into the schedule. But we're getting other minor, we're getting regulators from other counties, we're getting investors galore coming to the mine on a much, much more frequent basis.

I guess one final thing. When you start development underground are you going to do it yourself or you're going to have a contractor?

So we have already started to identify the internal competencies in our company for underground. So our top two safety professionals, who are like Co-Directors in our company, because they're so good, both have extensive underground mining experience. We have a couple of operators with underground mining experience. We have some engineers with underground mining experience. I think what will happen is, but we don't -- it would not be correct to say that we have fully capable underground mining competency. So what will happen, which I think is pretty logical, is that we will engage some third-party experts to help us to begin with. We will work together and ultimately develop and transition, so that we're doing it all of ourselves. And I think that philosophically, we don't outsource core business processes. So even if we're using an expert tunneling contractor or building a shaft, I mean it's going to be under the direct control and supervision of our project managers, not a third party. But ultimately today we own and control the entire chain, right, in what we do. And when we first started, for example, we relied heavier on SRK for help in the mine plan and the development plan. I mean one of the reasons our cost have come down in that line item of mine development is that we're now doing it all ourselves. But originally, we had mine engineers coupled with third-party mine engineers, so that we got it right, and now we're doing it ourselves. So there's an evolution there. We'll start with some partnering or some expert support, but ultimately we'll plan to do it ourselves.

The next question comes from Steve Emerson of Emerson Investment Group.

I'd like to distill Steve Shipman's excellent line of questions for a simplistic mind like mine. My concern is that the projected $5 million decline in mining cost is strictly running down your pad and not replenishing it or more likely is strictly a function of your lower strip ratio, which basically requires less mining expense for the same amount of ounces on pad? And to what extent can you run through this year without increasing your strip ratio?

So our reductions are fully based on a growing concern, right. So it's not the first point that you made, where it's a wind out of anything. So let me just give you three sort of components of the cost reductions. A very welcome component of it is the lower strip ratio, without question. We're just below 3:1 right now. We expect in the first half of the year to be even better than that. But ultimately we see ourselves normalizing in this 2.5 to 3:1. So I don't see it as a one-off or a non-sustainable kind of aspect of the plan. Certainly, there will be days where we're 5:1 and there will be day where we're 1:1. The Dayton as an example has a very, very good profile in terms of strip ratio so far, number one. Number two, there were inefficiencies that we had in the system tied to the variation that we were getting in our mine class. It was very difficult to schedule crushing. We had to have extra trucks. Not just the waste or the strip ratio variation, but just the predictability variation, and we've got that now down to a very, very low level and we're making further changes in the scheduling that will allow us to do as much or more with less. Thirdly, there is some fundamental reductions that have already occurred that we don't have to take any additional action on. Some of those are third-party resources that we relied on, that we no longer rely on, that we're running at an even better rate in the first quarter than we realized for the full year. Some of them is energy. We spent $2.1 million in fuel last year, and projecting for next year, it's just about $1 million. So $1 million of that $5 million of savings is just on lower energy inputs. And I am evaluating and it's not based on the lowest gas point, all right, it's based on a more conservative assumption for next year. However, I am looking at other ways to lock some of that in at some point. So we're just starting to think through that. I think that absolutely a big piece of it is the improved strip ratio, but not in an extreme unsustainable point, sort of in a normalized point. A piece of it is absolute dollars that are already been taken out of the system, and then a piece of it is some additional ones that we'll take out in the system, and we look forward to having a leaner profile. If we get less ounces and have less variable cost, then the number will be even lower. But if we ramp up, we'll be able to hold these kind of performances and really leverage the system.

And another sort of simplistic question that will save me research time is, what are the changes from your plan when you did your last money raise? What really happened, pushed out profitability, changed in your drilling, expenditure plan, et cetera?

