|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
NEVADA
(State or other jurisdiction of
incorporation or organization)
|
|
1040
(Primary Standard Industrial
Classification Code Number)
|
|
65-0955118
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
|
Three Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
REVENUES
|
|
|
|
||||
Revenue - mining
|
$
|
1,457,991
|
|
|
$
|
5,442,027
|
|
Revenue - real estate
|
33,285
|
|
|
46,264
|
|
||
Total revenues
|
1,491,276
|
|
|
5,488,291
|
|
||
|
|
|
|
||||
COST AND EXPENSES
|
|
|
|
||||
Costs applicable to mining revenue
|
1,262,316
|
|
|
3,219,831
|
|
||
Real estate operating costs
|
92,324
|
|
|
61,267
|
|
||
Exploration and mine development
|
810,916
|
|
|
530,660
|
|
||
Mine claims and costs
|
273,877
|
|
|
293,163
|
|
||
Environmental and reclamation
|
357,238
|
|
|
388,790
|
|
||
Land and road development
|
20,904
|
|
|
862,246
|
|
||
General and administrative
|
942,028
|
|
|
1,311,329
|
|
||
Total cost and expenses
|
3,759,603
|
|
|
6,667,286
|
|
||
|
|
|
|
||||
LOSS FROM OPERATIONS
|
(2,268,327
|
)
|
|
(1,178,995
|
)
|
||
|
|
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
||||
Interest expense
|
(216,358
|
)
|
|
(330,451
|
)
|
||
Other income (expense), net
|
(370,099
|
)
|
|
—
|
|
||
Total other income (expense), net
|
(586,457
|
)
|
|
(330,451
|
)
|
||
|
|
|
|
||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(2,854,784
|
)
|
|
(1,509,446
|
)
|
||
|
|
|
|
||||
INCOME TAXES
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
NET INCOME (LOSS)
|
(2,854,784
|
)
|
|
(1,509,446
|
)
|
||
|
|
|
|
||||
DIVIDENDS ON CONVERTIBLE PREFERRED STOCK
|
—
|
|
|
(965,164
|
)
|
||
|
|
|
|
||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
(2,854,784
|
)
|
|
$
|
(2,474,610
|
)
|
|
|
|
|
||||
Net income (loss) per common share – basic
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
||||
Net income (loss) per common share – diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
||||
Weighted average common shares outstanding — basic
|
176,737,416
|
|
|
82,540,600
|
|
||
|
|
|
|
||||
Weighted average common shares outstanding — diluted
|
176,737,416
|
|
|
82,540,600
|
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
REVENUES
|
|
|
|
||||
Revenue - mining
|
$
|
3,438,755
|
|
|
$
|
11,369,201
|
|
Revenue - real estate
|
73,042
|
|
|
156,507
|
|
||
Total revenues
|
3,511,797
|
|
|
11,525,708
|
|
||
|
|
|
|
||||
COST AND EXPENSES
|
|
|
|
||||
Costs applicable to mining revenue
|
2,678,237
|
|
|
6,937,743
|
|
||
Real estate operating costs
|
144,753
|
|
|
261,294
|
|
||
Exploration and mine development
|
3,438,508
|
|
|
1,133,854
|
|
||
Mine claims and costs
|
570,310
|
|
|
714,227
|
|
||
Environmental and reclamation
|
729,934
|
|
|
1,011,944
|
|
||
Land and road development
|
20,904
|
|
|
862,246
|
|
||
General and administrative
|
2,027,136
|
|
|
3,457,234
|
|
||
Total cost and expenses
|
9,609,782
|
|
|
14,378,542
|
|
||
|
|
|
|
||||
LOSS FROM OPERATIONS
|
(6,097,985
|
)
|
|
(2,852,834
|
)
|
||
|
|
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
||||
Interest expense
|
(438,095
|
)
|
|
(554,124
|
)
|
||
Other income (expense), net
|
(370,099
|
)
|
|
3,186,626
|
|
||
|
|
|
|
||||
Total other income (expense), net
|
(808,194
|
)
|
|
2,632,502
|
|
||
|
|
|
|
||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(6,906,179
|
)
|
|
(220,332
|
)
|
||
|
|
|
|
||||
INCOME TAXES
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
NET INCOME (LOSS)
|
(6,906,179
|
)
|
|
(220,332
|
)
|
||
|
|
|
|
||||
DIVIDENDS ON CONVERTIBLE PREFERRED STOCK
|
—
|
|
|
(1,883,996
|
)
|
||
|
|
|
|
||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
(6,906,179
|
)
|
|
$
|
(2,104,328
|
)
|
|
|
|
|
||||
Net income (loss) per common share – basic
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
||||
Net income (loss) per common share – diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
||||
Weighted average common shares outstanding — basic
|
170,075,960
|
|
|
82,515,428
|
|
||
|
|
|
|
||||
Weighted average common shares outstanding — diluted
|
170,075,960
|
|
|
82,515,428
|
|
COMSTOCK MINING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|||||||
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
(6,906,179
|
)
|
|
$
|
