Comstock Inc. (LODE) Q2 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Welcome to the Comstock Mining Second Quarter 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Corrado De Gasperis. Please go ahead.

Thank you, Maria, and good morning everyone. It's Corrado here and welcome to our 2017 second quarter conference call. We completed our second quarter review and filed our financial favorance on Form 10-Q last night. This morning we also released he summary of those results and selected strategic and financial highlights in that press release. If you haven't seen that press release, please go to our website at www.comstockmining.com, under news/press releases. My comments today will briefly discuss results today and the progress so far and strategic initiatives will keep the same if not a briefer format for the call and I'll certainly be available for the Q&A after the prepared remarks. As always, any statements related to matters that are not purely historical facts may constitute forward-looking statements. These forward-looking 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 and the SEC, and in this morning's release, and all the forward-looking statements made during this call are also subject to those same and other risks that we can't identify. I'm going to be very concise and brief with the prepared remarks this morning, just delimiter to on cost performance and then a good update on the strategic activities and ventures and that will leave us some more time for Q&A. First with cost, our performance in the first half of this year does put us on an all-time low for our history as a fully permitted infrastructure junior mining company and as we discussed at the annual meeting, we're very focused on getting them even lower. We've given some guidance for the full year in the 10-Q and the guidance for the run rate is come down $1 million lower than what we're even experiencing for the full calendar year this year. Meaning, that we're expect to get a run rate to below $3.5 million and we're at back rate now and we will continue that rate forward and we'll keep working on it lower. G&A cost were a record lower 1.6 million for the six months ended June 30, with a meaningful amount of those dollars shifting to a good amount of diligence on our joint venture work, a good amount of work on the collaboration, some of that's legal support, we did a tremendous amount of mineral land tidal work in the first six months of this year including outside tidal men that was in part due to our refinancing with just outstanding across the board results. We probably have one of the strongest, cleanest best land positions especially for Historic District for Barnon [ph]. Our real estate segment actually reflected a very positive result year-to-date in our both positive cash flow and positive GAAP profits, including record low cost. This is true despite overall growing our land position and growing our foot print. Environmental and reclamation costs were also at a record low. In this regard we were slightly below, 27% below the prior period, but we had a tremendous amount of activity in the first half of this year on just water mitigation and water management. So the good news is the costs are lower, the good news is about a third of those costs are already eliminated and going lower and I think the best news is we're fully safe and fully compliant with all of our environmental activities and all of our permits. As we mentioned a little bit earlier, we've been spending a little bit more time transactionally, We've also been spending a little bit more time on the capital market front, that includes both updating our investors, targeting new investors and starting to gain some strong momentum with interest. I think that does reflect having put the restructuring and cost reducing activities substantially behind us and those reflect progress being made on finally moving our business model forward, but we're clearly getting a good interest. It's not luck and it certainly hasn't happened overnight. It feels like we've been working at this almost six to nine months, but we're clearly getting some traction. We have a good liquidity, certainly and our trading last 90 days has been remarkable. We ended the quarter with over $1 million of cash. I mentioned last quarter that we would expect to maintain at least 0.5 million of cash we bump that number up to at least 1 million. We really want to make sure that we have to bear with to accomplish everything that we're setting out to do. Bottom line, we have that financial wherewithal and everything that we're trying to do is very, very focused on being meaningfully accretive, largely accretive and it's starting to happen. Let's shift over to those strategic activities. Let me first start with the Lucerne mine project. This has been a sort of spark for us over the last 18 months, but we spent the last few months advancing discussions on our mining joint venture for this project. We've done more than just discuss, we've been very productive in structuring an agreement. We've been very diligent in making sure that all of the assets at Lucerne mine project are enabled and entitled properly establish position to do this. We're not negotiating economics in that regard, that's all done, but we're working very hard to ensure that the arrangement is protective of our investors, our assets and certainly our potential partners. Personally, I'm confident that we'll have the process resolved and announced. I expect it to be this month. These transactions are certainly never guaranteed, but in this case we've advanced conceptual mine planning. As I mentioned we've aligned specific return assets into one project and we're most certainly positioned to accelerate the development. Some things have come out of this work that have been very positive all around and one way or another we are focused on bringing our projects to our proxy's ability studies that means establishing mine plans, that means establishing proven and probable reserves, that means having real timelines and this is one of the three ventures that we have, that we're working on that in progress. The next one I'd like to talk about and I'll stick with reference on this discussion is that during the second quarter we did sign an entrant to a joint collaboration agreement, frankly just to see if we could extract one metal primarily silver from the existing heap leach pad. As you guys know - you guys and gals know that our leach pad has all of those and over from last four years of mining activity, we're currently running stimulations with this partner on that material using an alternative processing technology that's proprietary with this partner. It's not byproducts. I don't want to confuse the two. This is a more advanced established processing technology. It is not Cyanide based, but it's also proven in different application and is most - it's been designed, it is most effective for extracting silver. I think from our perspective Cyanide still leads the path in terms of gold extraction and the efficiency of extracting gold from ore, but we see some things here that tell us that silver might be better. We've extracted almost 60% of our silver from this pad with Cyanide, which is probably at the highest end of almost on the vat of standards, but that still means that 40% of the metal is still showing residue on the pad and so this project is really designed to see if we can get a meaningful amount of that silver out. If it was successful, it means we'll be extracting silver again in the future, but it's still being