Those proceed were delineated primarily for, I would say, two buckets, right. One was, exploration drilling, and we had allocated about $7 million for exploration and drilling. And the other was, I'll call it, road/infrastructural, but it had to do with rerouting the state route and expanding our haul road capacity, right. And so let's call that $3 million. So from that exploration and drilling perspective, we started the activity. We delineated the $7 million to be $2 million for Lucerne, $3 million for Dayton and $2 million for Spring Valley. So we started the Lucerne further. There is no change in the objective. We have all three objectives laid out. There has been somewhat of a change in the approach, and that we think we're going to be much more efficient for two reasons. The first and most important one is that we prioritized full cross-sectional level plan integration into a potential or preliminary mine plan, before we went in to do the drilling, and we did that for Lucerne and Dayton. We can't do that for Spring Valley, because we don't have enough data. Then we revised our drilling programs and they even got more efficient. So they went from $2 million and $2.9 million for Lucerne and Dayton respectively, to probably a number right now that looks like its $3.5 million to $4 million, and that's sharpening the pencil with where we want to drill and how. The last improvement, if you will, is that we have this underground access and that could take the $2 million that we wanted to drill in Lucerne, down to about $1 million. So we're achieving all the same objectives, but I think we're doing it much more efficiently. And hopefully at the end of the day more productively, by getting…

So how much money -- will that $3 million ultimately be less or how is that number?

The $3 million -- I think that the number is still going to be a good estimate. I think it could be less, because as we mature some of the mining on the west side, we have different and better alternatives for rerouting.

And the cash flow goals, it strikes me they were pushed out six months or really you're much closer to plan?

So originally we were estimating and this is before May, certainly before the timeframe you are talking about. We were hoping to do 40,000 ounces in the current year. We changed that guidance in the second quarter to getting to the run rate of 40,000 and turning cash profitable by the end of the year. And what Steve Shipman was saying, we didn't get to this 40,000 run rate, although we got very close, we validated every major economic variable to what we want. And so the yields we achieved, the grades we achieved, the strip ratios we achieved and the cash profitability that we were looking for, in terms of turning profitable, we achieved, right. So I feel like from a platform foundation going forward perspective, where we want to be, we would like to make more money during 2014, and that's the disappointment.

The next question comes from [ph] Jack Albright, Private Investor.

On this adit thing you said, how do you find that?

Now, so let me tell you it's a very straight-forwarding answer. So we probably, I mean not probably, I mean we have the largest geological library/database on the Comstock, when you take into account historical and current information. So we have effectively modeled on a geostatistical 3-dimensional model, all of the former mine workings of the Comstock to their known, right. So when we were mining into -- when we were getting into lower benches of Lucerne mine on the open pads, our geologist highlighted that, hey, you know, we're about two or three benches away from the historic Woodville entry and also the Silverhill shaft. And so what does that mean? Well, it means if those shafts are where we think they are, and we're usually very precise, give or take a few feet, then we can access those adits safely. If we can do those two things then we can sample into the heart of the ore body, we can sample right into the structure. So it's time that's likely guest for us, right. It's not luck, right. We have a full geostatistical model of all the four mine workings. We update it for every single bench that we mine. So you might have a vein structure [indiscernible] let's say, from west to east that you have in your model, and it connects over to another structure and then when you mine it, you realize it were 10 feet wider than you estimated and maybe five feet off of where you thought it was going to be. So what you do is you recalibrate the whole model every time you learn something. I mean every hole you drill you update the model, every 20 foot block that you mine, you update the model. And so we are finally getting to a point where the history -- it's always been an informational advantage. But we are finally getting to a point where it's translating itself into a mining advantage, right. It's a gift, could be able to access from underneath rather than have to drill from a far.

And is this part of the Woodville mine?