(220,332
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation, amortization and depletion
|
3,355,178
|
|
|
3,836,092
|
|
||
Stock payments and stock-based compensation
|
336,964
|
|
|
44,400
|
|
||
Accretion of reclamation liability
|
92,890
|
|
|
130,653
|
|
||
Gain on sale of properties, plant, and equipment
|
(583,462
|
)
|
|
77,579
|
|
||
Amortization of debt discounts and issuance costs
|
182,471
|
|
|
315,735
|
|
||
Payment of interest expense and sales tax with common stock
|
183,900
|
|
|
—
|
|
||
Loss on payment of debt obligation with common stock
|
150,166
|
|
|
—
|
|
||
Net change in fair values of derivatives
|
—
|
|
|
74,271
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
24,642
|
|
|
263,453
|
|
||
Inventories
|
299,572
|
|
|
83,511
|
|
||
Stockpiles and mineralized material on leach pads
|
978,668
|
|
|
(105,213
|
)
|
||
Prepaid expenses and other current assets
|
(1,051,816
|
)
|
|
(690,599
|
)
|
||
Other assets
|
—
|
|
|
12,941
|
|
||
Accounts payable
|
168,923
|
|
|
(625,432
|
)
|
||
Accrued expenses and other liabilities
|
(416,569
|
)
|
|
(2,828,946
|
)
|
||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(3,184,652
|
)
|
|
368,113
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from sale of properties, plant and equipment
|
1,858,511
|
|
|
117,065
|
|
||
Purchase of mineral rights and properties, plant and equipment
|
(258,075
|
)
|
|
(3,750,271
|
)
|
||
Decrease/(increase) in reclamation bond deposit
|
20,260
|
|
|
(100,000
|
)
|
||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
1,620,696
|
|
|
(3,733,206
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Principal payments on long-term debt and capital lease obligations
|
(3,654,240
|
)
|
|
(4,579,697
|
)
|
||
Proceeds from long-term debt obligations
|
925,000
|
|
|
9,419,392
|
|
||
Proceeds from the issuance of common stock
|
4,025,000
|
|
|
—
|
|
||
Common stock issuance costs
|
(571,250
|
)
|
|
—
|
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
724,510
|
|
|
4,839,695
|
|
||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(839,446
|
)
|
|
1,474,602
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
1,663,170
|
|
|
5,308,804
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
823,724
|
|
|
$
|
6,783,406
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid for interest
|
$
|
321,405
|
|
|
$
|
507,592
|
|
|
|
|
(Continued)
|
|
COMSTOCK MINING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|||||||
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Additions to reclamation liability and retirement obligation asset
|
$
|
—
|
|
|
$
|
659,295
|
|
Issuance of common stock for properties, plant and equipment
|
$
|
—
|
|
|
$
|
16,049
|
|
Issuance of common stock for settlement of long-term debt obligations
|
$
|
4,140,029
|
|
|
$
|
—
|
|
Dividends paid in common stock (par value)
|
$
|
—
|
|
|
$
|
1,723
|
|
Issuance of long-term debt obligations for purchase of mineral rights and properties, plant and equipment
|
$
|
—
|
|
|
$
|
197,515
|
|
Vested restricted common stock (par value)
|
$
|
36
|
|
|
$
|
40
|
|
Properties, plant and equipment purchases in accounts payable
|
$
|
—
|
|
|
$
|
42,693
|
|
Property transferred in satisfaction of accounts payable
|
$
|
1,100,000
|
|
|
$
|
—
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
In-process
|
$
|
151,379
|
|
|
$
|
249,130
|
|
Finished goods
|
—
|
|
|
201,821
|
|
||
Total inventories
|
$
|
151,379
|
|
|
$
|
450,951
|
|
|
|
|
|
||||
Mineralized material on leach pads
|
$
|
343,543
|
|
|
$
|
1,322,211
|
|
Total stockpiles and mineralized material on leach pads
|
$
|
343,543
|
|
|
$
|
1,322,211
|
|
Total
|
$
|
494,922
|
|
|
$
|
1,773,162
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Land and property deposits
|
$
|
1,387,855
|
|
|
$
|
1,169,285
|
|
Lease obligation deposits
|
1,759,764
|
|
|
231,000
|
|
||
Other
|
1,499,256
|
|
|
787,768
|
|
||
Total prepaid expenses and other current assets
|
$
|
4,646,875
|
|
|
$
|
2,188,053
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Long-term reclamation liability — beginning of period
|
$
|
6,827,568
|
|
|
$
|
5,908,700
|
|
Additional obligations incurred
|
—
|
|
|
659,295
|
|
||
Accretion of reclamation liability
|
92,890
|
|
|
259,573
|
|
||
