Welcome to the Comstock Mining Incorporated First Quarter Update Call. At this time, all lines are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded Thursday May 9, 2019. I would now like to turn the conference over to your host, Mr. Corrado De Gasperis, CEO and Executive Chairman for Comstock Mining. Please go ahead.

Thank you, Emily, and good morning, everyone. It’s Corrado here, Chairman and CEO of Comstock Mining. Welcome to our 2019 first quarter conference call. This morning we published summary highlights of our quarter. We have plans for filing our 10-Q next week, including our customary quarterly – we’ve been working for now for probably about nine years. I’ll provide a brief summary of the information included in our press release from this morning, including some solid tangible progress on all aspects of our strategic initiatives. I think this part of the call will be very interesting to all of you and I’m sure we’ll get some good Q&A. 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 we may have – we may make forward-looking statements on this call. Any statement relating 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 previous reports filed by the company with the SEC and in this morning’s press release. And all forward-looking statements made during this call are subject to the same and other risks that we can’t identify. Let me just start with the financial highlights. Our net costs are down period-over-period and this is despite some significantly increased amount of strategic activity, primarily administrative associated with these transactions, both the transaction with Tonogold that we’ve been working diligently on throughout the entire quarter, some other strategic ventures and the whole opportunity zone phenomena and the related business opportunities that have come from that.…

Thank you. [Operator Instructions] Our first question comes from the line of Carl Frankson. Your line is open.

Thank you. Hi, Corrado.

Hi, Carl. How are you?

Good evening, guys. How are you? Fine. I got to tell you, I’m trying to settle down a little bit here. I’ve been on the call obviously all – for all these years and we’ve gone through a very barren time. You would have to admit, since we’re mining.

Yes.

You’ve got to – I’m trying to get my arms around some of the numbers that you’ve said. Just number one, just in terms of the Lucerne-Tonogold transaction, I think you mentioned ultimately there would be something about $24 million in revenues generated from there?

Yes. So that’s just…

The question is, if there are no costs involved with that, we’d have tax loss carryforwards that all comes down to the bottom line as revenue. We haven’t had revenue in ages. How does that get reported, in cents per share? I mean, we’re all going to sit and see, for six months you’re in $0.24 a share or something. This is more than the market cap or the stock.

Yes. So great question. Let me hit it in two points. So let me break it into three pieces, if you will, okay? So this $23 million that we’re going to get, which $11.5 million is the cash payment and $3.5 million is the stock payment, those will all be gain is that we will record on the sale of the asset. And those gains will fall to net income. Those gains will translate to earnings per share and those gains will be sheltered from taxes. And so in fact, we’ll actually be able to recognize some of the NOLs in every loss assets that are currently not recognized as well. So you’ll get the full benefit of that profit for lack of a better description. Then very importantly to what you just said, that the additional, let’s call it $25 million, that comes from rental of American Flat, both in terms of an annual fee and dollar per ton, that is revenue. It’s structured like a triple net lease. So there is no cost of sales associated with that revenue and that revenue drops right down to the bottom line. And it is sheltered from tax and its EPS. And then there’s 1.5% royalty, which would be – and let me just say this, if you look at Tono’s rate case in preliminaries, they’re probably talking about that conservatively, over a – the base part, the $15 million, the first estimate over about a four-year period, and then maybe the second part over a two- to three-year more period, you’re looking at a very nice, a very nice stream of revenue. And then the royalty on top of that, which again, has no cost of sales associated to it. So I know people didn’t quite understand that, it’s like…

Another kind of question that’s related, you kind of lost me with all the LLCs and capital partners and whatnot.

Sorry.

And this is kind of a forward-looking question, but we’ve gone from no revenues to how many potential different revenue sources are there? It sounds like there are 8 or 10 different areas we’re going to be generating revenues.

There are six that we’re specifically focused on, right? We have Tono royalty, we have Northern Minerals royalties, but those would be a little bit further off. You have three clean technologies that we believe will be revenue generating and then you have the Dayton mine itself. So those are near-term. But I want to say to you as we’ve got three mature, clean technologies. And when I say mature, I mean, we’ve got engineering designs. We’ve got feasibility work. We haven’t finally and fully proved the concept, but finally proving it means we start generating revenue. So literally in the first proof of concept with the mercury equipment, we’ll be generating revenue. So I would say six that are known, that are on our whiteboard, but we haven’t fully completed feasibilities. Obviously we haven’t fully modeled those screens, but what we’re hoping is that by the annual meeting, which is just this summer we’ll have a lot of clarity and a lot of specificity and those folks are going to be there and you’re going to get to talk to them and it’s going to be very excited.

Well, I got to tell you, thanks, I’ve been on this call for quite a while and this is going forward now it really sounds exciting. Good job.

We have been making a real company that’s generating real revenue.

Very exciting going forward. Thanks. Corrado.

Thank you, Carl. Talk soon.

[Operator Instructions] Our next question comes from a private investor, Lauren Danny. Your line is open.

Good morning, Corrado. Glad to hear out of the blues. So I’ve digested a lot of what you said and it all makes sense, but I’m going to ask you to look forward a little bit and specifically with Dayton. But before I do that I got one other quick question. Does the formation of all those entities, that’s not going to impact or decrease or hurt the NOL at all, right?