We believe that it connects right into the old Woodville bonanza and the Woodville vein structures. And let me add to that, one of our senior geologists, Steve Russell, who has over 30 years of experience and substantial majority of it, here in the Comstock. He actually had originally hypothesized that the known part of the Woodville bonanza and it structure had been mined out. And what happened was, first, as we were developing all the geology to the east, and as we were synchronizing and connecting it to the west when we were mining, and then as we've got some additional drill data to the east, he started mapping that all out. He started putting the puzzle altogether. And he came back and said, I think it's much bigger, and it's much more expensive than anyone ever thought before. And he is making estimates, but he is making based on known structures, known extensions, known connections. So we have now, without any drilling, expanded and developed a resource in the Woodville area that we believe in the context of dropping a shaft and oxide ores being reachable. We have a feasible underground mining to start. Secondly, we believe we have much, much higher grade, bigger structure, manifesting itself in the shoot zone, right, that we don't know fully the metallurgy of yet. And then there is a gap in between, so this adit -- so before we had access to this adit, we built some drilled hole profile to fill in the blanks. But now that we have access to the adit, we're going to defer and potentially in lieu of ever drilling those holes, to see if we can figure it out from the form of mine workings from below. So it's not certain that we'll have all the accesses that we would want and that we'll get all the information and samplings that we need, but it's highly likely. And I don't think it's yes or no, I think it's a question of how much can we get. And then based on that information what additional drilling would we need; if none we'll have a final underground mine plan that will evolve from great grades and very malleable, leachable material to phenomenal grades potentially harder rock, more sulphide malleable material that's we are close. We are close, right. We're not done, but we're close. And we'll be documenting these activities for both mine economics, geological and historical purposes all three in one as we go.

Then how are you running into this? How are you making access with?

So picture an open pit for Lucerne, picture of wall, so there is a wall that's literally right up against the State Route. So we're just standing in the Lucerne pit and you're looking east, you're staring at a wall. That wall has a tremendous of ore in it, right. That's one of the main reasons we know we're going to ultimately reroute the road, because it's sitting right under nose, right. And there is a big ass hole in the wall. So what we're doing now is that we are building with waste a platform that's going to look like a little ramp that goes up to that hole, and then our guys are going to [multiple speakers].

How deep is that hole compared to the highway?

Because it's not just one shaft, you're accessing the underground workings that go along this whole mile. So whole mile --

So lots of different shafts and adits?

And we also know some of them that are blocked, right, and we know some of that aren't. So part of this would be what's immediately, and let's say, accessible for free, and then what will require some amount of excavation and sampling to get to. And then ultimately, we'll drill, right. And drilling for us would be very precise, because the structure is delineated. We can see it's 3-dimensionally, right. It's like you're looking at a human -- you're looking at actually [multiple speaker] let him put a hole through their liver, right.

You actually go in the adits and drill in the site, is it safe enough to do that?

Initially, we're going to go in and do some visual hand sampling of the ore body. Ultimately, first of all, it has to be secure and it has to have ventilation, so we're working on that right now. And then ultimately, it has to be secure enough. And then, yes, you get the underground drill rigs into it and drill from beneath which is even better, right. So all that --

Do they get to square set in those?

Some of them do. Yes.

And how good work condition are they in?

I don't know yet. But I will let you know as soon as I know. One of our chief geologist has accessed these workings in the past, right. So it's not a new thing for us, right. He has been there before.

And the thing that I wonder is that there are so many [indiscernible] in that area how do they possibly have missed that shoot area.

Well, there is a lot that they missed, Jack. There is a tremendous amount that they've missed. I think they missed more than they got. They didn't have drill rigs. The shoots has no -- there's no visible mineralization from down within hill there. The only visible mineralization is like the Succor and the Woodville. Anything that's beneath that wasn't visible, they didn't know about it. They couldn't go after it. So it's a whole different world. I mean the entirety of Spring Valley is undiscovered country. And we've proven both through structural control and through drilling that the structures continue all the way down there, but they've didn't know about that. There is a tremendous amount down there and we believe some big things are coming. But the shoots zones, they had no idea that that's a new discovery.

Anyways, let me ask another question. Are you guys to will be able to afford to go after that? I mean I don't think you really have whole a lot of money in the bank?

We're good Jack. We're good. We're making some money now. We made more money. In the fourth quarter, we recovered our capital, we recovered everything. We paid down substantially all of our revolver debt. So I feel like everything has been strengthening, right. So we have to planned it out, it has to be scheduled out. And to the extent that we have these convenient, the access isn't it free, but its almost free, right, it's there, we're just going to go in and figure it out. So ultimately dropping a real shaft down to shoot selling will be full feasibility study that will come along with it and everyone will see it before it happens.