tested with our ores. It's being tested in the Reno area both with independent labs and with our partner's process and I look forward to giving you update on that. That's a nice segue actually until an update on Cycladex. We put out a very nice press release out a few weeks ago on the column test that Cycladex had run on site. As most of you already know. We're an investor in Cycladex, but we're also partnering and developing this non-Cyanide based leaching process. We ran Cycladex materials against Cyanide, so we really designed this test safely for ourselves, meaning, we pair on Cyanide with non-Cyanide solutions and very interested in the results both ways. We actually felt pretty confident what the Cyanide results would look like because in 2011, we did a tremendous amount of column testing in Reno with the end material and we yielded on average over 80%. We are very happy with that, but these columns came out 82% to 85% with Cyanide for gold, which is outstanding. But in both cases Cyanide and non-Cyanide, we had very, very fast yield. The 82% to 85% was a 25 day marker. The Cycladex numbers were closing in on 80% at that same 25 days, so very good. In the silver's case, Cycladex performed better than Cyanide. One thing that's very important to clarify here is that when it comes to yields and speed, we were reasonably confident that we would be getting these kind of results and still feeling obviously to get them. But the science in terms of extraction has been known pretty well for a while. What we're really working on is the specific consumption of these materials in the process. Meaning, the less they get consumed the cheaper it is and the breakthrough here will be proving that it's cheaper and we're a running a series of tests with Cycladex now to do that. They've also brought in some of the world's largest material science companies whose names would be recognized and there's joint development activities going on, testing and trailing different materials to see what the cheapest, lowest consumption could be. We're cautiously optimistic I would say. This has been a very safe investment for us because it's mainly been using federal funds to advance these different technologies, while we're providing the platforms to do it most efficiently. While I wrap that up, let me say that we're also working on two other ventures. They're smaller in nature, but not necessarily less exciting. In both cases, it would expand our mining potential. It would certainly reduce our cost and improve ultimately our land position. We expect that we should have some announcement coming with those by early September. So hopefully so far I've given you two sort of perspectives, two sets of context on us. We're working extremely hard to have the lowest possible cost platform to be as efficient and not waste the dollar and we're working effectively now and allocating our time away from blocking and tackling and very hard towards mine development, exploration development, technologies that increase this ability, economic feasibility and ultimately getting to those economic feasibilities for both our target mines, so that there's prospect to our mines going forward. We really enjoy doing that a lot more and so let me close with the Dayton project. We've been working internally very had to advance the Dayton resources. We've been doing it frugally, we've been doing it with our internal resources to put together a production ready mine plan within three years. That means publishing proven and probable reserves, that means having production schedules being ready to get back into production. That metallurgy work yielding 83% to 85% in just 25 days strongly enhances what we believe we already have but we haven't stopped there. We've also developed some specific drill programs. These are new drill programs based on updated analysis of prior geophysical studies that that we took in and correlated with surface testing that we did. We correlated with additional and new drilling that had been done. And it resulted in a much stronger interpretation of the geology. If you guys get a chance to there's a figure in press release as well as in the 10-Q, page 19 of the 10-Q, which not only shows the geophysical stand that we published before but it shows new interpretation of structures in Dayton that overlay on the Dayton Resource but then extrapolate all the way down to about 1.5 mile into the Spring Valley. Conceptually, Spring Valley always has been a tremendous target for us, but technically now we're really calibrating on some very specific targets and structures. That image also depicts half a dozen drill holes that have been put in to try to validate those interpretations with universal success across those drill holes. So far the geophysics, the interpretations and the limited drilling to date really tells us, this is a big target. Ultimately, we've already done economic shale and mine planning. We've disclosed in the 10-Q that we brought in SRK late last year and early this year to corroborate what we believe we already know. That corroboration was 100%. The economic shale and mine plans that we've already developed for the North Dayton have been reviewed by third parties. What we're very interested in is doubling, tripling, quadrupling, quintupling that resource into a much, much bigger reserve. So that work is moving forward. We'll continue to give updates as we go. But in summary, just two or three points and we'll go to questions. We are marching towards Dayton Feasibility compeller high water to have these production planned ready and to go in two years and will very likely start some of the permitting processes associated with Dayton later this year. They call that the Lucerne Project is fully permitted from every perspective. The Dayton project is permitted for expiration, drilling and development but there would be an additional permit ultimately for production. Lucerne is on the verge of a venture that could accelerate development, validate reasonably quickly, proven and probable reserves within a year I think and move us back towards production in a couple of years as well. Lucerne, it has been a double head to the coin. In one regard, it's fully permitted and could move a lot faster. In another regard, it's bigger and more complex and could take a little bit more development time. Certainly, the permitting side of that is not the risk, it's just the amount of time and diligence that we put into the development. Regardless, we see efficient task to those proven and probable reserves really frankly with or without a partner but in this context we like the JV model. We have two other existing and ventures in place, Cycladex and one other in a similar vein of Cycladex to collaborate enhanced feasibility with potentially new models is emerging as well. In this case, we're being safe, right. We're doing this on our partners, some of our partners time and if they're success, it applies directly to our mines, but if they're success, it could create new business models that will emerge well beyond our mines truly killing to maybe in some cases three birds with one stone where there are two other smaller JV potentials that I mentioned that we'll be talking about soon. And clearly, our time has been redeployed from more mundane activities that were necessary but not sufficient to activities that we believe will sufficient to deliver the value depicted in our plan. I really do appreciate the patience but it is not happening. So I will leave my prepared remarks to that. Maria if you are there, could you please turn up to Q&A?