No, no. Everything remains 100% under common control Comstock Mining Inc. and Comstock Mining Inc. reserves, probably its NOLs. The NOL – there’s really no provision to lose the NOL, but there are provision to limit the NOL if you materially change the ownership of Comstock Mining. So, it’s interesting to say that because when we were talking about the opportunity zone, one of the first ideas was what is an opportunity for Comstock Mining. And the immediate response was that would destroy the NOL. So we’ve been a big part of this, which you’ve clearly kicked up on as we’ve been how do we structure how do we structure revenue generation and value generation without diluting our shareholders or minimizing that dilution to the absolute close number, while maximizing the use of the NOL. That’s really been the two governing parameters when it comes to structure. Obviously, the opportunities come with different reasons. People see us as a permitted platform with remarkable accolades on environmental competency, environmental acknowledgement. And so we’ve become a sort of a – I used to think of those awards, first place reclamation, first place reclamation, first place reclamation as intangible, like it feels good. We’re glad that we do things well, but it’s turning into a tangible asset because people are coming – I’ll use the mercury example. The counterparty came to us and said, we’ve been testing mercury around the world. We’ve been testing mercury in the Philippines, we’ve been testing mercury in Nicaragua. We have a solution that works on mercury. But for people to really accept it, wouldn’t it be ideal if we can test it in the United States under an EPA and Nevada EPA. U.S. EPA and Nevada EPA formally approved a plan for remediation – remediating mercury. But where you are going to find that? Oh, guess what? We have not. So, by doing all those things the right way, and frankly investing the money in that long-term plan, getting the U.S ETA district mine approval, getting end depths, sponsorship, we now have an asset. And so now together with this technology, we commercialize that asset. So anyway, I got a little sidetracked. Now the NOLs are fine. very fine actually. Very fine.

And then one more thing about NOLs and then I’ll move on to Dayton. So NOLs, what do they have about another 15, 20 years before they started?

Yes, yes. So I will answer it this way. Like our oldest block, I mean they go, they actually go back – they actually go back. Some very small ones, we’ll go back as far as 12 or 13 years, 14 years. So that means those only have six years left on their lives. Those are the ones we would use. There’s a big block that’s eight years old. We’ve got 20 years to use them. So, the big block gives us 12 year head room. So I would say the average life if you weighted the average is probably 15, 16 years. I didn’t do that math to be honest, but I would show that that’s directionally correct.

And then getting onto the Dayton, what would be the ultimate hypothetical use of the Dayton would Comstock Mining, would you guys mine it would possibly Tono mine it? I mean, I know obviously it’s early and there’s tons of possibilities, but what, is there any plan in place or it’s too early or there’s just an infinite possibilities.

No. We have a full plan in place to bring it into production. Okay. So that’s not the right verbalization. We have the full intention to bring it into production ourselves and we have a schedule that represents all the planning activities required to do that. Okay. Part of that would be get special use permit in Lyon County and part of that would be to ensure that the local community, participates in that planning and that we’re communicating before we go for the permits and what we’re doing and how we would do it and getting their input. Part of this is the economic feasibility and so we’re marching to update our resource estimate. That’s the first technical report, and we’re doing it in a way that it will be an updated resource estimate. It will be fully compliant with the new guidelines. The U S is also adopting Canadian guidelines, which is – that’s not the right verbalization. The U S is adopting new guidelines in an enhancement of Guide 7, that actually is much more consistent with the Canadian resource reporting, which is viewed as the best standard in the world. And that will allow us to start disclosing our resources and reserves in our filings. That’s been prohibited today by the United States. That’s why a lot of people prefer to listen Toronto, but that’s coming to the U.S. now, so that’s great. So we’re going to put out a resource estimate report as that’s updated. It’s going to be scoped – sort of like what is Tono is doing to have a lot of the prerequisites for a preliminary economic assessment that would allow us to do a second report that is more of a real preliminary economic assessment. Now you started talking about economic…

Got it. And then, so you touched on drilling in the Dayton, so there’s going to be a lot of that because if you’ve only touched on a fractional share of three miles, there’s sounds like there’s plenty of room for drilling.

Yes. So the – there’s a precise drill plan. Larry Martin, our Chief Geologist and Mike Norred, our Senior Mine Engineer, quietly, just like we’ve been doing. Quietly have been building a [indiscernible] his level plans. We integrating that. And when you do that, the precision that you get on a three dimensional model allows for – I hate the word because it’s a little exaggerated, but it allows for more surgical drilling. I mean you aren’t drilling right into a cross section and a, cross point where you know, there’s a structure, but you don’t know what the mineral values are. So, we tend to get very, very high returns on those dollars that’s in the tiny part up at the top. But then it feel for another two miles we’ve done geo physical analysis and the magnetic signatures. What’s really beautiful about it is, you’re looking at the magnetic signatures where you know, you have a $0.5 million ounces ago, right? So, that tells you something, then you do geophysics, down for two miles, which we’ve done with a third party and the signature continues. And then you started defining what we believe all of structures would overlay. And you drill into that. That is a longer term drill plan. That is very, very exciting prospect that, it’s when I talk about – when I talk about, going into production within two, 2.5 years, I’m talking about the small northern part of the possibility. If we were talking about drilling out the rest of the day and drilling up the rest of the Spring Valley, you’re not talking, that’s going to be an awesome runway for much, much more mineral definition and resource estimation and grow.

Awesome. Thanks. You really answered my questions. That’s kind of what I envisioned. Thanks so much.

Thank you very much.

That concludes the question-and-answer session today. I would like to turn the call back to Mr. Corrado De Gasperis.

Hi, everyone thank you for the time, and we are pleased with the recent – the recent progress, it feels like 2.5 years of hard work finally coming to fruition. But we can certainly expect updates and communications in May and in June, as well as nailing down the annual meeting and reporting that day. So look forward to talking to you guys in the near future and we appreciate all the interest.

That concludes today’s conference call. You may now disconnect.