Long-term reclamation liability — end of period
|
$
|
6,920,458
|
|
|
$
|
6,827,568
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Retirement obligation asset — beginning of period
|
$
|
1,107,120
|
|
|
$
|
1,619,101
|
|
Additional obligations incurred
|
—
|
|
|
659,295
|
|
||
Amortization of retirement obligation asset
|
(414,997
|
)
|
|
(1,171,276
|
)
|
||
Retirement obligation asset — end of period
|
$
|
692,123
|
|
|
$
|
1,107,120
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Accrued Board of Directors fees
|
$
|
349,000
|
|
|
$
|
251,000
|
|
Accrued production royalties
|
149,035
|
|
|
120,332
|
|
||
Accrued payroll
|
137,607
|
|
|
174,640
|
|
||
Accrued vendor liabilities
|
97,389
|
|
|
633,282
|
|
||
Accrued personal property tax
|
—
|
|
|
115,907
|
|
||
Other accrued expenses
|
520,974
|
|
|
344,365
|
|
||
Total accrued expenses
|
$
|
1,254,005
|
|
|
$
|
1,639,526
|
|
Note Description
|
June 30, 2016
|
|
December 31, 2015
|
||||
Note Payable - Caterpillar Equipment Consolidated
1)
|
$
|
3,677,254
|
|
|
$
|
—
|
|
Note Payable - Caterpillar Equipment
1)
|
—
|
|
|
2,679,723
|
|
||
Capital Lease Obligation - Caterpillar Equipment
1)
|
—
|
|
|
1,652,934
|
|
||
Lease Obligation - Varilease
|
2,674,972
|
|
|
3,556,479
|
|
||
Note Payable - V&T
|
494,968
|
|
|
750,000
|
|
||
Note Payable - Donovan Property
|
357,845
|
|
|
414,389
|
|
||
Note Payable - White House
|
278,318
|
|
|
281,139
|
|
||
Note Payable - Daney Ranch Property
|
275,849
|
|
|
1,139,834
|
|
||
Note Payable - Gold Hill Hotel
|
249,306
|
|
|
259,173
|
|
||
Note Payable - Dayton Property "Golden Goose"
|
175,741
|
|
|
489,212
|
|
||
Note Payable - Railroad & Gold Property
|
95,154
|
|
|
110,725
|
|
||
Capital Lease Obligation - Kimball
|
60,582
|
|
|
104,522
|
|
||
Notes Payable - Other
|
228,446
|
|
|
259,419
|
|
||
Note Payable - Auramet Facility
|
—
|
|
|
1,600,000
|
|
||
|
|
|
|
||||
Subtotal
|
8,568,435
|
|
|
13,297,549
|
|
||
Less current portion
|
(6,498,515
|
)
|
|
(8,538,336
|
)
|
||
Long-term portion of long-term debt and capital lease obligations
|
$
|
2,069,920
|
|
|
$
|
4,759,213
|
|
|
|
|
Fair Value Measurements at December 31, 2015
|
||||||||||||
|
Total
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Note payable (Daney Ranch Property)
|
$
|
1,139,834
|
|
|
$
|
—
|
|
|
$
|
1,139,834
|
|
|
$
|
—
|
|
Total Liabilities
|
$
|
1,139,834
|
|
|
$
|
—
|
|
|
$
|
1,139,834
|
|
|
$
|
—
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(2,854,784
|
)
|
|
$
|
(1,509,446
|
)
|
|
$
|
(6,906,179
|
)
|
|
$
|
(220,332
|
)
|
Preferred stock dividends
|
—
|
|
|
(965,164
|
)
|
|
—
|
|
|
(1,883,996
|
)
|
||||
Net income (loss) available to common shareholders
|
$
|
(2,854,784
|
)
|
|
$
|
(2,474,610
|
)
|
|
$
|
(6,906,179
|
)
|
|
$
|
(2,104,328
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
176,737,416
|
|
|
82,540,600
|
|
|
170,075,960
|
|
|
82,515,428
|
|
||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted average shares outstanding
|
176,737,416
|
|
|
82,540,600
|
|
|
170,075,960
|
|
|
82,515,428
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
June 30,
|
||||
|
2016
|
|
2015
|
||
Convertible preferred stock
|
—
|
|
|
53,608,855
|
|
Stock options and warrants
|
50,000
|
|
|
50,000
|
|
Restricted stock
|
1,444,000
|
|
|
1,796,600
|
|
|
1,494,000
|
|
|
55,455,455
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Mining
|
$
|
1,457,991
|
|
|
$
|
5,442,027
|
|
|
$
|
3,438,755
|
|
|
$
|
11,369,201
|
|
Real estate
|
33,285
|
|
|
46,264
|
|
|
73,042
|
|
|
156,507
|
|
||||
Total revenue
|
1,491,276
|
|
|
5,488,291
|
|
|
3,511,797
|
|
|
11,525,708
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost and Expenses
|
|
|
|
|
|
|
|
||||||||
Mining
|
(3,667,279
|
)
|
|
(6,606,019
|
)
|
|
(9,465,029
|
)
|
|
(14,117,248
|
)
|
||||
Real estate
|
(92,324
|
)
|
|
(61,267
|
)
|
|
(144,753
|
)
|
|
(261,294
|
)
|
||||
Total cost and expenses
|
(3,759,603
|
)
|
|
(6,667,286
|
)
|
|
(9,609,782
|
)
|
|
(14,378,542
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Loss
|
|
|
|
|
|
|
|
||||||||
Mining
|
(2,209,288
|
)
|
|
(1,163,992
|
)
|
|
(6,026,274
|
)
|
|
(2,748,047
|
)
|
||||
Real estate
|
(59,039
|
)
|
|
(15,003
|
)
|
|
(71,711
|
)
|
|
(104,787
|
)
|
||||
Total loss from operations
|
(2,268,327
|
)
|
|
(1,178,995