Yes, thank you. [Operator Instructions] We'll take our first question from Mike Oswaliss [ph].

Hi, Mike. How are you?

Not too bad. I'm an individual investor. I just had a quick question any word on when this joint venture partner is going to be made public?

Yeah, it would - it really would be upon signing and closing the definitive agreement.

Okay.

We're under confidentiality. Frankly, it's difficult sometimes to keep those confidentialities. So we've been trying to be very prudent in disclosing what we can, obviously the risk of talking about it in advance if it doesn't happen is that it doesn't happen but these activities have been very, very collaborative, very productive. We feel like we're moving forward regardless. So hopefully it will be this month.

Great. Well, thank you, appreciate it.

Thank you, Mike.

And we'll take our next question from Harvey Redcroft [ph], private investor.

Good morning, Corrado.

Good morning.

Can you give us a little update on what's happening with the stock, I'm noticing that just today's performance it's already up to an excess of 13 million shares. You have any new institutional investors that are taking a look at the Company?

Yeah, I think that is for sure. We have on - it's always - this is always a double headed coin to write. Liquidity is a very, very good thing. We certainly think from our investors perspective it's a risk reducer, the more liquid the stock the better for our investors. But liquidity also seems to beget liquidity. So to answer your question, it really wasn't until April that we were starting to target, update to our story, we didn't feel prior to then, prior to the refinancing and getting out of that pretty difficult first quarter that we weren't going to have enough traction with the go forward activities. We're absolutely aware of institutional investment frankly coast to coast, right. We have - we see pockets on the East Coast, we see pockets on the West Coast, but we haven't gotten some inquiries from some names that are gratifying I guess I would say. On the flip side is, there is obviously someone selling when someone is buying as we were marching below $0.15. I think I mentioned on the last call, there's a new thing into my closet and I kept eyeing it, to kill myself but we kept the faith and we just kept marching forward and I think for me the most important thing is that the business model has got traction, the business model is moving forward nowhere near as fast as we want it to. We're trying to be diligent and patient but we're also impatient. We have a sense of urgency. So I think you'll see if you have record days, I don't expect you'll see that too often. But I think you've seen an elevated level, I think it's here to stay and I think we're working very, very hard on it. May be one other bit of color, I've never had a lot of success working with third party by our firms, but we've connected with two or three professionals that have really worked their asses off for us communicating effectively the story even before it was gaining traction and setting a lot of foundation. So I don't think it's luck, I think it's a tremendously hard effort. It's a high maintenance effort. When you're selling land and paying off debt and trying to get traction with new technologies and developing exciting mines, it takes a little hand-holding, it takes a little explanation, but we're getting there. Our hope is in the next six months, this thing simplifies dramatically and starts moving a lot faster. So that's the best I can offer right now. I'm sure people will be looking towards the filings and in the next you few weeks or so to see who is accumulating and it's good. I think net-net, it's good.