Do you know what the cost of doing all this going to be?

Well, let me say this, right. If you had to spent $6 million to drop a shaft into a target, that's one thing, but if you have to drop $6 million to go into a target and you have a 125,000 tons of 0.08 ounces per ton, $12.5 million worth of gold and silver in your way, well, that's kind of a nice proposition, right. So we have sort of a hybrid situation here and this is the strength of what the company has become I believe. We're not just exploration, we're not just development, right, we have prudent feasible operations. So now if we can be nimble, if we can be smart, right, we can leverage everything that we have to an efficient way to access, use the data to get expanded resources more intelligently without as much as drilling as you might have had to do otherwise. Develop an underground access that actually pays you while you're going. I don't want to sound too idealistic, a lot of the stuff has to be engineered out and feasibilitied out and nailed down, but I think it's all there for us.

[indiscernible] it look like you're still making that much money.

Yes, we are now.

Is that a forward-looking statement?

Yes. I have a few in today's call.

On the website there was mentioned, and hope you upgrade that, beginning to be meaningful website, but it kind of, I don't know how to --

We'll get it back on the [multiple speakers].

How about March production will bring that back in, so will you see how we're doing in March?

Yes. We'll be doing the aiding at all.

The last question comes from [ph] Dr. Dennis Foss, a Credit Investor.

One thing I have to say that I've got a meeting that I have to get to, and you're a terrific communicator and you're exactly the kind of person I like to hear someone who thinks clearly and speaks clearly and has a good heart. But at the same time, I think maybe -- I've been listening to these things for years and years and years, and there are some people who tend to meander shall we say. And I think they should be -- in most calls they limit people to one question and a follow-up or something, so it moves along. You're such a kind person. You never like to end someone before they've asked every single question. I really think that maybe you can ask Kimberly to step in for you. By the way I think your website is really excellent and I'm excited about some of the things that you've got coming in terms of the visualizations. When you say that you have these in 3D, do you mean that you have a picture forum in 3-dimension or in fact that you've modeled them to actually be 3D in real life?

Now, there is two aspects of it, it is not 3-dimensional. Our resource model which is vast, right, a resource model is 3-dimensional, and a less user-friendly, less at point visually graphic way. Our reserves and our mine plans, and our engineered mine plans, I mean I don't know what state-of-the-art is, but I assume Vulcan, Maptek softwares that we use are state-of-the-art. I mean, you literally can look at the entire ore body underground, you can spin it anyway you want. You will then deploy an engineered pit or an engineered underground portal that you can spin it anyway you want from the topography above to the dimensions below to the block models to the veins, you can look at our 0.05 shell, you can look at our 3.0 shell, you can look at our 0.1, I mean it's remarkable.

Proud, as an investor, I just get so excited about the amount and the depth of knowledge and information potential knowledge that you have. I mean it's overwhelming and I find a really exciting.

We have to be able to now leverage that information, because I think it's one of our best assets, that we have 150 years of production history. We have 3 dimensional model of all of the former mine working, 700 miles in the northern part of Virginia City, right. And then much less, very little actually as we get down to where we are now that's why access to this adit is a gift, because we're not in the middle or underneath Virginia City, we're all those intense, dense mine workings. We are at the butt end of it. And so the Woodville bonanza was the most southernly bonanza discovery, it was the last one to the south. So we have access now to that with sort of these residual working, it's exceptional. But both points are accurate. The website is well structured and well laid out, but we haven't provided an abundance of updated data. We frankly have been doing more of the work rather than presenting more of it. So that will shift now, that will shift, because now that we've got traction in the substantial completion, I mean I've just looked at the Dayton's preliminary, it's not a real mine plan, we have to do some more drilling, but we're spinning it. We're spinning it and it looks fantastic.