|
)
|
|
(6,097,985
|
)
|
|
(2,852,834
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense), net
|
(586,457
|
)
|
|
(330,451
|
)
|
|
(808,194
|
)
|
|
2,632,502
|
|
||||
Net income (loss)
|
$
|
(2,854,784
|
)
|
|
$
|
(1,509,446
|
)
|
|
$
|
(6,906,179
|
)
|
|
$
|
(220,332
|
)
|
|
|
|
|
|
|
|
|
||||||||
Depreciation, Depletion and Amortization
|
|
|
|
|
|
|
|
||||||||
Mining
|
$
|
1,580,201
|
|
|
$
|
1,890,467
|
|
|
$
|
3,240,713
|
|
|
$
|
3,780,575
|
|
Real estate
|
82,345
|
|
|
32,120
|
|
|
114,465
|
|
|
55,517
|
|
||||
Total depreciation, amortization and depletion
|
$
|
1,662,546
|
|
|
$
|
1,922,587
|
|
|
$
|
3,355,178
|
|
|
$
|
3,836,092
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
Mining
|
$
|
156,815
|
|
|
$
|
143,272
|
|
|
$
|
334,840
|
|
|
$
|
3,651,623
|
|
Real estate
|
2,261,263
|
|
|
—
|
|
|
2,261,263
|
|
|
14,663
|
|
||||
Total capital expenditures
|
$
|
2,418,078
|
|
|
$
|
143,272
|
|
|
$
|
2,596,103
|
|
|
$
|
3,666,286
|
|
|
As of June 30,
|
|
As of December 31,
|
||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Mining
|
$
|
34,996,561
|
|
|
$
|
41,886,124
|
|
Real estate
|
2,838,107
|
|
|
1,326,767
|
|
||
Total assets
|
$
|
37,834,668
|
|
|
$
|
43,212,891
|
|
|
|
Weighted Average per ton Gold
|
|
Weighted Average per ton Silver
|
||
Q1, 2014
|
|
0.024
|
|
|
0.345
|
|
Q2, 2014
|
|
0.034
|
|
|
0.546
|
|
Q3, 2014
|
|
0.026
|
|
|
0.564
|
|
Q4, 2014
|
|
0.039
|
|
|
0.680
|
|
2014 YTD
|
|
0.030
|
|
|
0.527
|
|
|
|
|
|
|
||
Q1, 2015
|
|
0.039
|
|
|
0.734
|
|
Q2, 2015
|
|
0.030
|
|
|
0.654
|
|
Q3, 2015
|
|
0.021
|
|
|
0.573
|
|
Q4, 2015
|
|
0.023
|
|
|
0.564
|
|
2015 YTD
|
|
0.031
|
|
|
0.659
|
|
|
|
|
|
|
||
Q1, 2016
|
|
—
|
|
|
—
|
|
Q2, 2016
|
|
0.025
|
|
|
0.436
|
|
2016 YTD
|
|
0.025
|
|
|
0.436
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
Change
|
||||||
Revenue - mining
|
$
|
1,457,991
|
|
|
$
|
5,442,027
|
|
|
$
|
(3,984,036
|
)
|
Revenue - real estate
|
33,285
|
|
|
46,264
|
|
|
(12,979
|
)
|
|||
|
|
|
|
|
|
|
|||||
Costs applicable to mining revenue
|
1,262,316
|
|
|
3,219,831
|
|
|
(1,957,515
|
)
|
|||
Real estate operating costs
|
92,324
|
|
|
61,267
|
|
|
31,057
|
|
|||
Exploration and mine development
|
810,916
|
|
|
530,660
|
|
|
280,256
|
|
|||
Mine claims and costs
|
273,877
|
|
|
293,163
|
|
|
(19,286
|
)
|
|||
Environmental and reclamation
|
357,238
|
|
|
388,790
|
|
|
(31,552
|
)
|
|||
Land and road development
|
20,904
|
|
|
862,246
|
|
|
(841,342
|
)
|
|||
General and administrative
|
942,028
|
|
|
1,311,329
|
|
|
(369,301
|
)
|
|||
Loss from operations
|
(2,268,327
|
)
|
|
(1,178,995
|
)
|
|
(1,089,332
|
)
|
|||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||||
Interest expense
|
(216,358
|
)
|
|
(330,451
|
)
|
|
114,093
|
|
|||
Other income (expense)
|
(370,099
|
)
|
|
—
|
|
|
(370,099
|
)
|
|||
|
|
|
|
|
|
||||||
NET INCOME (LOSS)
|
$
|
(2,854,784
|
)
|
|
$
|
(1,509,446
|
)
|
|
$
|
(1,345,338
|
)
|
|
June 30, 2016
|
|
June 30, 2015
|
|
Change
|
||||||
Revenue - mining
|
$
|
3,438,755
|
|
|
$
|
11,369,201
|
|
|
$
|
(7,930,446
|
)
|
Revenue - real estate
|
73,042
|
|
|
156,507
|
|
|
(83,465
|
)
|
|||
|
|
|
|
|
|
|
|||||
Costs applicable to mining revenue
|
2,678,237
|
|
|
6,937,743
|
|
|
(4,259,506
|
)
|
|||
Real estate operating costs
|
144,753
|
|
|
261,294
|
|
|
(116,541
|
)
|
|||
Exploration and mine development
|
3,438,508
|
|
|
1,133,854
|
|
|
2,304,654
|
|
|||
Mine claims and costs
|
570,310
|
|
|
714,227
|
|
|
(143,917
|
)
|
|||
Environmental and reclamation
|
729,934
|
|
|
1,011,944
|
|
|
(282,010
|
)
|
|||
Land and road development
|
20,904
|
|
|
862,246
|
|
|
(841,342
|
)
|
|||
General and administrative
|
2,027,136
|
|
|
3,457,234
|
|
|
(1,430,098
|
)
|
|||
Loss from operations
|
(6,097,985
|
)
|
|
(2,852,834
|
)
|
|
(3,245,151
|
)
|
|||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||||
Interest expense
|
(438,095
|
)
|
|
(554,124
|
)
|
|
116,029
|
|
|||
Other income (expense)
|
(370,099
|
)
|
|
3,186,626
|
|
|
(3,556,725
|
)
|
|||
|
|
|
|
|
|
||||||
NET INCOME (LOSS)
|
$
|
(6,906,179
|
)
|
|
$
|
(220,332
|
)
|
|
$
|
(6,685,847
|
)
|
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit
|
|
|
|
10.1*
|
|
Sales Agreement, dated as of June 30, 2016, between the Company and International Assets Advisory.