The potential joining partner, a lot to be purchasing in the open market or right under a definite -

No. No, no, no, no, no, no. Yeah, we're under - anybody that has information that would be considered material non-public regardless of agreements can't be trading the stock. So we're not aware of any of that kind of thing.

I'm referring to the - of the joint minor partnership.

Oh, yeah. No, I wouldn't imagine at all, no.

Okay. It seems like an opportunity if they're going to be doing the digging that they know what the value of the stock is.

No, we're seeing it from institutional funds.

Okay, from the real estate standpoint and the water standpoint.

Oh, yeah, good. I went a little skinny in my prepared remarks there. So thanks for the question. Lot of activity happening, first and foremost, we said about 18 times since last year that this new USA Parkway was the critical catalyst, it was originally scheduled for December, but there was a lot of rumor mill that it was going to be done by the end of September. Last week, the Nevada Department of Transportation announced a ribbon cutting on August 28 with full open functionality on September 8. So we could not be happier with that project coming in literally a little bit ahead of schedule and presumably on budget for the state. When it's on time, it usually is on budget. They also completed already without fanfare or announcement, the roundabout right on Highway 50 that USA Parkway will connect into that roundabout is within immediate proximity of our industrial property in our water rights. And it looks gorgeous, right. So the whole area is developing in a way that - it is hurting to say in a way that was expected. It's probably more appropriate to say in a way that everybody was crossing their fingers and holding their breath that it would. So kudos to the state for spending $88 million and committing another $45 million to expand Highway 50 up and down the corridor that all of that touches our land and so that couldn't be better. More immediately, we got updates from our brokers last Friday and there are multiple properties going into escrow around us, some smaller ones, and there are multiple parties have been saying our properties and our lands and areas immediately around our lands. Some of the properties that are going into escrow are fully functional, some of the properties going into escrow but do not have water rights, which is absolutely key for us. In addition, of the 20,000 acre addendum to the industrial park, most people are aware of the industrial park is 8,000 acres in Storey County, Nevada. There's 20,000 adjacent acres right on the other side of the county line. Also in immediate proximity touching literally USA Parkway goes right through it and in immediate proximity of our industrial land and the developer is moving now just had sort of an all hands on planning commission meeting in Lyon County to move that with industrial development. It would be impossible for me to exaggerate the amount of activity. Some people have asked why haven't we gotten offers on the land, I think it's fair to say not, not in the case of the water rights, but in the case of the land that we forward priced these things to September. Our attitude was, we know the property is going to be worth more when USA Parkways running than it is today. And so if you look at the comps we're right in line with Dayton, these are more established communities that already have these highway access. We priced in one line with those neighbors, then our media center but things are all moving up to that direction, we'll reassess it in September and see how things look, but we couldn't be more pleased with the economic activity around us. And so we're looking forward to getting some sales done. We're looking forward to being debt free.

Good. Your tenant remarks addressed Tesla and Apple.

Yeah.

I thought that Google had picked up 1,300 acres as well, is that still the case or –?

Yes, it is. So there's probably four anchors if you will, right. Tesla being ground zero and Tesla is on - Tesla's news just keeps getting stronger. I mean literally I think they've already moved from 6 million square feet to 8 million square feet, but they're literally talking plans now to have three floors and potentially 15 million to 18 million square feet. I mean it's hard to - it's impossible to envision the facility. You have to come out and see it. But around that you have Apple investing a billion in doubling the size of its existing data center. You have Switch, which has the largest cooperative data center in the world already established in there. And then Google purchased property for $30 million that rankest with Tesla and Switch in the top three land holders in that industrial park. Now Google hasn't announced any plans and it's not irrational to assume that like Apple and Switch, they're going to put a data center in there, but there's also been tremendous amount of a rumor mill about their autonomous car research and development campus and where that's going to end up so.