I'm very excited. And actually I'm also excited about the way your investors are reacting, because you would assume that some of us who watch the stock decrease like yourself, have been disappointed, because what you've done on the ground. I was saying to Kimberly, you guys are doing all the right things and so many places, as I said in the previous calls; in places like jurisdictions. When you came in I mean that community was, I would say, so hostile to mining. And you have made it -- instead I think that you made yourself a partner with the community in a way that's really terrific. You've taken that systems approach, I think to the really high level. And the way you've involved your staff, and so I think you're right, you have a very deep bench. I mean you've got a lot of the competencies you need and certainly to oversee it, and I'm really happy to hear you say that you're going to take ownership of all those projects, all of them, no matter who is actually carrying it, I mean that makes really good sense. I'm thrilled.

You can't delegate management, right. And I'll say just this that as much as I concur that a lot of wood has been chopped and a lot of bricks have been laid and there is a real foundation here, we also had a lot of very difficult challenges, be it the community and the approach to permitting, be it the federal government and complexities of land titles and positions like Lot 51 when we got knocked-off the whole road. And so I think it's important that we acknowledge when things didn't go the way we planned or we were surprised by something that maybe we should have known, and so let's also acknowledge that we didn't achieved some of the things that we set expectations for, but in other cases, we've reduced the risk profile, improved the variables better, which should bode well. Now, we still wood to chop, because we're not sitting here with a 10-year mine plan and three years forward guidance, right. We are sitting here with great economic feasibility, proven performances now on all the variables that really matter, stability, but we have three developments going on. We have three developments going on, so that has to be coordinated, scheduled and managed, right. And if you delegate it, forget it. It's like assumptions, right. It will come back and it will bite you. You have to manage it. So I am trying to be more --

But also I think what you've done quite wisely is involve people in the decision making process. It's a lot quicker and easier just to give orders, but if you involve people in the decision making, a, number one you're stupid now too, because they know so much, but also if they buy into it and they're looking out and know what the goal is, they're going to be intelligent human beings in help you to reach your goals.

Yes. So if we have to grab this traction that I feel that we have, if we continue it, and if we get some turn in the market, and I'm not talking about gold prices, per se but I mean, it's --

I actually think we're at a very great turning point. I also see it with our stock. I know that you tell me that there isn't a lot of short selling. I am wondering if that's only the short selling that's been registered or borrowed shares, because I suspect there is a lot of -- has been, I think it's changing, I can see that.

Yes.

I mean the way people were selling, they weren't people that were trying to sell who are taking losses, but usually you don't want to disrupt the market if you're trying to exit a position. But these people look like they were definitely trying to destroy the market in the process of unloading. What I am convinced that there was lot of share sold, that weren't borrowed, that were sold short.

They might have been. There was some time pressure with the tax here. But I think that the most important part of that analysis is the stability of the capital base. And what we said earlier is that our investors actually, they are extremely diligent. If you look at top 10, they come here, they visit, they keep the tires, they see.

Is that what you want is those long-term investors [multiple speakers] for a quick buck.

But if something changes that is not what they expected, then they're holding us accountable too. So it's all good, it's all good. All right, I owe you a call for other appointment, then I think [multiple speakers].

And one thing, I would just mention as a positive thing that you could do, you are such a socially responsible firm and you've done such great things in that area. We know that there are a number of funds that build themselves, socially responsible funds. There are number of others that have taken pledges to be socially responsible even if it's not their name. I wonder if it wouldn't be worthwhile for Comstock to make the presentation at those meetings, because I would think if they wanted to hold a gold company that would be a great [multiple speakers].

We're going start targeting, because it's not a question now of being socially responsible. I mean if the question of demonstrating it, having demonstrated at the highest level. So when we talk about these low costs, right, we don't comment that we've done more environmental sampling than anyone in the state in Nevada. We don't comment that we do more air quality monitoring than anyone in the state. We don't comment that we completely restored, not reclaimed, restored the Keystone pen pit, that's all in our numbers.

[multiple speakers] I think you should be proud of those accomplishments.

Right. So we can start targeting those funds and showing them real evidence that we're at the top of that food chain.

There are no further questions at this time, please continue. End of Q&A

All right, everyone. Thank you again. I do take those last few comments well about extending the calls. We will do something to be more concise and we look very much forward to news on our geology and then reporting on the first quarter in just a bit. Thank you all. Bye, bye.

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