|
|
|
|
10.2*
|
|
Forbearance Agreement, dated as of June 27, 2016, between the Company and Caterpillar Financial Services Corporation.
|
|
|
|
31.1*
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1*
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95*
|
|
Mine Safety Disclosures.
|
|
|
|
101*
|
|
Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2016, furnished in XBRL (eXtensible Business Reporting Language)).
|
|
|
|
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015, (iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 and (iv) the Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
COMSTOCK MINING, INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: August 4, 2016
|
By:
|
/s/ Corrado De Gasperis
|
|
|
Name: Corrado De Gasperis
|
|
|
Title: President, Chief Executive Officer and Executive Chairman
|
|
|
|
|
|
|
|
|
|
1.
|
Services
. In connection with this engagement, ADVISOR will perform the following services
:
|
a.
|
Review the Company's current financing arrangements;
|
b.
|
Analyze the Company's operating projections and market conditions;
|
c.
|
Provide the Company management with recommendations regarding methods of addressing the Company's financing needs;
|
d.
|
To represent the Company in its efforts to obtain financing in the form of a private sale(s) of shares or direct market sale(s) of securities under the approved ATM. ADVISOR will assist the Company with potential investors who may have an interest in purchasing the Company's common shares in a negotiated sale and will advise the Company with respect to the proposed terms and conditions of the purchase. ADVISOR will help the Company prepare for investor meetings, management presentations, responses to requests for data and other activities. ADVISOR will assist the Company in managing the process of negotiating and closing the financing. This includes reviewing all proposals from potential financing sources, analyzing the terms of such proposals and participating in presentations to the Company's Board of Directors regarding any proposals, as well as reviewing the transaction documentation and other closing activities. The Company is free, at its sole discretion, to accept or reject the terms of any proposed purchase;
|
3.
|
Company R
e
pres
e
n
t
a
t
ions
. The Company will:
|
a.
|
Retain Company counsel and request that they address and deliver to the Company and us a letter dated as of the date of the Closing any Capital Raising Transaction containing statements customary for similar transactions and addressing such additional matters as ADVISOR shall reasonably request;
|
b.
|
As a condition to the closing of any public offering transaction, retain independent public accountants and request that they address and deliver to the Company and to ADVISOR a letter or letters (which letters are frequently referred to as "Comfort Letters") dated as of the date of the Closing of the Capital Raising Transaction;
|
c.
|
As a condition to the closing of any public offering transaction, obtain from its officers and directors written lock-up agreements restricting each such person from selling any shares of Common Stock of the Company for a period of 90 days after the closing of the transaction without the prior written consent of ADVISOR, in a form reasonably acceptable to both the Company and ADVISOR.
|
4.
|
Scope o
f E
ng
a
gement
The Company acknowledges that we will not make, or arrange for others to make, an appraisal of any physical assets of the Company. ADVISOR has been engaged by the Company only in connection with the matters described in this letter agreement and for no other purpose. We have not made, and will assume no responsibility to make any representation in connection with our engagement as to any legal matter. Except as specifically provided in this letter agreement, ADVISOR shall not be required to render any advice or reports in writing or to perform any other services.
|
5.
|
Term of
Engagement
.
Our representation on an exclusive basis will continue for a period of not less than Twelve (12) months from the date this letter agreement is executed with ADVISOR or the expiration of the Effective Shelf Registration which shares are registered for sale under the Board approved ATM, whichever is longer; provided however, that either party may terminate the relationship at any time upon thirty (30) days written notice to the other party. Notwithstanding the foregoing, in the event of termination or expiration of this agreement, ADVISOR's expenses incurred will be payable in full.
|
6.
|
Fees and
Expenses.
ALL
Fees and Expenses due will be made payable to and sent directly to the broker/dealer IAA.
|
a.
|
Financial Advisory Fee/ Placement F
ee.
The Company will pay a non-refundable retainer of $5,000 which will cover the first 30 days of the engagement, which is due with the execution of this agreement and pay $5,000 monthly thereafter the 1st of each month for the remaining term of this agreement.
|
b.
|
Placement A
g
ent Fee:
Any sales of Company securities as dictated to ADVISOR under the board approved ATM transaction(s) will pay to ADVISOR a 2.5% (two and one half percent) commission which will be paid directly from gross proceeds of the sale prior to settlement of the transaction and funds being dispersed to the Company.
|
c.
|
Expenses:
Company will reimburse ADVISOR for all approved out of pocket expenses incurred under execution of this Financial Advisory Agreement.
|
d.
|
It
shall be noted that the fee structure set forth herein applies to a contemplated offering of securities by the Company from the current Effective Shelf Registration (as described in first paragraph) under the Board approved ATM only.
|
7.
|
Indemnity and Contribution
.