Any ranchman offered through any of those four players?

There has just recently been some dialog between Tesla - and I wouldn't say with an agent of ours but a very close relationship. And what we learned there is that they're talking to a lot of people about getting their people housed. So that's happening. One of the people, one of the developers in Silver Springs is looking at multiple different properties for starting to put up apartments homes etcetera in place. So those are the hubs, right, Carson, Dayton, Silver Springs and Fernley, are they going to be the four biggest beneficiaries of USA Parkways. Silver Springs is in the bull's eye and Dayton is where the Daney Ranch is just to the right. So again I think it's a matter of time we will get more proactive in reaching out and we've just updated all the profiles. I don't think the one thing with the ranch is it's impossible to envision it and so we just posted an aerial drone fly over of all of the homes on the ranch, I mean there's five homes, right all the homes on the ranch, their internal, external view of the facilities. You can now get a pretty but good understanding of it was a much better than before and now we'll start to do targeted outreach. We always felt USA Parkway was the biggest catalyst and so now it's here.

Great. Thanks, Corrado.

Thanks, Harvey. Thanks for asking that.

We'll take our next question from David Brigham with Brigham & Associates.

Hi, David.

Hey, how are doing? I've been around these diggings long enough to remember when your stock was $3 or $4. So it's nice to see so much positive happening. I'm curious, could you explain that what you should before about this is going to be quite a subset of people who know about your company, our company and its prospects. Do we suffer from a lack of exposure, is it, or do we have plenty of exposure I mean after all the stock prices were higher would give you an awful lot of options you don't have now.

Yeah, I don't.

I guess what I'm saying is that if we could by some quarter or to get a hold of every single fact and figure about Comstock can publish it to the world that wouldn't be a bad thing in our case would it?

No, no, very good. Let me say this I think that there was disappointment last year, which is justified in terms of our development we feel like we're getting it back on track very well now, but you know there were some this time last year. I think emerging from that we had to do some refinancing I think there's probably some concerns about our balance sheet. We just had to get through a couple of important things. We had to get through a restructuring and cost reduction, we had to refinance the existing debt and push it out for years and then we got a little curve ball thrown at us not making excuses that the weather was horrific in the first quarter, we really had to buckle down and fight through that. And we have a small team so it's like a seal team, but it was working around the clock. And really since April, we feel like our activities have really started to be forward looking, had really started to be productive. And I think that's first. So now that we've gotten that and you can get that and not have the market respond to it. I think we're seeing the market respond to it. And to the earlier question, professionally institutionally and when you start to see real institutions coming in, in the way they are then people will join in on that. We have started out reaching but not - certainly not on a global scale but interestingly as we're getting enquiries from Canada we're now getting some serious enquiries from Europe, but we had an enquiries from China which is outside of my head right now, but you never know. And so to the extent we have the capacity and we're feeling that we're getting it. We can start to get the message out in a much more constructive way and much more broadly. It's been harder prior to last three months, it's been a little better than the last three months and I think it will just keep getting better. So the point is well taken, more to do there. I think it's important that the messaging is accurate. Sometimes the Comstock fame is for massive history, we want people to understand there's some real current, there is some real modern stuff happening right now and it's positive. So we'll work on that more. We did add some resources to do that and will continue do I guess on that pavement.

We'll take our next question from Thomas Ramirez, private investor.

Hello, Tom. Tom?

We'll take our next question from James Dell [ph], private investor.

Hey, Corrado. Wait, just put you on speaker. Okay, hey, listen, could you - you touched on it a little bit, but are we getting any real nibbles on your industrial property?

Yeah, we're getting real nibbles. I mean there's two parties that have been doing diligence. Feels like a couple weeks now talking to county managers, checking permits, checking zoning, there's other developers that are just enquiring and there's other developers that are enquiring that are diligent thing other properties around us. So, it's important to balance it like you'll have - if you're in Reno, you have closings every day. I mean it's almost unbelievable, but and you're seeing that Dayton and Fernley also, but in Silver Springs what you're seeing is a lot of diligence, a lot of sizing op, a lot of prospecting and comparing and certainly if you're just out to get land and a lot of it like 50 acres or 100 acres you could step out a bit it and get it a little cheaper than what we're propositioning. But if you want to be central to the equation, we're one of the key properties. We're adjacent to an airport, one of our prospects met with the airport to talk about how you get through the fence access from our property to the airport I mean that kind of activity going on right now.

Good. All right. Next question. You did mention of the Occidental, a little. Could you give us an update on what's going on up there?

Yeah, so as a reminder the Occidental and also formally known as the Brunswick Lode is a 1.5 mile strike that has some 40-odd claims amongst it, something like 34 unpatented claims and six patented claims or something very close to that. And we've been doing a bunch of historical work on it. In other words trying to first leverage and catalog in and make sure that we understand the history with a couple of meaningful findings. And we've also been doing some work on the Sutro Tunnel Company and we were collaborating some data but Larry Martin, our Chief Geologist, identified a report when the Sutro Tunnel was coming underneath that Occidental loading. And just another point in history, the Occidental had very, very minor amount of formal workings. It stand parallel to the Comstock Lode. And historically there might be 600 - I mean there's a time difference there between the Comstock Lode's rocks and Occidental but it's not big. And they mined a couple of pods of very high grade near surface like 300 feet and then there's a shaft or two had like 500 feet, maybe one at 700 feet. I mean very, very light in any context of the load, which you know was mined to 3,600, 3,700 feet. And so this work that we're doing includes surface mapping, it includes collaborate, coordinating the tire workings, there's few, but then we identified a report from the Sutro Tunnel development that had identified 50 feet of something like a quarter of an ounce per ton very high grade gold at about, it came around 1,200 or 1,300 feet something like that. And so that's stunning 50 feet is stunning. It wasn't crystal clear on the continuity of the 50 feet, but it's - if we put a drill hole anywhere with 50 feet of quarter of an ounce per ton, I'll pass out, like you have to revive me. So they haven't mined really in any way past 350 feet, couple of shafts, a little bit deeper, but at 1,200 feet corroborating evidence, there's a high grade vein. So we'd love to put some drill holes in the Occidental. What we're talking about with our geology team is that when we're ready to mobilize some drilling on the Dayton would be ready to have let's say half a dozen surgical hole that's a bad term because nothing surgical really but as precise as we could get the most amount of data from based on what we could learn today. So that's really the update. It's not a lot of attention compared to the Dayton and the Spring Valley work, but there's absolutely nothing that we know and certainly a lot that we do know that suggests that the Occidental could be as important as a target as the Dayton and Spring Valley combined. They're both very long known mineral strikes train have these consolidated the entire package on.

Okay. In previous conversations we talked about a joint venture possibility up there, were any discussions ongoing or the terminated or what?

Yeah, now, we had a couple of I would say smaller partners make enquiries, nothing's been terminated. I just think that they've been lower priority and not sort of facilitated in the same light, but they're still there and they're certainly feasible. But no real update there. Nothing's happened in the last three months.

Okay. Well, keep it going.

Thank you. Thank you.

Have fun. All right, bye.

All right, bye.

We'll take our next question from Lawrence Janney [ph], private investor.

Good morning, Corrado. How are you?

How are you?

Good. So for clarity purposes, this hypothetical joint venture, are they other than adding some financing and helping out with that are they like more expert at extracting resource? Are they not a middleman that's something that you guys couldn't do yourself? Is it more efficient to have them? Are they bringing something to the table but you couldn't?

Yeah, so our pre-requisites are strong mining competency. So, the executive and/or executives have long experience in both open pit and underground mining because Lucerne is still has the potential for both possibilities tends to be riskier. In our case we have very valuable lands that take care of that. So, I don't know. Is that a good answer? Right. We're going to have to raise some amount of equity, but we're not looking to do deals. We're not looking to complicate the structure, right. We wanted to be very simple, very clean, very efficient and only as is needed. So, we've been doing that over the last few months and we've gotten through an interest payment, which was fantastic and we've got a good buffer and now it should be very, say, as we move forward, I'm going to focus as much if not most of my time on these land sales as I am on the ventures to move forward, only because of how important it is to the balance sheet and the company's value.

It sounds good. Good luck.

Okay. Thank you.

Thank you Corrado.

We'll take our next question from Jordan Einstein [ph], private investor.

Yes. Good morning, sir. This could be one more question or three depending on how you would answer the first one. But what I'm curious is in terms of the joint ventures, would you be able to release whether or not these companies are privately held or publicly traded?

So, we have a bucket of both. We have a couple of publics and two publics, three privates, so it's a hodgepodge.