The parties agree to the terms the indemnification agreement attached hereto as
Appendix A
and incorporated herein by reference. The provisions of this paragraph shall survive any termination of this agreement.
|
8.
|
Other Business
. The Company understands that if ADVISOR is asked to act for the Company in any other formal additional capacity relating to this engagement but not specifically addressed in this letter under section (6), then such activities shall constitute separate engagements and the terms and conditions of any such additional engagements will be embodied in one or more separate written agreements, containing provisions and terms to be mutually agreed upon, including without limitation appropriate indemnification provisions. The indemnity provisions in Appendix A shall apply to any such additional engagements, unless superseded by an indemnity provision set forth in a separate agreement applicable to any such additional engagements, and shall remain in full force and effect regardless of any completion, modification or termination of ADVISOR's engagement(s).
|
9.
|
Other ADVISOR Activities
. ADVISOR is an independent firm that offers brokerage and investment services through IAA, (the Broker/Dealer). All Securities are offered through IAA (member FINRA/SIPC). In the ordinary course of our activities, ADVISOR or its affiliates may hold positions, for its own account or the accounts of customers, in equity, debt or other securities of the Company. The Company also acknowledges that ADVISOR and its affiliates are in the business of providing financial services and consulting advice to others. Nothing herein contained shall be construed to limit or restrict ADVISOR in conducting such business with respect to others, or in rendering such advice to others, except as such advice may relate to matters relating to the Company's business and properties and that might compromise confidential information delivered by the Company to ADVISOR.
|
10.
|
Confidentiality of
A
d
vice
. Except as otherwise provided in this paragraph, any written or other advice rendered by ADVISOR pursuant to its engagement hereunder is solely for the use and benefit of the Board of Directors of the Company and shall not be publicly disclosed in whole or in part, in any manner or summarized, excerpted from or otherwise publicly referred to or made available to third parties, other than representatives and agents of the Board of Directors, without ADVISOR's prior written approval, unless such disclosure is required by law. In addition, ADVISOR may not be otherwise publicly referred to without its prior written consent.
|
11.
|
Compliance with Appl
icable Law
. In connection with this engagement, the Company and ADVISOR will comply with all applicable federal, state and foreign securities laws and other applicable laws and regulations.
|
12.
|
Independent Contractor
.
ADVISOR is and at all times during the term hereof will remain an independent contractor, and nothing contained in this letter agreement will create the relationship of employer and employee or principal and agent as between the Company and ADVISOR or any of its employees. Without limiting the generality of the foregoing, all final decisions with respect to matters about which ADVISOR has provided services hereunder shall be solely those of the Company, and ADVISOR shall have no liability relating thereto or arising therefrom. ADVISOR shall have no authority to bind or act for the Company in any respect.
It
is understood that ADVISOR's responsibility to the Company is solely contractual in nature and that ADVISOR does not owe the Company, or any other party, any fiduciary duty as a result of its engagement.
|
13.
|
Successors and Assigns
. This letter agreement and all obligations and benefits of the parties hereto shall bind and shall inure to their benefit and that of their respective successors and assigns. The indemnity and contribution provisions incorporated into this letter agreement are for the express benefit of the
|
14.
|
Announcements
.
Upon completion of Capital Raising Transaction, Acquisition Transaction or Sale Transaction, the Company grants to ADVISOR the right to place customary announcement(s) of this engagement in certain newspapers and to mail announcement(s) to persons and firms selected by ADVISOR, the whole subject to the Company's prior approval and all costs of such announcement(s) will be borne by ADVISOR.
|
15.
|
Notices
.
All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or otherwise delivered by hand or by messenger addressed:
|
a.
|
if to the Company, at the address on the first page hereof, or at such address or facsimile number as shown in ADVISOR's records as may be updated in writing from time to time; or
|
b.
|
if to ADVISOR, one copy should be sent to 2502 Rocky Point Drive, Suite 550, Tampa FL 33607
|
16.
|
Governing Law
. This agreement shall be governed by and construed under the laws of the State of Florida applicable to contracts made and to be performed entirely within the State of Florida. Any dispute, claim or controversy arising out of or relating to this agreement or the breach, termination, enforcement, interpretation or validity thereof, shall be decided by the state and federal courts sitting in the City and County of Tampa, FL. Both parties hereby irrevocably waive the right to trial by jury. The prevailing party in litigation on shall be entitled to reasonable attorneys' fees. The provisions of this paragraph shall survive any termination of this agreement.
|
17.
|
General Provisions
. No purported waiver or modification of any of the terms of this letter agreement
will
be valid unless made in writing and signed by the parties hereto. Section headings used in this letter agreement are for convenience only, are not a part of this letter agreement and will not be used in construing any of the terms hereof. This letter agreement constitutes and embodies the entire understanding and agreement of the parties hereto relating to the subject matter hereof, and there are no other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof
.
No representation, promise, inducement or statement of intention has been made by either of the parties hereto which is to be embodied in this letter agreement, and none of the parties hereto shall be bound by or liable for any alleged representation, promise, inducement or statement of intention, not so set forth herein. No provision of this letter agreement shall be construed in favor of or against either of the parties hereto by reason of the extent to which either of the parties or its counsel participated in the drafting hereof.