Okay.

I know that doesn't help you, but I can't really disclose there.

Yeah. Would you be able to say what exchanges are traded on?

I don't know. I think -

Okay. Yeah, I'm just trying to squeeze out any type of information we can on it, but, okay, well, I appreciate it now. Keep up the good work.

No problem. Thank you very much.

We'll take our next question from Carl Frankson, private investor.

Hi, Corrado. I almost hesitated to ask this question, because it's irrelevant and I'm almost embarrassed to ask it, because I'm a long time investor. As a matter of fact on my desk I brought up a couple of the ingots from the first [indiscernible] on September 9, 2012. Yeah. And as I say, maybe it's advancing age, but my memory is kind of deserts me a little bit. We went through the infrastructure. We had the equipment. We opened the mine. We've got the ingots from the first pour. The infrastructure, we changed the roads. We've got the people, the machinery, and five years later we're not producing any gold at all and I hear things like two years for the Lucerne and stuff like that. Again, it's not a quarterly question. It's kind of a historical question and I should know the answer. I am afraid I don't. What happened?

No, it's a great question. So, it's really Lucerne, right, and let's just reiterate the infrastructure is in place. The equipment is in place, even the BLM, right away roads in place et cetera, the - we started mining. We mined and extracted ore from September 2012, actually from August 2012 we started extracting the ore all the way until September 2015 and then we processed right through December '16 getting 90% yields on the gold and 60% yields on the silver. And that did completely enable the county to give us a landmark expansion of our permits. We mined right up to the permit boundary on everything that we did and then we got massive expansions on our permits. And for the sake of history, right, I made the decision to try to thread the needle and transition that open pit mine into an underground mine, because we were literally seemingly arm's length from this high grade corridor. And that was more complex and more difficult than we expected it would be. It also, though, built two major underground tunnels that position us remarkably well for the next round of drilling and development. But we pushed ourselves hard to make that transition and strained our capital resources to do it. And really there's two questions here. If we're going to continue the Lucerne as an underground development, which is a possibility, there is a complex network of high grade ore body down there that could take a couple of years of drilling and development. With the not certain outcome, I think you certainly will get a mine plan, but to what extent and what length is not certain. In the process of what we've been doing lately, we've also reassessed just extending and expanding the surface mine, which is much more feasible when it comes to the ore body and again it varies depending on different price points. We're remarkably at almost $1300 gold despite all-time high in the equity market. So, something very positive in my opinion is happening with the precious metal that still is an obvious. So, the answer to the question is Lucerne is fully permitted, fully infrastructure. And depending on how you want to optimize the next phase of mining, it could be almost immediate. It could be within a year or it could be in the underground scenario two to three years. So, the first phase was successful in terms of proving a number of critical variables from ore to metallurgy to grade to strip ratio. But we didn't have the expanse of permitting to extend it. And if you were going to go from a surface perspective, you would also still need some federal permitting. So, there is a number of possibilities that will take some very important engineering and studying to do, which is what the ventures are designed to do, but it's there, right, it's just how. I think it's a question of how you do it and the resources you put into how you do it. With the Dayton, we have an economic shell that is very, very near surface, much higher grade and even Lucerne was before just as good or better metallurgy on private land and there's really a short path there up to two and a half years max to get that into production. The debate is, 'Do you put that into production or do you extend it to its larger potential in the southern part of the Dayton all the way in the Spring Valley?' And most arguments would say that's not a difficult thing to try to do. Let's drill down and expand. So, we've been putting our calories into defining the ore body to finding the characteristics, so that you could efficiently drill out in the way that we originally did Lucerne. I mean we first drilled out Lucerne. We got over a million ounces of measured and indicated heading to a million and a half pretty quickly. And there isn't necessarily a reason we couldn't do the exact same thing extending the Dayton resource out. So, I think the notion of just taking the existing mine and expanding it was oversimplified and I think that's the sort of the wall we ran into. The ore is there. The resource is there. Many people outside the organization are excited about it. We are - but it's just going to take a little more work. The right context, though, is if you were looking at a brownfield or even a greenfield, you're going to be seven to 10 years away from getting those reserves proven and ready to go. Two years - two to three years relative to zero sucks, but two to three years given the way we've titled the entire district, the footprint, the zoning, the permits, really is a low risk low cost path to proceed. And some of these other things we're working on could really juice up the economics for us even better. So, I'm not trying - I don't want to sound like I'm making excuses. I'm just trying to explain that the idea of the initial mine expanding sort of seamlessly into the larger mine, it wasn't loud [ph], it was just more - it's just going to require much more than we basically thought I guess is the short answer.