If
any provision of this letter agreement is held by a court of competent jurisdiction to be
|
1.
|
Forbearance Period
. Subject to Sections 2 and 4 below, CFSC agrees to forbear from declaring a default under the Equipment Contracts and from exercising its rights and remedies under the Equipment Contracts until the earlier to occur of (“
Forbearance Period
”):
|
(a)
|
November 1, 2021, unless extended at the sole discretion of CFSC, or
|
2.
|
Conditions of Forbearance
. CFSC’s agreement to forbear from declaring a default and pursuing any of its rights and remedies is conditioned upon and subject to timely satisfaction (subject in each case to a 10 day grace period pursuant to which any payment within 10 days of the due dates set forth below shall be deemed timely) of each of the following conditions (“
Conditions of Forbearance
”):
|
3.
|
Payments Made as Conditions of Forbearance
. As of the date of this Agreement, Obligor’s obligations to CFSC under the Equipment Contracts total Three Million Six Hundred Seventy Seven Thousand Two Hundred Fifty Three Dollars and Fifty Cents ($3,677,253.50) (the “
Obligation
”). Each payment that Obligor remits to CFSC as a Condition of Forbearance will be comprised of a part of the Obligation and applicable interest, as set forth in greater detail in
Exhibit D
, which may be amended
from time to time as prepayments and excess payments are remitted from Obligor to CFSC. If any of Obligor’s payments that are remitted to CFSC as a Condition of Forbearance are in excess of the amount required, CFSC agrees to apply such excess payments to reduce the Obligation,
provided
however
, that such excess payments will not reduce the amount of the required monthly payments but will reduce the duration of payments required under Section 2(f).
|
4.
|
Interest
. Interest on the outstanding Obligation will be computed from the date of this Agreement at the rate equal to 5.70% per annum. All interest payable hereunder shall be calculated on the basis of a thirty (30) day month in a year of three hundred sixty (360) days. CFSC and Obligor agree to conform strictly to applicable usury laws as presently in effect. Accordingly, CFSC and Obligor agree that all sums that constitute interest under applicable law which is contracted for, charged, or received under this Agreement will under no circumstance exceed the maximum lawful rate of interest permitted by applicable law. Any excess interest shall be applied to the reduction of the Obligation owning under this Agreement or refunded to Obligor by CFSC, at CFSC’s sole discretion.
|
5.
|
Termination Event
. The occurrence of any of the following will be deemed events that terminate this Agreement (“
Termination Event
”):
|
a.
|
Obligor fails to comply in a timely manner with any of the Conditions of Forbearance set forth above;
|
b.
|
Obligor breaches any of the representations, warranties and covenants contained in Section 7 of this Agreement;
|
c.
|
An event of default occurs under any of the Equipment Contracts; and
|
d.
|
CML or Comstock voluntarily files a petition for relief or has an involuntary petition filed against it under the applicable bankruptcy laws, or any kind of receivership or insolvency proceeding is commenced by or against CML or Comstock.
|
6.
|
Effects of Termination Event
. Upon the occurrence of a Termination Event, in addition to the termination of this Agreement, the Equipment Contracts will be declared to be in default. CFSC will be under no obligation to forbear in any respect and will be entitled to immediately accelerate the balances due under the Equipment Contracts and to exercise all of its rights and remedies under the Equipment Contracts and at law and equity. CFSC may accept any payments, partial payments
|
7.
|
Representations, Warranties and Covenants
. The following representations, warranties and covenants are made to CFSC:
|
a.
|
Obligor affirms each of the representations, warranties and covenants made to CFSC in the Equipment Contracts;
|
b.
|
Obligor is duly authorized and empowered to enter into and perform under this Agreement and the execution and performance of this Agreement does not and will not violate any agreement to which Obligor is a party;
|
c.
|
Until all obligations to CFSC are satisfied in full, without the prior written consent of CFSC, Obligor will not transfer or cause to be transferred any of their respective assets, or make distributions of dividends or other property outside of the ordinary course of business. For clarification, CFSC has consented to the auction of the equipment set forth in Exhibit B and Exhibit C and the auction of such equipment will not be deemed a breach under this Agreement or the Equipment Contracts;
|
d.
|
Obligor acknowledges the truth and correctness of the recitals and Obligor affirms their respective obligations to CFSC under the Equipment Contracts;
|
e.
|
Obligor agrees that they have no claim, defense, counterclaim, setoff and/or any other grounds of avoidance to its obligations under and in respect of the Equipment Contracts;
|
f.
|
All financial and other information given to CFSC by Obligor or Obligor’s agents or representatives is and will be true and accurate;
|
g.
|
As of the date hereof, all liens, security interests, assignments and pledges granted by Obligor to CFSC are first priority liens, security interests, assignments and pledges and continue unimpaired, are in full force and effect and will continue to secure all of the obligations described in the respective instruments in which such interests were granted until and unless CFSC agrees to release such liens, security interests, assignments and pledges; and
|
h.
|
Obligor acknowledges that this Agreement represents an arms‑length transaction, and that each party has acted in good faith in the making of this Agreement.
|
8.