Okay. Thank you.

Thank you, Carl.

We'll take our next question from Derek Smith, private investor.

Hey, good morning, good afternoon. Can you just tell me - give some color on the AMT program or the ATM - excuse me, ATM program?

So, yeah, so we have both, American mining and tunneling is one. And then the equity line is the other, which one were you referring to?

Yeah, the ATM, I'm sorry, the aftermarket.

Yeah, so we actually have two facilities that we have in place. One that's been in place over a year that didn't use hardly at all in 2016 and one that we put place in April. And they're really designed to allow us to safely access equity as we need it. With the land sales coming up, we don't really want to - we certainly don't want to raise - we look for not to raise any equity at these levels, but we certainly don't want to raise a lot of equity or do a structured transaction. So these facilities just give us more efficient access. The one that's been in place for over a year, it's structured by design not ever trade more than 9% of any day's volume, it's very light in terms of its implication and use. With these higher volumes obviously it can be more effective in some cases but that's really in a nutshell, we have one with a $5 million facility, one $3.25 million facility. So they are not huge, I mean that's not small to us, but we just wanted to as a public company make sure that we had the tools in place such that we never did have any kind of liquidity issues.

Has there ever been any discussions about approaching private investors for loans of the Company?

We have $10.7 million four-year loan to the Company, it's secured by our assets. And as we sell those non-mining assets, we hope to fully pay that off. When we have mine plans and production schedule I think that financing becomes a very nice alternative for us. But right now we're not in a mood to increase our debt or in the mood to pay off our debt and get ourselves funded to production. So, yes is the answer, but depending on the circumstance and the time, we'll have to wait what's the best and safest for us to get there.

And just lastly then who makes the decision on what company you use to exercise the ATM offerings?

There's been a tremendous amount of diligence on that and we probably talked to every mine and everyone's mother. Frankly, we're not fans of the conventional facilities that we see out there or even the banks that use them, even the better banks who claim to use them better. What we've tried to structure is something that can be trustworthy, used very lightly or we're placing stock into investor funds that we know. The biggest negative in my opinion is you never - you don't know where the stock is going. Really if you look at our history, the one thing that we've done a good job in is the institutions that we've been able to bring and hold in especially our top 10. So we probably have an unusual amount of tension to - first of all we have a lot of resistance to even the notion but ultimately if we challenge a couple of assumptions about knowing where the stock goes first and secondly how it's effectively used. If we could control those things then we thought it was a good addition to this, the tool box not to be used lightly only - not to be used loosely only as needed for the current circumstance. Our recent circumstance unfortunately because we had a cash interest payment due July 1, we had to use them more than we would have liked to at lower share prices. But again we're trying to bridge to a much different place and I feel like we're on the right path to getting there.

Yeah. That's why having IAA Financial, is that still the group that you use? And Leviston, I think it is, is that right?

Yeah, IAA has been - IAA is sort of the parent structure. We use a very specific broker that's been with the Company for over 8 years, probably knows us better than anyone that I know and is incredibly trustworthy. So they're not if they use a NFS infrastructure, Fidelity Infrastructure, it's very professional activity. They're not - in that case, it's a very light use, they're not market makers per se the way that you would think. Leviston is the firm and professional that we've used to identify good long-term resource investors and we're very pleased with that as well.

I just noticed I see the price that you guys got was I mean maybe if I'm missing - I don't know if I'm reading it correctly, but it was $0.155 or what have you and that seems like in the low end of the range but it's what is it.

There is not - that's the timing of the market which as I said was unfortunate because we had an interest payment coming up than it was the cost of these facilities. These facilities are probably the most efficient facilities in the market in terms of cost of using that.

Okay. Thank you.

Thank you.

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

Thank you, Maria. Thank you for the call. I'm finally taking the full hour, we want just slightly over, it's very important for us that there's full transparency that there's full understanding I'd ask you all to read the 10-Q and if you have any other questions, please don't hesitate to circle back and ask. Also please be on the lookout of us getting some of these things over the finish line and announce sooner rather than later. Thank you all for your time.

And this concludes today's call. Thank you for your participation. You may now disconnect.