|
Release and Waiver
. Obligor acknowledges and stipulates that it has no claims or causes of action of any kind whatsoever against CFSC, its officers, directors, employees, agents, representatives, attorneys or consultants. Obligor releases CFSC, its officers, directors, employees, agents, representatives, attorneys and consultants, from any and all claims, causes of action, demands and liabilities of any kind whatsoever whether direct or indirect, fixed or contingent, liquidated or non‑liquidated, disputed or undisputed, known or unknown, which Obligor has or may acquire in the future relating in any way to this Agreement or the Equipment Contracts.
|
9.
|
Costs and Expenses
. Obligor agrees to pay, upon written demand by CFSC, all out‑of‑pocket costs and expenses of CFSC in connection with the enforcement or protection of CFSC’s rights under this Agreement and/or the Equipment Contracts.
|
10.
|
No Obligation to Extend Future Forbearances; No Waiver
. Obligor acknowledges and agrees that CFSC is not obligated and does not agree to extend any other or future forbearances or additional
|
11.
|
Governing Law; Venue
. This Agreement will be governed by and construed in accordance with the laws of Tennessee. The parties agree that any legal action by either party against the other relating in any way to this Agreement, the Equipment Contracts, or any relationship between or conduct by the parties, whether at law or in equity, whether sounding in contract, tort or otherwise, will be commenced only in a court of competent subject matter jurisdiction located in Tennessee.
|
12.
|
Amendments
. This Agreement cannot be amended, rescinded, supplemented, or modified except in writing signed by the parties hereto.
|
13.
|
Counterparts
. This Agreement may be executed in more than one counterpart, all of which, taken together, will constitute one and the same instrument.
|
14.
|
Time of the Essence
. TIME IS OF THE ESSENCE OF THIS AGREEMENT. THE PARTIES TO THIS AGREEMENT HAVE READ AND UNDERSTAND ALL OF THE PROVISIONS OF THIS AGREEMENT.
|
Contract Number
|
Contract Type
|
Manufacturer
|
Model
|
Serial Number
|
001-0669820-000
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R01054
|
001-0669820-001
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R00910
|
001-0669820-002
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R00968
|
001-0669820-005
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R01381
|
001-0691975-000
|
ISC
|
CAT
|
D8T Track Type Tractor
|
FCT00118
|
001-0691965-000
|
ISC
|
CAT
|
988H Wheel Loader
|
BXY04526
|
001-0708302-000
|
ISC
|
CAT
|
966K Wheel Loader
|
TFS00798
|
001-0708723-000
|
ISC
|
CAT
|
740B Articulated Truck
|
T4R01577
|
001-0708723-001
|
ISC
|
CAT
|
D8T Track Type Tractor
|
MLN00551
|
001-0708723-002
|
ISC
|
CAT
|
D6NXL Track Type Tractor
|
LJR00664
|
001-0728277-000
|
ISC
|
CAT
|
14M Motor Grader
|
R9J00960
|
001-0728277-000
|
ISC
|
CAT
|
349E Excavator
|
TFG00382
|
Contract Number
|
Contract Type
|
Manufacturer
|
Model
|
Serial Number
|
001-0669820-001
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R00910
|
001-0669820-002
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R00968
|
001-0708302-000
|
ISC
|
CAT
|
966K Wheel Loader
|
TFS00798
|
001-0708723-002
|
ISC
|
CAT
|
D6NXL Track Type Tractor
|
LJR00664
|
001-0728277-000
|
ISC
|
CAT
|
14M Motor Grader
|
R9J00960
|
Contract Number
|
Contract Type
|
Manufacturer
|
Model
|
Serial Number
|
001-0669820-000
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R01054
|
001-0669820-005
|
Finance Lease
|
CAT
|
740B Articulated Truck
|
T4R01381
|
001-0691975-000
|
ISC
|
CAT
|
D8T Track Type Tractor
|
FCT00118
|
001-0691965-000
|
ISC
|
CAT
|
988H Wheel Loader
|
BXY04526
|
001-0708723-000
|
ISC
|
CAT
|
740B Articulated Truck
|
T4R01577
|
001-0708723-001
|
ISC
|
CAT
|
D8T Track Type Tractor
|
MLN00551
|
001-0728277-000
|
ISC
|
CAT
|
349E Excavator
|
TFG00382
|
/s/ Corrado De Gasperis
|
|
Corrado De Gasperis
|
|
President, Chief Executive Officer and Executive Chairman
|
/s/ Corrado De Gasperis
|
|
Corrado De Gasperis
|
|
President, Chief Executive Officer and Executive Chairman
|
Mining
Operating
Name
MSHA
Identification
Number
|
Section
104S&S
Citations
|
Section
104(b)
Orders
|
Section
104(d)
Citations
and
Orders
|
Section
110(b)(2)
Violations
|
Section
107(a)
Orders
|
Total Dollar
Value of
MSHA
Assessments
Proposed
|
Total
Number
Of Mining
Related
Fatalities
|
Received
Notice of
Pattern of
Violations
Under
104(3)
|
Received
Notice of
Potential
to Have
Pattern of
Violations
Under
Sections
104(3)
|
Legal
Actions
Pending
as of
Last
Day of
Period
|
Legal
Actions
Initiated
During
Period
|
Legal
Actions
Resolved
During
Period
|
||||||||||
26-01871
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
300
|
|
—
|
|
No
|
No
|
No
|
—
|
|
—
|
|
26-02771
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
400
|
|
—
|
|
No
|
No
|
No
|
—
|
|
—
|
|